Category Archives: Kellogg

CONTROLLED DESIGN MANAGEMENT – Part 4

By Moises J Goldman & John Jonelis

Today’s business culture is more strongly creative and entrepreneurial than at any time in history, posing new organizational opportunities and challenges.  That calls for a new way to think about and implement design management.  This is the final installment of a four-part series introducing the Controlled Design Management Model.  Using the language of the digital age, this model applies a radically different technique to managing the creative process.  The history and theory was discussed in Parts 1 through 3.  Now let’s set up a working model. 

Figure 6 – Controlled Design Management Model

Practical Example

Let’s optimize an organization using a Controlled Design management Model.  For clarity, this particular enterprise is engaged in the deployment of a product and has just three primary departments:

  • MARKETING DEPARTMENT – Produces market research, and marketing planning. The input to this department is idea generation from its founders, its research wing, or its own internal analysis. Its output is the product concept, complete with all the required features and characteristics that the market requires in tandem with a marketing plan for a successful launch.  Marketing’s output serves as the input for Systems Engineering.
  • SYSTEMS ENGINEERING DEPARTMENT: Translates the marketing requirements into engineering concepts, tests their feasibility (simulation), and produces the required technical maps and schematics to be able to create a working prototype. Its input is the output from Marketing. Its output is the technical representation of the product, including mathematical and simulation results, schematics, and mock-ups.  This becomes the input for Applied Engineering.
  • APPLIED ENGINEERING DEPARTMENT: Creates and tests a physical prototype until it is ready to deploy. (We’re not taking into consideration production or logistics in this example.). Applied Engineering starts with the output from System Engineering. Its output is the finished prototype ready for testing and then deployment by Sales.

We have three departments.  Each is solely responsible for the optimization and efficiency of its own particular function within the organization.  Each is in a dependent, sequential relationship with two other departments.  Now, we link the individual department’s optimizing flow chart (from Figure 6) into one companywide Controlled Management Model.  (See Figure 7.)

Figure 7 – Optimized Departments

Let’s look at application.  Based on Figure 7, it’s clear that to achieve optimum productivity, a department must minimize internal disturbances.  Examples of such disturbances include underperforming employees, faulty data, equipment malfunctions, changes in existing regulations, policy changes induced by government, budgetary restrictions, new competition, company restructuring.  All of these are down-to-earth practical matters, as are the corrections, which are ordinary responses and decisions.  What is new is the simple structure of the decision-making process and the ability to map it and to know exactly where, in the larger picture, you are at any given time.  That helps eliminate bottlenecks and confusion, and helps address a problem early—before a weakness becomes magnified down the line.

Conclusion

Does the Controlled Design Management Model meet the goals stated earlier in the paper?

  • Intuitive – The management system is readily understood and implemented using visual tools in the language of the digital age. It entirely bypasses complex mathematics as well as the sequential categorization of past models.
  • Adaptable – It does not impose a particular organizational structure but rather adapts to any.
  • Focused – Departments do not involve themselves in the optimization of other departments—each is concerned only with what is under its direct control.
  • Practical – It provides a roadmap for effectively optimizing and controlling the release of any new product. Each department’s optimization is a benefit to the workflow of the entire organization.
  • Measurable – Because the sum of independent optimized departments adds up to the optimized organization, upper management can easily map and manage the progress of each department and the entire organization. Even in a complex organization, it is a simple matter to identify the bottlenecks in the process.

The Controlled Design Management Model works with the same basic material as all previous models—people, ideas, and structure—but does so from an entirely different perspective, using different thinking and tools—the very same principles as electronic control system design.  It provides a practical digital approach in a digital age.

Go back to Part 1

Download full paper (PDF)

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References

  1. Deming, W. Edwards (1964) [1943].  Statistical Adjustment of Data. Dover. ISBN 0-486-64685-8. LCCN 64-24416. (1966) [1950].  Some Theory of Sampling. Dover. ISBN 0-486-64684-X. LCCN 66-30538.
  2. William Ouchi: “Theory Z” How American Business can meet the Japanese Challenge.  Addison-Wesley Publishing Company, 1981
  3. Lean was originated by Eiji Toyoda and Taichi Ohno of Toyota Motors.   Ohno, Taiichi (1988), Toyota Production System: Beyond Large-Scale Production, Productivity Press, ISBN 0-915299-14-3
  4. C. F., L. S. Shieh, Joint Automatic Control Conference, Michigan, p 454
  5. Shieh, L.S. and Goldman, M. J., 1974 I.E.E.E. Trans. Circuit Syst., 21, 341
  6. The Hollow Corporation, Anita Campbell, Small Business TRENDS (2012)  https://smallbiztrends.com/2004/04/hollow-corporation.html

Graphics

Flow-charts by Moises Goldman and John Jonelis.

Graphics from MS Office.

About the Authors

Dr. Moises J Goldman holds an MSEE and a PhD in Engineering Systems from UCLA, specializing in large-scale systems, process optimization, and product innovation. MBA from MIT Sloan, specializing in strategic planning and business development.  His focus is on periods of challenge and change, including startup, growth and restructuring.  Goldman served as CEO, COO, and CTO in diverse industries and developed business across the USA, Germany, Spain, Mexico, Dominican Republic, Jamaica, and Brazil, working with small firms as well as branded giants such as Lockheed, Rockwell, ATT, America Movil, GM, Ford, Scotia Bank, and HSBC. Sits on several boards where entrepreneurship and innovation are the primary goals.  Consults to merging companies during the integration phase as well as startups, helping them become going concerns. Member of several advisory boards at MIT.  Founding member of the TALENT program at IMSA.  Dr. Goldman can be reached at Moises.Goldman@outlook.com

John Jonelis patented seven products and developed dozens more in the field of air pollution control.  Created the Revelation suite of trading algorithms.  Private equity investor.  Artist.  Writer, and publisher of Chicago Venture Magazine and News From Heartland—the Journal of the Heartland Angels.  Author of the novel, The Gamemaker’s Father.  Illinois Wesleyan BFA, 1974.  Kellogg MBA 1989.

 

Copyright © 2019 Moises Goldman & John Jonelis. All rights reserved. Quotation with attribution is permitted for educational purposes.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. We do not guarantee accuracy. Please perform your own due diligence. It’s not our fault if you lose money..
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CONTROLLED DESIGN MANAGEMENT – Part 1

By Moises J Goldman & John Jonelis

Today’s business culture is more strongly creative and entrepreneurial than at any time in history, posing new organizational opportunities and challenges.  That calls for a new way to think about and implement design management.  Using the language of the digital age, this article introduces a new perspective, applying a radically different technique to the management of the creative process, and then demonstrates an intuitive working model that functions in any modern organization.  This is the first installment of a four-part article. 

Current Management Models

Management models have undergone disruptive changes over the years.  The early 1980s was a time when Japanese productivity achieved the highest level anywhere in the world. At that time, productivity had fallen in the USA, and many felt that America could and should learn from Japan.  There was a real call to break from the Traditional Model of product management.

Curiously, the Japanese renaissance was, in large part, the product of an American—the pioneer W. Edwards Deming.  He espoused high product quality coupled with a humane approach to managing people.  He laid out a complex set of principles to realize those ideals.  Deming built his approach on different assumptions than the Traditional Model.  I had the pleasure of working at a company founded on his principles.  This was rare in the USA, but the Japanese implemented his theories with fervor.  Much can be said about the details, but when you boil it down to its simplest terms, Japanese success was actually based on three broad factors:

  • A focus on a strong corporate structure
  • Long-range staff development
  • Consensus decision-making

These factors led to lower turnover, higher job commitment, and higher productivity.  This initiative was then adapted for use in the USA by William Ouchi and became known as Theory Z.1   For a time, Eli Lilly, Rockwell International, General Motors, Westinghouse and many other large corporations embraced this new dogma.

But this new paradigm clashed with the ideas of western management and the expectations of an American workforce.  Theory Z didn’t gain lasting traction in America, where the Traditional Model continued to dominate.  Why the cultural clash? It has to do with the way we think—more particularly, the way in which we picture or imagine a process.  Figure 1 lays out the Traditional Model of product management in graphical form:

Figure 1 – Traditional Product Management Model

The Traditional Model can be expressed as a high-level sequence and it is, quite simply, one specific mode of thought.  To its credit, it does an excellent job of defining a product life cycle.  Everything is placed neatly in a row.  There is a defined beginning and end.  But the weakness of this model slows many organizations that use it and it does nothing to improve or optimize a process.  The inherent top-down mode of thought is a limiting factor, and is also limiting to the models that grew out of it or rose up in reaction to it.

New Paradigms

Nowhere was the contrast with Japan greater than in automobile manufacture.  Japan, long known for its cheap, low-quality vehicles and other junk, began to crank out the best-made cars, electronics, and other products in the world.  Meanwhile, Detroit remained mired in the concept of planned obsolescence.  Consumers took notice and they voted with their wallets.

Then Toyota rolled out Just-in-Time Manufacturing (JIT) as a way of reducing the cost of inventory.  Among other changes, JIT heightened the awareness of design management itself.  Eventually America had to adjust if it was to compete with the Japanese, and the resulting chaos changed the way we do business today.  Companies began to adopt JIT, and increasingly moved toward a new ideal—the Hollow Corporation—also known as the Virtual Business.6

At its extreme, the Hollow Corporation is an organization stripped of almost every function.  Brand means everything and the company makes nothing.  Everything is measured in money, and profit is the only goal.  A simple example of a hollow corporation is an American clothing designer taking on a European-sounding name and making designer clothing in China for sale to the world.  As this trend grew, companies outsourced more and more functions.  This intensified the importance of brand marketing and marketing for globalization.  While this was going on, America was busy transforming itself into a service economy.

Globalization Matures

But industry discovered that it was not only possible but also cheaper to manufacture products overseas and ship them back to US shores.  Whole industries moved their factories offshore—especially to China.  The entire textile industry left.  Tool and dye left.  Electronics manufacture left.  With time, others followed, including crucial smokestack industries such as steel.

The next logical step was to offshore project management and product development.  Creative and physical design had always been a key competitive advantage in the USA.  Its business world smugly expected it to remain so.  But due to the ability to collaborate across the internet, actual design began to take place at multiple locations across the globe, with products for sale to the world—and with great success.

These trends were not without intriguing and sometimes counterintuitive aspects.  Businesses made adjustments.

  • Many US electric generation utilities sold off their physical power plants in search of greater profits as distribution networks.
  • Fluctuation in the currency market led Japanese automobile manufacturers set up production facilities in the USA, closer to the end consumer and using American workers—and still, American manufacturers struggled to compete with them.
  • US automobile manufacturers and other industries abandoned the policy of planned obsolescence and over time learned the new culture of quality.
  • South Korea began to design and manufacture high-quality goods—from pianos to automobiles to mobile phones.
  • China began outsourcing to the Vietnam and other third world countries in search of even cheaper labor.

Lean

In the early 2000s, after the internet bubble burst, it became abundantly clear that the US needed a new competitive edge.  A product management philosophy took hold, called Lean—Lean Development, Lean Manufacturing, Lean Planning, Lean Sigma, Lean Start-up. 2  Lean is a management philosophy that considers any part of the enterprise, which does not directly add value to the final objective, as superfluous—be it product development, customer service, or for that matter, the entire enterprise.  It examines all processes and eliminates the ones that do not add value to the end objective.   Lean is an attempted departure from the traditional way of doing business.  It found favor in the US and, to one extent or another, became a dominant model.

The next article will compare and assess Lean in light of previous models.  Then we will introduce an entirely new way to manage creative enterprises.

GO TO PART 2 – LEAN

Download full paper (PDF)

.References

  1. Deming, W. Edwards (1964) [1943].  Statistical Adjustment of Data. Dover. ISBN 0-486-64685-8. LCCN 64-24416. (1966) [1950].  Some Theory of Sampling. Dover. ISBN 0-486-64684-X. LCCN 66-30538.
  2. William Ouchi: “Theory Z” How American Business can meet the Japanese Challenge. Addison-Wesley Publishing Company, 1981
  3. Lean was originated by Eiji Toyoda and Taichi Ohno of Toyota Motors. Ohno, Taiichi (1988), Toyota Production System: Beyond Large-Scale Production, Productivity Press, ISBN 0-915299-14-3
  4. C. F., L. S. Shieh, Joint Automatic Control Conference, Michigan, p 454
  5. Shieh, L.S. and Goldman, M. J., 1974 I.E.E.E. Trans. Circuit Syst., 21, 341
  6. The Hollow Corporation, Anita Campbell, Small Business TRENDS (2012) https://smallbiztrends.com/2004/04/hollow-corporation.html

Graphics

Flow-charts by Moises Goldman and John Jonelis.

Graphics from MS Office.

About the Authors

Dr. Moises J Goldman holds an MSEE and a PhD in Engineering Systems from UCLA, specializing in large-scale systems, process optimization, and product innovation. MBA from MIT Sloan, specializing in strategic planning and business development.  His focus is on periods of challenge and change, including startup, growth and restructuring.  Goldman served as CEO, COO, and CTO in diverse industries and developed business across the USA, Germany, Spain, Mexico, Dominican Republic, Jamaica, and Brazil, working with small firms as well as branded giants such as Lockheed, Rockwell, ATT, America Movil, GM, Ford, Scotia Bank, and HSBC. Sits on several boards where entrepreneurship and innovation are the primary goals.  Consults to merging companies during the integration phase as well as startups, helping them become going concerns. Member of several advisory boards at MIT.  Founding member of the TALENT program at IMSA.  Dr. Goldman can be reached at Moises.Goldman@outlook.com

John Jonelis patented seven products and developed dozens more in the field of air pollution control.  Created the Revelation suite of trading algorithms.  Private equity investor.  Artist.  Writer, and publisher of Chicago Venture Magazine and News From Heartland—the Journal of the Heartland Angels.  Author of the novel, The Gamemaker’s Father.  Illinois Wesleyan BFA, 1974.  Kellogg MBA 1989.

Copyright © 2019 Moises Goldman & John Jonelis. All rights reserved. Quotation with attribution is permitted for educational purposes.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. We do not guarantee accuracy. Please perform your own due diligence. It’s not our fault if you lose money..
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CAN’T KEEP A SECRET

written by John Bueter, 

comments by John Jonelis

Wow!  Who can resist this?  Take a look-see at this invitation from John Bueter, famous fly fishing personality. 

I’ve printed the letter below along with recent local photos so you can see what’s going on over there.  This is the perfect getaway for a Chicago entrepreneur! Check it out:

The ONE, The ORIGINAL, The ONLY 

SALMON CAMP ‘18

A Tradition for 28 Years!

September 28-30

Well, kids, it’s THAT time of year again!  The excitement of the season is overwhelming, as the River comes alive with HUGE fish. Our target species is the mighty King Salmon in the wild and scenic Pere Marquette River.  This area is FLY RODS ONLY.  No spinning gear.  No snagging.  No treble hooks welded to spark plugs.

Last season’s fish weighed in heavier than normal.  This year they’re even LARGER, with documented catches off shore of 40+ pounds!  Bring your big guns, Kids!  We’ll be hosting festivities again at the Bueter Compound.

The 24 hour Campfire tradition continues, providing the backdrop for the usual hijinks, exchange of regional information (mostly lies), recounting of the day’s adventures (again, mostly lies), and permanent cementing of friendships.  Campers are encouraged to use the showers to control the fly, bear, and buzzard problems.

The spirit of mentorism and camaraderie will flourish once again.  Proven fly patterns, proven knots and rigging—all demonstrated.  Maybe some new stuff, too.  Be sure to bring your tying gear—you’ve got things to offer and learn!

We’ve manned the barbeque pit. All the usual suspects will again prepare a super-duper-up-north dinner Saturday night, and a breakfast that will revive the near-dead.

There’s always room for newbies—no matter your level of experience.  Remember the founding concept of Salmon Camp: “This is too much fun to keep to ourselves!”

Lookin’ Forward to fishin’ with y’all !!!

Your Master of Salmon Mayhem,

John Bueter

Is that a compelling invitation or what?  Wanna go?  Well, yeah!  I get to chase 40 lb salmon with a fly rod? Who wouldn’t want a thrill like that?  Let’s go early! 

I particularly like the legal jargon on their “catch and release” form:

“…Illegal substances, firearms, and spinning tackle are not welcome in Camp…Camp “crashers” will be found, drawn and quartered, and their hides nailed to the fence so as to discourage others.  This Camp will go on rain or shine—NO WHINERS.  We encourage good stewardship of our resources, and will not tolerate scofflaws.”

Never fly fished before?  Neither did the gal who caught a 40 lb Chinook last year.  Didn’t stop her.  Oops—guess I just can’t keep a secret. 

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Here’s the place:

  • Bueter’s Salmon Camp 3200 South James Road, north of Baldwin, MI 49304
  • RSVP John or Rhonda Bueter via phone, ‘e’mail, or snail mail, so we don’t run outa bbq sauce & eggs.  Office 231-745-3070, Cell  248-345-1402,  j.bueter@sbcglobal.net , Website www.cloud9baldwin.com
  • Cost for Salmon Camp ’18:   $135

Hey, that’s a bargain!

Pack this stuff:

  • Michigan all-species fishing license
  • Big Dog Fly rod (8-9-10 wt) a spare is not unwise
  • Quality Reel with super-smooth drag
  • Sink-Tip Flyline
  • 12 pound tippet, or higher
  • Lots and Lots of flies (Note: max size #4 single point hook)
  • Waders, Boots, Wading Staff
  • Hook Hone, Nippers, Pliers [Hemostats are worthless here]
  • Big Landing Net (17 inch handle max)
  • Polarized Glasses
  • Flashlight, Lantern, Headlight [Important!]
  • Rain Gear, Appropriate Clothing
  • Tent, Sleeping Gear, Personal Stuff
  • Don’t Forget yer Bubba

Read: ALIEN ABDUCTS FISH,

THROWS FISHERMAN BACK

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 Read: TOO MUCH FUN

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Photo Credits

Various photographers as posted by John Bueter on Facebook, just prior to the event.

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. We do not guarantee accuracy. Please perform your own due diligence. It’s not our fault if you lose money..Copyright © 2018 John Jonelis – All Rights Reserved
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OIL FROM WATER

oil well T2by John Jonelis

What if you can make oil out of water?  What if, you also end up with more water?  A discovery like that will benefit our country and the world.

The technology now exists.  Commercialization is beginning.

The story starts here in Chicago.  Len Bland, mild-mannered local businessman, creates Business Network Chicago — a forum for presenting early stage ventures to the entrepreneurial community.  Over the years, he sees hundreds of startup companies and occasionally grapples with some very good ideas.

Once in a while, a surprise technology comes along that’s practical, profitable, and good for society. When that happens, it’s time to get involved personally and help them along.  That’s just what Len does.  This is a story about that company.

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Social Entrepreneurship

Nano Gas Technologies is a company that grows out of the discovery that very small gas bubbles remain in liquid a very long time—much longer than had previously been thought in scientific circles.  If you saturate a substance with oxygen or some other gas and it remains in situ for a very long time, a whole range of possibilities opens up.  One ramification of this discovery is to solve the fresh water dilemma.  That’s huge.

Next to the air we breathe, there is nothing more important to life than water.  And our fresh water is drying up.  There are two ways to provide more water to the world:

  • Find more
  • Waste less

Nano Gas starts along the first path and ends up solving the second.

oil well

Find More

Clean drinking water is the first market the company tests—until the real blockbuster application turns up.  Let’s briefly explore this first path because it’s an important one that will benefit humanity.  The company can return to it at any time, and given its importance to society, they probably will.

Fresh water is processed in municipal wastewater treatment facilities.  These facilities are incredibly inefficient.  Turns out, by injecting nano-bubbles into the sludge, a whole lot more pure water can be reclaimed.  Simple.  The best discoveries are simple.

This is hugely exciting news because the benefits extend far beyond relieving the stench in and around the neighborhood of these plants.  We are looking at the potential solution to water shortage in the industrialized world.  Beyond that, the process can provide drinking water to third world nations by extracting purified water from swamps and polluted rivers.  This is social entrepreneurship at its best!

clarification steps

Politics has a funny way of throwing roadblocks in front of good causes.  It turns out that cracking the municipal market is a slow and painstaking undertaking because there are so many cities and towns and each of them takes a long time to make a decision. Wastewater treatment is a good and important application for the technology, but it’s not a market suited for a new company raising significant capital for rapid growth.  In other words, the time horizon for the served market and the time horizon for the capital market don’t match.

Again, I believe the company will return to this market once it achieves maturity.  Meanwhile a much more profitable opportunity has come to light—one that can propel the company to significant growth on a timetable attractive to venture capital.

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Waste Less

Let me tell you about the change that captured my interest in the company:

Domestic oil wells use a lot of water.  Not just fracking operations, but ordinary wells too.  Many of these run out of water before the lunch whistle blows and operations cease for the day.  That means more tankers of oil get shipped from unfriendly places in the world.

At these domestic wells, once the water is used, it comes back as a contaminated slurry.  The standard method to gain value from the slurry is gravity–settling ponds.  Given time, valuable minerals sink to the bottom or rise to the top.  This is slow, messy, and doesn’t do a complete job of cleaning the water.  The reclaimed water is not fit to drink.  It’s not even fit for recovering oil because it clogs up the machinery.  The industry doesn’t know how to deal with the water that remains.

oil well in Rockies

Believe it or not, this water gets entirely wasted.  Drillers truck it to special facilities called disposal wells that pump it back into the ground just to get rid of it.  This reduces the amount of water available for drinking and for industry.

So we’re wasting too much water and pumping too little oil.  Enter Nano Gas Technologies.  They use their profoundly simple nano-bubble discovery to clean wastewater for oil wells.  This is huge because, once purified, oil wells can re-use their water.  That’s right, instead of wasting more and more water and pumping the contaminated residue into the ground, the same water can now be cleaned and used over and over.

That means oil wells no longer cease operations early in the day.  America gets a whole lot more domestic oil and wastes a whole lot less water.  And the company is dealing with the free market rather than multiple bureaucracies.  Everybody wins.

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Big Money

This is a social benefit with $35B market in a very short span of time.  It’s profitable for oil wells, disposal wells, and of course, for the company.  An additional 18 barrels of oil can be reclaimed from 3000 barrels of wastewater.  Dirty water is no longer a nuisance—it’s so valuable that Nano Gas Technologies proposes to pay the well owners for the water and sell the oil they reclaim from it!  Now, there’s a revolutionary idea!  Rapid industry-wide adoption is anticipated once the technology is demonstrated.

Here’s a diagram of the process logistics:

Nano Gas Process

Residual oil reclamation plan – Nano Gas Technologies

Fair Disclosure:  I’m impressed and invested.  Who wouldn’t invest in more oil and more water?

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Contacts

Nano Gas Technologies, Inc. –

BNC – Business Network Chicago

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This article appeared in News From Heartland 

Photo Credits – Nano Gas Technologies

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VAST PILES OF MONEY

Chicago Social Enterprise Eyes a Trillion Dollar Market

Piggy BankImpact Engine Part 9 – by Jeff Segal, Message Therapist –

“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”— James Baldwin

Imagine your reaction if your bank charged you a 9% fee to write a check to your sister in Cleveland. You send $100, but she only gets $91.

It’s unthinkable. But if you’re a low-wage immigrant sending part of your wages to family in your native country, that’s standard procedure—just one of the ways  you pay more for being poor.

But this isn’t an article about how immigrants get ripped off. It’s about vast piles of money.

Dubai is one of the world’s largest employers of foreign workers

Dubai is one of the world’s largest employers of foreign workers

Estimates vary, but there are currently well over 200 million people who work in one country

and send their earnings somewhere else. Rahier Rahman, Founder and CEO of Pangea a Chicago-based global payments company, says “Remittances through formal channels in 2012 were estimated at $534 billion. Many experts believe that flows through informal channels double that estimate. We’re looking at a trillion dollar market.”

Do I have your attention yet?

Rahier Rahman - CEO

Rahier Rahman – CEO

Between fees and the spread on exchange rates, the World Bank claims the average cost of an international transfer is 9.3%. Nine percent of a trillion dollars is a vast pile of money. Hell, any percent of a trillion dollars is a vast pile of money.

“And some markets are more competitive than others,” adds Rahman. “In corridors like Japan-to-China, fees can be as high as 20%.”

Now then. On the one hand we have millions of hard-working, poorly paid people getting the

Carson Junginger - Product Dev

Carson Junginger – Product Dev

shaft from the corporate banking establishment. On the other hand, we have vast piles of money. It’s a textbook opportunity for a social enterprise solution.

That’s where Pangea comes in.

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A textbook social enterprise solution

To review: a social enterprise generates its sustainable revenue and profit from a business model that achieves a social benefit. Startups from Chicago-based incubator Impact Engine are proving that profit-driven innovation can create solutions to some of the world’s direst problems.

pangeaPangea is one of eight startups from Impact Engine’s first cohort They’ve developed a new approach to money transfer that skips the entrenched, agent-based system. With a beta launch scheduled for later this year, Rahman doesn’t share many details, but says Pangea will work through existing retailers, online or mobile, will make funds available instantly, and will “help consumers save between 50% and 80% of what they’re paying now.”

Some perspective: Workers in the US remitted $22.4 billion to Mexico in 2012 —more than all foreign direct investment in Mexico—and incurred just over $2 billion in fees. Cutting those charges by half would put an extra billion dollars into the hands of 1.4 million Mexican working class families.

remittance1

Workers transfer billions to Mexico every year. Workers in the US remitted $22.4 billion to Mexico in 2012

Money like that has what Rahman calls “a reverberating impact,” since earnings are so much lower in developing economies. What we Americans might consider spare change can create meaningful lifestyle changes for poor families in places like India or Latin America.

Bottom line—if Pangea succeeds, millions of people will lead better lives.

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Investors Won’t Do Badly, Either

Omar Khudeira - Engineering

Omar Khudeira – Engineering

Of the five Impact Engine startups to receive funding since December’s Investor Day , Pangea has closed the most to date—a $1 million angel round. “Our partners recognize and respect our mission,” Rahman says.

I imagine they also recognize and respect the profit potential of a company that seizes even a fraction of a percent of a trillion dollar market.

That’s not cynicism. That’s capitalism.

Pangea has identified an underserved market, determined a pain point, and built a solution.

Lamia Pardo - Marketing

Lamia Pardo – Marketing

Like any other startup, their success will make a few wealthy people even wealthier.

Unlike any other startup, their success will also make large numbers of poor people a little less poor.

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Contacts

Pangea – gopangea.com

Impact Engine – www.TheImpactEngine.com

Image credits: guardian.co.uk   arstechnicaPangea

This article appeared on the wildly popular WE’RE NOT EXPECTING ANY SURPRISES

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About the Author

Jeff SegalJeff Segal Twitter Bird @MsgTherapist, works with entrepreneurs as a Message Therapist, translating great ideas into messages that connect with customers, partners and investors. He also writes at BrokerSavant and We’re Not Expecting Any Surprises. Contact him at mt.jeffsegal@gmail.com

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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KILLING IT

Impact the World TImpact Engine – Part 8

By Jeff Segal – message therapist

Less than a year ago, I asked a prominent figure in Chicago’s startup community about local investors’ interest in the social enterprise model.

She told me flatly, “No one cares.”

Well, they care now. Six months after the first Impact Engine Investor Day, five of the eight members of the initial cohort have closed a round of funding. If you’re keeping score at home, that’s 62.5%, compared to 6% or less for startups in general, according to Forbes.  Impact Engine and social enterprise are killing it – killing the competition.

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Surprise

Portapure, one of the first group of grads, builds individual water treatment devices for developing nations. The company recently closed angel funding worth potentially $300K. I didn’t see that one coming. What did I miss?

“Other filtration technologies aren’t specific to developing countries’ needs and environment,” says founder George Page. “They are high-end products developed for the first world, some with pumps that require electricity or batteries. They’re useless in developing countries. Portapure units work on gravity, with no complex mechanisms. Anyone with a 2nd grade education level can understand how to use them.”

Page explains that Haitians, who on average earn less than $1,000 a year, can spend as much as $3.50 a week on drinking water—but can buy a Portapure unit with a microfinance loan and pay it off in 4-5 months with the savings. With more than 4 million Haitians lacking access to clean water, that’s a promising market.

Before Impact Engine, Page says he was offered $50,000 for half of his company. It’s now valued at $4 million. He thanks Impact Engine “…for access to folks who understand that sustainable social impact is a true value-add, at the forefront of changing how business works.”

Impact the World courtesy Technori.

Legitimacy for the Whole Social Enterprise Space

Collaborative Group closed on funding of $550K. They connect retail brands with artisans in the developing world—for example, a line of Rachel Roy/FEED handbags is now sourced from India. Founder Kathleen Wright describes the impact such projects create: “We’re employing five artisan groups, and they’re all now sending their kids to school. It really enables them to have different dreams for their kids and themselves.”

But it’s not all social impact—Wright projects that her revenues will double this year.

ThinkCERCA got funded to the tune of $490K and launches its platform this August. They provide curriculum and tools that teach the critical thinking and literacy skills essential to the new Common Core State Standards—standards 49 states already adopted—standards that nobody knows how to implement.

For starters, they’ll reach more than 5,000 students between grades 4 and 12 in both city and suburban school districts. “It helps teachers and kids collaborate and construct new knowledge,” says founder Eileen Murphy, “because you just can’t teach someone to write using multiple choice questions.”

Aside from its feel good vibe, Murphy points out a concrete advantage of the social enterprise model in the tech community: “The social impact focus makes a big difference (for a startup company) competing for engineers.”

Regarding Impact Engine, Wright says, Chuck Templeton’s  guidance—how can you put a price on that? It gives legitimacy to the whole social enterprise space.”

Murphy adds, “Their energy, intelligence, support, and influence can’t be replicated, no matter how brilliant you are or how hard you work.”

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Two More Funded

Asadi, which markets inexpensive feminine hygiene products in rural India, has since moved back to India to build and train its sales network of 100 female entrepreneurs.

Pangea —which, for reasons unstated, didn’t even pitch on Investor Day—has closed on more than $1 million to finance its multiplatform, worldwide money-transfer solution.

Elizabeth Riley, Impact Engine Program Manager, explains the kind of company that fits the incubator’s profile: “We don’t accept companies with a Buy-One, Give-One business model,” she says, referring to companies that just donate to charity every time someone makes a purchase.

That’s not the social entrepreneurship model. A true social enterprise creates its social benefit from the exact same business activity that generates its sustainable revenue. It’s a model that’s gaining credibility and winning converts, and the eight members of Impact Engine #1 are establishing Chicago as one of the world’s top social enterprise centers.

So—who’s next?

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About the Author

Jeff SegalJeff Segal   Twitter Bird @MsgTherapist, works with entrepreneurs as a Message Therapist, translating great ideas into messages that connect with customers, partners and investors. He also writes at BrokerSavant  and We’re Not Expecting Any Surprises. Contact him at mt.jeffsegal@gmail.com

This article can also be seen at Technori

Photo credits – Technori and Jeff Segal

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Look for Part 9 – Coming Soon

Back to Part 1 – WHAT’S GOOD

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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Filed under angel, angel capital, angel investor, big money, Chicago Ventures, Impact Engine, Impact Investing, Kellogg, new companies, Northwestern, Social Entrepreneur, Technori, vc, venture capital

WHO DO YOU TRUST?

PIVOTJohn Jonelis—Verbatim from special correspondent, Donatas Ludditis

Welcome—welcome to Ludditis Shots & Beer! Glad you come in.

Got question for you.

Don's look-alike

Don’s lookalike

I hear about this guy: Nikhil Sethi his name. No, don’t ask me—I never say it right. He got easy way to advertise on social web. His outfit called Adaptly. Got three slick platforms that work as if by magic. And his company, it grow like crazy! This I want to know more about.

SPEAK UP! . WHAT IS THAT TERRIBLE NOISE, YOU SAY? . IS ONLY “L” TRAIN. . PRETTY SOON YOU NO NOTICE.  .DRINK UP.  .I GIVE YOU MORE.  .IS ON HOUSE!

Ludditis Shots and Beer

Pivot to Success

There you see? Is quiet now.

So I go to big Northwestern University event and hear him speak—entrepreneur@nu they call it. Hey, finish drink. I give you highlights only. Here, I got notes—wait, my thumbs too big, even for this gadget.

Editor’s note—Ludditis keeps his notes on a huge Samsung Note II phablet but his fingers look like sausages. Ah, he’s found his notes:

Business only three years old. It still baby but look how big already! He start when still at university. So how he get funding to grow so fast? He say, “If you ask for money you get advice. If you ask for advice, you get money. We ask for a lot of advice.”

Nikhil Sethi at e@nu

Nikhil Sethi of Adaptly

He make me think. He say, “Technology just way to copy some kinda human behavior,” or words like that. I crank that over in my old noggin a long time. It finally sink in.

Then he say, “At any given moment, eight groups are working on the same idea. Somebody will do what you’re doing whether or not you do it yourself.”

So outa all them company’s, maybe only one is winner. How you become winner? I like answer he give. He keep pushing to next level. You think he too pushy? That is what make success. Drive, he call it.

Hey – there no be this bar if I not drive business.

Is same for this guy.

audience-angle

Another thing—nowadays startups all in big hurry. Wait, I check word: “Minimally viable product.” Yeah that is what these kids make nowadays. They put junk out there and see how people like it, then change, then change again. “Pivot,” I think they call it. “Fake it till you make it,” he say, “You don’t know you missed it till you miss it.”

You want truth? I like this new way. Is quicker than expensive marketing study and faster too.

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What Makes a Great Team?

What about his people, you ask? Every team member must understand deep root of why they do what they do. That way it make sense to them.

Then surprise: “Don’t hire your friends,” he say. “It is about going into a world that’s not so friendly.” Then he say, “One of the biggest reasons for failure is difference of opinions between founders. It’s like dating. You want to know each other’s deepest and darkest secrets. If you don’t find out now, it will come out later.”

Seem like – how you say – contraption. Non-sequencer maybe. I mean I cannot put his two ideas together, but lots o’ times I no can put two ideas together. So I give him benefit of doubt. Here, I pour you another—no worries.

Nikhil Sethi

Nikhil Sethi

How he keep growing so fast? Is initiative! “We make sure we keep reinventing ourselves at a high rate. Our rate of change is ridiculous. We have to destroy and reinvent the business every six months.”

So he create when he destroy. “These things are working and growing but they’re not going to keep working and growing forever. It’s hard to throw something that’s working in the garbage but you gotta do it. There no lack of opportunity—only lack of focus.”

I say it take special talent to do that. Startup is high-stress. I like bar a whole lot better. So I get rough and throw out troublemaker sometime. That – what you call – therapy. Let off steam. Is good for the old ticker. Here, have another shot.

When can he break his own rules? “When you need to.” He says. “It’s a gut feeling. You first have to understand what the rules are.”

e@nu-conference

How he know what advice he take? “Ignore everything and only do what you think is right. Otherwise, it hinders making a decision.” Then he bounce this off wall: “Get your advice from a limited group of trusted people. The biggest decision on picking a board is you trust each other. Find people you can trust.” To me it sound like another contraption, but I see wisdom on both sides. I live my whole life with people I trust. Is best way to live. Best way do business.

You already have enough drink? Come back and I tell you how student companies make money.

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GO BACK TO PART 1

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ContactsInc Magazine Cover

Follow Nikhil Sethi on Twitter – @nsethi

Adaptly

Entrepreneur@nu Pivot to Success Conference

Forbes - NU most entrepreneurial Inc. Article on NUvention

Forbes article – “63% of NU students claim they want to start their own businesses”

Photographs courtesy Northwestern University, Adaptly, John Jonelis Studios.

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money. .Copyright © 2013 John Jonelis – All Rights Reserved . .

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