JAN. 2014
Legal: Know Your Intellectual Property Rights
A Look at Arizona’s Key Sectors and How We Compete Fitness Clubs a
Healthy Market New Direction for Leadership
Development This Issue
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Cross-Border Trade Is
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January 2014
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RESPECT IT COMES IN ALL SHAPES AND SIZES.
TPC SCOT TSDALE | JANUARY 27 - FEBRUARY 2, 2014 W M P H O E N I XO P E N . C O M | # G R E E N E S T S H O W
Contents
January 2014
22
Are We Winning? A Look at Arizona’s Key Sectors and How We Compete
For her sector-by-sector look at how we compete against other states for new business, Pat Kossan speaks with economic development experts, economists and leaders in key industries to look at where we stand now and how well poised we are to grow in the future. Departments
9 Guest Editor
Arizona Governor Janice K. Brewer introduces the “Economic Scorecard” issue.
Features
18 How Does the Fitness Sector Shape Up? 10 Feedback
Noted business and community leaders Bill Pepicello, Clark Peterson and Jim Swanson respond to IBM’s burning business question of the month.
The market for fitness clubs supports diverse types of facilities and programs, Don Rodriquez finds as he takes the pulse of a cross-section of companies among the variety in the Valley.
“Social Media Lead Generation,” “Click and Create a Website,” “Drive Real Content to Attract Online Engagement,” “NextFort Is the Next Generation of Data Centers,” “Legal Videos Inform on Social Media and More,” “Innovator Puts 3-D Model Technology Toward Full-Scale Buildings,” “New Platform for Sale of Precious Metals” and “Grabbing a Slice of the Pizza Segment”
Long-term success needs leadership that delivers on both happy employees and bottom-line results. Tasha Eurich, Ph.D., discusses where many leaders fall short on one or the other, and how to simultaneously achieve both goals.
36
16 By the Numbers 36 Trade Across the Border
41 Arizona Small
Business Association Partner section
6
t ASBA
Desp ite W as Arizo na Ec hingtononom y Impr ovin
g
in this
issue
Infiniti Q50S 3.7 AWD Plus: Sound systems in tune for the office
40 Power Lunch
20 Trickle Up
50 Roundtable
New releases explore leadership philosophies and styles of execution.
by Rick The Arizon Murra a Small y, ASBA (ASBA Busin Chief ) is the ess Assoc Execu larges in the tive Office iation t trade state repres assoc r memb Feder er busine enting 11,000 iation al lawma million sses, kers had in and over + emplo have the recov yees ASBA really 1/2 in all put a memb shutd ery. 15 count own of damp ers Threa signifi ies. er on ts of the federa cant group enjoy acces been any confid the U.S. enjoyi s to oppor l gover discou ng. defau Large ence tunitie nmen nts, count lting comp s to do t may other, on loans business less busine have owner lies ahead anies are a wide all but and the ss with doing s array produ . They’ killed as little each of insura cts, and figure re waitin any recov two-week as possib d out. nce active public ery we This affects g to see le in order advoc policy client. if the had acy issues busine to minim gover And for many to protec efforts on nmen sses. small many ize their t is going busine t Disco of them, www. risk until And althou ver more their sses asba. to start it is their becau they know com. doing at gh the se they life blood enoug their shutd what have h to make . own didn’t big busine job and get Join ASBA gover a differe things begin ss as . Be amAZ nmen until Octob nce. an accou t, and For busine ed® on in there nt or er 1, Wash is very the threat ss owner ington little impac s and . The to be s, optim ts the the blamin confid dysfun ism is econo stopp direct g starte my. Growt ction is affecti ent about ed when ly tied with the d early to confid h, expan ng anyon busine rhetor ence sses sion, ic and e trying To make lose confid equip in blamin the to run ment g that things ence a busine upgra is going busine worse in the des and Redef ss, which , the ss owner econo ining hiring inabili my. the , in turn, s scratc work, are all ty to Ameri the epic log on slowe hing their can Dream d down to the failure comp heads ... . or Afford of the anies . While . ... able federa that can emplo most Care . . . l websi Soluti avoid are still Act websi pg. 2 yees on for te did the emplo have in nothin a Better te has ability major g to help the dark as yer to shop left small Health conce to how care rns becau coverage or pay allevia ASBA . . pg. mand it is going for goods se ate becau te the confu Legisl 3 to and servic any additio ative Recen sion. Forca t surve nal expen se they Even es. st . . . have the ys show espec .... se on fewer Centr optim ially troubl pg. 4 a custom than al Arizon ism is 50 emplo esom a er affects wanin 4600 e trend y the g amon E. Wash major their here g entrep could ington ity of Phoen in Arizon affect the workfo reneu Street ix, AZ their willing rs, a, , Suite and 85034 where rce. If p. 602.3 hiring 340 ness small comp is suffer 06.40 to hire anies busine Despi 00 ing. That or expan with ss owner te all f. 602.3 fewer the negat is an d. s are 06.40 than these nervo South 01 ivity, the 50 worke issues us about ern Arizon econo have rs busine the future a dama my a 4811 sses E. Grant ging impac continues , that can not more to impro Road, Tucso contro t peopl Suite ve, albeit, n, AZ l by thems on the econo e, pay 262 85712 a differe more at a p. 520.3 my and elves. taxes nce. 27.02 the recov snail’s pace. But becau and are Individ 22 Howe ually, ery. These the econo se we, f. 520.3 you just ver, all as small 27.04 mic engin That are things do not 40 is why busine e in the have small the Arizon © 2014 ss owner time to collec econo Associa ASBA. A tive voice worry my, togeth s, emplo a Small contact tion. For publication about y of small Busin focus more er we of the it. Arizona us at www.as informat Arizona ess on your can make busine Small Small Businesba.com. ion or to comp ss, protec Association Busines and ranke s AssociaSection join ASBA, any. is here. ting your pleases Recen tion. designed d the by the tly, Arizon most For 40 turnar ability entrep ound. years to opera a has reneu we have been te a busine help make The gover rial state ranke been d as a in the ss and it all possib nor and legisla the count top-10 allowi ture deser ry. The le. ng you state for busine world to ve our is taking thank ss climat s, but notice e it is small of the Arizon busine a ss owner s that
38 Assets
International trade and investments opportunities for Arizona
29 Books
®
Abou
38
The Henry Plus: Celebrity names go for the restaurant biz
View from the top looks at how Carrie Martz grew her marketing, advertising and PR agency by listening.
Going global is where growth opportunities lie for many businesses. Organizations fostering trade with Mexico and Canada share with RaeAnne Marsh reasons why Arizona companies may find these inviting options to consider. Special Sections
Debut article of this new monthly feature highlights important intellectual property issues for business owners.
12 Briefs
28 Be a Bankable Leader
28
34 Legal
30 Nonprofit
The Clothes Cabin Jewish Family & Children’s Service
Learning how to think benefits leaders more than learning what to think. On The Agenda
31 Spotlight
ASBA Small Business Outlook 2014 Insight’s CloudCast ’14
32 Calendar
Business events throughout the Valley
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January 2014 • Vol. 5, No. 1
Visit our Business Solution Centers to learn more about Business
Need Funding? Learn more by downloading this report on alternative lending at inbusinessmag.com/ business-solution-center For much more on areas of business, visit our Business Solution Centers on: Finance & Banking • Marketing Safety • Healthcare • Legal Commercial Real Estate • Small Business
Publisher Rick McCartney
Editor RaeAnne Marsh
Art Director Benjamin Little
Contributing Writers
Tasha Eurich, Ph.D. Mike Hunter Pat Kossan Don Rodriguez Alison Stanton Michael Vaughan
Photographer-at-large Dan Vermillion Advertising
Operations Louise Ferrari
Business Development
Chris Bowers Louise Ferrari Alex J. Goff Brock Gorubec Craig Jeffries Maria Mabek Sara May Katie Pacioni Kelly Richards Cami Shore
More: Visit your one-stop resource for everything business at www.inbusinessmag.com. For a full monthly calendar of business-related events, please visit our website. Inform Us: Send press releases and your editorial ideas to editor@inbusinessmag.com.
President & CEO Rick McCartney Editorial Director RaeAnne Marsh Senior Art Director Benjamin Little Financial Manager Donna C. Mitchell, CPA Office Manager Matthew D. Whitmire
Corporate Offices 6360 E. Thomas Road, Suite 210 Scottsdale, AZ 85251 T: (480) 588-9505 F: (480) 584-3751 info@inmediacompany.com www.inmediacompany.com Vol. 5, No. 1. In Business Magazine is published 12 times per year by InMedia Company. POSTMASTER: Send address changes to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251. To subscribe to In Business Magazine, please send check or money order for one-year subscription of $24.95 to InMedia Company, 6360 E. Thomas Road, Suite 210, Scottsdale, AZ 85251 or visit inbusinessmag.com. We appreciate your editorial submissions, news and photos for review by our editorial staff. You may send to editor@inbusinessmag.com or mail to the address above. All letters sent to In Business Magazine will be treated as unconditionally assigned for publication, copyright purposes and use in any publication, website or brochure. InMedia accepts no responsibility for unsolicited manuscripts, photographs or other artwork. Submissions will not be returned unless accompanied by a self-addressed, stamped envelope. InMedia Company, LLC reserves the right to refuse certain advertising and is not liable for advertisers’ claims and/or errors. The opinions expressed herein are exclusively those of the writers and do not necessarily reflect the position of InMedia. InMedia Company considers its sources reliable and verifies as much data as possible, although reporting inaccuracies can occur; consequently, readers using this information do so at their own risk. Each business opportunity and/or investment inherently contains certain risks, and it is suggested that the prospective investors consult their attorney and/or financial professional. © 2014 InMedia Company, LLC. All rights reserved. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission by the publisher.
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Janice K. Brewer, Governor, The State of Arizona
Guest Editor
Economy at a Crossroads
Governor Jan Brewer has served the people of Arizona for nearly three decades. Her path of public service has taken her from the Maricopa County Board of Supervisors to the Arizona Legislature, the Secretary of State’s office and, ultimately, the Governorship. Through it all, she has been guided by a personal motto to do the right things, make the tough decisions and leave her place in life a little better than she found it. Governor Brewer’s term expires in early 2015.
Since the statewide economic slide of the recent recession, Arizona economic development agencies and business leaders have focused on diversifying the state’s economy beyond the boom-andbust industries of tourism and construction. Efforts have ranged from identifying sectors built around the “knowledge worker” whose employment helps drive an economy forward and upward to trying to strengthen the state’s position in national defense projects. Together, our efforts over these past five years have set Arizona on a responsible, viable and prosperous course. At the state government level, we remain focused on identifying and growing opportunities for business, knowing that it is critical to Arizona’s long-term economic success. While government itself does not grow a business, it can serve to create an economic and regulatory environment that allows the private sector to thrive and do what it does best: create jobs. As governor, I have sought to do that by keeping taxes low and regulations lean. Moreover, in today’s modern economy, we can no longer be content competing for business on the local level. That is why, in addition to working with our state legislature and the Arizona Commerce Authority to build a strong business climate in our state, I have also engaged businesses internationally to promote Arizona. Whether it is our pro-business policies or unmatched tourism opportunities, companies are increasingly eager to experience all that Arizona has to offer. That potential growth opportunity will be key to Arizona’s long-term success story, and I intend to continue a proactive approach in attracting businesses to locate and grow in our great state. In this issue’s cover story “Are We Winning? A Look at Arizona’s Key Sectors and How We Compete,” writer Pat Kossan presents a sober look at challenges Arizona faces in jobs, investment and the state’s global brand. She explores the status of key sectors, such as the emerging one of bioscience and traditional mainstay of aerospace and defense. Leaders in the respective fields discuss with her the factors impinging on growth in those industries. Spanning service and healthcare arenas, fitness clubs have been proliferating in the Valley of the Sun, and Don Rodriguez’s “Sector” feature looks at the options in these facilities that offer a fit for a variety of goals. In her “Leadership” article, Tasha Eurich, Ph.D., addresses the need for effective leadership to deliver on the company’s bottom line as well as workplace morale. The “Commerce” feature examines cross-border opportunities with Mexico and Canada for Valley businesses. And, debuting “Legal” as a regular department, this issue discusses intellectual property issues of concern to businesses. In Business Magazine offers business owners and executives timely and informative articles on a broad range of topics. I hope you enjoy this January issue. Sincerely,
Connect with us: Janice K. Brewer Governor The State of Arizona
Arizona: Land of Prosperity If business leaders have anything to do with it (and, fortunately, they do), Arizona will truly come into its own in this new economy. Factors of the past several years are forcing opportunity among industry, technology and innovations. Arizona wants to be at the center, and evidence of our placement there is coming to fruition. Basic incentives, like those Arizona pioneered after World War II that built this
inbusine ssmag.com
economy in the first place, will come back and deals to get businesses here with high-paying jobs are going to be the norm. The naysayers will fall to the wayside and Arizona will once again boom. We want to thank Governor Brewer for her leadership and insight in shaping this particular issue. She has been a proponent of economic development in Arizona and
Story Ideas/PR: editorial@inbusinessmag.com Business Events/Connections: businessevents@inbusinessmag.com Marketing/Exposure: advertise@inbusinessmag.com Or visit us online at www.inbusinessmag.com
is working to bring us to the forefront. She and her staff have been a pleasure to work with and we appreciate the support she has given In Business Magazine as we work hard to be the conduit for connecting business opportunities and businesspeople. —Rick McCartney, Publisher
J a n u a r y 2014
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Feedback
Valley Leaders Sound Off
Executives Answer What are the greatest challenges companies in your sector of business face to grow individually or as an industry?
William J. Pepicello, Ph.D.
Clark Peterson
President University of Phoenix Sector: Education Higher education’s challenge today is how to serve students and deliver the learning they need to succeed in a fiercely competitive global economy. All postsecondary educational institutions — whether they deliver professional training, a full degree program, certificates or credentials — must deliver to students the skills they need to advance in their careers. Schools must work closely with employers to ensure consistency in learning outcomes and competencies delivered to students. Technology and innovations in the classroom present tremendous opportunity to change the way learning is delivered and how it connects employers’ talent needs with students’ demand for training. Higher education must form partnerships with industry leaders to design specialized curricula and degree programs — this is the future of higher education. A degree itself is no longer a ticket to economic stability. The degree, and the coursework that constitutes it, must be relevant, substantive and reflective of today’s skill requirements. College is for creating a pathway to career success. University of Phoenix phoenix.edu
William J. Pepicello, Ph.D., became the sixth president of the University of Phoenix in 2006, and as such is responsible for the leadership of the largest private university in the United States. Dr. Pepicello helped guide the University through the transition from a degree completion institution to a comprehensive university serving students from associate through doctoral levels. He holds advanced degrees in Linguistics from Brown University.
James T. Swanson CEO Kitchell Sector: Builder, Developer After a challenging few years, we’re cautiously optimistic about the future of the commercial building industry. We’re fortunate to be as uniquely diversified as we are, and able to adjust and focus our work on areas where there is activity and we have expertise: predominantly healthcare, Native American and student housing. Our development business has experienced a renaissance with the excitement around luxury multifamily, and we’ve been able to fill in some prime real estate holdings with high-quality residential and mixed-use space. As a
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CEO Telesphere Sector: Telecommunications Cloud communications is an industry that is experiencing tremendous growth right now, but with that growth come many challenges. These are the top three that stand out in my mind. Finding great talent: In an industry that is daily forging new ground, it is very difficult to find employees who understand cloud communications or even have the aptitude to learn it — and it is people that really differentiate a company. It would be advantageous if universities had more classes specifically geared toward newer technology like VoIP, cloud and IP networks. Breaking through the marketing noise: Telesphere was offering cloud communications long before “cloud” was cool and when most had no idea what it had to do with communications. Now, with every company touting some sort of cloud service, it is difficult for customers to determine the “real deal” providers and the right product. Keeping up with the pace of technology: With content becoming centralized, it is easily served from the cloud, and thus the pace at which new “apps” are introduced is becoming staggering. There will continue to be a tremendous challenge for businesses and providers to keep up with this pace and leverage these new technologies as they arrive. Telesphere telesphere.com
Clark Peterson currently serves as CEO of Telesphere, among the largest and fastest-growing cloud communications companies in the U.S. The company has been recognized twice as among the ACE awards fastest-growing private companies in Arizona, three times on the INC 500/5000 list, and is on this year’s Deloitte FAST 500 growing companies in North America. Peterson is also chairman nationally of the Cloud Communications Alliance.
100-percent employee-owned company in an increasingly competitive landscape, our biggest challenge is maintaining focused and happy employees. Like many in our industry, the demographics of our work force have changed over the past few years, with younger professionals equipped with new knowledge of cutting-edge technology exploring ways to leverage their talents. Our seasoned managers are actively mentoring this cadre of emerging leaders, so that they understand our expectations of a high level of customer service, while encouraging them to look long-term at Kitchell as the place where they see their career growing for many years. Kitchell kitchell.com
James T. Swanson is CEO of Kitchell, a Phoenix-based legacy builder, developer and construction manager with more than 800 employees and major offices in Phoenix, Sacramento and San Diego. The company’s extensive portfolio spans integrated project delivery, design-build, at-risk, general contracting, construction and program management projects for private and public-sector clients throughout the country.
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Make a big career move without leaving Phoenix. Your next big move could be right here in Phoenix. At University of Phoenix, we shape our curriculum around the skills employers are actively seeking, so your studies can prepare you for a brighter future. Get started at our local campus and see how far you can go.
Visit phoenix.edu/phoenix or call us at 602.557.2000
University of Phoenix is accredited by The Higher Learning Commission and is a member of the North Central Association (ncahlc.org). The University’s Central Administration is located at 1625 W. Fountainhead Pkwy., Tempe, AZ 85282. Online Campus: 3157 E. Elwood St., Phoenix, AZ 85034. Š 2013 University of Phoenix, Inc. All rights reserved. | REG-02345
Briefs
Quick and to the Point
Bytes Social Media Lead Generation OptifiNow, an industry leader in SaaS-based solutions designed to optimize the effectiveness of the sales force, is establishing the industry benchmark by launching Social onDemand, the first use by a sales team. Social onDemand empowers sales teams to acquire leads, nurture prospects and convert customers via social media channels. optifinow.com
Drive Real Content to Attract Online Engagement ScribbleLive is a content provider that places realtime content on a user’s website from his or her brand through stories, to create distinction and differentiation. The fee-based Scribble powers live event coverage, product launches, second screen, live blogging, real-time journalism, onthe-fly storytelling or whatever a company’s realtime needs may be. It also creates new revenue opportunities through content syndication and unique advertising opportunities. scribblelive.com
Click and Create a Website Strikingly, a mobile-optimized website builder for non-coders, has launched the world’s fastest website builder — a new feature that allows anyone to build a personal profile website with a single click, simply by using their Facebook profile. Strikingly creates this mobile-optimized site by intelligently combining the person’s profile picture, work experience, geographic residence and other key facts and photos — then giving the user the option of customizing the new website with more content, photos or slides. strikingly.com
Go online for more!
NextFort is the Next Generation of Data Centers
NextFort recently became the newest addition to Chandler’s technology-focused Price Corridor, opening in early December its cutting-edge concept in data centers that increases energy efficiency up to 40 percent over conventional data centers. Along with innovative designs in power distribution and facilities architecture are changes in the facility’s cooling design. “Most commission data centers [which provide space for tenants to operate their own computers] are designed for the main-frame time; they’re not designed for the numbers of computers needed to run the applications of today,” says NextFort CEO Mark Towfiq. The density of computers needed to run the applications is increasing every year, so, although the computers are getting smaller, the heat they produce is increasing. At the same time, Towfiq notes, water — commonly used in cooling systems — is becoming an increasingly scarce resource. NextFort has created efficient air conditioning that uses no water, keeps separate the exhaust and cool sides of the computers, and can use outside air. Giving tenants their own dedicated concrete and steel suite, rather than
maintaining the facility as one large room, further curbs cooling costs as well as providing more security for each tenant. Unlike the traditional wholesale data center’s model that requires companies to lease space and invest capital and additional personnel to run operations, NextFort’s modular approach minimizes a company’s capital expenses while delivering complete IT infrastructure solutions — data center space, access to power infrastructure, cooling and physical security — as a single unit of paid monthly service. The Phoenix market is seen as one of the safest areas in the country, Towfiq observes. “For West Coast companies who need to be away from disaster areas, Phoenix is a onehour flight from Southern California and Northern California, where a lot a high-tech companies are located.” Towfiq also cites the lower cost of energy and real estate, a businessfriendly environment that allowed NextFort to get the facility approved and built quickly, an educated work force, and an eco-system of companies that support MSPs (managed service providers). —RaeAnne Marsh NextFort nextfort.com
Visualize This
Seeing Is Believing Legal Videos Inform on Social Media and More
Arizona social media attorney Ruth Carter posts
videos every week about common legal questions related to business legal services. Business owners can subscribe to her YouTube Channel to get the latest information on social media and tech issue of the day. Areas include trademark & copyright, business law best practices, First Amendment & privacy, blogging, social
Visit our “Briefs” link online.
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media and even flash mob law. carterlawaz.com
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Photo courtesy of NextFort
social media application designed specifically for
Briefs
Quick and to the Point
Innovator Puts 3-D Model Technology New Platform for Sale Toward Full-Scale Buildings of Precious Metals
3-D printers is a hot and exciting technology whose use has inspired imagination in diverse fields. Retired engineer Brian Korsedal saw an application to housing construction and, about a year ago, began putting 3-D modeling to use with full-sized buildings. Observing, “Everyone wants to do 3-D-print houses,” the founder of Arcology Now! Inc. says, “The algorithms and physics dictated the solution.” The structure must first be planned as for a 3-D model, to scale, and then that information is input to Korsedal’s “universal constructor.” Working exactly like a 3-D printer, according to Korsedal, the program figures out the steel bars needed to frame the structure, which can be electrical conduit, a building material Korsedal says is cheaper than 2x4s and can even be reused. It also generates manufacturing and assembly instructions as well as a price quote for the materials. Connected to a laser printer, it produces stickers that a person can “slap on the conduit” and have a “techno version of a barn-raiser.” Arcology is currently doing temporary structures such as for festivals and shade structures for bars while Korsedal works out programming for floors. His target market is people who want to build their own home. Korsedal, who moved to Phoenix after the real estate crash because of the lower housing prices, feels his business might do better in a “more tech-savvy city,” but sees a lot of potential in Phoenix because it “has a lot of room.” —RaeAnne Marsh
Scottsdale Mint, locally based fabricator of precious metals, has entered into a strategic partnership with Singapore Precious Metals Exchange as the Exchange’s only certified broker in North America. The partnership will allow United States- and Canadian-based investors to participate in the world’s first physical gold and silver exchange, with peer-to-peer bullion trading capabilities via online services provided by the Exchange. Scottsdale Mint president Josh Phair, who has extensive background in metals financing with Phelps Dodge and ASARCO, founded the company in 2008 because he saw a growing interest among investors for more transparent and safe means of storing their precious metals. With most storage provided by banks, Phair says, “There’s a lot of question and concern about banks’ accounting standards” and use of paper derivatives. Explaining that the physical metal bars sell at a premium over paper, Phair says the Exchange provides a platform allowing investors to “have that physical storage and peace of mind but at the same time have that liquidity” of being able to sell their bullion. “Our relationship with SGPMX presents a ground-breaking opportunity for precious metals investors in North America.” Noting the company had already been doing a lot of business in Southeast Asia, Phair says Singapore is becoming a big player as a financial hub. “If not the biggest today, it will be — probably in the next year or two,” he says, citing the city-state’s stable government, transparent legal system and history of investment management combined with investor interest in geographic diversification. —RaeAnne Marsh
Arcology Now! Inc. arcologynow.com
Scottsdale Mint, LLLP scottsdalesilver.com
Fresh pizza in four minutes? This is part of the edge the owners of fast-casual eatery Fired Pie feel they’ve found in the popular pizza segment of the restaurant industry. The short cooking time is enabled by real brick ovens that hold a steady 600˚ F and a proprietary method of pressing the dough with a hydraulic press that holds it in place and sears it. Offering a variety of high-quality toppings, Fired Pie lets customers build their own pizza — or salad. Salads are tossed on the line and served immediately. Pizzas take that fourminute detour to the oven before being served to the customer. Co-owner Fred Morgan emphasizes the “fresh” factor that differentiates Fired Pie from “by the slice” pizzerias where a
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customer may be able to add toppings but it’s to a pre-cooked slice that is then reheated. Co-owners Morgan, Rico Cuomo and Doug Doyle, who share extensive experience with California Pizza Kitchen, self-funded their first Fired Pie, which opened six months ago at the Deer Valley Towne Center in north Phoenix and “was profitable from Day 1,” according to Morgan. They have since opened three more, the most recent in early December at Northsight and Raintree in north Scottsdale. A partner stays at each location to oversee training and operations, and to make sure it is executing at all levels, Morgan explains. “It’s four to five months of us being there every day.” Explaining they have modeled their business
on Chipotle, Morgan says their plans are to build a similarly large presence throughout Arizona and they are already eyeing sites in Flagstaff and Tucson. —RaeAnne Marsh Fired Pie firedpie.com
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Photos courtesy of Arcology Now! Inc (top); Liger Unlimited (bottom)
Grabbing a Slice of the Pizza Segment
“Fast
answers, great solutions.�
Subscribe Today and Class Up Your Client Entertaining, Employee Recognition and Business Development 602-495-1999 | phoenixsymphony.org
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By the numbers
Metrics & Measurements
TPP May Drive International Trade and Investment for Arizona New Business Roundtable fact sheet details projected benefits to Arizona by Mike Hunter Negotiations are continuing on the U.S. Trans-Pacific Partnership (TPP), which aims to broaden trade between the United States and 11 other countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Arizona trade with TPP countries — exports and imports — supported nearly 278,000 jobs in 2011. Notwithstanding controversy over issues and secrecy that has plagued the negotiations since they began in 2010, the aim of improving international trade has kept the players at the table. Expanding economic ties with TPP countries is predicted to help support our state’s economic growth and jobs, according to a fact sheet recently prepared by Business Roundtable (BRT), an association of chief executive officers of leading U.S. companies with $7.4 trillion in annual revenues. “The 11 other TPP countries represent critical markets for U.S. goods and services exports, accounting for a combined population of 482 million people and representing roughly 15 percent of global trade,” says John Engler,
president of BRT, whose member companies, which comprise more than a third of the total value of the U.S. stock market and invest $158 billion annually in research and development — equal to 62 percent of U.S. private R&D spending — generate more than $540 billion in sales for small and medium-sized businesses annually. “The TPP holds significant potential to create new opportunities for Arizona, all 50 states, and the overall U.S. economy to benefit from increased commercial engagement with these countries.” According to the BRT, an estimated 277 Arizona businesses are subsidiaries of companies based in TPP countries. The goal of the TPP is to remove barriers and strengthen partnerships, and Arizona could see further investment by companies based in TPP countries. Arizona’s positive trade experience, to date, includes the following: ■■ Fifty-eight percent of Arizona goods exports went to TPP countries in 2012. ■■ Arizona exported about $8.9 billion worth of goods to the six TPP countries that are
current bilateral U.S. free trade agreement (FTA) partners — Australia, Canada, Chile, Mexico, Peru and Singapore — in 2012, accounting for roughly 50 percent of Arizona’s goods exports globally. ■■ Arizona exported about $2.0 billion worth of services to the six current U.S. FTA partner countries in 2011 — accounting for roughly 19 percent of Arizona’s services exports globally. ■■ The TPP will open new markets for Arizona with five countries that are not current U.S. FTA partners — Brunei, Japan, Malaysia, New Zealand and Vietnam. Arizona exported $1.4 billion in goods in 2012 and $952 million in services in 2011 to these “new FTA” TPP countries. Nationwide, more than one in five jobs are supported by trade, both export and import. Since 2004, U.S. exports have grown faster than overall U.S. GDP and now account for nearly 14 percent of U.S. GDP. Including international trade and investment, more than 30 percent of U.S. GDP is tied to international trade.
Arizona Goods & Services Exports to TPP Countries, 2011 Existing Foreign Trade Association Partner
Canada $3.1 Billion
New Foreign Trade Association Partner
Japan $1.7 Billion
Malaysia $537 Million Mexico $6.2 Billion Peru* $45 Million Chile $111 Million
Singapore $733 Million
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Brunei* $118,300
Australia $511 Million
Trade numbers are from 2011, the last year of available services export data. *No services export data are available for Brunei, Peru, and Vietnam. Totals for these countries reflect only goods exports. Source: The Trade Partnership, courtesy of Business Roundtable
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Vietnam* $69 Million
New Zealand $69 Million
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SE C TOR
Industry at Its Best
How Does the Fitness Sector Shape Up? Fitness clubs provide member options to build up bottom line When it comes to staying fit in Phoenix, it can be easy as climbing Camelback Mountain no matter what time of year it is. But many fitness operators have bet people want a little help even in what has been a challenged economy, and that bet is paying off. For Becky Renner, an Arizona regional developer for Orangetheory Fitness, the area’s outdoor recreational opportunities are, indeed, a competitor, along with other fitness operators here. “It’s just a fit city,” she
says. Rick Berks, founder and president of YouFit Health Clubs, voices a similar view. “Phoenix, with so many different players, is a very competitive market,” he says. But as long as people always want to get in shape, says Whitney Jones, owner of AZ Pro Physiques, “there’s enough business to go around.” There definitely is industry growth in Arizona. According to InfoUSA, there were 453 health and fitness clubs listed in the Yellow Pages in 2009. By July 2013, the total for the
Exercise equipment at a YouFit Health Club
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state was 584 — a 29-percent increase. In the Mountain region, only Colorado was better, with 640 clubs and a 33.9-percent increase in the same period. For the entire region, there has been an overall increase of 15 percent — about half the rate for Arizona. Renner, Berks and Jones see positive results from their efforts, especially with customers wanting to meet their needs with different levels of service. There are nine YouFit locations in the Phoenix area that serve more than 50,000 individual members in energy-efficient facilities. Throughout the nine studios of Orangetheory, its group sessions serve 5,000 members. For those looking for a one-on-one experience with a trainer, AZ Pro Physiques’ lone studio in Gilbert counts 450 clients. And there are some customers who want that something extra, and this is the niche targeted by the three Village Health Clubs & Spas. While the clubs have the basic exercise equipment found elsewhere, says President Carol Nalevanko, there’s also a large social component to the clubs that includes cooking classes and triathlons. “They’re looking for total healthy lifestyles,” she says of the 20,000 members who come from the high-income communities surrounding the clubs. “But you have to be on your toes to be high-end.” inbusine ssmag.com
Photo courtesy of YouFit Health Clubs
by Don Rodriguez
Photo courtesy of Village Health Clubs & Spas
Groups also are at work at Orangetheory, where each franchise location offers nine to ten different one-hour sessions daily, with a trainer leading each group of up to 24 people. Instead of paying a personal trainer $50 to $70 an hour, Renner says, the session is $10 per group member. “I call it personal training on a budget.” For those who prefer personal attention, most customers at AZ Pro Physiques’ have half-hour sessions or up to an hour, depending on the client’s physical level of activity or goals. With 18 full-time trainers, it’s the biggest personal training studio in the state, says Jones. The specialized sessions are sold in packages, with rates based on the amount of floor time spent with a trainer. In addition, those packages contain meal and cardio plans plus workouts outside the studio, but “we just don’t charge for each of these things,” she says. Although their types of customers and needs vary, all four clubs share something in common: growth. Even during a slow economic recovery, client bases and numbers of locations have grown. For Orangetheory, the membership base almost doubled and six studios opened in 2013 alone. “People are spending a little more on themselves each year,” says Renner, noting six more locations are expected to open in 2014. She and her husband own the Chandler and Mesa locations, with their next opening in south Chandler in January and perhaps another within a few years in Tucson. When AZ Pro Physiques opened in early 2010, it already had 60 clients ready to go. By the end of the first year, the need for more space arose. With some clients even flying in to meet with their trainers, the studio was expanded in 2012 to 5,000 square feet in separate studio suites. “We’ve already advanced to what we thought would take five years,” Jones says of a loyal client base that extends from Avondale to New York, plus some who are international. According to the International Health, Racquet & Sportsclub Association (IHRSA), 19 percent of health club members stay with a club for “access to fitness professionals.” For the Villages, construction begins in January on an 82,000-square-foot facility in Chandler. When it opens in January 2015, Nalevanko expects more than 150 additional employees will be needed to join the current 650 to 700. Berks says YouFit is considering other sites in the Arizona market but cannot discuss any until a deal is in place. Still, he inbusine ssmag.com
feels activity will slow down as the market becomes saturated with health clubs. With more people going back to work, more are going back to work out. As the economy improves, people have more discretionary income, Berks says, and when people have more discretionary income, they’re more likely to spend it on services. “It’s pretty simple, really,” he says. During the recession, there was a loss of members at the Villages for a combination of reasons, many related to the collapse of the real estate market. “But we had enough diversity in membership so we had a slight growth,” Nalevanko says. With more than 60 percent of the Village members being referrals, the retention rate at the clubs has been a minimum 80 percent and is currently at 83 percent. She compares that to an industry average of 67 percent. While some people couldn’t afford to maintain memberships during the recession, “most of those people have come back,” Nalevanko says. In the past year, “even those who took time off for a while” at AZ Pro Physiques are coming back, Jones says. Many of those being trained are business professionals looking for stress relief to improve their health, Jones says, pointing out the irony that, while the economy
is getting better, success for those customers comes with added stress. As an option for them and others who find it hard to get to the studio, Jones offers online training. “It’s been a trend that has worked out well for us,” she says. Clients are sending pictures to trainers every two weeks to monitor their progress — a sign that this rare group can keep themselves accountable. In addition, for someone who needs some direction on a new exercise, there is Skype — or Jones can shoot and send a video from her phone. “It’s quick and easy.” Technology is very much part of the industry’s future. “I believe members are more advanced with technology than our industry is,” says Nalevanko, who carries a more global view as an IHRSA board member. There is some catch-up to do already as members rely more on apps to help live their lives. “The consumer isn’t just thinking about fitness in four walls of the health club,” she says. “Fitness is now 24/7.” AZ Pro Physiques azprophysiques.com International Health, Racquet & Sportsclub Association ihrsa.org Orangetheory Fitness orangetheoryfitness.com Village Health Clubs & Spas villageclubs.com YouFit Health Clubs youfit.com
Yoga studio at one of the Village Health Clubs & Spas
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Trickle Up
A View from the Top
Carrie Martz: Learning from Challenges But her core philosophy in growing her marketing, advertising and PR agency has remained constant As Carrie Martz, chief executive officer of Martz Parsons, has learned first-hand over the years, there is not one main ingredient to becoming successful in a highly competitive field. Instead, she notes, building up her fullservice and integrated marketing, advertising and public relations agency to where it is today has required a combination of approaches, combined with a willingness to learn from various lessons along the way. Martz, who opened her original Martz Agency back in 1980, says her company was acquired in mid-October by MP Agency, L.L.C., an organization owned by GoDaddy founder Bob Parsons. Martz says she and Parsons both share a common passion for treating their clients as Number One. “What created a strong synergy between me and Bob was that my basic philosophy has always been to listen to my clients and deliver great service at fair prices,” she says. “If you do this, they will become clients for life and will refer us to others. This is Bob’s philosophy, too.” One of the other things Martz has done to help her company succeed is to be very involved in community causes. Over the years, she has served on a wide variety of boards and nonprofit committees. “The agency also supported this cause by doing a lot of pro bono work. Community giving is a ‘feel good’ part of what we do, and I also feel it is what any business — small or large — should
build into their DNA.” Giving back to the community and providing the pro bono work also introduced her to a lot of larger business owners, which, in turn, allowed her to get her foot in the door with the companies. “They saw our work ethic, and that gave us the opportunities to work for them.” Martz also cites joining the Transworld Advertising Agency Network as being a crucial part of her agency’s overall success. Thirty independently owned agencies from around the country would meet two times a year for “very intensive” three-day meetings, Martz recalls, adding that she was the only member from Arizona. “What the meetings allowed me to do was share some of the bigger concerns that I had about my business with others, like handling staff issues, or trends in advertising law. We all learned so much from the speakers, and from talking with each other about what we’re experiencing. I was the only woman in the group, so it was like having 30 big brothers watching over me and guiding me in that growth.” As for challenges, Martz says she has learned the hard way — twice — not to buy a building for her company, but rather to be content with leasing. “I should not own buildings. In 1996, I said it, but I didn’t learn my lesson and so I did it again in 2006, at the height of the real estate market. I’m always challenged in regards to growth and getting the right size building,” she
Carrie Martz: Quick Facts
■■ Martz formerly served on the boards of Childhelp USA; Phoenix Children’s Hospital ■■ ■■ ■■ ■■
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Foundation; and Cystic Fibrosis Foundation, Arizona Chapter (its advisory board). She was a board member with Phoenix Suns Charities for 20 years. Martz has also served on the advisory board for Citizenship Counts, founded by Gerda Weissman Klein and her granddaughter, which is dedicated to teaching youth the tenets of citizenship and encouraging them to appreciate their rights, responsibilities and opportunities as Americans. Some of Martz Parsons clients include yurbuds, Pacific Links International, YMCA, OneNeck IT, Fennemore Craig and Olympia Group. Martz graduated from Arizona State University with a B.S. in Marketing. One of Martz’s more innovative projects is the Home of Miracles program. Considered one of Arizona’s most successful charitable events, it raised more than $7.5 million in its last six programs for Phoenix Children’s Hospital and various other local charities.
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says, relating she misjudged her space needs but was stuck with what she had purchased. “Both times it has been catastrophic for me.” Another lesson that Martz says she has worked hard to learn is to not overwork her team while trying to grow her business. Although she would constantly work to pitch new business, she felt she could not afford to hire new people until the new clients were on board. “Not burning people out has been a big challenge for me, so I ended taking a lot more work on myself. I have an incredible amount of energy, and I will never ask someone to do something that I will not do myself.” But she adds, “This was not a good long-term solution.” When Martz’s company was acquired by Parsons, learning his core philosophy was “music to my ears and to my team’s ears,” she says. “His MO is to expand with people before you need them. That way, people come to work with fresh minds, and fresh minds do great work. Bob is giving us opportunities to hire before we need them, and hire the most skillful people that we will keep, and that will be well-rested.” Martz is optimistic that Martz Parsons will continue to evolve. She expects huge opportunities for growth within the next three years, and she hopes the agency will be known as one of the best places to work in the Southwest. “Business will come to us, if we have right people in place.” Martz Parsons martzparsons.com
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Photo courtesy of Martz Parsons
by Alison Stanton
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To ur i
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Real Estate
re ca lth ea H
En S er ola g r y
ce se pa fen os e er D A nd a
A Look at Arizona’s Key Sectors and How We Compete by Pat Kossan
Arizona’s economic researchers say 2014 looks flat and steady. At least, say the optimists among them, we’re not going backward. The problem is jobs. One of every five Arizona workers has a job in two industry categories, either “retail” or “professional and business services.”
Arizona’s 2013 job growth in these critical categories lagged behind national growth. Arizona will add jobs in 2014, but at half the rate it needs to catch up to a typical year, says Lee McPheters, research economist at Arizona State University’s W. P. Carey School of Business. “In other words, this huge part of the Arizona economy is expanding below the national average, even though construction is growing faster than nationally, even though finance is growing faster than nationally,” McPheters says. He notes that, without federal money and facing a weak national economy, states are on their own to stimulate their economies. Yet, in Arizona’s case, many of the traditional growth sectors, such as tourism and real estate, are tied to a weak national economy, and the deep cuts to the federal budget known as sequestration are limiting the number and amount of government contracts and, therefore, limiting growth of high-paying jobs in industries such as bioscience and aerospace and defense research and development.
Tourism Is Still on the Move
Arizona’s sun still draws returning snowbirds and other winter visitors who bring new dollars to pump up the economy, says Cheryl Cothran, hospitality industry researcher at Northern Arizona University’s W. A. Franke College of Business. The sun, however, is not enough to attract business travelers. After a decline during the recession, businesspeople are on the move again, but they
are taking shorter flights to places like Chicago and Denver and cheaper flights to Las Vegas, and this hurts jobs at Arizona’s large resorts and hotels that count on large conferences and conventions to fill their rooms. The recession had a bright side for the state’s rural towns, however. More regional tourists traveled by car to save money. These tourists were drawn to local niche attractions, such as the growing wine industry in Verde Valley and southeastern Arizona. Places like Cottonwood have resurrected their downtowns with tasting rooms, craft beers, locally grown foods and a distinctive history, says NAU hospitality researcher Thomas Combrink. Despite the recession, foreign travelers never stopped visiting Grand Canyon National Park. The state has fallen out of the top 10 for international travel, however, now coming in at number 12. “If it wasn’t for the Grand Canyon, we wouldn’t be in that list at all,” Cothran says. “Places like Florida are really booming with internationals from places like Latin America. California and New York capture loads on internationals. And then Vegas.” Some market watchers say Arizona’s rough handling of illegal immigrants has not helped its ability to attract international travelers. Glenn Hamer, CEO and president of the Arizona Chamber of Commerce and Industry, who has been on trade missions with state leaders, says relations with Mexico are warming just as the state is warming up to immigration reform. He believes new flight routes recently opened between Mexico and Phoenix Sky Harbor International Airport will help. “Our tourism relationship with our North American friends is moving in the right direction. We should start seeing that in some of the numbers.”
Real Estate Is on a Slow Climb
In the residential real estate market, the first half of 2013 had homebuyers outnumbering sellers. The median price of a Phoenixarea single-family home rose 32.7 percent between September 2012 and September 2013, according to Michael Orr, real estate researcher at the W. P. Carey School of Business. But the government shutdown in October unnerved some potential buyers, and, while home values continued to rise, the cooling market slowed job growth and weakened incomes in the sector. Orr expects the market will pick up volume in 2014, but not enough for the sector to gain jobs. The commercial market, static the last half of 2012 because of the uncertainty of an election year and the bickering in Washington, D. C. over spending cuts and taxes, had been expected to prove robust for 2013, according to Craig Henig, CBRE’s senior managing director. “That has not been the case, and now I think that
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confidence is at an all-time low, and the [federal government] shutdown didn’t help recently,” Henig says. “We don’t have very good job growth and that’s what needs to happen here.” As commercial space rebounds, it is expected to take a different shape. Online shopping will change what retailers put on their shelves, Henig says. For example, retailers may dedicate more space to shoes because consumers still want to try them on. Large electronic retail stores already limit space dedicate to CDs or DVDs, because consumers can download them from their computers. Similar to retail space, companies will reshape the rebound in office space. The trend is toward what Henig calls “bullpen offices” with one large open space shared by all employees and a few large conference rooms. More employees already work from home, which, he points out, leads to companies needing less space. “We’re one of the better states in seeing the housing values increase over the past year,” Hamer says. But, noting that of the more than 300,000 jobs Arizona lost during the Great Recession, half were in the construction of new homes and commercial real estate, he sees it being a long, slow climb to the “go-go years” of the early and mid-2000s.
Although bioscience was a growing sector over the last decade, investments in Arizona’s industry are drying up. That lack of cash is flattening the state’s trajectory and weakening its reputation as the next bioscience hub, says Walter Plosila, senior advisor for Battelle Technology Partnership Practice and author of the annual Arizona’s Bioscience Roadmap. “We’ve been trying to raise the concern for years,” he says. “It takes perseverance, continuity and sticking to it.” Bioscience production does not work like an information technology start-up, which can take a new product to market within six months, Plosila explains. Bioscience means the creation and distribution of pharmaceuticals, surgical and diagnostic tools and medical implants — a process that takes a coordinated effort. For example, state university researchers must collaborate with researchers in private nonprofit organizations, such as the Translational Genomics Research Institute. Hospitals must be willing to help create and test new products. A network of smaller businesses then must join the team to manufacture and distribute products. This ongoing cooperation is needed to move a discovery into an application and then through its trials and regulatory approval, and Plosila notes the process takes 10 to 20 years and willing investors. Investors typically join syndicates to invest in several bioscience projects, dividing the rewards and risks among members. In the last few years, however, there hasn’t been enough local capital in Arizona to entice investors from other states to create investment syndicates, according to Plosila. Federal stimulus grants that helped the industry weather the recession are gone, and,
Healthcare Outperforms Bioscience
To Barry Broome, CEO and president of the Greater Phoenix Economic Council, the bioscience part of the economic equation is insignificant. He believes the state is not a player in drug development and biotechnology because Arizona has not invested in the University of Arizona’s medical school. Noting that 66 percent of California’s biotechnology industry spins out of California’s medical schools, he says, “So if you have a medical school that is unfunded, if you have a medical school that isn’t supported, if you have a medical school that is too small, you’re not going to end up with any kind of bioscience program.”
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while grant money from the National Institutes of Health is still flowing, there is less money and more competition. Plosila observes that Arizona offers one of the most generous research and development tax credits in the country, but it isn’t enough. Efforts to entice the state to kick-start a pool of private and public bioscience investment funds have failed. “This is one serious gap in Arizona that really hampers it,” Plosila says. “You can have the best research in the world, but if you don’t have the capital to take the product to market, what can you do but end up exporting your research to somewhere else that will get it to market?” Arizona is, however, a big player in healthcare. The state is home to an unusually high number of top-tier healthcare centers, such as Phoenix Children’s Hospital and the Mayo Clinic, each with a global reputation and a record of growth. Pointing out that 2,000 people work in bioscience while 250,000 work in healthcare, Broome says, “Healthcare excellence is where we’re getting our lift.” The state recently expanded federal Medicaid eligibility to about 350,000 state residents as part of the federal health insurance reform. Hospitals will no longer be burdened with the cost of caring for these uninsured, low-income residents. The change allows the sector to continue to grow and produce jobs; Broome believes it gives Arizona an edge over competitors, such as Texas and Florida — states that did not expand healthcare coverage for low-income residents.
Aerospace and Defense Are on the Line
The deep, annual, across-the-board cuts in federal spending mandated by Congress, known as sequestration, are threatening the entire aerospace and defense industry. Arizona ranks among the top five states for its aerospace and defense industry, and Arizona’s sector grew faster than any other state’s during the 1990s. If federal cuts continue and impact research and development, then large Arizona corporations, such as Honeywell, could shut down plants, and smaller supply-chain businesses that rely on them will contract and many will close. Wonders Broome, will the state remains a top state for the aerospace and defense industry and will the sector still produce enough jobs to be worth much in the future? “So the policy question will be, ‘Is defense going to be an industry that really matters in the U.S. in 10 years?’” Broome says. If sequestration does spare the Arizona industries, Broome believes the state still needs to bolster its universities’ engineering programs and find pubic funds to sponsor research projects that create new technology, such as the civilian use of drones. Arizona has weather and varied terrain that make it ideal for testing drones in development. According to Hamer, our state already has had more test flights than any other state. Some states restrict where drones can fly, making it more difficult for testing. “Our legal framework and regulatory framework in Arizona is very positive,” Hamer says. “So this is an area I would expect that we could see a lot of new jobs.” Federal money still is flowing for the development of drones, now referred to by the friendlier names of “unmanned aerial systems” (UAS) or “unmanned aerial vehicles” (UAV), says retired Brigadier Gen. Thomas Browning, USAF. The future of unmanned vehicles is not military but civilian use, such as surveying farm fields or determining the hot spots and geography of wildfires. Japan is already using drones to spray crops. “You are only limited by your imagination about what these things can do,” Browning says. Browning, co-author of Arizona Aerospace Defense and Security Enterprise Strategic Plan 2011-2013, believes Arizona is particularly well suited for research and development of unmanned aerial systems. Just how fast Arizona develops this sector is dependent on a sevenvolume proposal made to the Federal Aviation Administration to become one of six unmanned aerial system industry hubs in the country. That would shake the sector out of its complacency and grow new research, new companies and new jobs. Arizona is one of 25 sites in the running and the FAA’s decision is due after this issue goes to press, Dec. 31. If Arizona is not selected as a site, Browning says, it will need to raise its capacity and its profile as a national and global player in the industry.
Solar Energy Is Still Warming Up
Arizona’s potential as a solar industry hot spot has waxed and waned along with the still bumpy evolution of solar technology and
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manufacturing. Some call our relentlessly sunny days the state’s edge in building a solar industry. Others say sun guarantees only that Arizona is a good place to use solar energy, not to build a manufacturing and distribution sector that provides significant jobs. Arizona’s current potential in solar depends on the development of two technologies: concentrated solar and photovoltaic. Concentrated solar technologies use huge fields of solar mirrors that focus energy onto towers, which then generate steam to turn turbines and create electricity. There are several concentrated solar plants in Arizona and the southwest region, and our state is home to several component manufacturers as well. “That’s where Arizona looked extremely attractive because of the volume of sun,” says Robert Mittelstaedt, dean emeritus of the W. P. Carey School of Business. “They thought it was going to be the future. Now, it turns out photovoltaic electricity is eclipsing concentrated solar in terms of cost.” Solar photovoltaic technologies use material placed on a building’s roof that converts light energy into electricity. Solar photovoltaic was never cost-effective until the industry recently found cheaper ways to manufacture the rooftop panels, explains Mittelstaedt, now senior fellow at ASU’s Utility of the Future Center. Governments, particularly in Europe and the United States, were eager to reduce man-made emissions that impact global climate change. Governments began to subsidize, or require utility companies to subsidize, households and businesses that installed panels and produced their own photovoltaic electricity. The problem is, rooftop electricity also needs a traditional power grid with capacity to step in and seamlessly provide power when sun power wanes. In the short run, there is no cost-effective way to meld the two systems, observes Mittelstaedt; keeping capacity idling online when the sun-generated electricity can’t handle the load is very expensive. Tempe is headquarters for First Solar, a leading provider of photovoltaic solar energy systems in the world. The company, along with state universities and other private companies, is working on research and development in the solar industry. However, for photovoltaic solar power to become an Arizona growth industry, it must create a significant number of jobs from local manufacturing plants and distribution centers. Arizona jobs in the industry now are mainly confined to rooftop solar installation. “I think it’s a fable to talk about this being the center of the world for the solar industry, because the use of the product and where it is produced are completely unrelated here,” Mittelstaedt says. Broome, whose organization has spent a great deal of time attracting solar companies to Arizona, says it is too early to write off the solar industry as a growth sector for the state. He sees concentrated solar as a viable and growing technology and the only current technology that can produce enough energy to reduce
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the area’s carbon footprint. Concentrated solar is already producing manufacturing jobs in Arizona, as opposed to photovoltaic, which currently is dependent on the finite and fickle construction industry. Broome expects Arizona to produce somewhere between 25,000 and 40,000 jobs in the solar energy industry within the next decade. That is a small percentage of the 350,000 jobs the Phoenix area will need, he says, but the solar sector along with other renewable energies will be a contributor. “It’s overwhelmingly going to have a future here,” says Broome about solar. “The question is, how big of a future, what is it going to look like and what is its value?” With states on their own to stimulate their economy, governors — including Arizona’s — are taking international trips to entice global trade and investment and are attempting to lure businesses away from other states to create jobs in their own. Unemployment is expected to come down very slowly in 2014, with cautious consumers, busy paying off their debts, seeing home values and the stock market go up. Arizona depends on the same elements that drive the national economy — such as consumer spending, business expansion, tourism and construction — and the good news is, people are once again moving into the state. Battelle battelle.org CBRE U.S./Phoenix cbre.us/o/phoenix/Pages/home.aspx Science Foundation Arizona sfaz.org Utility of the Future Center asulightworks.com W. A. Franke College of Business franke.nau.edu W. P. Carey School of Business wpcarey.asu.edu
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Leadership
A Path to Follow
Be a Bankable Leader Long-term success needs leadership that delivers on both happy employees and bottom-line results by Tasha Eurich, Ph.D. Why won’t my employees just do what I tell them? Why am I struggling to motivate my team? Why aren’t they giving me the performance I need? These are common questions that plague many leaders. Often, companies promote to leadership employees who are competent technical professionals — who know how to build a bridge, negotiate a deal or justify a capital expenditure. But whether holding the office of a middle manager or a CEO, technical skills usually won’t help an individual be a better leader. But effective leadership has an undeniable business value. In one study, Jack Zenger and colleagues (“How Extraordinary Leaders Double Profits”) examined the best (top 10 percent) and worst (bottom 10 percent) leaders at a large commercial bank. On average, the worst leaders’ departments experienced net losses of $1.2 million, while the best leaders boasted profits of $4.5 million.
Sink or Swim Is Not a Plan As any disgruntled employee will attest, exceptional leadership isn’t commonplace. One recent Center for Creative Leadership study reveals that up to 50 percent of managers are ineffective. And sadly, their companies probably aren’t doing much to help their managers. In the first place, they probably use the wrong criteria to select leaders by focusing on technical — rather than leadership — skills. Secondly, most invest precious little to develop leaders, and training is often an isolated, one-size-fits-all event. Without follow-up, 90 percent of information from training programs disappears after three months! Without organizational support, leaders wanting to improve are left to their own devices. But when they search on Amazon for “leadership books,” they’re assaulted with more than 100,000 options! No wonder leadership feels so complex and impossible. Luckily, there’s good news. Though psychologists used to believe leaders were “born,” recent research tells a much different story: Leadership is an acquirable skill. Recently, a study by Richard Arvey at Singapore’s NUS Business School revealed that a whopping 70 percent of leadership is learned. That means anyone can learn to become an effective leader.
Two Behaviors All Leaders Must Master For decades, scientists have known everything we need to know about how successful leaders behave. It’s like finding the TV remote tucked under a couch cushion after hours of searching elsewhere: The secrets to leadership really have been here all along. In 1945, a group Ohio State University researchers set out to disprove the notion that leadership was an inborn personality trait. With 70 International Harvester Company foremen as their subjects, they discovered that leadership effectiveness was related to the presence of two independent behaviors. Firstly, effective leaders showed consideration, displaying support, compassion and friendliness to their team. Secondly, they initiated
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structure. They clearly defined the role each employee played and drove their performance. We’ll call these behaviors “People” and “Results,” respectively. Managers likely feel an inherent tension between People and Results. On one hand, they must build relationships by connecting with their team, earning trust and motivating them. On the other, they must drive top- and bottom-line results through their performance and productivity. I can drive them to perform, leaders think, OR I can be their friend: People . . . . . . . . . . . . . . . . . X . . . . . . . . . . . . . . . . . . . Results Left-Side Leader Right-Side Leader Depending on the individual’s upbringing, culture and role models, the leader will find a comfort position between these behaviors. For a select few, that position is in the middle, leveraging each outcome to support the other. The rest fall somewhere to the left or the right, and some to the extremes: The Cool Parent: Left-side leaders act like the “cool parent.” Focusing on the happiness of their team at all costs, they don’t set expectations, give honest feedback or make tough decisions. Working for a left-side leader might feel pleasant … at first. But as soon as an employee needs tough — but true — feedback, this leader would freeze like a deer in headlights. The Trail of Dead Bodies Creator: Right-side leaders drive results so aggressively that they leave a “trail of dead bodies.” This leader requires grueling hours, is never satisfied and withholds recognition lest employees become complacent. Though right-side leaders help employees “up their game” initially, in the long-term, the employees suffer both physically (from overwork) and mentally (from lack of appreciation). The best leaders are able to move to the middle, focusing on people and results. These bankable leaders create prosperity in the form of achievement, health, happiness and wealth for themselves, their team inbusine ssmag.com
Books and their organization. The best managers are seemingly a walking contradiction, achieving all of these things at once: ■■ Caring for and understanding team members and setting aggressive performance targets ■■ Helping team members succeed and expecting responsibility for successes and failures ■■ Providing recognition and pushing continuous improvement ■■ Helping each employee enjoy his or her job and ensuring everyone maximally contributes
Three Actions to Become More Bankable
Gather the Facts. Just like a person can’t start a weight-loss program without getting on a scale, leaders must begin their journey by learning the truth about themselves. We’re often the worst evaluators of our behavior. While a leader may place himself in the middle of the continuum, believing he places an equal emphasis on People and Results, his team might say, “Are you kidding? He’s a total slave driver!” Leaders can use their resources and gather the facts, whether it’s through an assessment or feedback in the form of conversations. Be Laser-Focused. For executive teams, research by Paul Leinwand and Cesare Mainardi of Booz & Company shows that as their quantity of goals increases, revenue declines. Similarly, leaders often choose too many development goals. Leaders have the greatest chance for victory by developing one thing at a time. It is far better to make progress in one area than to make little or none in five! Practice Daily. A leader may well have had a development plan before — that gathered dust in a drawer. He was probably engaging in Delusional Development: the futile hope that just by wanting to get better at something and knowing enough to be dangerous, he would show improvement. The amount of deliberate practice a leader chooses will be proportionate to his improvement. The journey to Bankable Leadership is like learning a violin concerto: First learn the concepts (reading music) and behaviors (playing the violin). Then practice every day to create beautiful music.
Bankable Leadership Happens Day by Day From music to science to athletics, people with average talent have achieved extraordinary things. Scientists used to think that superior athletes achieved greatness because of biological differences. But we now know that the best marathon runners, for example, simply train more in the weeks leading up to the marathon. The same is true for exceptional leaders. That’s why the “I just wasn’t born to be a leader” excuse doesn’t hold water. A person may not want to be a leader, which is entirely different. But with focus and commitment, anyone can become a more effective leader. The daily commitment it requires isn’t always sexy, but the person who follows it will become a more bankable leader — guaranteed. Dr. Tasha Eurich tashaeurich.com
A proud leadership geek, executive coach, speaker and author, Tasha Eurich, Ph.D., is the author of Bankable Leadership: Happy People, Bottom-Line Results, and the Power to Deliver Both (www.bankableleadership.com). Dr. Eurich pairs her scientific grounding in human behavior with a practical approach to solving leadership challenges. The majority of Dr. Eurich’s work has been with executives in large Fortune 500 organizations, including Western Union, the City of Cincinnati and HCA. She holds an M.S. and Ph.D. in Industrial-Organizational Psychology and B.A.s in Theater and Psychology, and serves on the faculty at the Center for Creative Leadership.
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Lead by Example
Leadership 2030: The Six Megatrends You Need to Understand to Lead Your Company into the Future The tumultuous changes of the past decade, including China’s economic rise and the financial meltdown, were just the beginning. The next cataclysmic wave is surging relentlessly ahead, demanding leaders who can steer their companies through complexity and change. Drawn from original research conducted jointly with foresight company Z-Punkt and further analyzed by Hay Group, Leadership 2030 uncovers megatrends that will dramatically impact organizations’ markets, cultures, systems and processes. Research findings and case studies provide compelling evidence of each megatrend and highlight the skills, capabilities and attitudes leaders must cultivate, such as adaptability, collaboration, cultural sensitivity, strategic thinking, meaning creation and more. Georg Vielmetter $27.95 AMACOM On shelves and online
Finding the Space to Lead: A Practical Guide to Mindful Leadership The complexity and relentless pace of our world places exceptional demands on leaders today. They work incredibly hard and yet feel that they are not meeting their own expectations of excellence. They feel disconnected from their own values and overburdened. Janice Marturano, a senior executive with decades of experience in Fortune 500 corporations, explains how Mindful Leadership training integrates the practice of mindfulness — meditation and self-awareness — with the practical tools of management, enabling leaders to bring a wider range of their capacities to the challenges at hand. We already know from scientific research that mindfulness practices enhance mental health and improve clarity and focus. This book shows how this training has specific value for leaders. Janice Marturano $26 Bloomsbury USA On shelves and online
On the Edge: The Art of High-Impact Leadership This is an engaging leadership manual that provides concrete insights garnered from various extreme environments that range from Mt. Everest to the South Pole. By reflecting on the lessons learned from her various expeditions, author Alison Levine makes the case that the leadership principles that apply in extreme adventure sport also apply in today’s extreme business environments. Both settings require leaders to be able to make crucial decisions on the spot when the conditions around them are far from perfect. Survival of both the leader and his or her team depend on it. This book provides a framework to help people scale whatever big peaks they aspire to climb — be they literal or figurative — by offering practical, humorous and often unorthodox advice about how to grow as a leader. Alison Levine $27 Grand Central Publishing On shelves and online
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NonProfit
by RaeAnne Marsh
Actions to build Community
The Clothes Cabin: Offering Dignity through Clothing
Snapshot
“No More Chilly Nights,” being held Feb. 1, is the aptly named chili cook-off fundraiser by The Clothes Cabin, which provides clothing — and blankets — to people in need, including abuse victims who often can carry nothing with them when they leave their home. Begun as a sock drive under the name “One Small Step” (and still registered as a 501(c)3 organization under that name) about five years ago, The Clothes Cabin’s free clothing bank serves individuals regardless of what city they live in, and the only identification clients need is a photo ID. Clients may take
up to nine pieces of clothing for each person in their family, four times per year. “So they get [clothes for] each season,” says executive director Dara Gibson. The chili cook-off will be held in an airplane hangar at 4129 W. Milky Way, Chandler — the offices of PRS Property Management, which is co-sponsoring the event with Downtown Chandler Business Alliance. The chili competing for judges’ awards and the People’s Choice Award will be provided by the Chandler, Phoenix and Sun Lakes fire departments. Go-withs on the menu are salad, corn bread,
desserts and beverages. There will also be a silent auction and live entertainment. The Clothes Cabin clothescabin.org
■■ The Clothes Cabin serves an average of 40 clients per day, each usually with a family of five or six — distributing 1,600-2,000 pieces of clothing each day, plus towels, blankets and hygiene kits. ■■ The organization distributes only clean, undamaged, new or gently used clothing. Any that do not meet those standards are sent to a homeless men’s ministry in Phoenix or to orphanages and churches in Mexico. “Nothing is wasted,” says executive director Dara Gibson. ■■ The organization also runs a Back to Work program that provides steel-toed work boots to men who need such boots to get or keep a job. ■■ Another program unique to The Clothes Cabin is a laundry service for the homeless. Gibson recalls one client who had only the pants he ■■
was wearing. “If I give you my jeans, I won’t have anything to wear,” he told them. But they found some shorts he could wear while they washed his pants, and got them back to him within an hour. “We don’t normally do it that fast,” Gibson says. The Clothes Cabin operates its clothing bank and a thrift store with one paid staff and about 45 volunteers.
Jewish Family & Children’s Service: Life-Changing Programs Broussard, whose motivational story of how he went from ward of the State of Oregon to its juvenile justice system to become, eventually, a respected community and business leader reflects the goals of JFCS. “Jewish Family & Children’s Service is a non-sectarian, community-based organization that strives to restore hope to those in desperate circumstances; ensure a future where families are strong, children are safe, and elders can live with dignity,” says Michael R. Zent, Ph.D., president and CEO of JFCS. “Our dedication to this mission is strengthened by our commitment
to core Jewish values that honor community and the continuity of the generations.” Jewish Family & Children’s Service jfcsaz.org
■■ JFCS expects 400-500 people at its 5th Annual Brighter Tomorrow Luncheon, which will be held Feb. 7 at the Arizona Biltmore. Last year’s event raised nearly $230,000. ■■ Serving a diverse population from children to older adults that includes Hispanics, Native Americans and African Americans, JFCS touches the lives of about 36,000 people through its programs for individuals and families. ■■ Programs include behavioral health and social services. JFCS is one of the largest providers of services to Arizona’s Child Protective ■■
Services, helping with family preservation, reunification of family and parenting skills. Its child crisis team is called in to hospitals to help children and their family who have suffered terrible trauma. Four hundred child welfare, behavioral health and other professionals are assisted by about 100 volunteers in four programmatic divisions: behavioral health, child welfare, older adult and Jewish community.
In business to do good for the community, nonprofits enrich the lives of those who contribute as well as those who receive. In Business Magazine showcases two nonprofits in each issue, focusing on their business organization and spotlighting an upcoming fundraising event.
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Photos courtesy of The Clothes Cabin (top), Jewish Family & Children’s Service (bottom)
Snapshot
Changing lives is the core of what Jewish Family & Children’s Service is all about — and its 5th Annual Brighter Tomorrow Luncheon “is a chance for us to give a story or two about what JFCS has been doing in the community,” says Frank Jacobson, VP of marketing and development, who organizes the event. One spotlight story, shared as a video presentation, is that of an eight-year-old boy who had been with Child Protective Services and went through JFCS’s behavioral health program, turned his life around, and has been adopted. The headline speaker will be Eldridge
by RaeAnne Marsh
www.inbusinessmag.com
January 2014
O n t h e Ag e n D a
Photo courtesy of Jay Mark
A listing of Greater Phoenix business organizations and their events. Visit www.inbusinessmag.com for an expanded monthly calendar of educational, networking and special business events.
Arizona Small Business Association
Insight Enterprises, Inc.
Small Business Outlook 2014
CloudCast ’14
Wed., Jan. 29 — 8:30a – 10:30a
Wed. – Fri., Jan. 29 – 31 — all day
Healthcare is a top issue on the mind of smallbusiness owners. Arizona Small Business Association presents an in-depth look at this subject from several different angles at its Small Business Outlook 2014, Jan. 29 at The Phoenician.
Tempe-based Insight Enterprises, Inc., a leading worldwide provider of hardware, software and service solutions, presents CloudCast ’14 as a three-day conference, Jan. 29 – 31. “Cloud computing is still an evolving space that is changing week over week,” says Ken Lamneck, Insight president and CEO. “We find our clients are trying to research what technology solutions they can benefit from and which ones they should be implementing. Insight is bringing together leading industry experts to help clients learn about cloud solutions and help provide a forum to network with peers.” Recognizing that many IT departments feel they are not taking full advantage of the cloud’s potential, Insight is bringing together industry thought leaders for keynote speeches and breakout sessions. The conference will cover the latest trends in the cloud, the proper migration path to the cloud and potential pitfalls such as how to handle security and contractual areas. Additionally, attendees will learn more about operating in a hybrid cloud environment. Among the notable industry speakers are Geoffrey Moore, an organization theorist, business consultant and best-selling author whose books include Crossing the Chasm, Inside the Tornado and Escape Velocity; Frank Gens, senior VP and chief analyst of IDC; Lance Crosby, president and CEP of IBM company SoftLayer; Adam Swidler, global head of Google Apps Solution Strategy; and Bill Fathers, general manager of VMware and former president of Savvis. The educational program will fill the first two days of the conference at the Hyatt Regency Scottsdale Resort and Spa at Gainey Village, along with an expo of industryleading solution providers. Insight is inviting conference attendees to spend the third day at the Waste Management Phoenix Open, with access to its private tent at this premier PGA golf event. General registration is open until Jan. 3 at $299; after that date, registration is $499.
Herb Schultz
Staying on top of the subject is a continuing challenge. “Healthcare.gov is still very fluid, and there are new updates weekly,” says Jerry Bustamante, senior VP of public policy and Southern Arizona. But the Outlook will be able to address the biggest, Jean Tkachyk most current issue at the time of the event — the key speaker will be Herb Schultz, regional director of the U.S. Department of Health & Human Services, who will be able to deliver factual, current information on what’s going on with the continual roll-out of the Patient Protection and Affordable Care Act. Also presenting will be Jean Tkachyk, chief operating officer of Meritus Health Insurance. Offering information from the insurance carrier side, she will speak about insurance plans and unique ways business owners can structure health insurance plans for their employees. Aimed at small-business owners and those in health insurance and ancillary industries, the event “will give small-business owners a look at changes, what to expect and how to maneuver through obstacles and opportunities,” says Kristen Wilson, chief operating officer. Registration for ASBA members is $40; for non-members, $60.
Insight Enterprises, Inc. insight.com
Notable Dates This Month Wed., Jan. 1
New Year’s Day
Mon., Jan. 20
Martin Luther King Jr. Day
Agenda events are submitted by the organizations and are subject to change. Please check with the organization to ensure accuracy. See more events online at www.inbusinessmag.com.
Arizona Small Business Association asba.com
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O n t h e Ag e n d a ARIZONA CHAMBER OF COMMERCE AND INDUSTRY 2014 Legislative Forecast Luncheon Fri., Jan. 10 Noon – 2:00p
House and Senate Majority and Minority leadership discuss their caucus’ priorities for the upcoming legislative session, and the Arizona Chamber and Arizona Manufacturers Council officially present the Business Agenda. Members: $80; non-members: $95 Phoenix Convention Center 100 N. 3rd St., Phoenix tmcarthur@azchamber.com
ARIZONA HISPANIC CHAMBER OF COMMERCE Buenos Dias Networking Breakfast Tues., Jan. 14 8:00a – 10:00a
Presented in partnership with Blue Cross Blue Shield of Arizona: discussion of healthcare reform and the Affordable Care Act. Members: free; non-members: $5 Blue Cross Blue Shield of Arizona — Townley Building 2525 W. Townley Ave., Phoenix azhcc.com
ARIZONA SMALL BUSINESS ASSOCIATION Fast & Curious Speed Networking™ Tues., Jan. 14 3:00p – 4:30p
Fast-paced format of networking allows you to make vital business connections at 3-minute intervals. $25 ASBA’s Business Education Center 4600 E. Washington St., Phoenix asba.com
Worksite Health 101 Seminar Thur., Jan. 16 9:00a – Noon
Learn how to create and implement a healthy worksite program. Topics include: Making the Case for Worksite Health, Leadership and Culture in the Workplace, Assessment and Data Collection and more. Free ASBA’s Business Education Center 4600 E. Washington St., Phoenix asba.com
Small Business Outlook 2014 Wed., Jan. 29 8:30a – 10:30a
A must-attend event for all small business owners and supporters of the small business community in Arizona, this year’s program will focus on healthcare in Arizona. Members: $40; non-members: $60 The Phoenician 6000 E. Camelback Rd., Scottsdale asba.com (See story on page 31.)
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January 2014
ARIZONA TECHNOLOGY COUNCIL Mobile Monday Mon., Jan. 6 6:00p – 9:00p
Practical issues will be discussed related to choosing a software development environment, setting up your computer, beta testing, and publishing your app to various app stores. Hosted by Arizona Technology Council and CellTrust. Free ASU SkySong 1475 N. Scottsdale Rd., Scottsdale Danielle.Kuskowski@celltrust.com
Lunch and Learn Tues., Jan. 21 11:30a – 1:00p
“They Call Us Crazy — How Two Twenty-Something Entrepreneurs Beat the Recession and Built a Marriage”: Local entrepreneurs (husband and wife team) Scott and Rachel Salkin take you through their journey from bootstrapped start-up to multi-million-dollar, nationally recognized lead generation and marketing firm. Presented by IDS Technology Marketing. Members: free; non-members: $15 Eller College of Management 16425 N. Pima Rd., Scottsdale (602) 343-8324
CENTRAL PHOENIX WOMEN Luncheon
Thurs., Jan. 16 11:30a – 1:00p
$35 Ritz-Carlton, Phoenix 2401 E. Camelback Rd., Phoenix centralphoenixwomen.org
CHANDLER CHAMBER OF COMMERCE Technology Lunch Seminar Series Thurs., Jan. 9 11:30a – 1:00p
Discussion of the latest in technology. Complimentary breakfast. Members: $5; non-members: $15 Chandler Chamber of Commerce 25 S. Arizona Pl., Chandler info@chandlerchamber.com
Meet the Legislators Breakfast Fri., Jan. 10 7:30a – 9:00a
Meet the 2014 Arizona State Legislators. Dick Castner from the U.S. Chamber of Commerce will speak about what’s happening in Washington, D.C., and provide his perspective on the “fiscal cliff ” and its impact on Arizona. Members: $20; non-members: $30 Hilton Chandler-Phoenix 2929 W. Frye Rd., Chandler info@chandlerchamber.com
Meet the Elected Officials Breakfast Thurs., Jan. 16 7:30a – 9:00a
The Chandler Chamber, the East Valley Chambers of Commerce Alliance, and the East Valley Partnership present breakfast with Arizona Governor Jan Brewer. Free Hilton Chandler-Phoenix 2929 W. Frye Rd., Chandler info@chandlerchamber.com
Chandler Chamber Lunch Club Mon., Jan. 20 11:30a – 1:00p
Businesses will have a chance to exchange business cards as well as provide a gift from their business to use as a door prize. $10 for lunch and drink Rudy’s Bar-B-Q 7300 W. Chandler Blvd., Chandler info@chandlerchamber.com
Economic Update Wed., Jan. 22 7:30a – 9:30a
Find out what’s happening in the City of Chandler, and learn more about important issues that impact us all here in Arizona. Members: $25; non-members: $35 Location TBD info@chandlerchamber.com
Small Business Counseling Fri., Jan. 3, 10 & 17 9:00a – 1:00p
Experienced mentors provide help for your small business. Sessions are available by appointment only. Free Chandler Chamber of Commerce 25 S. Arizona Pl., Chandler info@chandlerchamber.com
Small Business Development Center Academy Class Tuesdays, Jan. 7, 14, 21 & 28 4:00p – 6:00p
Free weekly classes cover various skills to help start your business. Free Chandler Chamber of Commerce 25 S. Arizona Pl., Chandler info@chandlerchamber.com
ECONOMIC CLUB OF PHOENIX January luncheon Thurs., Jan. 23 11:30a – 1:30p
With more than 26 years as owner and chairman of AMERCO and U-Haul, Joe Shoen will share his views on corporate governance in today’s business environment. He will also share business lessons learned from taking U-Haul public, running a family business, enduring financial reorganization and overcoming multi-year litigation. Members: free; non-members: $75; introductory members: $60 Camelback Golf Club 7847 N. Mockingbird Ln., Scottsdale wpcarey.asu.edu/economic-club
GREATER PHOENIX CHAMBER OF COMMERCE ‘Overcoming the Obstacles to Growth’ Thurs., Jan. 09 11:00a – 1:00p
Professional Women’s Alliance presents speaker Carrie Martz, CEO of Martz Parsons. Members: $20; non-members: $40 Phoenix Country Club 2901 N. 7th St., Phoenix Brittney Conklin, bconklin@phoenixchamber.com
2014 Governor’s Reception & Legislative Kick-Off Thurs., Jan.16 5:30p – 7:30p
Mix and mingle with the business community, meet Arizona legislators and hear from Governor Jan Brewer. Register by Thursday, January 9. Free Phoenix Art Museum 1625 N. Central Ave., Phoenix Jessica Mayer, jmayer@phoenixchamber.com
NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS NAWBO University Wed., Jan. 8 9:30a – 11:00a
“Communications in High Stakes Situations” is presented by Deborah Johnson. Get a fresh perspective on how to improve your communications skills for better relationships and better results. Members: free; non-members: $30 Phoenix Country Club 2901 N. 7th St., Phoenix info@nawbophx.org
Luncheon
Wed., Jan. 8 10:45a – 1:00p
“Aspire to Lead” is presented by Renie Cavallari, who will walk participants through the 6 Pillars to inspiring people and creating an accountable and highly engaged community of leaders. Members: $38; non-members: $48; after Jan. 3: add $15 Phoenix Country Club 2901 N. 7th St., Phoenix info@nawbophx.org
NORTH PHOENIX CHAMBER OF COMMERCE Business Resource & Networking Luncheon Tues., Jan.14 11:30a – 1:30p
This month’s presentation will be a Health & Wellness Panel. Members: $20; non-members: $25; after Jan. 10: $30 Moon Valley Country Club 151 W. Moon Valley Dr., Phoenix northphoenixchamber.com
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Please confirm, as dates & times are subject to change.
PEORIA CHAMBER OF COMMERCE Mayor’s State of the City Dinner Wed., Jan 8 5:00p – 10:00p
The annual Mayor’s State of the City Address features Mayor Bob Barrett’s comments regarding the City’s accomplishments and future goals, and he will take live questions from the audience. $50 Vista Recreation Center 8866-A W. Thunderbird Rd., Peoria (623) 979-3601
YouTube Marketing Workshop Thurs., Jan 9 5:30p – 8:30p
$27 Peoria Chamber of Commerce 16165 N. 83rd Ave., Peoria peoriachamber.com
issues and business-related topics that are affecting your business. Free Scottsdale Area Chamber of Commerce 7501 E. McCormick Pkwy., Scottsdale scottsdalechamber.com
SURPRISE REGIONAL CHAMBER OF COMMERCE Business Education Seminar Fri., Jan. 24 8:30a – 10:00a
Includes continental breakfast, prizes and great networking before and after the presentation. Free Communiversity @ Surprise 15950 N. Civic Center Plaza, Surprise Mary Orta, (623) 583-0692
Fri., Jan.10 8:00a – 9:00a
For business owners only: Meet for one hour over coffee and carbs for a roundtable discussion about current
$35 Arizona Broadway Theatre 7701 W. Paradise Ln., Peoria lisap@westvalleywomen.org
WOMEN OF SCOTTSDALE Meeting
Sat., Jan. 18 11:30a – 1:30p
CloudCast ’14 Conference Wed. – Fri., Jan. 29 – 31 See schedule of events.
Learn strategies and best-practices to optimize your use of cloud technology. $299 Hyatt Regency Scottsdale Resort and Spa 7500 E. Doubletree Ranch Rd., Scottsdale cloudcast14.com (See story on page 31.)
‘Taking Care of Business’ Symposium Tues., Jan. 7 8:00a – 1:30p
Tues., Jan. 7 11:30a – 1:00p
Unique, high-energy networking event. Mention this magazine and receive a special discount. Members: $25 in advance, $30 day of; general public: $35 My Big Fat Greek Restaurant 525 S. Mill Ave., Tempe Sachiyo Spires, sachiyo@tempechamber.org
Business Owners Forum
Discussion of the City of Tempe’s General Plan 2040. Nancy Ryan, the project management coordinator, will share the plan as it was crafted by community stakeholders, council and public input. Members: $25 in advance, $30 day of; general public: $35 Location TBD Sachiyo Spires, sachiyo@tempechamber.org
‘Spotlight Our Members’ Luncheon
Networking @ Noon Thurs., Jan. 9 11:30a – 1:00p
Thurs., Jan. 16 11:30a – 1:00p
WEST VALLEY WOMEN
TEMPE CHAMBER OF COMMERCE
SCOTTSDALE AREA CHAMBER OF COMMERCE
OTHER BUSINESS EVENTS
Hot Topics and Lunch
“Directors & Advisers” $35 The Westin Kierland Resort & Spa 6902 E. Greenway Pkwy., Scottsdale womenofscottsdale.org
The Arizona Association for Economic Development presents an economic development and workforce development symposium. Ioanna Morfessis, Ph.D., president and chief strategist of IO.INC, will provide the keynote address, “Keeping Your Competitive Edge,” an insight into international business and economic development consultancy, specializing in growth strategy and competitiveness. Members: $60; non-members: $70 for; after Jan. 3: $85 Phoenix Country Club 2901 N. 7th St., Phoenix aaedjan7th.eventbrite.com
Prepare for 2014 and get Exposed!
Special Sections
Events Online
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Your company deserves to be fit. Performance Marketing: Print. Online. Email. Social Media. Events. (480) 588-9505 inbusine ssmag.com
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Legal
Legal Matters to Business
Rights and Wrongs in Intellectual Property Intellectual property ownership may not be as clear-cut as business owners think by RaeAnne Marsh Business owners tend to underestimate their intellectual property, says Lee Fraley, a partner in the Phoenix office of law firm Snell & Wilmer who specializes in IP and works with many entrepreneurial businesses in acquisition transactions. “They think patents is all of IP, but it’s much more than that — it’s anything that gives a company a competitive advantage.” The four primary types of IP are patents, trade secrets, trademarks and copyrights. The first two protect things that have practical use, the second two protect expression, explains Shane Olafson, a partner in the Phoenix office of law firm Lewis Roca Rothgerber whose practice specialties include trademarks and copyrights. A patent is a grant by the government of exclusive rights to a specific knowledge for 20 years, in exchange for expressly describing the item invented. A trade secret, such as the formula for Coca Cola, is the polar opposite — knowledge kept secret from everyone except those who need to know and for which there is no legal recourse if the secret does get out. “Some things are not well-suited for trade secrets, for instance anything that can be reverse-engineered,” Olafson says. However, some technologies have a very short shelf-life. Referring to semi-conductors, Olafson says it would not make sense to spend money patenting something that will be obsolete in a few years. A trademark is the name a company gives a product or service so customers can differentiate it from competitors, explains Flavia Campbell, an attorney who also practices in the Phoenix office of Lewis Roca Rothgerber. The company name, itself, can usually not serve as a trademark. A business owner may choose to not seek federal registration of a trademark, but, she says, “Even if he’s not worried about securing exclusive rights for himself, he needs to be sure he’s not infringing on someone else.” Should the item become successful and come to the attention of another business that has registered the trademark, the other business could issue a cease and desist order requiring signage to come down and products be taken off the shelf. A trademark can be any logo or name or tagline, and is an important asset. But Fraley cautions care in selecting the name. “If it’s too descriptive, it may be difficult to register — to keep others from using the descriptive terms.” Names that are suggestive, on the other hand — such as Greyhound and Coppertone — are the easiest to protect. “They are more distinctive, easiest to register, less likely to find in conflict with another, and easier to enforce if someone copies you.” Fanciful or arbitrary names, such as Apple for computers, can also be strong — but it’s an eventual rather than immediate result. Once a trademark is established, Fraley emphasizes it is important to maintain appropriate use of it to not weaken trademark rights and significance. Don’t use it in descriptive or generic fashion, abbreviate or hyphenate it. Do be consistent in its spelling. “You don’t want it to
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become a household name,” he says, pointing out that “aspirin” was once a trademark name. Fraley suggests also checking for domain names that are available, and securing reasonable variations — including Web extensions. Businesses should make sure the domain names are registered by the company and transfer them if they are not; if the domain name is registered by an outside contractor or individual in the company, that person owns the registration. Simply registering the domain name, however, reserves its place on the Web but does not give exclusive rights to the name, Campbell notes. Copyright is more applicable to artistic expression, such as photographs, music and architectural works. It is important to note that copyright attaches as soon as the item is created in fixed form, and the owner of the copyright is its creator. “You can use the copyright symbol to give notice to others that you created it,” Campbell says. To be able to sue in court against someone else’s unauthorized use, however, the copyright must be registered with the federal government. “You can obtain this registration at any time,” Olafson says, “but the timing may affect the damages you can recover.” “You don’t necessarily own it just because you paid for it,” Fraley notes. This applies not just to outside contractors, including website developers, but also to a company’s natural employee who is working outside the scope of his or her job description. For the company to own the copyright, it needs to have an assignment of interest. Avoid ambiguous verbiage such as “the contractor agrees to assign.” There are no specifically correct words, Fraley says, but the company needs to make clear what it is discussing. Correcting ownership issues ahead of time avoids the potential for someone to hold ownership rights as leverage against a business. Businesses may find it beneficial to do an intellectual property audit “to be sure you actually own what you think you own,” Fraley says. Lewis Roca Rothgerber lrrlaw.com Snell & Wilmer swlaw.com
inbusine ssmag.com
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J a n u a r y 2014
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Commerce
Cultivate Industry
Trade Across the Border Arizona is building strong ties with Mexico and Canada by RaeAnne Marsh Going global is where growth opportunities lie for many businesses. Arizona companies may find Mexico and Canada inviting options to consider.
MEXICO Those looking at Mexico may find themselves in good company, as 34 percent of Arizona’s exports currently go to our southern neighbor and 35 percent of what we import comes from there. “Mexico is Arizona’s largest trading partner,” says Patrick Welch, an attorney at Jennings Strouss & Salmon who currently sits on the Arizona-Mexico Commission. According to the Commission’s executive director, Margie Emmermann, the revenue involved in 2011 was $6.2 billion in exports and $13 billion in two-way trade.
Nearshoring Offers Competitive Advantage For companies that have chosen to offshore various elements of their business, nearshoring is becoming recognized as offering its own advantages. In manufacturing, for instance, working with companies in one’s own hemisphere reduces distribution problems that can arise when dealing with larger geographic distances, Welch points
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out. He notes that Ford Motor Company has a manufacturing plant in Hermosillo and that many companies in the aviation industry supply chain that have a presence in Arizona have arrangements with manufacturing companies in Mexico. “From aerospace to IT to software services, there’s an enormous amount of opportunity in Mexico for manufacturing,” says Emmermann. Tiempo Development discovered this resource seven years ago, after having had a bad experience offshoring software development projects to the Far East, relates Mike Garland, VP of marketing. Company founder Cliff Schertz began working with software developers in Hermosillo, which worked out so well that Tiempo now has software development centers in Sonora; Monterrey, Nuevo León; Saltillo, Coahuila; and Guadalajara, Jalisco, as well. “People in Mexico are appreciative of the opportunity to work with technology,” Garland says. Tiempo — which has been on the Inc. 500/5000 list the past two years and has increased revenue 40 percent over the past three years — believes in integrating communication between its development team and the customer, and CFO James Walbom observes, “The further away that team is, the harder it is to deliver the results the customer wants.” Proximity to Mexico for this Tempe-based company allows inbusine ssmag.com
those involved in a project to travel back and forth easily. And having everyone in the same time zone (or close) means the workdays are similar and it’s easier to arrange meetings. A successful relationship, Walbom notes, has “a lot to do with understanding legal and cultural differences, and how to navigate and align them with your business structures.” And he emphasizes the importance of investing in methodology and systems when recruiting in Mexico — so there is a unified process including a management plan regarding career advancement — and not treating it as an afterthought. Welch cites other benefits of commerce with Mexico: political stability, an educated work force — “particularly in Sonora, and especially for manufacturing and IT” — and good infrastructure in roads, railways, airports and ports of entry. The Mariposa Port of Entry is currently undergoing a major renovation that will make it the most state-of-the-art in the entire Mexico-U.S. border, according to Emmerman. A $240-million investment, the project scheduled to be completed by August 2014 will improve access for pedestrians, vehicles and commercial trucks.
Business Is in the Basics For Arizona companies doing business in Mexico, Welch recommends having a local partner because knowing local business practices and cultural differences is important. To locate that local partner, companies should do “really good due diligence on your contact, as you would anywhere,” says Welch. There are several organizations that can be helpful in connecting with local partners. These include Pro Mexico, a trade and investment office of the Mexican government; the Arizona Commerce Authority and the Arizona-Mexico Commission, which jointly maintain a trade representative in Sonora; and the Arizona District Export Council. Emmermann encourages Arizona businesspeople to take advantage of workshops and other interactive opportunities her organization offers regularly to meet with counterpart organizations in Mexico. In addition to establishing a local partner, other functions Welch recommends seeing to are having a CPA (in either Arizona or Mexico), having an attorney on both sides of the border to navigate intricacies of legal differences, knowing the laws governing one’s business, and knowing visa requirements. And Welch notes that, in addition to near-shoring opportunities for Arizona businesses in Mexico, there may be opportunities to attract finance capital from Mexican companies that want to invest in Arizona.
CANADA Glenn Williamson, founder and CEO of the Canada Arizona Business Council, suggests Canada offers advantages to companies dipping their toes in international commerce for the first time. With bilateral U.S.Canada trade at $1.35 trillion in 2012, the Arizona-Canada portion is $6 billion — which breaks down to $3.7 billion in trade, $1.7 in foreign direct investment and $1 billion in tourism. “Canadians have a strong interest in Arizona,” Williamson says. It started with tourism, but there are now 300 Canadian companies that have offices or operations here. Says Williamson, only partly in jest, “Canadians are interested in any business that would justify them inbusine ssmag.com
buying a house and living here for a bit.” Lifestyle, golf, sports and especially the weather has historically been the draw.
Connections Matter Many decision-makers from Canada live here, according to Williamson, who observes, “There’s nothing more you want in investors and tourists and partners in bilateral trade than those who have a vested interest in the region you live in.” All nine of the new Canadian owners of the Coyotes hockey team have bought houses here, and Williamson shares that there is a growing trend of Canadian businesspeople who have been successful in Canada buying a house here, getting integrated into the community and buying businesses here or investing in them. Other advantages Williamson cites for Arizona companies doing business with Canadian ones are the many things the two countries have in common: language, democracy, financial system, a stable government and geographic proximity. But there are cultural differences, and he emphasizes the importance of knowing the countries one is dealing with. “That’s fundamentally at the bottom of everything,” he says. Asking, “How do you expect to trade with people you know nothing about?” he notes that Canadians know “everything about you.” It’s about showing respect that Canada is relevant, he says, adding, “Let them know you understand hockey, or that Superman was created by a Canadian, or Canada gave us Jim Carrey. Knowing trivia about any viable business partner is good business sense, and it’s no different with Canadians.” Although there is a great deal of intertwining of the U.S. and Canada across their common border — for instance, the U.S. Coast Guard and the Royal Canadian Mounted Police ships can make chases right through the border — Williamson cautions Arizonans to remember Canada is a sovereign nation and there are differences between Canadian and U.S. laws. “There will be smaller differences than with any other country on the globe,” he says, but it’s important to work with a Canadian lawyer to ensure compliance with Canadian law. What matters most is making the personal connection. “If you’re going to sell to Canadians in Canada, go up there and make the sales call and get to know Canada,” Williamson says, noting that Arizonans tend to look to Calgary and Edmonton, but “Toronto and Montreal are viable opportunities for this region.” Noting Arizona’s growing strength in life sciences, Williamson says this is an area of huge interest to Canadian businesses. “People are starting to say we should set up our U.S. operations in Arizona.” He compares this to aerospace, observing, “Honeywell and JDC Control Systems run huge operations in Canada out of here.” Pointing out that Canada, with a population of only 34 million in a land area 41 times bigger than the United Kingdom, accounts for 40 percent of the direct foreign investment in the United States, 44 million visitors and more than $700 billion in trade and is the largest energy supplier to the U.S., Williamson says, “All that screams opportunity for Arizona.” Arizona Commerce Authority azcommerce.com Arizona District Export Council exportaz.org Arizona-Mexico Commission azmc.org Canada Arizona Business Council canaz.net Pro Mexico promexico.gob.mx Tiempo Development tiempodev.com
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ASSETS
by Mike Hunter
We Value What We Own
Introducing the New Infiniti Q50S 3.7 AWD The Sounds of Music
As Infiniti begins to completely reinvent its line of vehicles, the Infiniti Q50S takes first position as the introductory model demonstrating many of the new design features that are more than engineering and technological changes. Known as the high-end line of cars with the curves, the Infiniti make is debuting a new look. It’s all about performance with a 3.7-liter, 24-valve V6 engine that outputs 328 horsepower, 327 lb-ft of torque and gets nearly 30 mpg. This efficient and powerful engine boasts a sporty and tight feel when cornering, and the reduced weight and power provide for a responsive drive. On board is the world’s first system using electronics to streamline the steering mechanism for a more controlled feel behind the wheel, according to Infiniti. The Direct Adaptive Steering™ system allows for customization, providing three driver-selectable modes — heavy, standard and light. Each wheel is equipped with port pistons and rotors for “pure stopping power” and its sport-tuned suspension. Infiniti’s Intelligent All-Wheel Drive provides power and support on demand, instantly adapting to the changing conditions of the road. The design is sport luxury with a unique air dam grill fascia and 19-inch split-spoke aluminum alloy wheels. The sculpted exterior design is eye-catching with its impressive aerodynamic curves and styling. The artisan-stitched, leather-appointed upholstery and polished woods give luxury on the road a whole new meaning and level of comfort. An easyto-reach dual touch-screen display encompasses all of the latest technologies to keep the owner connected, secure and mapped. InTouch Apps by Infiniti, smartphone syncing and remote smartphone access mean the mind is on driving while the connection reaches the rest of the world but while fully engulfing the driver in the surround sound. The BOSE® sound system Infiniti Q50S 3.7 and HD radio erupts with an acoustical sound City MPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 that is like none other. Hwy MPG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 0-60 MPH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 sec Transmission. . . . . . . . . . . . . . . 7-speed automatic
Infiniti infinitiusa.com
Whether to relax or simply enjoy favorite tunes, here are some of the best and most easily installed sound systems for the office. Personally enjoy all the next acoustics in one simple desktop piece or on the jobsite.
Tivoli Albergo Clock Radio with Bluetooth AM/FM table radio was designed so that anyone can use it without confusion or frustration. Access the Bluetooth wireless technology by pairing to connect to smartphone, tablet or other Bluetooth enabled-device, and begin wirelessly streaming favorite music. Includes fully functional remote. $299.99 tivoliaudio.com
BOSE Wave Music System III
Lifelike, roomfilling sound for CDs and FM/AM radio from a small, one-piece system with multiple CDs, music from iPod® and Bluetooth® devices like smartphones, computers or tablets. $499.95 bose.com
MSRP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45,350
Runs off 12V to 18V DeWALT batteries, making it a cordless radio with power outlets. The DeWALT 3-stage charging system provides maximum run-time and extends overall life of the battery. AM/FM Digital Tuner with LCD display, built-in clock, and 15-station memory presets. $220 dewalt.com
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Photos courtesy of Infiniti (left), Tivoli, BOSE, DeWALT (right, top to bottom)
DeWALT DC012 Worksite Radio & Charger
Imagine a place that will engage your creativity and enhance your education and sense of cultural community. A place where you can explore a collection of over 17,000 works and experience new exhibitions that are sure to tenlighten your soul. Connect with Phoenix Art Museum—it’s a relationship like no other.
EXPLORE ENGAGE ENJOY The Cape | September 15 – February 19 Rufino Tamayo: Master Printmaker | September 21 – January 12 Xul Solar and Jorge Luis Borges: The Art of Friendship | October 2 – December 29 INFOCUS PhotoBid | October 5 – October 18 The West Select Exhibition and Sale | November 10 – December 31 Read My Pins: The Madeleine Albright Collection | November 23 – April 20 See, Hear, Feel: The Photographs of Debra Bloomfield and Christopher Churchill | December 7 – March 23 Hollywood Costume | March 26 – July 6
© 2013 Phoenix Art Museum. All Rights Reserved. LEFT to RIGHT: Ed Mell, Sweeping Clouds, 1989. Oil on canvas. 53” h x 53” w. Museum purchase with funds from anonymous donors. Krishna and Radha under an Umbrella, Kangra School, 19th century. Ink and color on paper. 8.375” h x 6.375” w. Gift of George P. Bickford. Robert Henri, The Laundress, 1916. Oil on canvas. 36” h x 29” w. Gift of Mr. and Mrs. Norman Hirschl.
1625 North Central Avenue Phoenix, AZ 85004 phxart.org
Power Lunch
by Mike Hunter
Meals that matter
Star Power Lunch Home to several celebrities, local and otherwise, the Valley offers some notable lunch joints that have more than just a name attached. Great food, sports and music themes make these hot spots a must.
Alice Cooper’stown
The latest in a long line of restaurant concepts by Sam Fox, this one is touted as the greatest neighborhood restaurant — and it may very well be. Included in this fully remodeled office space located near 44th Street on Camelback in the Arcadia neighborhood is a coffee bar (named XV), full-service restaurant, full bar, extensive patio, demonstration kitchen and professionally equipped meeting rooms. It is situated below the designer headquarters for Fox’s restaurant company, and one cannot help but think that Fox himself created exactly what he needed — as he is the chief neighbor. The food is simple with both industrial and classical influences, which translates to American comfort food infused with culinary experience and creativity. The full menu, available for lunch and dinner, includes appetizers that range from the Chilled Shrimp (cocktail) to the organic Hickman’s poached egg with traditional stuffing. Salads include the Kale & Apple salad made with bacon, Amish cheddar and almonds, and the Roasted Brussels Sprout Caesar. Sandwiches are a mish-mash of flavors and styles, from the Heirloom Quinoa Tacos to the Chicken Gyro and some classics in between. A house specialty is the Roasted Half Chicken made with rosemary lemon pan jus, which comes with delectable sides like the smashed garlic potatoes or the cauliflower polenta. Entrees will keep guests coming back with multiple choices, none like any other. Pasta, meats, grains and vegetables come together through the Mediterranean Branzino or the Korean Style Skirt Steak. The atmosphere makes guests truly feel like they are at home. Comfortable and living room-like, the country modern appearance is reminiscent of a British countryside inn. Because it is in Arcadia, bikes are welcome, parking is easy, and the ease with which one can get a “quick coffee” and move on gives great potential for anyone who needs to just stop by. As a Fox Concept restaurant, it meets expectations of top-notch service and the highest quality food. Refreshing landscape and a fireplace outside add to the ambience this time of year and will make this neighborhood spot a true hang-out for many.
Majerle’s Sports Grill
Dan Majerle is a sports icon in the area and has, since 1992, been a purveyor of great eats and sporting fun at his locations. With five locations — Chandler, Goodyear, Old Town, Downtown and now Flagstaff — Majerle’s has a seat waiting for you and your office mates. Enjoy burgers, salads, soups and much more alongside your favorite sporting event playing on the TVs. 5 Arizona locations • majerles.com
Wolfley’s Neighborhood Grill
Ron Wolfley, four-time Pro Bowl player, sports talk-show host and color commentator for the Cardinals, is the name behind the north Phoenix hot spot. With 23 TV screens, it’s sure to have your favorite game for you to watch while you enjoy food for any palate. Three patios, fireplaces and comfortable surroundings accompanied by a menu that includes steaks, salads, pastas and much more. 21001 N. Tatum Blvd., Phoenix (480) 515-2424 • wolfleys.com
The Henry
4455 E. Camelback Rd., Phoenix (602) 429-8020 foxrc.com
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Wolfley’s Neighborhood Grill
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Photos courtesy of The Henry (left), Wolfley’s Neighborhood Grill (right)
Meet Me at The Henry
Perhaps the best-known celebrity in Phoenix today, Alice Cooper has given Phoenix a sports bar and grill that’s a memory in and of itself. The celeb-named entrees and starters on his menu will keep you feeling like you’ve truly come to an event with all of the local names, including Pat Tillman, Al McCoy, Bernie Mac and more. Soups, salads, sandwiches, burgers and wings — it’s all here. 101 E. Jackson St., Phoenix (602) 253-7337 • alicecooperstown.com
®
Despite WashingtonArizona Economy Improving About ASBA The Arizona Small Business Association (ASBA) is the largest trade association in the state representing 11,000+ member businesses, and over 1/2
by Rick Murray, ASBA Chief Executive Officer
Federal lawmakers have really put a damper on any confidence business owners had in the recovery. Threats of the U.S. defaulting on loans and the two-week shutdown of the federal government may have all but killed any recovery we had been enjoying.
million employees in all 15 counties.
Large companies are doing as little as possible in order to minimize their risk until they know what
ASBA members enjoy access to
lies ahead. They’re waiting to see if the government is going to start doing their job and get things
significant group discounts, countless opportunities to do business with each other, a wide array of insurance
figured out. This affects many small businesses because they have big business as an account or client. And for many of them, it is their life blood.
products, and active advocacy efforts on
And although the shutdown didn’t begin until October 1, the threats and the blaming started early
public policy issues to protect their
enough to make a difference. For business owners, optimism is directly tied to confidence in the
businesses. Discover more at
government, and there is very little to be confident about with the rhetoric and blaming that is going
www.asba.com.
on in Washington. The dysfunction is affecting anyone trying to run a business, which, in turn,
Join ASBA. Be amAZed®
impacts the economy. Growth, expansion, equipment upgrades and hiring are all slowed down or stopped when businesses lose confidence in the economy. To make things worse, the inability to log on to the Affordable Care Act website has left small
in this issue
business owners scratching their heads. While most are still in the dark as to how it is going to work, the epic failure of the federal website did nothing to help alleviate the confusion. Even the companies that can avoid the employer coverage mandate because they have fewer than 50 employees have major concerns because any additional expense on a customer affects their
Redefining the American Dream . . . . . . . . . . . pg. 2
ability to shop or pay for goods and services.
Solution for a Better Healthcare . . pg. 3
Recent surveys show optimism is waning among entrepreneurs, and hiring is suffering. That is an
ASBA Legislative Forcast . . . . . . . pg. 4
employ the majority of the workforce. If small business owners are nervous about the future, that
Central Arizona 4600 E. Washington Street, Suite 340 Phoenix, AZ 85034 p. 602.306.4000
f. 602.306.4001
could affect their willingness to hire or expand. Despite all the negativity, the economy continues to improve, albeit, at a snail’s pace. However, all these issues have a damaging impact on the economy and the recovery. These are things small businesses can not control by themselves. But because we, as small business owners, employ more people, pay more taxes and are the economic engine in the economy, together we can make a difference. Individually, you just do not have time to worry about it.
Southern Arizona 4811 E. Grant Road, Suite 262 Tucson, AZ 85712 p. 520.327.0222
especially troublesome trend here in Arizona, where companies with fewer than 50 workers
f. 520.327.0440
That is why the Arizona Small Business Association is here. For 40 years we have been the collective voice of small business, protecting your ability to operate a business and allowing you to focus on your company. Recently, Arizona has been ranked as a top-10 state for business climate and ranked the most entrepreneurial state in the country. The world is taking notice of the Arizona
© 2014 ASBA. A publication of the Arizona Small Business Association. For more information or to join ASBA, please contact us at www.asba.com. Section designed by the Arizona Small Business Association.
turnaround. The governor and legislature deserve our thanks, but it is small business owners that help make it all possible.
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ASBA Board of Directors Donna Robinson | Chair VP and Director of Operations, Network Dogs, Inc. Mark Staudohar | Vice Chair President, ACCENT’ Hiring Group
Redefining the American Dream
Jamie Low, CPCU, CIC | Secretary Owner, Low & Johnson Business Insurance Jacob Gregory, CPA | Treasurer Gainter, Bandler, Reed & Peters, PLC
by Jerry Bustamante, ASBA Sr. VP, Public Policy + Southern Arizona
Roy Irwin | Immediate Past Chair Principal, Irwin Insurance & Investments, LLC
When I think about the America Dream, I see an image of a house, 2.5 kids, a dog and two cars
Bob Cody Director of Technology Consulting, Gate6, Inc.
consciousness as a representation of the traditional values of the American Dream. Unfortunately,
Rick Danford Vice President, BMO Harris Bank
and retirement security are all down as a result of the housing meltdown and the Great Recession.
Glenn Hamer President and CEO, Arizona Chamber of Commerceand Industry
parked out front. This is an image that many of us share because it has been deeply rooted in our the American Dream has taken some hard hits in the last decade. Home ownership, opportunities Many Americans now believe that, for the first time, the next generation will not be better off than the last.
Joe Higgins Serial Entrepreneur, Tucson Metro Area
There are, however, two groups of people that are not buying this dismal outlook for the American
Brannon Hampton Performance Improvement Team Member, Arizona Public Service (APS)
is that they are perhaps the ones that have been most affected by the Great Recession. Small
Ben Himmelstein Counselor & Attorney, WONG FUJII CARTER, PC Karen Karr Attorney at Law, Clark Hill Jack Lunsford President, The Lunsford Group, LLC Ryan McMullen Regional Manager, RSI Enterprises Lynn Paige Owner, LM Enterprises Nick Petra President, Strategic Duck Kim Marie Branch-Pettid Owner and CEO, LeTip International Jess Roman VP Commercial Relationship Manager, Johnson Bank
Dream, but are actually optimistic and are redefining it: young people and entrepreneurs. The irony business entrepreneurs took it in the chin over and over during the Great Recession, with no expectation of being bailed out by Uncle Sam. It also used to be easy for high school kids to land a part-time, minimum wage job; but that is very elusive for young people today. Young people and entrepreneurs have new ideas of what the American Dream is, and their values are a bit different than the traditional ones. These values coincide with many reasons for which people go into business for themselves: They want to pursue their interests and do work that they love and are passionate about. The idea of being miserable in a job for 30+ years is completely unacceptable. Financial freedom. They do not want their income to be limited to a salary or hourly rate. They do not want to feel trapped by credit card debts and student loans. Financial freedom is about keeping their heads above water and having stability. The paid off mortgage has now replaced the new BMW as a status symbol.
Linda Stanfield Owner, Benjamin Franklin Plumber
They want to control their own destiny. The idea of working in Corporate America
Victoria Trafton Consultant and Trainer, Victoria Trafton Presents
knowing if long term you will even be employed with them is also a deal breaker.
Russ Yelton President and CEO, Northern Arizona Center for Emerging Technologies
where the company decides where to put you, which city to move you to and not What they do, where they do it and at what price is a choice they wish to make for themselves. As much as our country has changed since we declared our independence from Britain over 200 years ago, freedom continues to be what we value most as Americans. The idea of freedom has changed. Today’s shackles and chains are school loans and credit card debts, underwater mortgages, uninspiring work and a rudderless boat called your life. Young people and entrepreneurs are sacrificing, working hard and taking risks in pursuit of the newly defined
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American Dream.
ASBA and Meritus providing a solution for better healthcare by Carol Mangen, Director, Member Benefits, ASBA Small business owners often worry about making payroll, keeping
enhanced benefits. Committed to improving the health of members,
the lights on and paying taxes. Throw into the mix all the changes to
Meritus has also added non-traditional “lifestyle benefits” to some of their
healthcare, and it is easy to become overwhelmed. At the Arizona
health offerings. This includes a $25.00 monthly reimbursement on gym
Small Business Association, we understand that feeling. After all, we
membership, therapeutic massage, acupuncture and naturopathy.
are a small business ourselves. As a result, we worked on a solution to help you navigate the rough waters of healthcare coverage and
Working with Meritus seems like a natural connection; both they and the
get the answers you need.
Arizona Small Business Association are a local Arizona small business dedicated to serving its members.
We have partnered with Meritus, a local, Arizona-based health insurance company that is doing innovative things to help individuals
To find out more about the plans, email: cmangen@asba.com. Or, you
and small business owners.
may want to attend an upcoming session on Healthcare Reform and how
Meritus is a CO-OP (Consumer
Operated and Oriented Plan) that is committed to quality care for the
you may qualify for the Premium Tax Credit.
members and reinvesting profits in the form of lower premiums or
meetings at: asba.com/meritusaz.
Look for upcoming
Ken Blanchard College of Business | College of Education | College of Nursing & Health Sciences | College of Liberal Arts | College of Fine Arts & Production
Online • Campus
A R I Z O N A’ S P R I VAT E U N I V E R S I T Y S I N C E 1 9 4 9 Get started today! 855.287.0174 | www.gcu.edu/inbusiness Grand Canyon University is regionally accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools. (800-621-7440; http://www.ncahlc.org/ ).
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ASBA’s 2014 Legislative Forecast by Jerry Bustamante, ASBA Sr. VP, Public Policy + Southern Arizona Looking ahead and attempting to forecast the next legislative
Next, expect to hear a lot of debate about the children of Arizona.
session is always an interesting thought process.
Unlike
Two major topics concerning children will be widely discussed: Child
forecasting the weather, where science and proven models are
Protective Services (CPS) and education funding. Let us begin with
used with a high degree of accuracy, no such science and tools
CPS, where in late November it was discovered that roughly 6,000
exist for forecasting the next legislative session. Instead, we look at
reported cases of child abuse were closed without being
the existing political landscape, hot issues reaching a boiling point,
investigated. Governor Brewer, who has made child safety a top
current leadership and what is at stake in the next election cycle.
priority, called this an “inexcusable failure.” Some will argue that this was the result of a lack of funding. Others will argue that enough
It would be nice for our legislature to begin with a clean slate, just
money has been appropriated, and it was the result of poor
like starting a new year of grade school; but instead, there is
management and training. Education funding will again be a widely
always unresolved business and baggage that carries over from
discussed topic concerning Arizona children, following a much
the previous year.
The 2013 legislative session came to an
needed increase in 2013. The legislature has been criticized for not
eventful conclusion, to say the least, and it did not end well for the
addressing the disparities in the state’s system for school financing.
GOP.
Governor Brewer's political maneuvers that led to the
Others will argue that our system of school financing needs to be
passage of an $8.8 billion dollar budget, which included the
completely overhauled, and legislation to do just that is expected to
expansion of Medicaid, with a powerless majority witnessing it
be introduced. Charter school advocates will continue to argue that
unfold late into the night were certainly outside the status quo of
school district students are receiving more money per pupil.
how business gets done at the legislature. How 2013 came to a close is important because it further changed the political
Furthermore, as Arizona’s economy continues to rebound and state
landscape; new party lines were drawn, and the sour taste that
revenues have exceeded projections, we now have more money on
was left in the mouths of many law makers may still linger. All of
hand than anticipated. The debate will now be what to do with the
which carries over into the next legislative session.
extra cash; therefore, the state budget will again be a major topic of debate. Should state programs, whose funding was slashed, be
Therefore, here is what we expect coming into the 2014 legislative
restored? Or, should the state pay down its debts, buy back the
session. First, we expect a shorter legislative session that will not
capitol building, and save for the next rainy day? Extra revenue that
last into June like the previous. It is an election year, and with
will give lawmakers a good reason to debate the budget is a great
lawmakers serving the second of a two-year term, they are eager
problem to have.
to get the business of the state done and begin campaigning for re-election. It is also a year when we will elect a new Governor,
Finally, we will see what Governor Brewer has to say on January
Secretary of State and Attorney General. The Democrats seem to
13th when she delivers her final State of the State Address. Last
have their slate of candidates for each position lined up and
year, she surprised us all when she announced her plans to expand
appear ready to take on the GOP. Republicans, however, have
Medicaid, which set the tone for the entire session.
multiple candidates vying for these positions, and they are eager to battle it out among themselves leading into the Primary Election. A short session is perhaps the one thing all sides can agree on.
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Wednesday, January 29, 8:30am - 10:30am The Phoenician, 6000 E. Camelback Rd., Scottsdale
Drastic reform is expected to our healthcare system in 2014, and small businesses are poised to be at the forefront of this change.
Small Business Outlook
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Index Index by Name
Engler, John, 16
Mangen, Carol, 43
Schertz, Cliff, 36
Berks, Rick, 18
Eurich, Tasha, Ph.D., 28
Marturano, Janice, 29
Schultz, Herb, 31
Broome, Barry, 22
Fathers, Bill, 31
Martz, Carrie, 20
Swidler, Adam, 31
Browning, Thomas,
Fraley, Lee, 34
McPheters, Lee, Ph.D., 22
Tkachyk, Jean, 31
Garland, Mike, 36
Mittelstaedt, Robert, Ph.D., 22
Towfiq, Mark, 12
Bustamante, Jerry, 31, 42, 44
Gens, Frank, 31
Moore, Geoffrey, 31
Vaughan, Michael, 50
Campbell, Flavia, 34
Gibson, Dara, 30
Morgan, Fred, 14
Vielmetter, Georg, 29
Carter, Ruth, 12
Hamer, Glenn, 22
Murray, Rick, 41
Walbom, James, 36
Combrink, Thomas, 22
Henig, Craig, 22
Nalevanko, Carol, 18
Weissman Klein, Gerda, 20
Cothran, Cheryl, 22
Jacobson, Frank, 30
Olafson, Shane, 34
Welch, Patrick, 36
Crosby, Lance, 31
Jones, Whitney, 18
Orr, Michael, Ph.D., 22
Williamson, Glenn, 36
Cuomo, Rico, 14
Korsedal, Brian, 14
Phair, Josh, 14
Wilson, Kristen, 31
Doyle, Doug, 14
Lamneck, Ken, 31
Plosila, Walter, 22
Zent, Michael R., Ph.D., 30
Emmermann, Margie, 36
Levine, Alison, 29
Renner, Becky, 18
Greater Phoenix Chamber of Commerce, 32
Southwestern Business Financing
Brigadier Gen., USAF, 22
Index by Company
Corp., 8
Utility of the Future Center, 22
Alerus Bank & Trust, 15
Greater Phoenix Economic Council, 22
Alice Cooper’stown, 40
Henry, The, 40
Stoney-Wilson Business Consulting, 35
VMware, 31
Alliance Bank of Arizona, 2
IDC, 31
Strikingly, 12
W. A. Franke College of Business, 22
Arcology Now!, Inc., 14
Infiniti, 38
Surprise Regional
W. P. Carey School of Business, 22
Arizona Chamber of
Insight, 31
Commerce and Industry, 22, 32 Arizona Commerce Authority, 36
International Health, Racquet & Sports Club Association, 18
Village Health Clubs & Spas, 18
Chamber of Commerce, 33 Tempe Chamber of Commerce, 33 Tiempo Development, 36
Jennings Strouss & Salmon, 36
Tivoli Audio, 38
Arizona Hispanic Chamber of Commerce, 32
Jewish Family & Children’s Service, 30
Travel Assurance Promise, 4
Arizona Small Business
KTAR News Talk 92.3, 17
U.S. Department of Health &
Lewis Roca Rothgerber, 34
Arizona State University, 22
Majerle’s Sports Grill, 40
Arizona Technology Council, 32
Martz Parsons, 20
Arizona-Mexico Commission, 36
Meritus Health Insurance, 31, 42
AZ Pro Physiques, 18
Mercedes-Benz of Scottsdale, 51
Batelle Technology Partnership Practice, 22
National Association of
Bibby Financial, 4
NextFort, 12
Business Roundtable, 16
North Phoenix Chamber of Commerce, 32
Canada Arizona Business Council, 36
Northern Arizona University, 22
Carter Law Firm, 12
OptifiNow, 12
Cassidy Turley, 13
Orangetheory Fitness, 18
CBRE, 22
Peoria Chamber of Commerce, 33
Central Phoenix Women, 32
Phoenix Art Museum, 39
Chandler Chamber of Commerce, 32
Phoenix Suns, 7
Children’s Museum of Phoenix, 35
Phoenix Symphony, The, 15
Citizenship Counts, 20
Pro Mexico, 36
Clothes Cabin, The, 30
Regis Company, The, 50
Copper Point, 3
Regus, 21
DeWALT, 38
SCF Arizona, 3
Driver Provider, The, 21
Scottsdale Area
YouFit Health Clubs, 18 Bold listings are advertisers supporting this issue of In Business Magazine.
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Chamber of Commerce, 33
Fired Pie, 14
Scottsdale Mint, 14
Glendale Chamber of Commerce, 32
ScribbleLive, 12
Google Apps Solution Strategy, 31
Snell & Wilmer, 34, 52
Grand Canyon University, 43
SoftLayer, 31
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Human Services, 31 University of Phoenix, 11
Women of Scottsdale, 33
Women Business Owners, 32
Bose, 38
Economic Club of Phoenix, 32
West Valley Women, 33 Wolfley’s Neighborhood Grill, 40
Arizona District Export Council, 36
Association, 31, 32, 41
Waste Management Phoenix Open, 5
J a n u a r y 2014
49
Roundtable
A Candid Forum
Rethinking Leadership Development Learn how to think rather than what to think by Michael Vaughan Why do most training programs fail to change behavior? One of the main reasons is most focus on the characteristics of leadership; they do not go below the surface, but, instead, focus on visible factors and address them by teaching concepts, tips, introspection and what great leaders do. But leadership, organizations and people are dynamic. Every factor needs to be understood from a systems perspective within the context of the organization. Take a situation where morale is down, issues are up, and the team is falling behind on monthly objectives. What is the leader to do: Step in and tell the team specifically what needs to be done and how to do it (directing); mentor and teach the team to higher performance (coaching); or just increase the pressure on the team to get results (priorities)? What will be the short-term impacts on performance, stress and motivation? Are those acceptable? And what are the longterm effects? Even well-intended actions can create undesirable results. Let’s say the leader decides to invest her energy on coaching others. As a result, motivation probably improves, which causes performance to improve. Consequently, many deliverables are accomplished; therefore, the team feels good and motivation further improves. But even with the most capable teams, things can go wrong and issues surface. As the issues increase, so does stress, which increases the number of issues and decreases motivation. When this happens, the leader begins to split her energy between resolving issues and increasing motivation through coaching. This makes sense conceptually, but when the team leader’s boss expresses concern that the team missed three of its five deliverables, she might decide it is time to take matters into her own hands and start directing others more diligently. This can cause motivation to plummet, as the team feels less confident of their ability to handle the job — creating the need for even more directing. They are also not getting the time and help needed to improve. They are just following orders and losing confidence, even though their performance might temporarily improve. If the leader does not understand the dynamics, these actions can cause performance levels to cycle between adequate and unacceptable, with increasing stress and eventual burnout. With these powerful dynamics at work, even the best leadership tools, tips and tricks are impractical and inadequate. A more practical approach is to provide leaders with a framework that is adaptable, that helps surface the underlying dynamics and provides guidance on the best course of action. We call this framework the Core Thinking Practices. These practices are not meant to be followed in a particular order, nor are they meant to be applied as a procedure. Rather, these practices are meant to help leaders shed light on a situation by reframing it from different perspectives. Seek to understand the big picture. Fixating on one thing may improve that one thing, but most likely it will create multiple new unintended issues. Leaders who establish a big-picture perspective not only reduce unintended issues, they improve collaboration among their teams because they will work together to understand the system instead of finding someone to blame.
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J a n u a r y 2014
Directing
Coaching
Motivation
Stress
Deliverables
Performance
Issues
Priorities
Some of the dynamics at play in how a manager motivates her team to achieve better performance: The black boxes represent a few things a leader can control; the orange boxes represent part of how the team responds; and the blue boxes represent the results produced
Seek to understand the underlying behavior. The harder a leader pushes the system, the harder it will push back. Things tend to get worse before they get better and the cure is often worse than the disease. Those leaders who seek to understand these underlying system principles are better equipped to address their team’s needs in new and emerging situations. Seek systemic change. If a leader tries to change something in the direct, obvious way, the system is going to treat those efforts like any other outside influence and do its best to neutralize them. Leaders should understand that genuine solutions require careful consideration of the possible short- and long-term outcomes to avoid the pitfalls that drain both the emotional and intellectual energy from their teams. Seek to surface limiting beliefs. The root cause of failed efforts or unproductive meetings is often tied to the biases, flawed mental models, or fears of those involved. The more a leader surfaces her limiting beliefs — suspends her judgment — the more productive and supportive she will be at serving her teams and making the tough calls. Seek to evolve a shared vision. An idea can gain momentum only if others believe in it; their hearts and minds need to be invested in the idea for it to take root and grow. Too often, leaders are moving too quickly and overlook the need for their team to evolve a vision together. When a leader seeks alternative perspectives and incorporates insights from others, only then do leaders realize the sustainable power of their team. The Thinking Effect thethinkingeffect.com
Michael Vaughan, author of The Thinking Effect, is a leading authority on serious games and business simulations known for his work in artificial intelligence. He is president and managing director of The Regis Company (regiscompany. com), a leadership consulting firm whose leadership programs are designed to fundamentally change the way leaders think.
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