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  • Quartz: Manicures, Immigrant Workers, and Innovation Driven Growth

    In assessing the possible economic benefits of immigration reform, Quartz 's Tim Fernholz chooses to look at an industry we've not thought about: manicures. Fernholz shares some key takeaways from a study on manicure businesses in California, and reveals that it is a thriving business. And the growth has been driven by Vietnamese immigrant workers: Fernholz writes: Why was this possible? Because the immigrants were—wait for it—innovators in the manicure space. They developed the idea of the standalone nail salon that reduced costs, “making a once-exclusive service commonplace.” That meant more nails to paint, not just more workers per nail. The benefits of immigration accrued to people who got their nails painted, to the new immigrants, and even to the remaining non-Vietnamese manicurists. While nail-care business might not be the perfect stand-in for all low-income work, it does reflect what economists find more broadly: When new immigrants come, it does mean new competition for similarly-skilled local workers, but the new immigrants may also create opportunities that lead to more investment, which maintains wage growth and leads to economic growth. Indeed, with more immigration, average wages seem to rise, not fall. But the American workers most similar to low-skilled immigrants are uneducated Americans. Economists looked at how immigration affected them between 1990 and 2006, when a lot of unauthorized workers were coming into the country. If they assumed every new immigrant had the exact same abilities as a native worker (which obviously isn’t true, starting on the language front), the effect of immigration on the wages of native workers who didn’t finish high school fell 0.6% over 16 years, while those of everyone else improved. In a more accurate simulation, they found that less-educated natives saw their wages increase by 0.3% due to immigration, and average wages increased 0.5%. That’s not so bad at all. Read How manicures explain the benefit of low-skilled immigration here .
  • Richard Florida Calls Rising Creative Class the "Growth force of our time"

    It has been more than a decade since Richard Florida got our attention with his book, The Rise of the Creative Class . Even with the tumult of the last several years, Florida has not changed his position. He continues to believe that workplaces that tap into, and encourage, the creativity in workers will reap benefits in today's global economy. In this Big Think interview, Florida discusses the continuing rise of the creative class:
  • MarketingProfs: Tapping Into Potential of Big Data

    We are living in the age of BIG DATA , though it may still be the dawning of that age. AT MarketingProfs , Verónica Maria Jarski suggests that many global businesses have a communication problem. When different departments are not working hand in hand, the potential benefits of having all this new data are not realized. Jarski presents an infographic to make her point (note: this is focused on marketing and sales departments, but we think there is a larger lesson for organizations here): See the full size graphic here .
  • Brookings: 'Mobile Money in Developing Economies'

    One piece of technology is changing providing access to banking to millions of people in communities around the globe that have never had access before: the mobile phone. This Brookings video highlights M-Pesa , a mobile banking product that has changed the lived of an estimated 2 million Kenyans, and arguably lifted the economic fortunes of their communities. It is the story of an innovative product that scale s rapidly:
  • Crowdsourcing as a Management Tool

    For those executives who have not convinced themselves they have all the answers, strong leadership depends in part on utilizing the collective wisdom of all members of an organization. At Fast Company , Fort Hill President Michael Papay outlines some best practices for using crowdsourcing techniques to tackle organizational challenges. One tip is to " Create a Great Experience ": The quickest way to get to some fast answers is to make the experience a good one, perhaps even delightful. Time compresses when we’re engaged. The trouble is: Most survey methods are too cumbersome and too dreaded because the experience is dry and usually awful. What if you engaged people--perhaps even delighted them--in the process of asking them questions? This is less about driving people to do a survey, and more about the experience pulling them into a process where they see where others are, contribute, and shape direction. Facebook and other social media took off when the experience was simple and when people knew they’d learn something as they participated. And, in the process, those experiences created “stickiness”--the idea that people are drawn to return for more. In fact, the dominant social media sites--Facebook and Twitter--each ask simple questions to prompt posts and tweets: What’s going on and what are you doing? How about something that’s a good experience for the users--a crowdsourcing tool that engages the crowd and people see they can shape the opinion of a company? The process is transparent--people can see what others are doing. You get more engagement and you compress the time. Read Crowdsourcing Your Way to More Effective Leadership here .
  • Bill Gates the Optimist: Economic Development Will Come as We Innovate New Means of Delivering and Measuring Support

    Bill Gates calls himself an optimist. And he expects to see significant progress in developing economies and in "the lives of the world's poorest people," in the next 15 years. The tools for healthier, better lives are there. Now Gates feels there is a need to be more forward-thinking in connecting the right tools and resources to the economies where they are needed. At Project Syndicate , Gates writes: Skeptics point out that we have a hard time delivering new tools to the people who need them. This is where innovation in the measurement of governmental and philanthropic performance is making a big difference. That process – setting clear goals, picking the right approach, and then measuring results to get feedback and refine the approach continually –helps us to deliver tools and services to everybody who will benefit. Innovation to reduce the delivery bottleneck is critical. Following the path of the steam engine long ago, progress is not “doomed to be rare and erratic.” We can, in fact, make it commonplace. Though I am an optimist, I am not blind to the problems that we face, or to the challenges that we must overcome to accelerate progress in the next 15 years. The two that worry me the most are the possibility that we will be unable to raise the funds needed to pay for health and development projects, and that we will fail to align around clear goals to help the poorest. The good news is that many developing countries have growing economies that allow them to devote more resources to helping their poorest people. India, for example, is becoming less dependent on aid, and eventually will not need it. Some countries, like the United Kingdom, Norway, Sweden, South Korea, and Australia, are increasing their foreign-aid budgets; others, even traditionally generous donors like Japan and the Netherlands, have reduced theirs. The direction of many countries, including the United States, France, Germany, and Canada, is unclear. Read The Measurement of Hope here .
  • Godin: "If failure is not an option, then neither is success"

    Seth Godin's blog is required reading at The Watch. And we have been struck, and a bit confused, by how Godin is able to seem so optimistic while he points out all sorts of problems in the business world and beyond. But we may better understand now, after listening to him speak with Kara Miller , host of WGBH radio's Innovation Hub . And it all has to do with his views on failure. Godin and Miller spoke this week about the state of education in the U.S. But it is a conversation that is about so much more than failing schools. For Godin, the internet age requires entrepreneurial thinking and creative approaches to problem solving. He says we are not doing a very good job of developing the key skills to success. The reason? "We haven't taught our kids to fail," says Godin. Listen to the program here .
  • Signs of Recovery in American Manufacturing

    Earlier this week, Brookings gathered business leaders and policy makers to discuss "fiscal challenges, U.S. manufacturing and government performance." Bruce Katz , VP of the Brookings Metropolitan Policy Program , addressed the good and the bad of American manufacturing. Katz pointed out the manufacturing sector lost the most jobs during the great recession. When you lose manufacturing jobs, other jobs, like design and engineering jobs, leave the country as well. But some manufacturing jobs have come back (see Katz's handout on jobs recovered, by sector, here ). And Katz sees some trends that suggest continuing recovery in American manufacturing is possible. The key to continued growth, Katz says, is collaboration: You can watch other excerpts from the Brookings panel discussion on American manufacturing here .
  • Improvising Your Way to Better Leadership

    Bob Kulhan has taken his background in improvisation and built a business--and a teaching position at Duke's Fuqua School of Business--out of it. Kulhan applies the skills learned from improv to managerial decisions. He says the key to innovating your way out of a problem is to apply the central two words of improve work: "yes, and." He explains the value of this approach in a Big Think video:
  • Killing Your Company in Order to Save It

    New Year's Resolution for top executives: kill your company. Don't really kill it, of course. Rather, go through the first exercise in Lisa Bodell 's book Kill the Company: End the Status Quo . Bodell--founder and CEO of FutureThink --advises top managers fully engage with an exercise to determine their organizations' most dangerous vulnerabilities. If you figure out your weaknesses before your opponents do, you may be able to change them before they cause you real lasting harm. Bodell spoke about the need for this level of intense self reflection with Knowledge@Wharton 's Shannon Berning :
  • Creating Serendipity

    Just as you make your own luck, innovative companies make their own serendipity. So says Jack Hidary --founder of Samba Energy and of the Auto X Prize. For Hidary, the best way to bring innovative ideas into the world is to gather people who are both smart and open to new ideas, and let them have at it. The results are better products and and more productive interactions. (Maybe we need to reconsider the guest list for our New Year's Eve parties) From Big Think :
  • A Defense of 'Cuddly Capitalism' and Innovation in Nordic Countries

    At VoxEU , three Finnish economists respond to a recent paper in which the authors assert that "cuddly capitalist" countries like Finland and other Nordic economies, "free ride" off of "cut-throat" capitalist countries like the U.S. Not surprisingly, Niku Määttänen , Mika Maliranta , and Vesa Vihriälä see a different picture. First, they take issue with the idea that the U.S. economy is more innovative: As Acemoglu et al. (2012a, 2012b) stress, innovation requires risk-taking. In a very innovative economy, one would therefore expect to find intensive job creation and job destruction, as firms that are successful in innovative activities expand rapidly while others are forced to exit the market. The available data do not suggest that the US economy is unambiguously more dynamic than the Nordic economies (Bassanini and Marianna 2009, OECD 2004). In Denmark, worker reallocation is more intensive, and in Finland almost as intensive as in the US (Table 1). Moreover, time series from the US indicate a marked decline in job and worker flows since the late 1990s (Davis et al. 2012), whereas – at least in Finland – both flows have stayed intensive (Ilmakunnas and Maliranta 2011). The authors go on to challenge the assumption that there is less dynamism in Nordic countries like Finland, and make the case that these are actually highly innovative economies in which entrepreneurs are encouraged to take risks for some of the same reasons they might be described as "cuddly" countries: One explanation for Nordic good performance might be that they are better in mobilising human resources. While hours per capita are higher in the US, a larger share of the working age population is employed in the Nordics owing to more inclusive educational, social and employment policies. This may imply that talents are harvested better for gainful economic activity. A second explanation could be the rather determined public policies to promote innovation. A third explanation might be that the economic incentives for innovation in the Nordics, while weaker than in the US, are not miserable after all, at least not across the board. For instance, all Nordic countries have introduced dual income taxation, according to which capital incomes are taxed at a flat rate. This helps in motivating entrepreneurs, despite quite progressive taxes on earned income. Sweden has recently encouraged wealth accumulation by abolishing wealth and inheritance taxes altogether. A well-designed safety net may also work to promote risk-taking. In particular, unemployment insurance may help risk-taking entrepreneurs by making it is easier for them to hire workers (see Acemoglu and Shimer 2000). Read Are the Nordic countries really less innovative than the U.S.? here .
  • Building a Culture of Innovation and What It Takes to be First

    Innovation doesn't just happen. Organizations need to first build a culture that supports creative thinking and innovative approaches among it workers/members. In this instructive video for Big Think , University of Michigan Business School Professor Jeff DeGraff lays out a path toward that culture. DeGraff focuses on what it takes to create high risk innovation--which he also describes as "breakthrough innovation.":
  • Chocolate as Disruptive Development Tool in Madagascar

    Can chocolate bars be disruptive? It all depends on how and where they are made. Fast Company 's Katherine Gammon reports on a company that is working to make chocolate bars in Madagascar. It presents as an interesting case study in how sticking to some seemingly difficult constraints in a production model can bring about real innovation in product development: Africa produces 70% of the world’s chocolate and 60% of the world’s vanilla crop, yet the continent makes just 1% of finished chocolate bars, with very little profit getting back to the farmers themselves. Now, an innovative company is disrupting the market and using limitations to their advantage to make some of the world’s best chocolate--and make a difference in Madagascar. Madecasse started in 2008 to do just that. It was started by former Peace Corps volunteers who had seen the farmers in action, and who knew the global marketplace brought just a small percentage of the profits from chocolate back to the farms. The company, which was one of [i]Fast Company’s Most Innovative Companies in 2011, has recently moved to make the chocolate culture of Madagascar even stronger: It rediscovered species of cocoa that were previously thought to be extinct. The company says that the discovery highlights the plight of the country, which is an environmental hotspot where 80% of flora and fauna are found nowhere else in the world. Cocoa farms can contribute to conservation practices because they provide shade and are often a buffer zone close to protected areas. “We’ve gotten good at turning disadvantages to our advantage,” explains Tim McCollum, one of Madecasse’s founders. “Our model and our philosophy mandates that everything in our chocolate is going to come from Madagascar. That has forced us to be more innovative, and seek some innovative flavors that haven’t been done before, like pink pepper and citrus in a chocolate bar.” Read Using Chocolate to Pull People Out of Poverty here .
  • Rogoff: 'Innovation crisis or financial crisis?'

    In a post for the World Economic Forum , Kenneth Rogoff weighs in on the argument by Peter Thiel, Gary Kasparov, and others that the global economic slowdown is the result of an innovation crisis in advanced economies. Rogoff seems to see some validity in exploring the question of whether there is a need to encourage more rapid, life-changing technological advancement (even in the age of iPhones and cloud computing), but he writes that "the evidence still seems overwhelming that the drag on the global economy mainly reflects the aftermath of a deep systemic financial crisis, not a long-term secular innovation crisis." There are certainly those who believe that the wellsprings of science are running dry, and that, when one looks closely, the latest gadgets and ideas driving global commerce are essentially derivative. But the vast majority of my scientist colleagues at top universities seem awfully excited about their projects in nanotechnology, neuroscience, and energy, among other cutting-edge fields. They think they are changing the world at a pace as rapid as we have ever seen. Frankly, when I think of stagnating innovation as an economist, I worry about how overweening monopolies stifle ideas, and how recent changes extending the validity of patents have exacerbated this problem. No, the main cause of the recent recession is surely a global credit boom and its subsequent meltdown. The profound resemblance of the current malaise to the aftermath of past deep systemic financial crises around the world is not merely qualitative. The footprints of crisis are evident in indicators ranging from unemployment to housing prices to debt accumulation. It is no accident that the current era looks so much like what followed dozens of deep financial crises in the past. Granted, the credit boom itself may be rooted in excessive optimism surrounding the economic-growth potential implied by globalization and new technologies. As Carmen Reinhart and I emphasize in our book This Time is Different, such fugues of optimism often accompany credit run-ups, and this is hardly the first time that globalization and technological innovation have played a central role. Attributing the ongoing slowdown to the financial crisis does not imply the absence of long-term secular effects, some of which are rooted in the crisis itself. Credit contractions almost invariably hit small businesses and start-ups the hardest. Since many of the best ideas and innovations come from small companies rather than large, established firms, the ongoing credit contraction will inevitably have long-term growth costs. At the same time, unemployed and underemployed workers’ skill sets are deteriorating. Many recent college graduates are losing as well, because they are less easily able to find jobs that best enhance their skills and thereby add to their long-term productivity and earnings. Read the full post here .
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