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INNOVATIONPRINCIPLES

Innovation Principles to Catapult Your Organization and Career Path by Jovita Carranza

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

Remarks as prepared for John Hopkins University - Carey School of Business Good Evening. I can hardly believe that his day has arrived. After having been rescheduled several times because of snow and midterms, I was beginning to believe that I would never have the opportunity to meet this impressive group of business majors. I would like to offer a special thank you to Jennifer Dotzenrod and Rachel Hall from the Carey School of Business Student Services Department and Dr. James Calvin, faculty advisor to the Society of Minority Business Leaders. And of course, I must thank Dwayne Brown for his kind introduction. Before we launch into a discussion about Innovation, I believe that it is important to define the term and frame it for the conversation. It means a lot of things to a lot of people. The question that we must tackle is what does innovation mean to us as business people. We do not alone own the word. Innovation is one of those words tossed about by both government and private industry in an attempt to make an idea or a product or service appear provocative and even aggressively ingenious. As business people, we certainly are interested in the provocative and aggressively ingenious idea. However, our definition of Innovation must be pushed to standards that consider impact on key communities, which are ultimately focused on economic vitality. Innovation for Innovation’s sake means nothing if the service, product or idea causes the company financial ruin. Economist David Galenson directs us to two definitions for understanding Innovators. Galenson’s definition primarily focuses on the innovative techniques and methods of artists. However, you will see, there is a great parallel between the process of innovation in the world of art and the world of business. In Galenson’s own words, “Important artists can be divided into two types on the basis of their goals and methods. Experimental Innovators seek to record visual perceptions. Their goals are imprecise, so they work by trial and error. They build their skills over time, and their Innovations appear gradually, late in their lives. Conceptual Innovators express their ideas or emotions. The precision of their goals allows them to plan their works and execute them systematically. Radical conceptual Innovations depend on the ability to recognize the value of extreme deviations from existing conventions, and this ability declines with experience, as habits of thought become entrenched, so the most important conceptual Innovations occur early in an artist’s career.” Galenson’s experimentalists include Innovators whose greatest works came after much trial and error from earlier works;

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

Mark Twain was in his 50’s when he published Adventures of Huckleberry Finn, Alfred Hitchcock was nearly 60 when he directed Vertigo. These artists achieved innovation in a slow step-by-step process. Galenson goes on to describe conceptual Innovators as those who find success early in life like F. Scott Fitzgerald w h o penned T h e G r e a t Gatsby at age 29, Pablo Picasso who painted Les Demoiselles d’Avignon at age 26 and Orson Welles who wrote, directed and starred in Citizen Kane at age 26. These artists used fresh ideas and a fresh approach to achieve innovation. The theories of the experimental and the conceptual Innovation can be applied in the business world as well. The pharmaceutical industry a highly experimental industry is one that relies on the trial and error, research and development of experimental Innovators. Testing on a drug can take decades before a final product reaches the public. The basic paper stapler is a conceptual invention that has not changed in scores of years. Revolutionary when it was conceived during the reign of Luis XIV, the purpose and use of the devise was based on one novel concept. As business people, we must appreciate the distinction between experimental and conceptual Innovation and we should certainly understand their impact on our bottom-line. Ultimately Innovations born of any of the two models must satisfy a need or improve a product in a way that creates greater revenue and hopefully makes the world a better place. Reflecting on history’s most famous innovations, it is not enough that an innovation is immediately beneficial for the greater good of society. Ultimately, an innovation must be revenue generating in order to prosper. Take Eli Whitney’s cotton gin for example. While not terribly profitable for Whitney personally because of patent infringements, in the late 1700’s this invention changed manufacturing in the

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

south and helped launch the Industrial Revolution across the globe. It truly made Cotton King and in doing so perhaps helped prolong slavery in America. The name Elijah McCoy is not nearly as familiar to us as the phrase “the real McCoy” which refers to McCoy’s invention. He developed a lubricator for steam engines that did not require the train to stop. His lubricator used steam pressure to pump oil wherever it was needed. Not having to stop the train several times throughout a journey, revolutionized travel and dramatically increased the possibility of greater revenue. We can list scores of others who have pushed the edge of Innovation. And no matter how long the list, the innovations that survive are those that generate profit. In most cases there will be positives and negatives. As business leaders our job is to reduce the negatives and capitalize on the positives. Three Points to Innovation from a Business Perspective We will keep these two types of innovations in mind as we continue to frame our definition. I would also encourage you to focus on the uniqueness of the definition as it pertains to business.

Elijah McCoy

lubricating oil for steam engines

In addition to being economically viable, the litmus test that an Innovation must pass from a business point of view has 2 additional criteria. These criteria are useful to government, nonprofits and individuals. However, for businesses they each are essential. First an Innovation must improve upon an existing product, or create a new product or service. For example, Lillian Moller Gilbreth’s trashcan improvements, which are simple but highly useful. Gilbreth merely attached a lever at the bottom of the trashcan that would force the lid to open leaving your hands free to manage the garbage. Simple – but ingenious.

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

Innovation from a Business Point of View • Improve Upon an old or create a new product • Must be attractive to a broad audience

Second an Innovation must be attractive to a broad set of stakeholders. These stakeholders include customers, employees and shareholders. There would have been no advantage in business to create an mp3 player if the world refused to let go of portable CD players – and cassette tapes before that and eight tracks before that and LPs and so on…

And finally from a business point of view an innovation must be economically profitable. Businesses survive on their ability to generate revenue. Unfortunately, the desire to make a profit can be negatively colored by those who pursue wealth at the expense of all other things. Small and midsize enterprises are rarely painted as greedy, capitalistic monsters. That distinction is given to Big Business. And despite what you and I see in the media everyday, all corporate soldiers are not evil. For every one corporate scoundrel, you find scores of people who do the right thing and make a profit every day. It is a more interesting story Innovation from a however, to hear about the Business Point of View scoundrels. As business people who pursue the sexy, smart and • Improve Upon an old or create a new product aggressively genius idea for the sake of profit, you may find yourself • Must be attractive to a broad audience wrongly lumped in to the “Gordon Gekko” camp. Gekko is of course • Must be revenue generating - not Oliver Stone’s 1987 egomaniac and revenue draining ruthless profiteer from the film Wall Street. Gekko has become a symbol of unrestrained greed. Watch him in this classic greed speech. We are reeling from headline, after headline of corporate leaders whose relentless pursuit of profits quite literally brought the global economy to ruins. Therefore talking about the pursuit of profits in today’s climate makes some people uncomfortable. The last two decades have proven Gordon Gekko and his real life counterparts like Bernie Madoff were wrong about the pursuit of profit to the exclusion of social good. Ironically, this month Oliver Stone revisits his film with the release of Wall Street 2; Money Never Sleeps. In the sequel Gordon Gekko is being released from prison. When the original Wall Street was released it identified a culture of greed that was not only respected, but in some ways expected of corporate giants. Because the countless scandals that rocked the global economy, the greed model of business has become wholly unattractive and socially unacceptable. Take this bit of advice from a corporate soldier. The recent domino of corporate leaders falling

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

from grace does not mean that success is evil. It means that sacrificing others for your own personal gain is evil. So you see there is a caveat to the third criteria. In many ways it is the most important of the three. If an Innovation is not financially profitable, we would be wise to reconsider it. But here in lies the rub; the relentless pursuit of profitable Innovations without concern for the consequences to the greater good is ultimately destructive.

Wall Street “Greed is Good?”

Profitability is the fuel that drives our economy and perpetuates better living conditions and lifestyles. Not all will end up rich and famous, but profitable businesses should improve a community’s health – economic, educational and otherwise. You shouldn’t hunger for power, but you should thirst for success. Success means that profit and social good are not mutually exclusive. Worldport – Three Criteria My experience in corporate America bears testament to the importance of these three criteria. For 30 years, I earned my corporate stripes at United Parcel Service. I began my career as a part time package handler. I retired as the Vice President of Air Operations for UPS. As I moved up the corporate ladder, I witnessed first hand the complete transformation of the way packages were processed and delivered. When I started as a package handler, almost every facet of the service delivery process was manual. As Vice President of Air Operations, I led Worldport a cutting edge package processing facility and all-points international hub. World Port

Worldport continues to be a successful packaging processing system for UPS because it passed the litmus test for successful business innovations. It improved upon the old manual way of scanning packages, was widely accepted by employees, shareholders and customers, and increased revenue through its efficiency. If any one of these three criteria had failed, Worldport would have failed as well. Worldport is also a great success, because it followed the rules of moral and legal accountability in business that must be discussed for a fuller appreciation of Innovation in an Age of Accountability. Accountability Legal/Legislative Because of the corruption in businesses that were too large to fail, but did anyway, oversight and accountability is important. It is certainly important if it keeps us from plunging into another dark financial abyss. We are embarking on the beginning of what can only be classified as a season of increased oversight and accountability.

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

Smart regulation is necessary. The interest of the business owner and the customers are protected against false claims. Regulation is not meant to be overpowering and stifling to innovation. Consistent application of the regulation is necessary In light of the highly public corporate scandals, a new/innovative model of corporate responsibility and social entrepreneurship has been born. I must clearly state that the concept of a company promoting a socially conscious way of doing business is not in and of itself innovative. The innovation comes from the birth of an organized tangible social enterprise movement Evidence of the new movement is a new business structure. The L3C or low profit limited liability company is a marriage between the tax-exempt non-profit business structure and the limited liability corporation. The new business structure is designed for private industry that sees value in social enterprises, However, rather than simply donating money to a non-profit, they would rather partner with enterprise and gain a return on their investment. While Google is not an L3C, it is an example of a company that prides itself on being a good corporate citizen. Google gives us a perfect case study in both legal accountability and moral accountability. In fact, Google’s unique relationship with China is an example of legal and moral accountability colliding. In 2006 when Google entered the Chinese market, they received both complaints and praise. Whether you support or oppose, Google’s decision to enter the Chinese market, it is clear that a culture of conflict existed from the start. By agreeing to China’s rules of censorship, opponents of the move argued that Google nullified its early mission to make all the world’s information universally accessible. They received praise because they were opening the Chinese population up to more information than the people had ever had access to before. Google maintained that the mere message in a search that certain information is censored would create awareness, unrest and eventually policy change. I won’t linger on the headlines much here. By now, I know this business savvy crowd is aware that Google recently made the decision to pull out of China siting the Chinese government’s unwillingness to move to full access to Google search services. The decision was sparked by attempts to hack into the gmail accounts of Chinese Human Rights activists. There are those who say that Google is not as outraged as it claims by the email hacking, rather this is an opportunity for Google to leave China as the Chinese experiment has not been a revenue generator. Regardless of whether or not Google is pulling out because of legitimate human rights issues or financial, the relationship with the giant of Internet Innovation has brought a spotlight on China’s human rights violations in a way that official government channels never could have because of protocols in diplomacy. The access to limited information has emboldened the Chinese people in a way that the U.S. Government never could.

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

After the incident, Secretary of State Hilary Clinton made stronger statements against Human Rights atrocities. In late March, Google made the final decision to redirect users in Mainland China to its Hong Kong site. The Chinese foreign ministry spokesman Qin Gang told reporters that Google's move was an isolated act by a commercial company and should not affect China-US ties "unless politicised" by others. However as post recession U.S./Chinese relations take on a new hue colored by American debt to China, it is easy to make political analogies. Google while a commercial company is seen as an extension of America. Immediately after the decision, nationalist Chinese bloggers maintained that Google worked with the U.S. government to undermine and embarrass China. Western bloggers have applauded Google’s decision to refuse to buckle to censorship. Since leaving, other western companies have followed Google’s lead. One of the most recognizable names is GoDaddy. China only makes up 1% of GoDaddy’s domain registering market, but the statement against censorship rings loud and clear. The question for us as we tackle the subject of Innovation in an age of Accountability is “How did Google an American Company founded by two grad students just over a decade ago gain the gravitas to be able to put the People’s Republic of China on notice?” Clearly Google has moved far beyond being simply a search engine. I argue that Google has gained world dominance by expertly passing the litmus test for business. Google 1) created a new product, that was 2) wildly popular with a broad audience and largely through advertising and banner ads it 3) proved profitable. Remember, the conceptual model is a big idea that is achieved almost without the practice of trial and error. Google’s conceptual mission to make all of the world’s information universally accessible quickly grew into a culture of experimenting with new ideas. ith one gmail account, you are able to not only check your email, but host live video chats with people from around the world and work with dozens of other experimental apps in your gmail “lab.” Google, like Facebook and twitter has made itself relevant in all components of our lives. They can learn from the Myspace business model that was never able to really find a financial footing and thus lost ground.

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INNOVATIONPRINCIPLES Innovation in an Age of Accountability - Jovita Carranza

Haiti Lack of Accountability Equals Lack of Disaster Preventative Innovations The crisis in Haiti represents a unique model of both accountability and Innovation at work. By comparing the San Francisco earthquake of 1989 to Haiti’s most recent earthquake, we can see how this underdeveloped nation lacked the Innovations of disaster proof buildings and other infrastructural Innovations of modern architecture. The mass devastation caused by these shortcomings is unprecedented. Haiti also suffers from an accountability problem. Throughout its history Haiti has been riddled with corrupt leaders who have not exercised any level of accountability to the people. Such lack of accountability allows a form of graft in government that ignores building codes. Both the San Francisco earthquake and the earthquake in Haiti measured 7.0 on the Richter scale. However, only 63 people died in the San Francisco quake and those were mainly attributed to the Cypress Viaduct collapsing. Over 150,000 are estimated dead in Haiti, in large part due to buildings that crumbled at the quake. They crumbled to dust even though the world had the advantage of 20 years of new disaster Innovation. Just early this month, the west coast of the United States experienced another earthquake that measured greater than the devasting Haiti earthquake. Less than five lives were lost because of the innovative ideas in building construction that save lives. Now that an estimated 300 million dollars have been donated to the relief effort in Haiti, the eyes of the world will demand accountability. Secretary of State Clinton and other world leaders have boldly stated that the goal of outside aid to Haiti should be providing help to the nation as a partner not a patron. As a partner bringing millions to the table, Haitian leaders must be held accountable to rebuild a sound nation that takes advantage of modern bright ideas in disaster prevention techniques. By now, we should see that there is a theme running through all of these stories of bright ideas profit. This word alone brings us back to the first question that we posed? “What does innovation mean to us as business people?” From the business point of view, innovations that do not generate profit can be a danger to business. But don’t be discouraged. I can hear the audible gasp. I am not leaving you with a Gordon Gekko message of greed. I am leaving you with a message of hope - A hope that lives in your generation. Your business innovation can change the world for profit and for good. You have the potential to be instrumental in that change. You have the competitive advantage to bring Innovation to life. Your competitive advantage is the generation to which you were born - a generation that fully embraces economically profitable and socially responsible products and services. Your generation can make the People’s Republic of China revise its policies on information control. Your generation can and will find cures for diseases that have baffled scientist for millennia. Your generation can create buildings in Haiti that are economically practical and structurally sound. Innovations driven aggressively towards profit and social good are commonplace in your world – your generation will make them commonplace in your business. Thank You

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INNOVATIONPRINCIPLES

Jovita Carranza began her undergraduate education at Alverno College in the spring of 1997.  As her career advanced, a job transfer took her to Florida in the Fall of 1999.  Despite her short time at Alverno, the college made a profound impact on her life and professional pursuits.

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Carranza started her successful 30-plus year career at UPS in 1976 as a part-time, nightshift box handler and worked her way up to vice president managing domestic operations and president of international operations for Latin America and the Caribbean. In December of 2006 President George W. Bush nominated her, and the U.S. Senate unanimously confirmed her, for the post of Deputy Administrator of the U.S. Small Business Administration.  As Deputy Administrator, Carranza managed    an agency with more than 80 field offices across the country. Carranza has also been extensively involved in community and civic activities. She has served as a board member for several national nonprofit organizations such as the National Center for Family Literacy and the United Way.  In her role    as Vice-Chairman of the American Cancer Society Corporate Advisory Council, she helped launch the inaugural Cure by Design Campaign enabling the American Cancer Society to fund cutting-edge research, early detection and prevention education, advocacy efforts, and life-affirming patient services.   For her outstanding accomplishments throughout her career, Hispanic Business magazine named her Woman of the Year in 2004. Under the banner of The JCR Group, Carranza continues advising business leaders in the area of business development,    federal procurement and logistics management. 

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