Friday, May 4, 2007

Cincinnati Innovation -- an Oxymoron?

I don’t mean to be overly provocative with my title. I do mean to raise the question “What is the Innovation culture, if any, of my beloved hometown of Cincinnati?” Let me say how much I love Cincy to start with here. I don’t think there is a more beautiful city in the Midwest, and it’s hard to beat Cincinnatians for being friendly. I spent many good years living in Cincinnati and I often wish to return to Mooney Avenue in Hyde Park and spend some time reading novels under a giant oak tree.

But I digress, this is not a love letter, it’s about an honest look at the state of innovation in Cincy. I return to my hometown May 21 for a 7:00 pm appearance at Joseph-Beth in Hyde Park to sign copies of Jack’s Notebook. Come visit with me! My visit prompted my thinking about my Hometown.

Historically, Cincinnati is darn innovative. Jet engines were first developed at GE in Evandale. Proctor and Gamble, the giant that looms large in this cities corporate profile, certainly has innovated like crazy over the years and continues to do so. P&G strategy over the last few years has been nothing short of brilliant. Kroger’s continues to grow by being very smart, and yes, innovative. Tom Nies and Cincom was a pioneer in the software business (disclaimer, I worked for Cincom for 4 years in the 80’s). Once upon a time Cincinnati was one of the most admirably balanced economic cities in the world, with all kinds of thriving companies. It was the world capital of precision machine tools at one point, and not so long ago. So, okay, Innovation and Cincinnati do belong in the same sentence.

However, Cincinnati is no longer as well balanced as it once was. The big companies continue to do well, but with some rare exceptions it’s hard to find the gleaming and exciting light of new business formation and innovation. Opportunity, or rather the lack of it, is at the heart of Cincinnati’s racial disquiet. No hope means despair, and desperate people do drastic things. I spoke with a real gentlemen named Jim Clingman, Jr. ( yesterday and he confirmed what I thought was true 20 years ago. It’s not a level playing field in Cincy for the young business person coming up. Jim is a UC professor and an advocate for economic empowerment. He says that the investment funds that were supposed to help small businesses (one of the responses to the racial problems that occurred) only go to companies with more than a million in revenues. And there doesn’t appear to be any micro loan programs in Cincinnati – and that’s hard to believe given the need and they’re proven effectiveness for bootstrapping. Jim is one of the driving forces behind Entrepreneur High School, an educational program located within Woodward High, to create new players on the field. It’s a modest success, having survived within CPS for 5 years now and graduating it’s first class. They’ve won national awards for business plan development. If only this program were more widespread…it should be an option in every public high school. Especially in Cincinnati.

And having said all the above, Cincinnati is still a force -- at this time home to 10 Fortune 500 companies and 18 Fortune 1000 companies. These companies do well in a low cost of living city like Cincinnati, drawing on its educated population, and on a solid mid-western work ethic. These companies long ago carved out their niches and are, mostly, content to do incremental innovation to maintain their market shares. One bit of good news -- as some of these bigger organizations downsize and send talented and experienced baby boomers off to retirement, those folks refuse to go quietly and often go out and start ventures. This is a real engine for small business growth and Cincinnati would do well to aid and abet this trend. Enquirer columnist John Eckberg, author of The Success Effect, made me aware of this. He cited as an example the story of the founding of Lenscrafter. Dean Butler, a retired P&G executive noticed that there was no good reason glasses had to take two weeks to come back from the grinder. He put the lens makers in the back of the store, delivered glasses in one hour, and the rest was history. A seasoned veteran is the kind of person who not only has that kind of business insight, but also has the experience to grow a company.

And Cincinnati has some stars -- Doug Hall at Eureka Ranch is arguably the leading innovation consultant in the USA. While I don’t agree with all his methods, you can’t argue with his results, which keep customers from all over the world coming back to Newtown for his services.

Let me get personal here. I left Cincinnati in the mid 80’s to pursue a software career in a bigger market, Chicago. It was a good move for me. I worked for several companies in Chicago and then started my own, with partners, in the early 90’s and prospered. That would never have happened for me in Cincinnati (you can’t get a cup of coffee in Chicago without running into somebody with a new business idea). New business requires capital and mentorship. It requires a culture that supports risk taking. Here’s my opinion: Cincinnati is a risk-averse city. The statistic I found on Wikipedia -- that it is #16 in the USA for entrepreneurship (not bad) and #1 in failure rates -- is interesting. It means only “sure things” are being tried. The downside to having a good batting average is you give up the long ball, the home run. The Big Red Machine didn’t operate that way! You need good bets and you need to bet on a long shot once in a while because they have the biggest payoff.

Let’s look at technology. There needs to be a culture that develops new technologies and nurtures them into new businesses. I don’t see that going on in Cincinnati. Okay, the University of Cincinnati does some good work in engineering research and development (check out the interesting work being done at Extreme Photonics – but unlike Stanford or Harvard – where are all the start-ups taking that stuff to the next level? And creating jobs? It’s really not happening in Cincinnati.

Until Cincinnati starts supporting technological development and start-ups, and until it does the hard work of creating more empowerment for small business from the ground up with micro loan programs, and better entrepreneurial education, it will remain what it is today, a good town content to follow, and not a great town leading innovation.