One-On-One with Chris Carrington

By: Luke Wyckoff Issue: Innovation, Growth, Job Creation Section: Business

CEO of Alpine Access

ICOSA: What is your background and how did you get into Alpine Access?

Carrington: I received my undergraduate degree in economics from Indiana University. After graduation, I began working for Bank One which is now JP Morgan Chase. After a couple of years, I decided I was much more interested in sales than banking, and I eventually was recruited away by a financial services group called DDS. I went through their management development program and from there went into sales with DDS where I progressed into management, then operations, and eventually into global sales. I was president of the Americas division where I ran a 600-person consulting team. I left DDS after 12 years and moved to Denver, Colorado where I became CEO of a small private equity company. I had to take that company through bankruptcy, re-package them after bankruptcy; and prepare them to be sold. I also worked for Capgemini Consulting for four years. Over the years, I met the equity-based companies involved with Alpine Access in 2002. So I joined the board in early 2006 and became CEO in July of 2006.

ICOSA: How big was Alpine Access in 2006 compared to where it is today?

Carrington: We were about $20 million and shrinking. We had never made a dime of profit in the eight years we had been in business. We had a great business model but had yet to make anything substantial happen. But that has changed. We’ve done about $128 million this year and are extremely profitable. Last year we finished our fourth year of double-digit growth. We grew 43 percent in 2010, and the first quarter of this year we grew 77 percent.

ICOSA: Who are some of the people/companies in business today that you consider to be great innovators?

Carrington: At the end of the day we are a Business-to-Business (B2B) type company. We serve Fortune 500 companies, so I always look to other B2B companies that are successful. I also look at some of the great consumer brands in terms of being innovative — like Apple, Inc. Apple is the creator of an elegant type of technology that provides a quality product and a unique experience from the moment that someone purchases it. We try, at Alpine Access, to create an environment for our employees that is very elegant — that the work is online and that employees can easily do their work in the comfort of their own home. We try to make our training a very smooth and unique process. We look at companies who have incredibly high standards for customer service, and we try to emulate those standards. We are a young company and we have plenty to learn, but I think that our growth suggests that we must be doing something right in that area.

ICOSA: What would you attribute to your growth?

Carrington: First and foremost I would give the credit to our unique business model. The whole concept of our company is, why bring the employee to work when you can bring the work to the employee? The foundation the company was built on was the virtualized call center model. And in doing that, we opened up complete access to all the possible talent across the United States. While examining the competitive landscape, we see other call centers and customer service centers that have a very basic brick and mortar based approach and can recruit within a 30 mile radius around the call center. What’s different about Alpine Access is our ability to go where the talent is, instead of trying to get the talent to come to where we are. Because of that, we have a lot of productive, skilled individuals working for us. Customers have a better experience and therefore want to buy more, thus helping us grow.

ICOSA: With that growth, what are some of the growing pains that you’ve had to go through?

Carrington: When I first came to the company we were really focused on “easy calls” such as seasonal retail calls. We had clients like 1-800-FLOWERS. We used to flip through PowerPoint presentations to train our new employees because there really wasn't a high level of difficulty involved. We soon learned that there was no way to grow a profitable, sustainable company using seasonal retail clients. We really needed year-round Fortune 500-companies as clients because those calls are very complex. Now we do advanced technical support. Training for those types of calls is more like 200 hours instead of 20 hours. Our biggest challenge was finding out how to transfer knowledge to somebody who was never going to come to our location and sit in a classroom. We had to figure out how to train people, on their computers, in the comfort of their own homes, in an efficient manner. Back in 2007 we invented Alpine Access University, a fully integrated multi-media platform that allows adult learners in all 50 states to participate in a 200-hour training program and come away with a wealth of knowledge. That, in a lot of ways, has been our biggest challenge, but at the same time, our biggest success.

ICOSA: What types of things do you do as a leader that fosters innovation within the company?

Carrington: I listen to all of our employees, not just my management team. We are constantly surveying our employees asking them for their opinions and ideas. Our employees always have great innovative ideas. As a leader, I like to create an environment in which to nurture those ideas. I always try to create incubation labs that allow people to test ideas and spend the money needed to do so. I believe in investing in my employees’ ideas, and I think that has really fostered an environment of innovation within the company. We will be very close to being a $250 million company in a couple of years. Because our model is so innovative, we’ve turned an industry upside-down. People are trying to catch up to us — but it’s just too late. We are an employee-based company where we value the strong bond between the employees and the employer. We don’t use contractors. We want Alpine Access to be a place where people can develop careers. Last year alone we created 200 new management positions within the company, and 90 percent of those were promotions from within. People can have amazing careers from their home.

ICOSA: What will Alpine Access look like two years from now?

Carrington: Two years from now we will be the next Denver-based public company. We have a very efficient growth model. There are a lot of people who would like to participate in the growth of Alpine Access, and we’ll accomplish that through an IPO. Denver is often known as a city that loses large companies. We want to be a company that claims Denver as our home base.

ICOSA: If you had advice for executives across North America, what advice would you give them?

Carrington: America is the greatest pool of talent in the world. Too often, we are lured by lower costs of outsourcing overseas. Sometimes you need to look beyond the appeal of lower costs to understand the greater opportunities that are available to your business. Alpine Access’ model proves that. We’ve proved that you can re-invent an industry right here in America, be cost competitive, and offer a greater service.

Luke Wyckoff is the Chief Visionary Officer for Social Media Energy. He can be reached at [email protected].

Helping Companies Start, Survive and Thrive

By: Annette Perez & Jan Mazotti Issue: Innovation, Growth, Job Creation Section: Business

An Interview with CEO Dr. Shadi Farhangrazi, Biotrends International

Whether you find her giving advice to a CEO or president of a start-up, working with a larger company on strategy, giving advice to major NGOs, or teaching classes on innovation and entrepreneurship at the University of Denver, one thing is certain, Dr. Shadi Farhangrazi is passionate about innovation. “That is how we create the future. That is what the future is about. It is how we improve lives all over the world,” she says.

Dr. Shadi is a neuroscientist, biochemist, an HIV/AIDS expert, strategist, entrepreneur, international speaker, professor, and expert in the area of innovation and entrepreneurship. She is the president and managing director of Biotrends International, the founder of the Biotrends Foundation and three other life sciences and innovation companies, and founder and co-editor of Biotrends.org.  Dr. Shadi is also an adjunct professor at the University of Denver at Daniels College of Business, College of Engineering and Computer Science, and the Women’s College. Dr. Shadi was born in Tehran, Iran but grew up in Europe where she attended boarding schools in England before moving to the U.S.  She is a member of the Clinton Global Initiative, is an advisor to USAID and the U.S. Department of State, and advises multiple multinational and small life sciences companies.  In late 2010, Dr. Shadi founded a new initiative called Innovate America, a project focused on promoting entrepreneurship and innovation by working with companies across the U.S. on job creation in innovation in emerging technologies. Dr. Shadi has spent considerable time in Africa and Asia an several countries working with schools, orphanages and several organizations focusing on women’s health, childhood diseases and women and entrepreneurship. She is currently working on a book on her experiences over the last five years. ICOSA had the distinct pleasure of visiting with Dr. Shadi about her work and ideas.

ICOSA: Why so much talk about innovation?

Shadi: I believe in the impact of science and innovation. I imagine a future that is better than today, and then I go to work every day, intent on creating that world. The future is not about one single area of technology. It is about people from various sectors talking about the impact that their technologies could have on the world. For example, information technology has had a major impact on our lives. Look at social networking — Facebook and Twitter — and how we communicate across the world with each other on the Internet and on Skype. The future will progress by incorporating many different innovations — innovations in life sciences, information technology, green technology, and the space industry. Medical research will help to improve the way medicine is practiced and how we treat patients, perhaps even how to prevent disease and scan for illnesses before the first symptoms occur. Or innovations in green energy could provide options for other alternative sources of fuel and energy for our homes, cars, and lives. So you see why I am so excited about science and innovation — I love what I do!

ICOSA: What kind of work do you do with the companies?

Shadi: I get calls from entrepreneurs who need help with their company. Many times, these highly educated and accomplished individuals have the technical background to start a business, but they need help with the actual business structure and operation. Being both a scientist and business person allows me to go back and forth — to translate the science and also translate the business. I can sit at the table with the scientists and look at the data, and sometimes even suggest experiments, but I can also help the company in meeting business challenges. This trend is not going away. In fact, more technologists and scientists are starting companies, and they do not have the time to go and get an MBA to understand the discrete underpinnings of running an organization.

Being an entrepreneur myself, I understand the different stages of creating and growing businesses. When I started my company, I had been through years of schooling and training, but nothing in my background had prepared me for my life as an entrepreneur. There are a lot of fears and obstacles to becoming a successful entrepreneur — so now I share “real life” stories as I teach entrepreneurship and coach people through the entrepreneurial journey. My associates and I assist companies in building realistic business plans and models, to grow here and abroad. We help companies with market introduction, building good management teams, and bringing the necessary resources to grow the business.

ICOSA: Many people argue that if oil prices drop, or if we develop better ways to extract oil and gas, we should not continue to invest in green technologies or alternative sources of energy. What do you say to that?

Shadi: The overall world population is growing. And in many countries like India, China, and Brazil even the middle class population is growing. All of these people are requesting, and sometimes demanding, access to clean water and more effective energy options. I recently spent a month in India interviewing companies and spending time with one of their largest banks, ICICI bank, and the growth models for the country were staggering, but not overly surprising. As our world gets smaller, we will need more general resources and sources for energy — that is a fact. And, if we want to be in a position that we are not competing for resources in terms of simple supply and demand, we must invest in alternative sources of energy production and transmission. The world needs multiple sources of energy and fuel, and it is part of the reason why many oil and gas companies have started to refer to themselves as energy companies — because they are investing in alternative energy solutions. But the reality is that we need to find ways of improving generation and the transmission of power from solar, wind, and hydrogen outlets. I do believe that in the near future, we will experience great strides in the overall technologies of solar, wind, hydrogen and clean gas, as well as anything we use now for our energy sources. And for what it’s worth, we must stay focused on the legacy we are leaving for the next generation, both here and abroad. We must constantly ask what we want our legacy to be. We must invest in the future — in a world where our innovations and discoveries will create a more sustainable world for our children and future generations.

ICOSA: What do you think we need to do here in the U.S. to improve our ranking in science and math education, while inspiring additional innovation?

Shadi: We definitely have a great challenge before us. U.S. students rank low internationally when it comes to math and science education, but we must put a major emphasis on all areas of education in order to succeed in the long term. We cannot remain competitive globally if we don’t. If we don’t make this a priority, the U.S will no longer be competitive in terms of having enough engineers or scientists, or just simply people who understand science, technology and innovations. There are many ways of improving our educational system, and the time is now and not later. I became a scientist because I love science. Science has always been so intriguing to me. But many times when I talk to kids in high schools, I am asked, “If I study science, what can I do with it?” When I hear that question, I realize that we have failed to teach children the importance of science from a young age, so they become disinterested very early. And by the time they are in high school and college, it is too late to get them engaged again. For us to have students who are interested in sciences, mathematics, technology, and engineering, we must ensure that they remain interested. If we do, I believe, we will have more students who will have the training to work in innovative companies in various capacities. There isn’t a lack of ideas — in fact we remain one of the most innovative nations on the planet — look at all the great innovative companies and ideas that have emerged recently. However, what we are doing is not enough. Many groups seem to focus on starting companies. But I believe that our greatest challenge is not how to start companies, but how to help businesses that start, ultimately survive the challenges and obstacles facing entrepreneurs today.

ICOSA: You seem to be a very extroverted, social person and not like a stereotypical scientist – what are your thoughts on that?

Shadi: Many people I meet tell me that, which I find very interesting. I guess I wonder what a scientist is supposed to act like. A big part of what we do is demystifying the traditional definition of scientists and science. After giving regular public talks, I realized that the public does not understand enough about science and scientific process, but we also do a really poor job of translating science for/to the public. Unfortunately, most scientists and technologists are trained to talk only to their peer groups. And those PR people who try to convey the science stories to the public have little or no science training. Therefore, the science and its implications often get lost in the public translation. A few years ago, at the Society for Neuroscience conference, a colleague from Harvard and I ran public education symposia for the neuroscientist members. We talked about why it was so important for scientists to talk to the public directly about its implications. At www.biotrends.org, our online magazine, we have partnered with other organizations and experts to continue to share conversations and education among scientists, technologists, innovators, and the public. And just a few months ago, we started the Biotrends Foundation, a nonprofit foundation to promote the public sharing of science, education of the public, and the promotion of science and math education. Through the initiation of the foundation came the Innovate America project. At the foundation, we believe additional partnerships can give real growth to innovative ideas focused on creating more companies and ultimately jobs.

ICOSA: How important are collaborations and partnerships in innovation?

Shadi: When I teach about innovative companies and how to manage them, we talk a lot about bringing the right team together — internally and externally. Innovative companies must look at the world as a global market — they can no longer just focus on a local strategy. As the world continues to get smaller because of innovative technologies, partnerships will be paramount in strategic global expansion. I like to think that my colleagues and I serve as a bridge — a conduit, if you will — where we find partners and strategic relationships anywhere in the world.

COSA: What do people say about you and how do you want to be remembered?

Shadi: In an interview I did last year, I was asked how I was inspired every day. This question reminds me of that. It’s more than, “What legacy do you want to leave?” I think all of us who are out there in the world of technology, science and innovation see glimpses of the future. Sometimes, I see technology and science years before other people do, yet I know what kind of impact those innovations could have on improving our lives — from making us healthier, to improving the way we live, to the way we communicate. When people ask me what I do, I say, “I think-up the future.” My work is beyond imagining — it’s thinking it, visualizing it, and going to work every day and making it happen. That really inspires me. Entrepreneurs also inspire me, because being one is not easy.

My global work benefitting women and children also inspires me. I want to leave the world better than I found it. I want to be remembered as someone who made a difference — not as someone who just thought about the future, but worked hard to create the future.

Dr. Shadi continues to teach about innovation and talk nationally and internationally on innovation and entrepreneurship and how to create more jobs.  To learn more visit www.biotrends.org or www.biotrendsinternational.com. To follow her on Twitter go to @Dr_Shadi.

I Shoulda, Coulda, Woulda...

By: Triche Guenin Issue: Innovation, Growth, Job Creation Section: Business

Innovation in the Healthcare Industry Is Now Easier

Dilemma… • Do you ever see or hear of a product or service and wonder why you didn’t come up with that idea first? • Do you ever come up with an idea for a product or service and wonder how to get others to know about it? Many of us have great ideas but no concept of how to take them to the next level – and those in healthcare are no exception. But, The Society of Physician Entrepreneurs (SoPE) is all about helping healthcare professionals get their ideas out to the marketplace. Founded in 2008, SoPE (www.sopenet.org) was created to provide education and support to physician and healthcare professional entrepreneurs from the idea stage through funding. SoPE now has 700 global members and is growing at 100 new members per month. There are five international chapters led by a steering committee composed of physicians, investors, medical device and drug companies, legal and other support organizations. SoPE’s success is measured in a number of ways: accessibility, membership, member participation, educational opportunities, funding support, and ultimately the quality of the products and services that come to market as a result of the membership leveraging the organization’s benefits.

There are many examples of products or services that have successfully come to market because of SoPE’s influence and support. Dr. Paul Sierzenski, an emergency department physician, who in an attempt to make the ER more efficient, started Emergency Ultrasound Consultants, LLC (http://www.eusconsultants.com), which specializes in training and oversight for point of care ultrasound (e.g. emergency, trauma, critical care, anesthesia, pediatrics, and nursing). The company partners to educate academic and community hospital employees, with a short term goal of expansion into national VA hospitals. Although the technology is known, the service is new. It is a means to reduce risk, decrease radiation exposure, and develop highly skilled practitioners, while meeting regulatory guidelines.

And there is Dr. Murray Grossan, an ear, nose, and throat specialist, who started Hydro Med, Inc. to manufacture and distribute Hydro Pulse Nasal/Sinus Irrigators, a non-drug medication for sinusitis, post nasal drip, and snoring. As a result of his interaction with SoPE, Grossan is providing drug-free options to the public, encouraging patients to take charge of their own therapy, and developing new products (www.grossaninstitute.com). As an indirect result of his SoPE interactions, Grossan has published two books — Free Yourself from Sinus and Allergy Problems-Permanently and Stressed? Anxiety? Your Cure is in the Mirror.

Driven by pharmaceutical products’ negative impact on the environment, the rising cost of healthcare, and the moral issue of making money vs. producing waste, A. Kumar, a research scientist in the pharmaceutical industry, recently developed a tool to optimize the prescription drug supply chain for a sustainable future. By streamlining and “greening” the drug delivery supply chain, there is a significant reduction in the harm expired drugs pose to the environment when they leech out of the landfills or the waste water system in which they are disposed. GreenRx (www.greenrxcorp.com) recently launched its pharmaceutical exchange platform.

Dr. Nayana Somaratna, a primary care physician based in Sri Lanka, realizing the interactive and immersive characteristics of an iPhone, recently developed an educational application which allows healthcare professionals to learn how to make proper diagnoses, order appropriate lab tests and develop treatment plans. The iPhone app, Prognosis: Your Diagnosis (www.prognosisapp.com) was accepted within two weeks of submittal to Apple and became the #1 free medical iPhone app in the U.S. in December 2010, when it was also recognized as one of the leading startups in the South Asian region. The Android app version was released in February 2011, and currently boasts over 200,000 users returning multiple times per week. “I’ve found that the world is flat – the very fact that someone on the opposite side of the world can build a product popular in the U.S., without traveling there, shows that no matter where you are, opportunities are present,” said Dr. Somaratna.

Another SoPE success is the London-based team of electronic, biochemistry, and microfluidic professionals who co-founded DNA Electronics, Ltd (www.dnae.co.uk ). The company has produced a microchip-based solution to enable faster, simpler, and more cost effective DNA analysis. This product is available in the commercial market, but the company is looking at potential applications in homeland security and the bio-defense industries. Additional examples of innovative products or services which have recently emanated from the Institute of Biomedical Engineering at Imperial College include the following: cutting-edge heart devices (Professor Sir Magdi Yacoub); liver surgical instrumentation (Professor Nagy Habib); and low power based diagnostics (Professor Toumazou). James Oury, a chartered accountant and senior partner with a London law firm, operates as one of SoPE’s resources for European-based efforts. He says of his SoPE colleagues, “…many personnel have demonstrated boundless energy, high acumen focus, and relentless assistance.”

Currently SoPE is the only organization of its kind representing the interests of physician and professional healthcare entrepreneurs. As founder, CEO, and chairman, Dr. Arlen Meyers has based much of SoPE’s initial service offerings from personal experiences in taking new products or services to market. He summarizes, "SoPE's mission is to help biomedical innovators get their ideas to patients faster. It's a great example of the power of global collaborative innovation networks." SoPE currently provides its entrepreneurs with the following assistance: • Advice/validation of proposed business models • Connection with other key entrepreneurs in the industry (e.g. assessing research collaborations) • Introduction to leading angel investors (e.g. research/develop investments, fundraising) • Encouragement/motivation (e.g. articles, industry news) • Support with legal issues (e.g. licensing agreements, CE marking, tax, and IP filings) • Leads to potential clients • Access to U.S. markets (the world’s largest market for healthcare products) • Collaboration and potential approaches to international markets (e.g. UK’s National Health Service) • A commitment to ongoing support throughout the lifecycle of the product/service • Preferred rates for educational events • Networking with U.S. and international partners • Access to potential medical device partners or licensees Dr. Meyers hopes that members will leverage the services included in their SoPE membership to leverage and perhaps expedite great ideas into and across geographical markets, as well as medical disciplines. His vision is to accelerate physician-oriented biomedical innovations in order to facilitate improved healthcare and delivery systems, in whatever form that takes. So, if you’re a physician and or healthcare professional entrepreneur with a great idea, don’t use the excuse “I shoulda, coulda, or woulda, if only……” There is an organization waiting to help you make your dream a reality — it is the Society of Physician Entrepreneurs.

Triche Guenin is President of Denver-based Partners Through Change, Inc., a process improvement consulting firm that facilitates organizations in becoming more efficient and effective in everyday operations. To learn more, visit www.partnersthroughchange.com.

Colorado’s Underemployed and Unemployed

By: Andre Takacs & Steve Kessler Issue: Innovation, Growth, Job Creation Section: Business

Resources for Jobs

Walk into an office today and you will see an array of machines from computers to copiers (that do far more than copy), and phones (that do far more than call). And that does not count what is in workers’ pockets. People today walk around with more computing power in their pocket than it took to put a man on the moon. However, the question is: Do the people using these types of technology know how to use them in the ways they need to be used as productive tools?

There are varying, and oftentimes heated debates on what the government and employers need to do to fuel the job market. Employers cannot be expected to provide fundamental skills training — they expect that the education systems have provided potential employees with the appropriate basic fundamental tools to get the job done. It is expected that when someone applies for a job they have the skills needed to be in that position. When typewriters were the technology of the day, students were expected to pass typing tests in the public school system. Nowadays however, our public schools are not imparting the necessary skills needed for the use of computers in the workforce.

The rapid evolution of technology does not help the situation. Someone who used to be a computer expert two years ago may no longer be an expert unless they have kept up with their learning. This poses a significant challenge to employers to decide the skills they require potential employees to use and for employment support groups to ascertain appropriate training. The speed of technological change is not going to wane; in fact, it will only get faster. Thus, foundational skills are vital.

The knowledge gap is widening between those who know technology and those who do not. Programs like KidsTek (www.kidstek.org) work to bridge this digital divide and make sure that all students have access to technology and the social skills to move beyond being labeled the stereotypical geek. Andrew Bissland, Program Director of KidsTek says, "Students need to be equipped with not only the computer skills for today, but the critical thinking skills to apply knowledge to technologies that have yet to be created." Factor in the population who come from difficult economic backgrounds and the gap grows even wider. "Technology skills need to be taught in all schools regardless of socioeconomic level," comments Bissland.

Computer skills are not the only skills people are lacking. Often people lack fundamental abilities, like general life and language skills, which play a significant role in individual employment. According to the Bureau of Justice Statistics, ex-offenders and the associated costs to taxpayers have steadily increased, creating the largest burden on local government. Ex-offenders have a much more difficult time re-entering the workplace due to their criminal record and need specialized training programs and job search advice such as those offered through local and regional workforce centers.

At the federal level, there are programs like the Workforce Investment Act (WIA) that, in conjunction with state and local communities, provide potential workers with information, job search assistance, and directed training that provides employers with skilled workers.

Colorado’s unemployed and underemployed citizens have been receiving much needed skills training through Colorado’s 52 workforce centers. These centers assist in job search support in order to help and ex-offender make a successful transition to new employment. And some of these trainings even provide the necessary computer skills for constituents to be more competitive.

Arapahoe/Douglas Employment by Design Workforce Center is one of these training centers that was specifically established to move individuals from dislocation and claimant status to employed status as quickly as possible. Employment by Design was created to meet the needs of the unemployed in having greater workplace skills by receiving training and ultimately re-entering the workforce in a timely fashion. Employment by Design was funded through a stimulus grant comprised of federal and state funding.

Program services at workforce centers include access to a fully equipped resource center which supports intensive job search activities including: resume creation and critiquing, mock interviewing, employer targeted hiring events, labor market research information, general job search assistance, and computer training workshops.

Denver DataMan, a Denver based computer training company, was contracted in November 2009 by Arapahoe/Douglas Works! (ADW!) Employment By Design to develop tailored computer training for ADW! clients. These classes have focused primarily on Microsoft Office applications, but has also included basic computer skills, navigating the Internet, and computer skills needed for composing and writing resumes and cover letters. Computer classes like these support local job-seekers in a classroom setting while being supplemented by custom training materials.

Results from the partnership between Denver DataMan and ADW! Employment by Design has aided 610 individuals over the past two years and helped 150 people in obtaining jobs they otherwise would not qualify for due to their previous lack of computer skills. By writing its own curriculum, Denver DataMan can cater the material to the specific needs of clients. For example, when Microsoft Office releases a new version with a different navigation interface, the training material and classes are catered to meet those changes quickly by updating the content and adding relevant changes.

Jobs across all sectors of the economy, even in industries that are not expected to require computer skills, now often do. These computer skills could include checking in and out at work or submitting a part request. The Denver Regional Transportation District, for example, uses Excel for maintenance orders on buses. New employees may never have had the opportunity or necessary skill-set to learn or keep up-to-date on this software, making it difficult to perform the job.

With the recent economic turbulence it is more important than ever to make sure that the national, regional, and local workforces, possess the skills they need to enter or re-enter the job market. Society cannot rest on its laurels and be satisfied with the workforce using the technologies of today; we must invest time and capital to ensure that we have a workforce ready to adopt and invent the technologies of tomorrow. From new computer systems to green energy, the American workforce is not only competing against others throughout the nation, but also those in developing countries making significant investments in education.

The role of the workforce centers is to provide workforce relevant skills in a more affordable and effective manner than through traditional education avenues. Having places where people can learn skills they are lacking and even refresh skills to be more marketable is a great asset to the business community and the community at-large. But what is also an important aspect is that participants choose to be part of these programs, rather than being overlooked by other social entities.

Offices of today are only a window into the offices of tomorrow. Technology that is used today may be laughable in the future, like that of Apollo computer systems of the 1960s, but it is with the current technology that the foundation for future success is laid. Success will only come with an educated and motivated workforce — by making sure people are trained to use modern technology. With that, society can have a productive workforce that will provide for the training of the technologies that will eclipse current tools and bring about a more technologically advanced workforce. And with collaborations like that of the Colorado Workforce Centers and private training firms like Denver DataMan, public-private partnerships are closing the employment knowledge gap and are putting people back to work.

Andre Takacs is Lead Trainer & Consultant at Denver DataMan. Steve Kessler is Owner & Lead Consultant at Denver DataMan.

Success Stories

“During unemployment, I was extremely hard on myself — questioning my skills. I was fortunate enough to have been contacted by my local workforce center to participate in specialized workshops set up and designed for dislocated workers. At first I started attending the workshops on an as-needed basis, but within a short time, I started cultivating relationships with Employment by Design staff, workshop facilitators, and networking groups. I became extremely excited about the services and workshops being provided. All along I was gaining new, invaluable computer skills, labor market information, and amazing job search connections. Armed with this new knowledge, I began looking at companies that interested me, and applied for positions that matched what I wanted to do. I am happy to announce I accepted a fulltime position with MCPN Clinics.” - Beth C.

“I was employed in the education industry for nearly 15 years. However, when my employer told me that my position was being eliminated, I found myself without a job for the first time. One evening, after a long day of job searching, I received a voice message recording from Employment by Design stating that they were offering a week-long intensive job search and computer workshop to assist unemployed professionals. So I went to check it out. After attending a number of free weekly intensive job search workshops, assessments, networking, and the fabulous computer training, I was so encouraged and motivated that this type of services was being offered in my community. I was exposed to and learning all of the high quality computer software applications that I never used while I was employed. Andre from Denver DataMan, as well as all my facilitators, was awesome! The emotional and practical benefits and services offered through Employment by Design have been endless – you can’t put a price tag on these things. I can’t thank you enough.” - Karen F.

The Future Looks Like... StoneAge

By: Michael Connors Issue: Innovation, Growth, Job Creation Section: Business

Durango, Colorado, for those who have never been, is in an inspiring corner of the state where the high desert slopes upward to the base of the San Juan mountain range and white capped mountains pierce a deep blue sky. Life here is about the outdoors and the passion that flows from nature. Just a short drive from Durango is Purgatory at Durango Mountain Ski area, and over Molas Pass, one can find the more challenging Silverton Mountain. The Animas River runs right through the heart of the town tempting anglers from all over the world while daring rafters to take the plunge - stunning geography to say the least. And unlike many of the resort areas of Colorado, Durango is a place where room has been made for industry and business. Furthermore, the people here are community-oriented and self-sufficient. The region supports oil and gas exploration and production, mining, manufacturing and is the home of Fort Lewis College. Granted, there are no single entities that dominate the commercial landscape, but the abundance of small business is its strength. It is in this thriving environment where StoneAge Inc., a leading water jet tool manufacturer is located.

Started in a garage in 1979 by John Wolgamott and Jerry Zink, StoneAge has grown into a thriving small business that is a shining example of innovation and job creation. Initially developed for uranium mining, the water drill they produced in 1979 ultimately found a home in industrial cleaning that is now commonly used in a variety of commercial settings including refineries, power plants, sewer and sanitation, as well as high-tech environments like NASA. This new technology allows operators to control the machinery remotely, increasing safety and productivity.

And as word has spread, StoneAge has increased its market share. In fact, sales growth has averaged over 18 percent per year since inception and is now over $20M net sales annually. Average sales-per-month has risen from $300,000 in 2000 to $1,400,000 in 2010, all the while remaining highly profitable. “As employees and stockholders – we do have our cake and get to eat it too. We are able to live in Durango, Colorado, earn above-average wages, receive excellent benefits and be part of something that makes our world better,” says Wolgamott.

As a 100 percent employee-owned business, StoneAge is able to leverage the passion and investment shared by everyone who works there and, as a result, they are an extremely valuable contributor to what is normally an insular local economy. Their focus on innovation and development has enabled them to position their company as an industry leader that sets the standard, creating 12 new products between 2008 and 2009.

Passion for innovation is really a by-product that comes from the company. Making its people a priority is foundational as noted in John Wolgamott’s acceptance speech for the 2009 Pioneer Award presented by the Water Jet Technology Association in August 2009, “For me personally, being able to create good jobs is one of the most worthwhile endeavors I’ve ever undertaken.” Turnover rates are remarkably low and many of their employee-owners boast 15, 20, and even 25 years with the company — a rare accomplishment in any industry.

Accepting the 2011 Governor’s Award for Excellence in Exporting, Kerry Petranek, StoneAge’s CEO, noted that their location in Durango can be a logistical challenge but one that StoneAge has overcome. She believes that being based in Durango and maintaining their exceptional culture of employee engagement is their core strength and they market this unique identity with enthusiasm. In a recent interview, Petranek emphasized StoneAge’s strategy for moving forward. She said, “The world is getting smaller. Again, for us the U.S. market isn’t going to grow like the global market. It’s very important for us to look to the future. How are we going to create more jobs and keep our employees happy by giving them growth opportunities while the company needs to grow? That future is international. “StoneAge, a respected name worldwide, has developed strategic partnerships overseas which has helped them overcome challenges of doing business in foreign markets. As a result of their innovation and employee retention, they are wildly successful overseas, noting that, “Exports represent almost half of our annual sales for the last three years.” And as they grow their business and exports, they inject new vitality into the local economy.

In fact, Durango, Colorado’s local economy is primarily based on the recirculation of the same dollars. But because 100 percent of StoneAge’s customer base is outside of La Plata County, the largest contribution to the community is through reduction in economic leakage by bringing new dollars into La Plata County — thus creating a stronger, more viable community.

As new business breathes life into the company, StoneAge is able to provide support and income that helps revitalize their community. Through StoneAge’s Community Contribution Program, they support 50 local nonprofits with time and money, but the employee-owners are also encouraged to give of themselves to local charities as schedules are flexible to help make community involvement a priority.

Drawing inspiration and strength from their environment, the people of Durango seem to share the knowledge that they are the keepers of a special place. When I asked what makes StoneAge a special place to work, Petranek says, “There are almost too many things to mention. The best part is I get to come in every day and work with some of the best people I’ve ever met.” And, by creating an enduring legacy, StoneAge truly represents what is best about the future.

Michael Connors has an M.A. in literature and an extensive background in teaching.  He is a Colorado native and spends his free time in the Rockies skiing and hiking.

Women-Owned Businesses

By: Tameka Montgomery Issue: Innovation, Growth, Job Creation Section: Business

Overcoming Barriers to Growth

Here are the facts: According to a 2011 report by American Express OPEN, there are estimated to be more than 8.1 million women-owned businesses in the United States, employing nearly 7.7 million people and generating nearly $1.3 trillion in revenue.

If U.S.–based, women-owned businesses were a state, they would rank second behind California and above Texas as the state with the largest economy. If they were a country, they would be the 13th largest economy in the world, ranking above Australia and Mexico.

Women-owned businesses are launching at nearly twice the rate of male-owned businesses. The Guardian Small Business Research Institute projects that women-owned businesses will create 5-to-5.5 million new jobs by 2018—more than half the 9.7 million new jobs expected to be created and about one-third of the 15.3 million total new jobs anticipated by the Bureau of Labor Statistics by 2018. These figures sound impressive; however, a closer look reveals something I find concerning.

While the number of women-owned businesses is growing, they appear to have hit another glass ceiling. The average women-owned business employs 0.95 people and generates, on average, $160,000 in annual revenue. The average annual revenue of male-owned businesses is 3.5 times more than women-owned businesses. Furthermore, only three percent of women-owned businesses reach $1 million or more in revenue as compared to six percent of male-owned businesses. Clearly, there are some barriers to growth that are causing women-owned firms to underperform and not reach their full potential.

I believe there is nothing inherently different about the capability of a woman to grow a thriving company. That begs the question, “How do women grow businesses that can have serious economic impact through job creation and increased revenues?” I am not suggesting that all women should seek to grow multi-million dollar businesses; however, I do think that the possibility and the vision for this goal should be given more serious consideration by women entrepreneurs, as well as the community resource partners working with them. While portions of this issue can be addressed through regulatory changes and the commitment of large corporations to do business with women-owned businesses, I would like to focus on a proactive approach by the woman business owner. Women who have grown high-performing businesses share these traits:

1. They set goals, goals, goals:

We have heard it said over and over that people who have clearly defined and written goals achieve higher levels of success than those without. This model holds true in running a business. A report done by the National Women’s Business Council indicates that “research shows that the only statistically significant predictor of business growth is not the industry, size of business or length of time in business; it is the entrepreneur’s goal for growth.”

Women business owners must resist the temptation to postpone establishing performance goals until the business is past the start-up stage. Women who have built successful companies set high goals for growth early on. Identifying these goals sooner than later can have an impact on the way they operate their businesses and could play an important factor in their abilities to pursue growth opportunities in the future. “Establishing high growth goals from the outset makes the business owner think differently about her business and drives decision making. Women with the faster-growing businesses say they behaved as if they had $1 million firms long before they achieved that level of revenue,” cited further in the report by the National Women’s Business Council.

2. They fall in love with running the business:

Many people start a business because they have a passion for something or a particular skill or expertise, not because they have business acumen. More often than not, the business owner is wearing multiple hats and may even fear giving up control because she may feel that the service delivery will not be at the standard or quality that she desires. However, if the business is going to grow, the business owner has to transition from doing everything to delegating. The Business Council’s report goes on to state, “Women say their goal is to keep the company at a size where they personally can stay involved in product or service delivery to ensure the quality and customer service that is their critical market differentiator.” This mindset can be a significant barrier to growth. Entrepreneurs who have gone on to build substantial businesses understand the importance of making the transition of always working “in” the business to working “on” the business. The key is to build a team and invest the time in creating the systems and processes so that the culture and values of the entrepreneur herself can be replicated by her staff.

3. They don’t fear the financials:

Recently, in a conversation with the founders of the company 10 til 2, co-owner Jodi Olin indicated that she recognized early on the importance of having a partner with a strong financial background. She insisted, while looking for a third partner, that this prospective individual had to have this skill in order to create a well-balanced leadership team of founders. While the numbers can be intimidating, in order to grow, an entrepreneur must change her attitude about managing her company’s finances.

The report goes on to say, “Women business owners who are focused on growth and expansion…are much more likely to embrace financial measurements as a major component of their business strategy. They produce more financial reports more often, review them regularly and use them to drive business decisions.” Lack of financial vision is an area of weakness that we see often at the Denver Metro Small Business Development Center. Many entrepreneurs do not understand the financials and do not recognize the role they play as a decision-making tool. To gain better control over the business, it is a good investment of time and resources for an entrepreneur to learn how to understand her financials and not hand this responsibility to an outside accountant or bookkeeper. The increased level of confidence that will come with this skill will increase the entrepreneur’s ability to build banking relationships and approach the use of outside capital in a thoughtful way.

4. They set performance indicators:

The quote “what gets measured gets done,” is a great reminder to identify your most critical measurements and remain focused on these key performance indicators. Beatriz Bonnet, owner of Syntes Language Group, shared with me that she knew early on that she wanted to build a business that had value. To do that, she invested time in understanding the metrics that are used in business valuation. She has incorporated these metrics into her business and uses them as a guidepost to remain on track for building a company with value.

5. They leverage multiple networks:

Women are great at building relationships; however, as business owners, it is not uncommon for women to limit their networking to groups specifically designed for women. While there is value in the camaraderie of being with other women, entrepreneurs should engage in more diverse business networking settings. Leveraging networks to build business and industry knowledge can be instrumental in gaining access to decision makers and being exposed to marketing channels that could help grow the business. The key to joining these groups is a high level of engagement. The level of engagement will determine the amount of value gained from the membership. Opportunities should be sought out to take on leadership positions that will increase access to other leaders and decision makers.

6. They are bold and courageous:

Life coach and author Margie Warrell asks, “What would you do if you had no fear of failing?” While business success is not guaranteed and everyone’s definition of success is different, I believe that women choose to become business owners because they have a vision for themselves that is far larger than what is possible within their current circumstances. To achieve that vision and build a business that is able to break the barriers to growth, women entrepreneurs must boldly and courageously press forward as if “failure is not an option” as stated by Lisa Buckley, CEO of American Automation Building Solutions. If women-owned businesses are to increase not only in numbers, but in size, incorporating these strategies of existing high growth companies would prove beneficial. Additionally, resources designed to support the growth of these businesses should also include programs and resources with a focus on the potential of women entrepreneurs to start and run high-growth companies and move beyond basic business-planning services.

Tameka Montgomery is the Executive Director of the Denver Metro Small Business Development Center a resource partner of the U.S. Small Business Administration. To learn more about the Denver Metro SBDC visit: http://www.denversbdc.org

An Energy Production Windfall

By: Emily Haggstrom Issue: Innovation, Growth, Job Creation Section: Business

VMT Technologies Engineers Innovative Equipment for the Wind Industry

As our current society completes the first decade of the 21st century, hindsight becomes 20/20. In just a century, at the pace the world and especially the United States use fossil fuels, it will be impossible to meet future demands of the increasing world population. For this reason, scientists, researchers, and engineers are producing technologies and seeking alternative sources of energy to alleviate fossil fuel dependence while also working to reduce emissions during energy production.

Currently, renewable energy represents roughly 19 percent of the world’s energy use according to the International Energy Agency. Of that, wind energy supplies only around two percent, leaving a large gap for manufacturers, producers, and suppliers to capitalize on many different factors for growth. With the world’s use of wind energy growing 31 percent in 2009, of all renewable energy sources, procuring wind has become a very attractive prospect.

The United States, once an international leader in wind energy installations, has taken a back seat to China who surpassed the one time wind giant in total installations — accounting for just over 50 percent of new wind turbines and leading the world market. However, according to the 2011 World Wind Energy Report, Europe holds the highest number of shares of wind power between Germany, Denmark, Portugal and Spain, reinforcing these European countries’ commitment to clean energy.

Although wind is a free and infinite resource, harnessing that power and ensuring production is no easy feat. High upfront capital costs are intrinsically associated with wind energy, making any investment into the industry a large one. The intricate design within the tower and turbine blades are tremendously expensive pieces of equipment, susceptible to fatigue failures, all of which are costly to maintain.

Each windmill turns on average 20 times per minute using a fixed rotation, as a variable speed has not been introduced by VMT Technologies yet. During high wind conditions, the existing technology signals an interface that feathers the blades and slows the rotation to avoid damage, thus decreasing output. Unexpected wind gusts or torque spikes pummel the gearbox inducing anywhere from 200,000 to 1 million extra foot pounds against these transmissions daily further causing fatigue which wears down the gearbox. Gearboxes are approximately the size of a minivan and would be efficient with a fixed transmission if only mother nature would provide fixed wind speeds. However, variable wind speeds cannot be predicted or controlled causing existing transmissions that are warrantied at five years to expire closer to two years after installation. Much of the long-term costs associated with the maintenance of these installations are from repair and return service of these parts. In fact, wind farms that could historically exist with five installations need additional installations just to account for lost production when one mill fails.

The industry, however, is projecting solid growth despite monetary setbacks. Wind energy is becoming an increasingly important component to our nation’s energy policy, but must be complemented by other sources of fuel to balance out the costs of producing a single kilowatt of energy. “Wind generated electricity sells for 14.5 cents per kilowatt hour, whereas nuclear, gas, and hydro sell for between 3 and 6 cents. Coal is about 7 cents. That’s a problem,” said Dick Wilson, chief executive officer of VMT Technologies. However, engineer Gary Lee of VMT Technologies created what he calls a Universal Transmission — an innovation that will further the wind industry and advance technology that will benefit many other sectors. The original design was created out of sheer frustration when Lee would burn out the belt of his snowmobile. “The heat burnt the belt in the transmission,” said Lee. “I knew there had to be a way to incorporate positive displacement instead of friction.”

After years of research and development, what Lee created was a similar weight transmission that required no clutch or torque converter. This specialized, positively engaged Continuously Variable Transmission (CVT) can change speed at incrementally infinite ratios in response to wind gusts and speeds, allowing the gearbox within the transmission to act more as a shock absorber than a metal grinder. “You could be going one mile an hour with the transmission engaged and you can then change the gear or the ration inside the transmission and go 1.2 miles per hour,” said Lee, giving an idea of just how small and quick the internal transitions are.

These new features reduce gearbox failure rates. Current turbines would be readily retrofitted with the new CVT design, increasing the longevity of the equipment. Warranty time frames would be met - leading to increased efficiency amongst the windmills - further eliminating the need for additional and costly repairs. “VMT’s technology can provide an immediate solution to the greatest challenges facing wind energy manufacturers,” said Lee.

One major challenge of the wind energy producers is regulating and maintaining a 60 Hz output, which comes at a high cost. Lee’s creation would improve overall efficiency by maintaining output rpm’s. “Wind may be free, but VMT is here to make it profitable,” said Wilson.

The technology doesn’t just work on windmills. In fact, it transitions easily into electric and hybrid vehicles, semi-trucks, heavy equipment, and military vehicles. “We see the immediate need coming from the wind industry,” said Lee, who has focused his innovation there for the time being. His green creation leans towards the continued efforts across the globe to reduce greenhouse gas emission while increasing efficiency. “Now that we’ve received our patent, we’re happy to open the curtain and show the world what we have,” said Lee.

Collaborative Leadership

By: Kim DeCoste Issue: Innovation, Growth, Job Creation Section: Business

All in the Family

ICOSA seeks to inform, inspire and educate as it shares success stories from likely and sometimes unlikely angles. Such is the case here. This story of collaborative leadership and success is one that is overlooked by many because Fred Franzia is a bit of a lightening rod. However, there is another important take-away from the Bronco Wine Company and Franzias’ story. For business leaders, students, and politicians, the Franzia family story is a case study in entrepreneurism, innovation, growth and job creation, and risk management. It is a fascinating and complex glimpse into the true agrarian roots of California - one of the top ten world economies – and into one industry which boomed there, the American wine industry.

California has its challenges today, but looking back at the early history of the settlement of the state, the heart of its success and longevity lies in the fields. It was born on the backs of immigrants and the brave souls who wandered west in search of success, gold, or both. The Chinese and Irish who helped build so much of the infrastructure and the Italians and Latinos who made things grow are as deeply a part of the state today as they were then. And the Franzia family is one of those families.

BACKGROUND

Fred Franzia and his family, through Bronco Wine Company, are epic wine producers in California and are now partnered around the world. They are the 4th largest wine company in the U.S., behind Gallo, The Wine Group, and Constellation. The volume of wine they bring to the market is staggering. A recent subject of the History Channel’s Modern Marvels, Bronco has, for example, one 42-foot-high tank which holds the equivalent of 3,500 wine bottles per vertical inch. It is just one of 413 tanks of various sizes at the headquarters in Ceres, California. One journalist said the winery looked like a “tank factory” when she met with Franzia. Franzia is as unapologetic as he is determined and as such, he is revered, feared, and respected in equal measure by most around him. He may seem an unlikely CEO, managing a massive empire with his brother Joseph, and their cousin John (thus the name “Bronco” - the contraction of “brothers and cousin”) from a trailer parked across from the guard station in Ceres. His other office is the dusty old Jeep Cherokee he uses to oversee the vineyards he loves. Franzia is the face of Bronco. He is the heart and soul of Bronco and he is – just Fred.

It is an inspiring and complex story of third generation Italian-Americans, the current Bronco leadership, who have come from humble beginnings. Giuseppe Franzia, their grandfather, moved to central California in 1893 and settled in Ripon. His wife Teresa, came later from Italy – not having met Giuseppe before they married – and they raised five children. They produced wine until Prohibition in 1917 and then again after its repeal in 1933. It was one of their daughters, Amelia, who married Ernest Gallo, and thus the families remain connected.

The schism that began in 1971 is a tough chapter and one not often discussed. Fred’s father, Joseph, and Fred’s uncles sold the company, Franzia Brothers, to the Coca-Cola Bottling Company of New York for just under $50 million, and as part of the transaction, the next generations of Franzias were forbidden from ever using their own name again in any wine ventures. However, after many years, the brand shuffled back to a San Francisco organization which maintains the iconic white box brand.

ENTREPRENEURISM

This is where the lesson begins. Fred, born in 1943, was raised in the wine business as was his brother Joseph, and their cousin John. It was a foregone conclusion they would continue the family business. As a result of the sale of the brand to Coca-Cola, Franzia did not speak to his father for seven years. “I just didn’t feel selling was the right thing to do, and I told my dad,” said Franzia to an INC. reporter, Kermit Patterson, for his 2006 article entitled The Scourge of Napa Valley. It is that article’s title that serves as an example of the acrimonious feelings Franzia has towards the buyout. For anyone who has ever taken a concept, put it into a business plan and hung up a shingle or printed a business card for himself, the idea of being self-employed or building a business is a thrilling prospect. But it is daunting. Imagine what the Franzias must have gone through when they decided to recreate their forbearers’ success. Joseph had gone from Santa Clara University to become a Marine Corps officer in Vietnam and was awarded the Purple Heart. Cousin John gravitated toward the agricultural side of the business and had a true affinity for the land. Fred had been talking about wine since he could speak and had studied the business inside and out. From a young age, Fred had an intuitive understanding of matters that usually come with experience. He was known to discuss the business even as a youngster with his friends’ fathers. People with names like Mondavi and Sebastiani are his friends to this day.

On December 27, 1973, the young Franzia men started doing things their way. Fred would be chairman and CEO, Joseph co-president responsible for distribution and John co-president for production. From scratch, on 40 acres, they have built an empire that few, if any, will ever rival. The strategy was straightforward, even if the business itself was complex. The Franzia’s controlled their own distribution in California which has served them well over time. Today, Classic Wines of California handles Bronco’s main distribution; however, they also distribute others’ products. And along the way they came to understand that the more aspects of the production they could control, the better off they would be. To succeed, they had to be willing to take extraordinary risks, and they had to look at an industry rooted in tradition to figure out how to do things more effectively and drive profit.

INNOVATION

Though Franzia is famous for saying, “Nobody should pay more than $10 for a bottle of wine,” Ron Russell pointed out in San Francisco Weekly, “He speaks not as a connoisseur, but as a businessman who takes delight in knowing the precise cost of juice, glass, cork and label.” To those most frustrated by Franzia, those who criticize his “Two Buck Chuck,” he stands firm. Critics say he’s charging less for wine than some charge for bottled water. Franzia’s response? “They overcharge for water.”

In fact, nobody appreciates water more than those who rely upon it for their business. Grapes need water to grow and water to become wine. And, California’s unique culture has kept water scarcity issues on the forefront of the discussion since the early seventies. Bronco handles irrigation and water management with cutting edge attention to detail. Real-time soil moisture monitoring is essential. Vineyards are on drip irrigation so that fertilizer is precisely applied only when needed. Weather stations calculate needs and stream in real-time to a web-enabled feed that the vineyard managers and wine makers can monitor. Bronco even grows its own beneficial algae to keep reservoir and drip lines clean and to consume damaging soil salts to protect the vines. High tech tools with soil maps, aerial photos, variable rate fertilizers, and targeted sample sites are loaded into handheld GPS devices for those who must constantly scout the vineyards. Bronco’s Napa Valley Distribution Center (NVDC) uses Unisolar technology, a thin film laminate on photovoltaic panels that is flexible and light. It does not negatively impact building structures by adding significant weight, and it is tremendously efficient for the purposes of climate control within the warehouse and offices. Careful attention to the deployment of this clean technology innovation allows the building to have an “ice chest” effect, keeping heat out and cool air in. Reduced refrigeration means reduced energy consumption and lower greenhouse gas emissions.

Collaborative innovation is evidenced by Bronco’s partnership with Verallia for the use of ECO Series™ glass for its bottles. Bronco is the largest U.S. user of the Verallia ECO Series™ which is lighter, less costly to ship — both empty and filled, takes less energy to produce, creates less landfill waste, and is 100 percent recyclable. Verallia’s wine sector uses 100 percent of the recycled glass it collects. One of Bronco’s brands, Down Under Cellars, won the prestigious Clear Choice Award in 2010 its the super lightweight packaging. This industry honor is bestowed by the Consumer Product Goods Manufacturers and sponsored by the Glass Packaging Institute. These and other measures have enabled Bronco to continue to prosper, and Franzias formula for success seems to remain, “Deliver value, reinvest in the business, and screw the pretense.”

GROWTH AND JOB CREATION

It is impossible to capture the pace and scope of Bronco’s growth in the constraints of this article. The success has been astronomical and few people are privy to the true bottom line. They do say publically that they own 40,000+ acres of vineyards in California, and they are the state’s largest grape grower. Their reach stretches from the Sacramento area to the edge of the Tehachapi Mountains, which are about an hour north of Los Angeles. Despite the company’s size, much data still remains “all in the family” and it most likely will. There are trusted leaders within the organization — lifers, many. The winemakers, like Ed Moody and Bob Stashak have remained loyal to the Franzia’s for years. Dan Leonard, vice president and treasurer is “like” family from an organizational standpoint. But, there are others, too. Throughout the United States, there are employees managing multi-state regions for the family; some are nearing 15-20 years of tenure. Many ask why they stay with Bronco in such a competitive and dynamic industry. Most say, “Leaving is hard to imagine.”

While the size of the organization has grown, so has its scope. Partnerships and investment relationships with up-and-coming brands, as well as with other storied families around the world, are starting to give Bronco the new and old world credentials many hoped they would develop. From Argentina to Chile, France, Spain, and Italy to South Africa, the Franzias have established trusted relationships with peers in order to expand their portfolio of products. All the while they remain the thorn in the side of many in California who begrudgingly come to Franzia to sell surplus grapes and juice at deep discounts, to bottle their products, and in some cases to manage their portfolios in their entirety. The Bronco portfolio is vast, but many “everyday” brands such as Fat Cat, Napa Ridge, Salmon Creek, Crane Lake, and Douglass Hill are common and are leading brands in their respective categories. The tagline they use in the Antares Wine Division, which represents about half of their wines, is “Wines for the American Table™.” That is the goal — everyday wines for everyday folks. Nothing fussy. Just good wine people can afford. Franzia says, “I don’t make wines to stick in a closet. I make wines to drink.” Terroir? Well, Harlow Ridge is named after the street in Napa where the bottling facility is located. It can deliver 18 million cases of wine a year. That is double the annual production of all of the Napa Valley! No pretense there.

Officially, Bronco does say that they bottle for other Napa wineries, but they decline to mention brands. Wine maker Bob Stashak explains, “This [bottling] line will put out about 240 bottles per minute. There are three lines. They run 24 hours a day, five days a week. When we get to the holiday, we kick in with a sixth and seventh day.” It’s certainly a far cry from the first 40 acres back in 1973.

The story of the evolution of the brand most know as Two Buck Chuck is interesting because that obscure label was acquired, with rights to the name, after the fallout of a broken marriage. The gentleman who is the namesake had to liquidate his assets, so Franzia picked up the name for $18,000. Then he sat on it for nearly 10 years. The real “gasoline” on the Franzia family’s “fire” was the partnership with regional grocery chain, Trader Joe’s, to create Charles Shaw Wines. Trader Joe’s selected the label out of several, and Franzia agreed to make a good bottle of wine exclusively for them which would retail for less than $2 — thus the moniker Two Buck Chuck. It has become the fastest-growing wine brand in history, and in its own way, has elevated Bronco even further. Critics are abundant, but in 2007, Charles Shaw Chardonnay beat 350 other California chardonnays to win Double Gold at the State Fair Commercial Wine Competition.

THE LAST LAUGH

To say Franzia has had the last laugh would imply that he’s nearing the end or that he has experienced the pinnacle of his success. Neither could be further from the truth for him or for Bronco. Franzia “charges on” daily with a regimen few could maintain. Seven days a week of work — most of the time starting at 5:30 a.m. and going well past 9 p.m. — often ends with a simple dinner at a local restaurant where he’s greeted by regulars on a first name basis despite his personal and financial standing. Have there been glitches? Yes. No success story is complete without chapters that reflect false steps. Franzia’s legal battles are the stuff of legend. He has appealed a judgment he thought was unfair to the U.S. Supreme Court where judges declined to hear his final appeal. When that happened, many celebrated while Franzia accepted the consequences. That is also a measure of a leader, by the way. Accepting responsibility on behalf of an organization when it fails is a trait many would argue has been missing in corporate culture. Franzia did, calling it “a business decision” and noting “someone had to take the fall.” Today, many wonder what Bronco’s next steps might be. Nearly all 13 of the next generation of Franzias are employed by the company in one way or another, including two of his children, one a retired Navy SEAL. His son Joey Franzia is assuming greater leadership roles — managing national distribution and brand acquisition — while his cousin Damon, Joseph’s son, deals with brand acquisition and distribution within California. Fred, Joseph and John continue to navigate the challenges of a tough economy, stiff competition, and eager critics. All the while, those connected to the company stand by waiting with eager anticipation to see when, if any, of the original founders will “retire.” One could only guess, but my money stays in the camp that says Fred will be in that trailer across from the guardhouse in Ceres until he can’t be anymore. His family and his company are his life.

Kim DeCoste is the Director of Career Services for Colorado Technical University and President of DeCoste & Associates, LLC. She can be reached at: [email protected] or 303.362.2948.

Corporate Tax Reform

By: Larry Burton Issue: Innovation, Growth, Job Creation Section: Business

Critical to American Jobs and Competitiveness

There’s a lot of talk in Washington, D.C. about how to get our economy moving again. Some talk about making our workforce more competitive, promoting trade or reforming and removing regulatory burdens that prevent businesses from expanding and hiring more workers. All of these are good ideas that should be pursued by policymakers.

But today I want to discuss another policy area that has been in serious need of reform for years – the U.S. corporate tax system.

There’s widespread recognition that our tax system is one of the most outdated and anti-competitive in the developed world. It’s true, and it’s a major problem for America’s competitiveness, which is critical for U.S. job creation. American multinational companies are responsible for 63 million American jobs and must be able to compete on a level playing field with non-U.S. companies.

Yet, America has one of the highest statutory corporate tax rates in the world at 39.2 percent (inclusive of federal and state taxes), fully 14 points higher than the average of our competitors in the Organisation for Economic Cooperation and Development (OECD). We are also the only G-7 country that taxes businesses on foreign earnings when they’re brought home, which is effectively a double-tax not faced by most of our competitors. Nearly every other developed nation employs a “territorial” system that exempts these active earnings from domestic taxation. Even our research and development (R&D) tax credit, once the envy of the world, has fallen way behind the incentives offered by our competitors. By 2009, the competitiveness of our R&D tax incentives ranked just 24th out of 38 OECD and advanced emerging countries.

Collectively, our tax system makes us an outlier among developed nations, putting U.S. companies at a severe competitive disadvantage abroad and hindering their ability to invest and create jobs at home. And with unemployment still painfully high, a tax overhaul is needed now more than ever.

Even so, there remains a lot of discussion questioning if American businesses pay their fair share. Some contend that, while our statutory corporate rate may be high, the effective rate – the average amount U.S. companies actually pay on their tax returns – is low. Not so.

Business Roundtable recently commissioned PwC (PricewaterhouseCoopers LLP) to conduct a study examining the global effective corporate tax rates reported by U.S. and foreign-headquartered companies on their financial statements. And what that study found was striking. Among the world’s 2,000 largest businesses, U.S.-headquartered companies faced an average effective tax rate of 27.7 percent over the 2006-2009 period, compared to an average of just 19.5 percent for their foreign-headquartered competitors. That gives us the sixth highest effective rate among all 59 countries included in the survey.

There is no doubt that fixing the outdated and complex tax code is a monumental undertaking. But federal politicians need only look at states and other countries to understand where to begin.

The international trend is overwhelmingly for lower corporate taxes. Canada recently announced plans to further reduce its federal rate to 15 percent, cutting it nearly in half since 2000. Even while reducing spending and raising other revenue to reduce a huge deficit, Britain recently announced a new round of planned corporate tax cuts. Ireland, which has cut deeply and raised taxes to resolve its fiscal crisis, has refused to budge on one thing – its 12.5 percent corporate rate.

Likewise, at the state level, many governors are moving ahead to reform and reduce business taxes. Just as with countries, states compete against one another to serve as headquarters for businesses and to encourage commerce in their locales. Bringing down state business taxes is especially important for competitiveness given that Nevada, South Dakota, Texas, Washington and Wyoming have no corporate income tax at all. The trend – globally and locally – is clear. While Washington, D.C. hasn’t made a serious attempt at reform since 1986, states and other nations are taking important steps to create the best possible environment to keep local businesses, attract new ones, and spur job growth.

But let’s make no mistake – fiscal policies are complicated and making tough choices can be politically risky. In March, Canadian Prime Minister Stephen Harper chose to let his government be defeated in Parliament rather than budge on his 15 percent tax plan. Forced out by the opposition, he took the issue directly to Canadians in one of the only recent national elections featuring corporate taxation, among other issues, as a significant theme – and sure to be a losing one, in the opinion of most pundits.

Yet, on May 2, in a result that should hearten advocates of competitive tax policy, Harper led his party to a resounding – and largely unexpected – majority win.

British Prime Minister David Cameron’s party generally outperformed expectations in the U.K’s May midterm elections. And in Ireland, a newly elected government has pledged to defend the 12.5 rate just as aggressively as the one it replaced.

Sometimes simply doing “what’s right” can be politically advantageous in addition to just making sense. In these countries, citizens were willing to reward policymakers who made the tough choices necessary to promote jobs and prosperity – even on something as seemingly politically perilous as reducing corporate taxes. In the U.S., there is wide agreement that our tax system is flawed. It is encouraging that Administration officials and congressional leaders are working to address this problem. But it’s still far from certain that we will see effective reform this year. That’s a problem.

We are still emerging from the worst recession in decades, and there is much more economic ground to make up. Unemployment remains high at around nine percent and our GDP growth rate in the first quarter of 2011 was just 1.8 percent. In order for us to achieve true recovery, economists agree that our economy should be expanding at a rate of at least three percent and creating more than 300,000 jobs each month. Serious pro-growth policies – such as meaningful corporate tax reform – are needed to give American businesses the confidence to invest and hire, helping move these numbers up to where they need to be.

For America’s workers and families, further delay and inaction is simply unacceptable. Congress and the President must work together to enact serious reform that lowers the U.S. corporate rate and adopts a competitive “territorial” system, like the rest of the world, that does not impose a tax on foreign earnings brought back home. Otherwise, America will see its competitive position erode and with it, more American jobs.

Larry Burton is Executive Director of Business Roundtable, an association of CEOs of leading American companies with nearly $6 trillion in annual revenues and more than 13 million employees.

Performance With Purpose

By: Kim DeCoste Issue: Innovation, Growth, Job Creation Section: Business

PepsiCo’s Indra Nooyi

It may be hard to imagine how the CEO of an iconic American consumer product company can truly be innovative. We all know what happens when our favorite products try too hard to reinvent themselves. (Pepsi’s rival cola certainly learned that the hard way a time or two.) Consumers are funny and fickle, and they do not like change when it comes to some things. American consumers are particularly challenging as we take the freedom of “choice” quite seriously in all that we do. We like to choose, and we do not like people to limit the options. Give us healthy chips on the store shelf where we want Fritos and we get angry. We choose with our dollars and we go to the next store, where the Fritos are in the right place.

While few can relate to the pressure faced by those in the top Fortune 100 companies, few will ever have to. It is an elite group of some of the most talented and accomplished people in business. Their dedication to their companies and the industries in which they operate is unmatched. In that crowd, Indra Nooyi stands out among CEOs in the United States for a couple of obvious reasons: she is Indian-born and raised, and well, she is a she. Asked which of those two factors makes a greater difference in her leadership style in a conversation with the Asia Society in April of 2009, Mrs. Nooyi said, “I cannot separate those things.” She further noted that the title “CEO” now has a lot of negative connotations to consumers and citizens. She is highly aware of her obligation to serve not only shareholders and employees, but to maintain a quality organization with far-reaching connections.

Then there is the whole problem of the global economy. PepsiCo does not just operate in the United States, but rather it has a massive international reach with presence in more than 200 countries. It is in its own way a “citizen” of many cultures and lands, and as such, it must be a “force of good in society,” said Nooyi when discussing Innovation with the Business Roundtable.

The products that PepsiCo represents are some of our most familiar brands in the U.S. Together, the 19 product lines under the main businesses of Quaker Oats, Tropicana, Gatorade, Frito-Lay, and Pepsi-Cola constitute the world’s largest portfolio of billion-dollar food and beverage brands. And, each of the brands generates “more than $1 billion in annual retail sales,” according to company reports. This amounts to approximately $60 billion in revenue.

GROWTH & JOB CREATION

Nooyi commands a mighty army of people at PepsiCo. With its global presence comes nearly 300,000 people worldwide, and with that, she recognizes a tremendous responsibility. Listening to her speak, you know right away that she is keenly aware of the, “soul of the company” and her own long-term legacy as the fifth CEO in a line of accomplished gentlemen. She also maintains an excellent relationship with her predecessors (and in one case the widow of a predecessor).

Collaboration is obviously part of her leadership style. Indeed, she is profoundly humane in her approach and in the way in which she clearly values the individuals who stand beside and behind her. When she talks about her Vice Chairman Mike White, respect and friendship are clear in her voice. The story of her ascension to president and CEO on October 1, 2006, and then later to chairman in May of 2007, is an inspirational one. The grace and humility with which she approached the roles is an example to all leaders, current and future, about how one can rise to power with dignity and authority without alienating the workforce. To hear the story told or to read the details, the striking absence of ego in the process she underwent is remarkable and admirable.

PepsiCo has a clear sense of its own corporate culture. Listening to Mrs. Nooyi talk about her team and her advisors, she refers to the, “kitchen cabinet” of former CEOs with whom she is regularly in touch, with great respect. She talks about her 27 executive committee members and how she regularly handwrites notes to their spouses, thanking them for supporting their spouses’ involvement in the organization. Finding and sustaining talent is one of her great concerns. Indra Nooyi is the chief architect of the company’s multi-year growth strategy which she labels Performance with Purpose.

Performance with Purpose resonates with those who share ICOSA’s approach in that it purports to have a multi-dimensional agenda. Item one - Human Sustainability: Nourish consumers from treats to healthy eats and shift toward, “good for you” products. Item two - Environmental Sustainability: PepsiCo does not just want to be environmentally impact neutral; it seeks to put back more than it takes out!

And then arguably, the most daunting challenge because the human element has inherent unpredictability, is the talent sustainvability. The way in which Nooyi discusses this reflects her correct perception that making PepsiCo an attractive and competitive work environment is key from a functional and operational standpoint, of course, but more importantly, if you want a culture that is innovative, you must have bright, motivated, satisfied people.

Her take on the challenge, “How do we create an environment at PepsiCo where people can bring their whole selves to work?” Stunning! The notion that one does not, and in fact cannot, leave his/her “life” at the door when the work day begins is refreshing and allows people the freedom along with the responsibility to do what they need to do when they need to do it. Particularly for the newest generation of young workers, this question around “work/life” balance is significant. Often the requirement for flexibility is seen by older generations as arrogance or laziness, but it is not always the case. In fact, the “Gen Y’ers” or the “Millennial” generation are happy to work longer hours and multitask. They value being respected to manage their own time, and they highly value companies that not only do well, but also do good.

Beyond these concerns, Indra Nooyi’s PepsiCo is facing a paradigm shift that impacts all of us. She calls it, “an era of profound change” and says, “The era of thrift is upon us.” She notes, “People are rethinking today how they spend and what their priorities are.” Governments are struggling to understand what their role is in these challenging times as they look to drive business and support industry while balancing the political pressures they face. And whole economies are being revolutionized – literally – by their people. “What,” wonders Nooyi, “is the new capitalism? Is it unfettered capitalism? Is it regulated capitalism?” She goes on to point out, “Companies like ours that tried to ‘go global’ are now faced with the threat of protectionism.”

INNOVATION

This is when the conversation gets interesting. Mrs. Nooyi goes on to talk about the fact that, “Governments are starting to realize that they can’t do it all themselves. They need private partnerships…corporations are going to be held accountable not to add cost to society.”

Taking the charge, for example, that companies like hers contribute to childhood obesity, Nooyi addresses this head on, and with a highly innovative long-term approach. Although the company produces a sugary beverage that is criticized, of the approximate $45 billion in revenue, (in 2008) about 10 percent of that was from soda. She goes on to remind us that nobody forces anyone to drink it, and “anything consumed in excess is bad.” But where the innovation comes into play is that by carefully managing that portfolio, overall in recent years we have seen, “growth in servings of beverages to be up about four to five percent; however the growth in the calories in those servings is decreasing — of course due to the penchant for sugar free and zero calorie drinks.”

PepsiCo understands the pressure that it is under to be responsible with the products it offers, so it continues to drive toward healthier foods and balanced offerings. It was the first company to take all trans fats out of its products. PepsiCo continues to grow its whole grain portfolio, like SunChips, and it uses heart healthy oils whenever possible around the world in the production of its foods.

PepsiCo is also a member of the Food and Beverage Retail Manufacturing Industry Association and is working toward common labeling conventions on food and beverage in the United States. This will help consumers know what is in all the products they eat and drink. And while government cannot afford to make physical education mandatory, industry can and does come to the table to help support healthy lifestyles. As of April 2009, when she addressed these points, she said that in the United States, Illinois was the only state that had mandatory elementary physical education.

We have to look at our own eating habits as a society, and decide what we can do to adjust generation-long bad habits and try to instill new, healthy habits. “This too can come from private and public partnership,” Nooyi asserted. “Industry creates jobs, keeps the wheels of the economy turning. Government should celebrate us, not regulate us.” And she goes on to say, “If we work together, I think we can get to the right solutions.” However, she does not want to be perceived as an armchair quarterback of government. When asked if she had any advice for the current U.S. President, she said, “In administration we trust. We have to.” But she also invites participation in the process, noting, “When you have a problem of this magnitude — in government in the U.S. today and with respect to the economy — I don’t think there is anyone in government who is not listening. Be participatory.” These challenges will only be addressed if citizens lend their interest and their expertise to help drive for solutions.

LOOKING AHEAD

None of us has a looking glass, of course, so we cannot be sure about the future, but when asked to look ahead and surmise what PepsiCo and she personally might be up to in, say, 2020, Mrs. Nooyi is clear in her vision. “I want PepsiCo to be a defining corporation. That would be my dream.” As she is looking to her future legacy, she says her goal is to create a, “corporation that can be a force for good.” She continues, “Nobody’s going to remember you for the earnings delivery. You will be remembered for what lasting impact you had on society. Did you run a company which after you left, sustained itself? Created jobs? Grew its footprint?”

What might she do at some far-off time in the future? Well, it’s too soon to say, but Mrs. Nooyi would like to give back to the United States. She would like to, “work on a serious problem” at some point and she does not, “want a paycheck for it.” She just wants to solve something. As to whether or not a government position is in her future? No, she says, “I cannot go through a confirmation process. It would be too intrusive.” She is, after all, the mother of two and happily married. It is not her calling to serve government in that way.

In the meantime, as she continues to lead PepsiCo forward, she is able to inspire and educate those who watch her approach to leadership and her success. At the heart of it, there is still something special and different in Nooyi. She is a very people-oriented leader for a massive organization and, at the end of the day, she says she still is mindful of her upbringing and her cultural roots. She reminds her own daughters, “Don’t let your net worth define your self worth.” And she continues to bear in mind an ancient Sanskrit quote, “Treat the world as if it is your family.”

Kim DeCoste is the Director of Career Services for Colorado Technical University and President of DeCoste & Associates, LLC. She can be reached at: [email protected] or 303.362.2948.

A Model for Collaboration

By: Gayle Dendinger Issue: Innovation, Growth, Job Creation Section: Inspirations

Building a Foundation for a Replicable Future

As the economic recovery inches along, I can’t help but think about the small, but meaningful, quality improvements that are being made across the nation and the state of Colorado to increase productive capacity — especially as demand starts to return and innovative investments, growth, and job creation slowly gain momentum.

While there are continued layoffs of our friends and neighbors, and while many Americans are chronically unemployed, small businesses, private businesses and entrepreneurs, though not flourishing, seem to be budding with new opportunities. In the wake of recent natural disasters and hypotheses about where the economy may or may not be going, these businesses are not waiting around to see what will happen; they’re thinking of new ways to recover from this country’s economic struggles.

Although economic predictions seem grim, I believe with good ideas and the right people, there is light at the end of the tunnel. It will take individuals working together to ease the strain, but collective unity, coupled with drive and determination to see the country succeed, I believe it is possible to replicate great and consistent ways of doing business that will elevate the U.S. to the next period of prosperity.

The backbone of an economy lies in developing infrastructure and educating people. But, there must be opportunities for growth. We cannot sit around to see what can happen — we must act now. It is in the face of despair that we must rise to the occasion and confront the challenges we share together by investing in the future, no matter how hard it may be.

While most high-level issues are discussed every day in committee meetings, in board rooms and in back offices, everyone concurrently, is not, perhaps, in alignment because the issues may be too large or too daunting to address.

The problems of this country cannot be solved solely in Washington, D.C. I believe it is imperative that we work together through this crisis. As General Patton once said, “In war, it takes more than the desire to fight to win. You've got to have more than guts to lick the enemy. You must also have brains.” Together, a collective can fight these issues and design something that can be successful and replicable.

The Biennial of the Americas in July of 2010 was a testament to this notion. Then mayor, turned governor, John Hickenlooper, helped to spearhead an event that would shape the way we look at problems and how we solve them. By bringing together disparate cultures through cultural events, as well as through political discussions, Biennial participants identified one common thread — shared challenges. It was also apparent that as a society, we are conditioned to provide remedial solutions to our toughest problems — solutions that only quell the pain but don’t stop the bleed.

Biennial roundtables on healthcare, education, energy and trade showed us the possibility of what could be done if people came together and shared best practices. We learned that much can be done to solve problems when people come together over one shared issue. We can move from talking to doing.

Early on, naysayers thought the Biennial was a ridiculous dream — that it couldn’t happen, especially in a state like Colorado. What people underestimated was that John Hickenlooper and the staff of the Biennial organization believed that Denver and the state of Colorado were not only a strategic place for these conversations, but that Colorado and its way of life would be the perfect model for collaboration.

As a firm believer in collaboration and people working together, I appreciate the tenacity of Governor Hickenlooper and his staff for seeing their vision through and putting Colorado on the map as a place where ideas have an open forum and a chance at completion. We look forward to the next issues brought forth by the Biennial and the years in between to see them brought to fruition.