Valuing Innovation

Something that received little attention recently is going to give innovation its due credit when it comes to literally valuing the contribution innovations make to the economy.

This summer, the government agency that determines gross domestic product numbers, the U.S. Bureau of Economic Analysis (BEA), is revising its method of calculation. For the first time ever, the BEA is going to count creative products—take, for example, a novel that is made into a feature film—as a fixed investment, essentially treating it the same way that a company’s investment in a new factory is regarded.

Why the change? Because creative products like films have a life beyond their initial box-office utility and continue to earn money long after they’re out of theaters, through copyrights on products.

The BEA’s revised number is expected to increase the size of our economy by approximately 3 percent. Considering that we have an economy somewhere in the neighborhood of $16 trillion—that’s a big contribution.

Try, Try Again

If we don’t succeed at first—given the impatience we’ve all developed as we multitask, and a 24/7 news cycle that creates a need-to-know-now mentality—it’s easier to give up than to try and try again. But sometimes we don’t have the luxury of moving on to the next thing, and that can be a good thing.

The recent battery misfortunes of Boeing’s new 787 Nightmareliners provide a good example of innovation being forced on an organization for the public good.

Before Boeing got the OK from the FAA to put the 787s back into service after being grounded, the company twice told the feds that they had the problem solved, yet the government agency sent the company back to the drawing board, saying that the problem was not adequately resolved.

Try, try, and on the third round, Boeing came up with the best solution—better than the previous two, which should be a relief to anybody contemplating a trip on the jumbo jet. Yet the company wouldn’t have necessarily come up with the best solution unless it kept trying. In this case, it was forced to keep trying.

How often are we settling for good enough instead of continuing to work toward the best? What are we sacrificing in the name of speed versus quality?

When you’re developing ideas, don’t allocate an hour or two to brainstorming. Your best ideas are going to come after you’ve already found what you think to be the best idea. Boeing’s initial engineering idea of using lighter lithium-ion batteries, which have better energy density, among other attributes, was a good one, but we all saw (much to the horror of Boeing shareholders) what happened to the idea. There was a better solution. And I’m not saying that Boeing didn’t jump through all the regulatory hoops to make sure that it’s plane passed every test, which it did.

As we’ve seen in many industries when accidents occur and standards are changed in response, there will be new requirements designed to safeguard the public—but shouldn’t we be trying to create the best, versus good enough, from the outset?

Cheaper is often very expensive.

Against the Grain

Local screenwriter Shawn Otto, who wrote House of Sand and Fog, has another treatment in development about wild rice. Perfect for Minnesota, right? You would think so. Slam dunk.

Not so fast.

At one time, under the leadership of then-Governor Arne Carlson, Minnesota had a thriving film production community. With an abundance of in-state talent, Hollywood started coming to Minnesota to shoot major productions—think Grumpy Old Men, Jingle All the Way, and The Mighty Ducks. But then a new governor, who, ironically, had strong film-industry ties, wrestled away incentives for production companies to shoot here, and Hollywood took its business elsewhere.

States like Louisiana, Georgia, and Massachusetts have aggressively pursued television and film production, primarily by offering tax incentives for production, and it’s paying off significantly in generating jobs and revenue.

So, what’s happening to Otto’s screenplay about wild rice? Producers are asking, “Does it have to be wild rice?” Adding, “Maybe it can just be about rice in general.” Why? Because you can grow rice in Louisiana, where they also offer some of the most generous tax incentives for filming. Since 2006, more than 300 productions have been shot in Louisiana, and in 2011, production companies spent more than $1 billion in the state.

It’s time for Minnesota to apply some innovative thought about how to bring back film production. Does it have to be wild rice? That’s up to legislators to decide.

What’s for Dinner?

“Sometimes you eat the bear and sometimes . . . well, he eats you.”

While this is a memorable line from The Big Lebowski, the same can be said when it comes to innovation.

Two recent examples come to mind—one TBD and one already decided.

The University of Minnesota recently announced that it’s putting its basketball program in the hands of 30-year-old Rich Pitino, son of Louisville Cardinals’ coach Rick Pitino. That surname likely sounds familiar to anybody that hasn’t been living under a rock for the past week or so, because Rick Pitino led Louisville to victory in the 2013 NCAA basketball championship.

Meanwhile, in hiring a very young coach with limited experience, the Gophers are rolling the dice big time and hoping that some of dad’s coaching DNA—make that all of dad’s coaching DNA—rubbed off on junior. No doubt, it’s a gamble, but sometimes you have to divert from the tried and true, and in the case of the Gopher basketball program, it’s not a bad idea. After all, they had taken the road most traveled in hiring “name” coach Tubby Smith, and we saw how that worked out.

Whether the Pitino hire proves to be an innovative stroke of genius or yet another Gopher coaching goof remains to be seen.

On another roll of the innovative dice, J.C. Penney came up snake eyes after hiring former Target and Apple executive Ron Johnson. Just yesterday, Penney’s announced that Johnson had been fired after repeated disastrous financial results trying to implement a new, innovative strategy for the traditional retailer. Some believed that all Johnson needed was a bit more time for his store-within-a-store strategy to work, and they pointed to positive results in stores that had implemented the new program, but his no-more-discounts-and-coupons plan backfired big time—sales plummeted and so did Penney’s stock.

When it comes to innovation, Wall Street is anything but patient, and the bears made a quick meal of Johnson. Rabid sports fans have just about the same amount of patience with respect to new coaches.

A bear’s a pretty big meal for a gopher.

The Organization’s Brain

The term “learning organization” got some traction a few years ago and became part of business vocabulary. But learning how to do may not help an organization as much as the exercise of learning in and of itself.

Neuroscientists have found that slowing down, focusing, and thinking deeper is what ultimately makes the brain smarter. So, it would follow that as an organizational collective, we can make the greater whole smarter by applying the same principles.

In our rush to do more with less, multitask, and act on the variety of variables on our daily dashboards, the race could ultimately be won by the organization that focuses on learning—rather than the “learning organization” that emphasizes doing.