This is a repost of Steve Faktor’s original Forbes article
I’ll be first to admit that I’m a reforming “innovation” trollop. I’ve thrown the word around too lightly, at any old sailor. I need a hot shower and a Brillo pad… What’s so bad about “innovation”? It doesn’t mean much…and maybe never did. Today, we use it to describe an iPhone newsreader app and the reinvention of space travel by SpaceX. That’s more range than Meryl Streep. My business is about creating great products and services, so I look for great tech partners. Some are startups led by brilliant entrepreneurs, bursting with optimism and 5-Hour Energy. As they describe their app, game, or web service, their words scream Johnny Depp, but the reality is a bit more Judah Friedlander. No shame in that, but I sometimes wonder how we could get these brilliant minds to work on meatier problems. My concern isn’t for them, but for us. The US needs jobs and as I wrote in Econovation, the big numbers still come from physical, capital-intensive businesses. Here are three ways we can help make brilliant minds deliver bigger results.
1. Redefine “innovation”
Words should mean something. What’s missing from the word “innovation” is any measure of economic and societal impact. In business, it’s the only way to tell Depps and Friedlanders apart. The Econovation Score(tm) does this by measuring the potential impact of any invention, product or service on the consumer, company, and country. Impact on each party is ranked from -1 to 3, with a maximum total score of 9. (Think: automobile or Internet.) The minimum score is -3. (Arguably, some types of outsourcing…or war!) Here’s how each score measures impact:
- Country: How many jobs or major efficiencies does it create?
- Company: Does it create profit potential for a single company or multiple players? Or does it create an entire new ecosystem (e.g. iPhone + app developers +accessories)?
- Consumer: Does it address a want, a need, or does it vastly improve quality of life?
(You can get more specifics on IdeaFaktory. In future Forbes columns, I’ll rate emerging innovations and technologies using this system and offer more detailed reports. )
2. Focus on real problems
Sometimes I forget how lucky we are. The developed world is running out of real problems. We’ve achieved enviable levels Bieberdom. We have iPads, hundreds of cereals, and 53 million search results for “zombie apocalypse”. My Thai food delivery guy has a better Android phone than I do. That doesn’t mean our problem tank is completely empty…yet. With some help from my Google+ community, I compiled an initial list of big problems that still need solving. (Feel free to suggest yours in the comments or tweet me at @ideafaktory with hash tag #Econovation.)
Econovation Opportunity Map
Note: The ones in Quadrant IV will create the greatest benefit to Consumers and Companies (entrepreneurs and investors). The greener the bubble, the greater the country-level benefits will be. Dark green means generating 100,000+ jobs or billions of $’s in efficiencies.
3. Incentivize Econovation
After watching The Men Who Built America on the History Channel, it’s hard not to be humbled by the magnitude of change they created. They made our Twitters and Brangelinas possible. Besides visionaries like Elon Musk, today’s entrepreneurs reflect our rosy bouquet of first world problems. There are plenty of good reasons for choosing this path. It requires less capital and minimal infrastructure. The skills are easy to acquire at places like Codecademy…or Bulgaria. And plenty of VC’s will gamble on these young, ambitious lottery tickets with 1000-to-1 return potential.
The odds seem stacked against the big ideas that drive domestic manufacturing, exports, and jobs. Temporary government incentives can help put those investments on equal footing with startups like Pandora and Zynga. Incentives should apply mainly to Econovations in Quadrant I (high Country and Consumer value, but less profitable for companies).
Here are four ideas to get top entrepreneurs creating big Econovations:
- Provide matching funds for qualifying Econovations. But unlike Solyndra, we should leave investment decisions to professionals, who must keep skin (and Rolex) in the game. As these businesses succeed, Americans benefit like other shareholders. Or, we can let the people decide. Citizens can use crowdfunding to direct matching funds towards businesses they believe can generate quality jobs and exports.
- Tax-free municipal mutual funds: Investbx in the U.K. allows investors to buy shares in private, local businesses. As an American, I love to super-size. We can scale this model here. US financial firms could sell mutual funds that invest in local and domestic businesses with high Econovation scores. With a little lobbying, these funds can be exempt from taxes just like municipal bonds. Their tax advantages would drive funding to high potential US businesses.
- Liberate Econovators. Not only do annual health care costs keep rising by as much as 30 percent, but they might be the single greatest threat to entrepreneurship. Many potential entrepreneurs never leave their cubicles in fear of leaving their families uninsured. If they choose to pursue qualifying Econovations, the government should shower them with all the free pap smears, prostate exams, and Robitussin they need for 12-18 months. This health insurance subsidy can be administered by Medicare, but will act more like an investment than an entitlement. We should do the same with student loans by slowing or suspending interest payments.
- Eliminate friction: Create a simple, one-stop shopping for all state and federal small business programs, regulations and financing options. The experience of registering a corporation, answering tax questions or finding capital should be as simple as ordering a burrito at Chipotle. For example, emissions, insurance, and employment are regulated completely differently in all 50 states. It stops growth, competition, and prevents entire states from experiencing the Geiko lizard…or Econovation.
Maybe that brilliant Farmville engineer will soon be building our smart energy grid instead. That is if GE doesn’t win his heart first…
ABOUT THE AUTHOR
Steve Faktor is founder of IdeaFaktory innovation incubator, author of Econovation, and ex-innovation and strategy executive at American Express, Citi, MasterCard and Andersen. Steve is a popular global keynote speaker and writer for Forbes and Harvard Business Review. He also leads workshops and training based on his 4C’s of Innovation(TM) methodology. Full Bio
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About Steve Faktor
Steve Faktor is founder of IdeaFaktory innovation incubator, author of Econovation, and ex-innovation and strategy executive at American Express, Citi, MasterCard and Andersen. Steve is a popular global keynote speaker and writer for Forbes and Harvard Business Review. He also leads workshops and training based on his 4C's of Innovation(TM) methodology. Full Bio