Cybersecurity budgeting is one of the most peculiar efforts today in corporate strategy and planning. For a cyber leader, requesting a budget is unfortunately more art than science. This is because measuring and communicating cyber risk is notoriously difficult — the threat is always morphing, enterprise vulnerability is fluid, and business impacts are far-reaching and tough to calculate. To justify budget requests, cyber leaders inevitably incorporate headline news that instills fear, uncertainty, and doubt. Here, leaders seek to influence through emotion. This process happens year over year, all to increase cybersecurity spending slightly. A couple more dollars here, a little more capability there, often with few measurable gains.
This awkward ritual creates two bad, interrelated business outcomes:
Cyber programs are underfunded to do the job — resulting in reactive and inefficient spending later.
Business leaders see cyber as just a necessary cost of doing business — a tax payment they’d rather spend elsewhere.
Fortunately, there’s a new mindset available, which some companies are practicing. This is a shift in thinking, focusing on cybersecurity’s undeniable strategic importance to the health and prosperity of today’s digitally minded companies (and who isn’t “going digital?”). Leaders are beginning to see cybersecurity as a means to improve their bottom line — and there are specific ways you can use it for this purpose.
How Cybersecurity Can Improve the Bottom Line
The right cyber investment can shed massive enterprise costs over the long term. It can also improve an organization’s appeal to customers, thereby increasing the opportunity for new and enhanced revenue streams. The scope for this opportunity is also expanding, moving beyond enterprise IT to the full business ecosystem — suppliers, R&D, production, products, services, and more.
Reduce costs. When properly orchestrated, cybersecurity can reduce costs by:
Minimizing business impacts (for example, operational, financial, regulatory) of cyber risks.
Lessening the remediation costs of cyber incidents by introducing capability to reduce incident volume and/or quickly contain incident sprawl.
Uncovering related business capabilities that require cost-minded improvements (for example, crisis management, supply chain management), by conducting cyber-readiness exercises.
Increase revenue. Companies can use cybersecurity to support revenue by:
Providing a differentiating and marketable trait to gain customers, increase transaction size, and charge premium prices.
Accruing new revenue sources by adding security capabilities (for example, monitoring, response) into an existing product/service portfolio.
Using security services for long-term “stickiness” with customers, keeping sales channels open for a range of offerings.
What Forces Are Shaping This Opportunity?
The concept of cyber monetization may fly in the face of conventional wisdom, so below we’ll dig into the forces behind this opportunity. The first point explores how paying attention to cybersecurity up front will help you reduce costs, while the latter articulates your opportunities for increased revenue.
Point No. 1: Successful digital transformation depends on cyber investment. A favorable digital transformation — in whatever form that takes — is dependent on infusing cybersecurity as a foundation. A recent Cisco study found there’s an estimated $5.3 trillion in private sector value at stake over the next decade. Sixty-eight percent of this value depends on making cybersecurity core to that transformation. Specifically, building strong cyber defenses for seven specific use cases will deliver $1.8 trillion in value.
Every company is exploring how emerging technologies can improve business. Whether you’re instigating wide-scale cloud migration, harnessing the power of smart manufacturing, or laying an AI foundation for better customer experience, your business’s infrastructure is changing. The capital outlays needed here are staggering. To improve the odds that your business will accrue the anticipated benefits and not be wrecked by costs from downstream cyber incidents, you need to infuse security into the infrastructure foundation from the start. Pay a little now, or a lot later. From moment one of any technology initiative, cybersecurity principles and practices must be a core tenet that leaders insert into strategic and operational plans. Simply put, transformational bets will have better returns with proactive cyber investment.
Point No. 2: Cyber drives buying decisions. Many customers are now making cybersecurity part of their buying calculus. In health care, a recent technology study showed that medical providers are deeply considering cybersecurity when choosing what suppliers to buy from. In the automotive industry, automakers banded together to create third-party cyber risk-management guidelines to improve partnership decisions. Similarly, your opportunity to do business with the U.S. Department of Defense is now further dependent on how effectively you embed cybersecurity practices across your ecosystem. And lastly, there’s the everyday consumer. As IoT devices continue to permeate our world, individuals buying home security and related systems will look for cybersecurity as a core feature.
This trend creates a revenue-capture opportunity. Buyers have shown they’re looking for much more than “bare minimum” compliance. They want to see thoughtful design and implementation of a supplier’s cyber program, diligence in appropriating the right budget, exceptional talent, and the right technology to underpin it all. And they’re willing to pay. By differentiating at this opportune moment, you can improve your market positioning and establish yourself as a cyber-secure brand that people seek out.
How to Properly Monetize Cybersecurity
With a market that’s ripe for action, let’s analyze four key moves:
Gauge your specific opportunities. First, determine how your business model and underlying technology infrastructures might change over the coming years. Maybe you’re deploying a predictive maintenance capability across your product base, or you’re banking on an edge-computing model. Every major initiative represents an opportunity to infuse cybersecurity. Next, look outward. Understand your industry’s trends, evolving regulations, and customer buying formulas. Identify opportunities (such as your commitment to securing their IP or vigilantly “hardening” IoT products) to capture their attention and demonstrate you’re the right partner for the long haul.
Establish top-level internal support (and funding). Next, it’s time to shift mindsets at the top of your enterprise. Executive advocacy is critical, because you’re seeking to elevate cybersecurity as a strategic pillar for how your company thinks and operates. When you run into challengers who seek to disrupt your mission, such as those fixated on customer acquisition or lean operations, you’ll want the C-suite in your back pocket. When you find senior disciples, latch on to them. Key leaders that believe in cyber monetization will help you expand influence in the right forums. With the right plan and senior advocacy, you’ll be more likely to get the job done. Funding should come from several places — some central funding will be key, but business units need to allocate resources as well, such as skilled liaisons committed to helping this networked effort succeed.
Build the capability (in the right places). It bears repeating that you need to think more broadly than traditional defensive cyber objectives. Yes, you must thoughtfully secure the IT environment, while expanding capability into all cyber-relevant areas of the business (that is, the attack surface). Nontraditional leaders across the business (for example, in procurement, product development, and manufacturing) will be key pieces to this puzzle, as each of their respective domains may need new cyber requirements, processes, or technologies embedded into localized strategies and operations. Bringing this capability to life across the business requires centralized, highly coordinated orchestration, so plan to make a person or group accountable for it. It may be ideal to select your foremost cyber leader (for example, your chief information security officer) to drive things, but if their mission is already too expansive or their time is better spent on internal cyber defense, you may need to go another route. Last, systematically exercise your capability to gauge coverage and effectiveness — you’ll discover surprising new opportunities for the business.
Communicate your cyber strengths. As you implement appropriate cybersecurity capability across the business, it’s time to “sell” it to the outside world. Your customer base needs to interpret it as a strategic differentiator. They need to see and believe in the cyber investments you’ve made and be educated on the value of those investments. Communication will take hard work, but fortunately, you can lean on established mechanisms, such as corporate strategy and marketing functions. Just as you’ve made other “differentiator” bets in the past, you have a new opportunity here to enhance your market position and create tremendous value for your business.
We’ve reached a tipping point, where the right cyber investment can improve a company’s bottom line. Businesses can use cybersecurity to assure their digital transformation bets while positioning the business to capture new and enhanced revenue streams. Those companies that act seriously and aggressively now will establish advantageous market positioning and be greatly rewarded over the long haul.
Building maintenance is usually a permanent line item on a business's expense sheet. However, with a little thoughtful planning and the use of truly green cleaning products and earth-friendly protocols, maintenance costs for a small business facility can take a smaller chunk out of the bottom line.
Sustainable maintenance and procedural practices can have far-reaching effects, including reducing expenses (not to mention additional benefits) in often unconsidered areas. As noted in a report by the American Institute for Cleaning Sciences (ISSA), greening any business environment can reduce absenteeism and presenteeism, improve effectiveness, preserve assets, and build internal and external advocates.
The key is to think of environmentalism's value not in terms of individual maintenance changes, but in terms of how those choices collectively affect the system over time.
In a nutshell, small business leaders and their respective facilities teams must look beyond their current green procedures and ask themselves how they can foster a positive, hygienic workplace where greenness isn't a one-and-done afterthought.
If you're eager and ready to take the next step in your small business's environmental measures, check out these four operational changes you can implement immediately.
1. Use as many green-certified cleaning products as possible.
If an ingredient in your current cleaning products will harm an aquatic species or require the use of eye protection, it probably shouldn't be used in your building. Go through all the items you currently use, from aerosol sanitizers to textile spot removers. Even if you have to spend more upfront, your tradeoff will be a location with improved indoor air quality. For small businesses that don't green clean, absenteeism plagues the workplace.
And as it turns out, absenteeism costs companies more than $225 billion annually, according to a separate ISSA report. If this is the cost and impact for larger companies, imagine its effects on smaller ones. A clean workspace is essential for reversing (and ultimately preventing) absenteeism and the role it plays on your bottom line. A big aspect of this simply involves keeping your indoor environment clean, contaminant-free and germ-free.
2. Choose dry methods of carpet cleaning.
For generations, companies have relied on hot water extraction-based carpet cleaning. These processes waste water and use up electricity; additionally, they facilitate moisture buildup, which becomes a breeding ground for mold. In fact, dry polymer carpet encapsulation processes can help reduce the dust in the air. ISSA research has shown that airborne debris can affect workers' ability to think clearly.
In fact, a 2016 study by Florida State University discovered that participants who held jobs in unclean work environments experienced a decline in cognitive function. It's simple: Keeping your business clean yields a high-performing team. Implement methods like dry carpet encapsulation, where polymers latch on to dirt and soil, then crystallize to be easily picked up by a vacuum, to safely and effectively remove dirt and debris.
3. Switch to sustainable paper and sanitary products.
For example, consider using bamboo fiber recycled toilet paper that hasn't been bleached by chlorine or covered in a thin, nonrecyclable plastic wrap. These measures may seem small, but they can have widespread effects. Plus, they leave an impression on your workers and visitors. You can still have a gleaming restroom – which 94 percent of consumers say makes or breaks their loyalty – while sticking to your philosophy of sustainable practices and partnerships.
4. Reduce your packaging.
From refill stations that negate the need for plastic water bottles to concentrated products, you can reduce your small business's packaging needs. You can also check your suppliers: Find out which ones are wasteful and which suppliers align with your commitment to bettering the planet.
Got a shipment in a plastic bin or sturdy box? Turn those items into long-term storage containers. And when you ship to customers, consider the materials you're delivering your products in; after all, you're sending a message with every shipment. And, of course, another obvious benefit is cost – the less packaging used, the less your small business budget takes a hit.
Walking the green walk means more than making a few adjustments. If you're truly invested in sustainability as a way of life, you have to look beyond what's happening in-house to what your vendors and partners do. Also, consider every step your small business takes today, as they all have ripple effects.
Restaurant marketing in the modern world means customers need to be excited about your restaurant before actually visiting it. Customers want (and need) to know what your restaurant looks like, menu options, hours of operations, location, and methods of contact before coming to your restaurant for the first time. Thanks to digital evolution, the restaurant experience has been mapped to the virtual world, which allows all these features (as well as online food ordering) to be available in one spot: your restaurant’s website!
How do you develop a great restaurant website? Many business owners are at a loss on the best approach to keep their restaurant visible to target audience and keep customers engaged. If you’re looking for ways to design a website for your restaurant, here is a list of steps you should follow to land potential customers.
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Define Your Customer Base
Before you begin designing, you have to decide the customer base you are looking for and the types of service they need and desire. Explore the area and its people (particularly their interests). The types of people your restaurant will appeal to, as well as its physical location, will determine important decisions, such as menu and pricing. For instance, a restaurant situated in an academic community (near a school) is sure to have higher patronage from students than bankers and business executives. And because you are kept in business by mostly students, your menu will most likely consist of cost effective eating options.
Keep Designs and Pages Simple
The next step will be developing the site. Adding a spectrum of colors that appeal to the emotions of customers is a great step to designing a website for your restaurant. The four colors: white, black, brown and red are known to perform wonders. Also, it is important to integrate essential pages such as “Home Page”, and the “Menu”.
Use Customer Feedback
The success of a business is determined by its continuous sales. A good way to have continuous sales is by building customer loyalty (having customers come back for more). The first meal a customer eats at a restaurant usually determines whether they will give you repeat business or not. Sometimes they decide to not return because of bad service, bad quality of food, and/or high prices.
On the other hand, if you make sure that every meal is spectacular, you secure that customer’s loyalty for years to come. So, find out from returning clients. Use their responses to improve and make adjustments as needed. Improving your restaurant by following suggestions made by your customers gives you a unique leverage over your competitors.
Maintaining Your Website
When your website is launched, always put in an effort to keep it in shape and up-to-date. A great step to your restaurant site management is exerting effort in making changes to its contents. So how do you make these changes and what areas need more attention than others?
Create Content for Your Site
Keeping your site updated gives the impression that your physical restaurant is still functional. Most restaurant websites that had started off on a good note had reduced traffic in later years because their content was sour to clients. Though an updated menu keeps clients checking for the latest information and meals available on your site, creating content that is relevant to your customer’s needs, such as doorstep delivery options, is a better way to instill your restaurant’s dedication to offering quality services.
Search engine optimization helps websites gain more traffic when used properly. So, when planning your content, you should focus on keywords that appeal to your restaurant’s services; then sit back and watch your website crush your competitor with higher online traffic.
Your restaurant obviously has staff such as waiters and chefs that oversee the smooth running of the physical location. Recruit a team of webmasters to take care of the website when you’re away. A good way to do this is granting permissions to site administrators to make changes and update your site with your latest services.
Integrate Contact and Feedback Forms
Your restaurant website should have a contact form that allows visitors to keep you in the know of services they expect and why they had visited your site in the first place. The feedback form helps you elicit the response from customers that placed orders on your site without necessarily visiting your physical location. You can have a bonus advantage if you integrate a map feature on your contact page. This will be helpful when visitors want to see the exact location of your restaurant.
Let Social Media In
Your site visitors might want their friends on Facebook to see your restaurant and the services you offer. A social media plugin allows them to share your site’s posts to social media platforms. Hence, strive to integrate social media sharing buttons such as Twitter, Pinterest, and Facebook. This increases your site’s visibility since more people are getting to see your posts.
What Software Should You Use?
Most of the time, developing a restaurant website leaves owners in a state of despair because software for the development is not familiar to them. But, you might not necessarily need software to develop your restaurant website. There are tons of websites offering customized templates that will suit your specifications. Websites such as Restaurant Hill, Wix, Jimdo and HappyTables allows you to use built-in software and templates when designing your restaurant’s website.
If you’re not familiar with web design or you have little time to spare for your restaurant’s website design, soliciting the services of a webmaster will be advantageous. A webmaster can ensure your website gets the facelift it might need during and after the design/launch. Also, you will probably need a webmaster to help you out with SEO tools and site administration, such as content creation and overall improvement of the client experience.
Which is Better: Mobile vs. Desktop Friendly?
The smartphone industry is on the rise and there are more smartphone devices in the hands of users than a computer. Placing your business on the screens of your clients’ smartphones should be the top priority; configuring your site to be mobile friendly is a great way to have clients coming back for more meals.
To this end, your restaurant website should be optimized with more emphasis on a mobile user-friendly interface or create an app. A mobile-friendly website is certain to have more traffic than one that doesn’t support such a feature because your customers are more likely to visit your site on their smartphones. So, be sure your website design is optimized in a way that different devices can have access to it without hassles. And if you are looking to create an app for your restaurant. Here’s a blog post that will you understand how to create an app for your restaurant.
From rows of cubicles to a totally open concept, offices have gone through tremendous design changes in recent years. However, after years of one way or the other, many businesses are finding the most value in blending the two design elements together.
While it is good to have open spaces for collaboration, it is just as beneficial to have private spaces where workers can retreat when trying to buckle down. Research shows that the move away from a completely open layout can be attributed to employees feeling too distracted in that type of environment. The study revealed that more than 60 percent of high performing employees found their work environment too distracting, while 58 percent said they craved more private spaces for problem solving.
As the Fortune 100 global sales and marketing executive, general manager, and senior cross-functional leader for Staples, Chris DeMeo has excellent insight into the current state of office designs.
We spoke with DeMeo about how office designs have changed recently, the key aspects that should be incorporated in all office configurations and what he sees for the future of office layouts. We also asked him some rapid-fire questions about technology, his career and advice he has received over the years.
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Q: What are the benefits of having both collaborative and private workspaces for employees?
A: A collaborative or open work environment stokes creativity and improves efficiency and speed of communication. Moreover, it allows for significantly better access to and interaction with colleagues and peers. However, for all the benefits, we have observed some pull-back from truly open workspaces. What we are hearing from customers is that people need their private workspaces, too, to tackle assignments that require higher degrees of focus.
The most important advice we offer customers is that creating an ideal work environment is not a perfect science. A balanced work environment matters, and companies that utilize both open and private spaces have had the most success.
Q: If you already have a built-out office that doesn't offer both types of spaces, are there some easy steps you can take to convert spaces in your office? Or, do you need to clear everything out and start from scratch?
A; We often find ourselves reassuring customers and reminding them that there's always a solution. You do not need to start from scratch when converting an office space. If your office consists of primarily private workspaces, you can remove an area dedicated to cubes and build 'harvest-style' or gathering tables to create a collaborative space.
If you're operating in a predominately open space, there are modular panels and fixtures on wheels that you can use to reorganize and reallocate your space as often as you'd like. This creates an adaptable space that allows for both open collaboration and privacy, enabling employees to select the work environment that best suits their needs.
Q: Does the rise in remote work options change how employers should think about their office design?
A: Absolutely. When designing an office with a remote workforce in mind, companies should consider docking stations, which are a great alternative to the traditional cube. Installing docking stations and modular workspaces in your office where employees can come and go as needed with their technology allows them to be both mobile and in-office.
You can also consider creating an established bullpen area as a check-in point for your remote workforce when they are in the office.
Lastly, there is incredible technology now in the form of telepresence programs that allow the virtual to become reality. To support the remote workforce, companies should embrace video-based conferencing and meeting room technology, as well as the collaboration software that is typically associated with these platforms.
Q: When it comes to design elements, what roles should light, greenery and wall colors play?
A: Studies have shown that people thrive in well lit, natural light-driven work environments with organic elements. Many employees attribute unhappiness at work to the physical environment that they're in, day in and day out, not to the actual company or their job. It is difficult to be inspired when you're constantly surrounded by grey or off-white walls and rows and rows of cubicles, but this is how most companies are designed.
The changes companies can make to create a more appealing office design can be pretty simple and inexpensive. They include throwing some color on the walls – it doesn't even need to be every wall – just something to break things up. I'd recommend companies take advantage of as much natural light as possible and make sure that each employee can see a window from their desk. Lastly, bring some plants into the common areas (and make sure they're real!).
Nowadays, companies design offices with an eye toward improving overall workforce wellbeing and to get the inspiration juices flowing. You'd be amazed at the impact that certain design changes, including a visually appealing and creativity-inspiring office, can have on employee morale.
Q: Besides having both collaborative and private work areas, what other elements should "offices of the future" incorporate?
I see the ability to connect virtually as a key tenet of any modern workplace. Successful companies will need to support work wherever it happens, and that means providing the right technology to facilitate work outside of the office walls. Technology is only going to become more advanced and integrated into our workspaces, and the ability to access your office from any location is going to be imperative.
When I think about the office of the future, I do not see it as limited to physical elements, such as desks and chairs. Rather, I see wellness becoming an increasingly important feature. For example, offices should consider creating meditation rooms and fitness facilities, or providing employees with easy access to these kinds of amenities as part of a benefits program. This can also mean offering health-oriented workshops for employees in the form of classes around a variety of topics – from how to effectively handle the flu season to the importance of a healthy diet.
Companies need to be thinking about the whole employee, not just the part of the employee that they see at work.
A: How important is it to gather input from employees when making office design changes?
Experts in workplace dynamics have proven that transparency is critical when it comes to office design changes. We believe that companies should involve employees at nearly every stage of the process, beginning with an open discussion about whether the office even needs changes.
Once established, we advise getting buy-in on the kinds of changes that should be made and nominating employees as representatives for the different functional groups. These 'taskforces' can help drive the direction of the change, the vendor selection and the design. This helps ensure that the entire process is collaborative and that all voices and opinions are heard and considered.
Transparency is ultimately the best currency to spend when making these changes.
Q: What piece of technology could you not live without?
A: My smartphone is everything. Just a few years ago I would have said my computer, but now technology is so durable and so advanced that the loss of my phone would be catastrophic.
Q: What is the best piece of career advice you have ever been given?
A: Fortunately, I've been given a lot of great advice over the course of my career. However, what really stands out to me is a piece of advice that I received at a pivotal point early in my career: It is as important to be known for what you have accomplished as it is to be known for how you accomplished it.
Q: What's the biggest risk you've taken professionally? Did it pay off?
A: When I graduated from college, I took a job in consulting. A year into it, there was an opportunity to run a retail outlet for Gap. Leaving a successful job in consulting was a serious risk – and one that definitely confused my colleagues. However, I saw great value in getting frontline management and business operations experience and ultimately took the job.
Running a retail outlet was only intended to be a yearlong stint and an investment in myself. I was young and wanted to learn how a business ran from the ground up. And it paid off – a lot of the lessons I learned that year (e.g., to think holistically, manage execution) helped to make me to be a better leader, and my positive experience has encouraged me to take more risks throughout the 20 years I've been working.
Q: As a leader, what's the biggest challenge you face?
A: My biggest challenge is my greatest responsibility. It is ensuring that my teams understand that their work matters and contributes to the higher company purpose, and providing them with the autonomy, trust, flexibility and compassion that they need to do the things in their personal lives that are important and fulfilling to them. This work-life balance is critically important.
Much has been written about the troubling lack of women in leadership roles generally and in health care in particular. At Lilly, we have tackled this problem head-on. Our approaches, we think, can be helpful to other companies working to address this imbalance.
In 2015, we conducted a workforce analysis that revealed a significant shortage of women in leadership at our company. Overall, our global workforce was 47% female — and 53% of entry-level employees were women. But at higher levels, the percentage dropped off sharply, plummeting to 20% at the top. While this number was comparable to the percentage of women executives at Fortune 500 healthcare companies in 2015, it was not a number we were proud of. Companies that have gender-diverse leadership deliver better financial performance than companies that do not – so addressing the gap was not just the right thing to do; it made business sense as well.
But before we could solve the problem, we had to understand it. So we embarked on an in-depth study of our own employees, based on a proprietary, multi-faceted process we use for market research. We engaged an outside firm to conduct the study to ensure independence and anonymity.
We surveyed high-potential women and men in the U.S. and asked highly personal questions we had never asked before, recording their stories. Our objective was to better understand how the experiences of women working at Lilly differed from those of men — and more specifically, to identify and remove barriers to career growth so we could increase the representation of women in leadership.
Here are some of the lessons we learned:
Get buy-in from the outset. Our management team was invested in this undertaking from the beginning. Dave Ricks, who was then president of one of our largest business units and who became CEO in January 2017, commissioned the research and supported it throughout the process. He and other senior leaders gathered for two days with human resources and the Lilly Women’s Network, one of our employee resource groups, to brainstorm solutions to barriers uncovered in the research. This was not “just” an HR issue — it was a business issue. We went all-in.
Do your homework. Only through rigorous internal research – asking the right questions, listening to the answers and crystallizing the results – can a company expect to understand its own workforce. We started with a business problem: If women comprised nearly half of our workforce, why were we seeing such a drop-off in senior management? Leaders (mostly male) hypothesized that many women were less ambitious than men, or weren’t capable of ascending to the highest levels of leadership. Traditional engagement surveys do not go deep enough to show whether either point is actually true. Not surprisingly, the surveys showed, neither is based in reality.
Understand your research. Numbers are just numbers unless translated into insights that can be put to use. The research showed that women are just as ambitious as men and equally likely to seek growth opportunities. But many women did not feel supported or recognized for their work. High-potential women start their careers at Lilly excited to take on more responsibility, despite relatively few women role models at the top, especially for non-white women. As they advance, our data showed that some women wrestled with how to fit in and move ahead in a culture that, as with most companies, was dominated by men. They reported encountering biases (conscious and unconscious), gender stereotypes, and talent-management practices that undermined their ambitions. For example, the women reported experiences in which “relationship capital” — whom you know and trust — was an important but unspoken factor in decisions about promotions. Study results showed that Lilly women were more likely to focus on doing the work itself than on networking, and therefore sometimes missed opportunities for promotions despite strong performance.
Be an open book. Accountability is key, so we acted transparently. We held our own feet to the fire by sharing our findings with leaders and employees in 2016. Two years later, we’re seeing women becoming more vocal and more influential. I’m here at the table, they’re saying, and I want to be heard.
Commit to change. Understanding the causes of our gender imbalance was a start, but we next needed to use the findings to create interventions and culture change. For example, we initiated training and deployed instructors to help managers lead more inclusively by valuing differences, recognizing and overcoming bias, fostering a speak-up culture—and we held them accountable for results. More than 2,000 managers, senior directors and vice presidents globally have participated so far. We are revamping our talent-management processes to minimize unconscious and conscious biases in our hiring, management and promotion practices. We’ve set a goal to increase the number of women in management by four percentage points within two years, and we are close to attaining that goal.
Where we are now
Already, we’re seeing progress and are now taking the same approach with racial and ethnic minority populations in the organization. From 2016 to the end of 2017, the number of women leaders at Lilly globally rose from 38% to 41%, and the number of women who report directly to our CEO climbed from 31% to 43%. Last year, women at Lilly accounted for 61% promotions to senior director and above in the U.S., compared to 54% in 2016. Half of the unit presidents in our pharma business are now women.
As we increase the number of women in our leadership ranks, we become better positioned to increase the diversity of our clinical trials, boost innovation, and authentically and responsibly market our medicines. We have become more deliberate, for example, about having women lead the marketing efforts for drugs that treat diseases that disproportionately affect women. The development and marketing teams for our new medicine to treat metastatic breast cancer were led by women and made up almost entirely of women, for example.
While many companies are trying to build more gender-diverse leadership teams and workforces, progress remains slow. We knew it would remain slow at Lilly, too, unless we took a different approach. So we sought to do something difficult: to understand and address our blind spots. Only then could we hope to grow our pipeline of potential women leaders.
Many U.S. firms have long had a simple mantra: “Invent here, manufacture there.” But, increasingly, those same companies are now choosing to invent as well as manufacture abroad. From automotive to semiconductors to pharma to clean energy, America’s innovation centers have shifted east, offering growing evidence that the U.S. has lost what Harvard Business School’s Willy Shih calls the “industrial commons”: indispensable production skills and capabilities. It’s not just that virtually all consumer electronics are designed and made overseas. It’s that the U.S. has lost the underlying capacity to make products like flat-panel displays, cell phones, and laptops; nearly half of the foreign R&D centers established in China now belong to U.S.-based companies.
This isn’t just a lesson for the United States. It’s a lesson for countries around the world: Once manufacturing bids farewell, engineering and production know-how depart as well, and innovation activities eventually follow. We can trace how this happened in the U.S. by looking back to the original offshoring frenzy which started with consumer electronics in the 1960s. The invention of modern transistors, the adoption of standardized shipping containers, and the advent of low-cost assembly lines in East Asia lowered costs and created larger markets for televisions and radios, setting the stage for an Asian manufacturing powerhouse. By the time that substantial U.S. federal research investments enabled the invention of the magnetic storage drive, lithium-ion batteries, and liquid crystal display technologies that paved the way for the next generation of consumer electronics in the 1980s and 1990s, the U.S. had already ceded electronics manufacturing to Asia.
U.S. firms took offshoring a step further and began contracting design and product development activities overseas around the turn of the millennium when China joined the World Trade Organization and Asian producers started investing in major capacity improvements. That pattern has continued. In a recent survey of 369 manufacturers, researchers found that across a range of fields U.S. companies were deciding to move R&D to China to be closer to manufacturers, suppliers, and talent as well as to reap lower development costs and higher-growth markets.
We know from looking at strong economies around that world that a nation needs both R&D and manufacturing activities to maintain a healthy 21st Century industrial ecosystem. While America has continued leading the world in terms of investment in basic science research, it has lost the ability to do the kinds of process improvements that are essential for innovation. When it comes to manufacturing, the country has lost the capacity for “learning by doing.”
But it should be possible for the United States to reverse these developments. We have identified four principles with straightforward steps that policymakers, business leaders, and universities can take to restore innovation ecosystems.
1. Don’t fear picking winners. The United States invests an unrivaled $140 billion annually in federal R&D, and yet the U.S. annual trade deficit in advanced technology products alone stands around $100 billion. America’s problem? It isn’t seriously investing in turning good ideas from laboratories into manufacturable products. In too many cases, other countries are securing new industries by taking advantage of promising results from America’s federal research investments: maturing innovations that were seeded in U.S. basic research laboratories, manufacturing products, and exporting those products back to the United States.
The United States needs investment in “translational research.” This means investing in not only basic science, but also the design, engineering and manufacturing work that can turn a promising idea into a valuable product. Take the example of lithium-ion batteries. While U.S. federal research in the 1990s largely established the feasibility of the technology, U.S. battery companies including Duracell and Energizer opted out of volume manufacturing these new products—not because of domestic labor costs, but because of fears of high upfront investments, long development cycles, and a lack of access to consumers of rechargeable batteries. Countries in East Asia saw an opportunity for job creation and decided to help homegrown firms overcome these hurdles. They provided facilities, loans, and other assistance to establish domestic manufacturing in the field. It worked. Today, US firms have less than 2% of market share in the multi-billion automotive lithium-ion battery industry.
Japan spends about 7% of its government R&D budget on practical “translational research”—converting basic research into meaningful new manufactured goods and processes. Germany spends about 12%. South Korea spends roughly 30%. The U.S., in contrast, spends just 0.5 percent. Even with Japan’s smaller national budget, its total government spending on translational research amounts to about three-times what the U.S. spends. Germany’s translational investments amount to about six-times total U.S. investments. South Korea’s are approximately eight-times what the U.S. spends. Historically, Americans have been averse to translational investments for fear of “picking winners and losers.” But other free-market economies have been able to pick winners and make these investments in fair, unbiased ways that demonstrably boost competitiveness.
Rather than allowing promising R&D results to languish in labs or even be commercialized by foreign competitors, the U.S. should launch a “National Innovation Foundation” to invest in engineering and manufacturing R&D to mature emerging technologies and anchor their production onshore. Right now, there’s no single “focal point” for manufacturing-related R&D in the U.S. federal government. MForesight, a federally-funded independent consortium of academia and industry focused on the future of U.S. manufacturing, estimates that with about 5% of the $140 billion federal research budget, the U.S. could create such an institution and significantly increase the return-on-investment from taxpayer-funded research. This would simply bring the United States into line with the rest of the industrialized world. An estimated 50 countries now have government-backed innovation foundations or similar agencies devoted to turning discoveries and inventions into commercially-viable and socially-beneficial results.
2. Invest in hardware startups and scale-ups. According to a recent study, even when MIT-based hardware startups had access to the skills and financing needed for R&D and proof-of-concept work, they required additional capital, production capabilities, and lead customers that the U.S. simply couldn’t provide. The result: most still had to go to China or elsewhere to scale production up to commercial levels.
The problem lies with both the U.S. government and venture capital (VC). The U.S. government has a long history of strengthening innovation through a combination of R&D and strategic procurement (think both aviation and internet). Government purchase orders, for example, can help companies to raise needed capital (both investments and loans), initiate pilot production or scale production in the U.S., and catalyze private investment. In recent decades, however, the U.S. has generally decreased these types of investments, leaving startups and scale-ups to piece together their own funding. Over recent decades, VCs have overwhelmingly focused on software and biotech investments over “hardware” investments, closing additional doors to manufacturing innovations. It’s no wonder that so many promising manufacturing enterprises have to look abroad to simply get off the ground—let alone soar.
U.S. policymakers can correct this imbalance by building on existing resources to help innovative hardware startups and scale-ups succeed—particularly through domestic government procurement. Other countries—including OECD members like Australia, Sweden, France, and Germany, as well as China—use government procurement skillfully to foster innovation. For example, France used a combination of national public policy and procurement to build a world-class nuclear power industry. China has employed government procurement, strategic technology transfer, and domestic technology development to build its respected high-speed rail industry. Local and regional governments also use procurement to drive innovation. Consider how Barcelona, for example, systematically seeks innovative solutions from entrepreneurs: winning proposals receive guaranteed contracts, plus additional support like office space for their operations.
3. Mind the Mittelstand. Ask a German businessperson or policymaker about the secrets to the strength of their manufacturing sector, and they’re likely to mention the Mittelstand, their small and medium enterprises. For good reason: these firms are diverse, resilient, and geographically distributed engines of innovation. They’re defined by high levels of “buy-in” from owners, investors, managers, and employees. They’re an important basis of “bottom-up innovation.”
In this era, large multinational firms are essentially “systems integrators”—they depend on suppliers, mostly Small and Medium Manufacturers (SMMs), to provide most of the needed components in any product. While few SMMs entertain offshoring strategies, they do, increasingly, compete globally.
The loss of America’s industrial commons has led to the consolidation, weakening, or loss of many small suppliers. This can be corrected. In the United States, SMMs still amount to about 250,000 firms, or 98% of all manufacturing firms. By strengthening and supporting these firms, the U.S. could rebuild the backbone of its manufacturing sector. For example, America’s public sector could help by offering loan guarantees and technical assistance to SMMs to speed up the pace of adoption of new smart manufacturing technologies that are becoming essential for process improvements. Further, government could work to ensure that SMMs are taking advantage of existing opportunities and expanded programs to build awareness about procurement opportunities, emerging domestic and export market opportunities, and new technologies. SMMs can play crucial roles in innovation by engaging in partnerships with universities and other laboratories to help mature technologies. Finally, there’s a straightforward way to help SMMs boost their own expertise: The U.S. could launch a program of industry fellowships to pay recent engineering and business retirees to help SMMs as well as to “coach” next generation of manufacturing start-ups, business incubators, and technology accelerators.
4. Power to the people. The U.S.’s manufacturing innovation decline has traced a similar decline in practical engineering talent. While American high schools typically require students to dissect a frog, few require students to disassemble a power tool. Exposure to real-world engineering is a crucial and cost-effective way to build interest in manufacturing careers—through either four-year engineering degrees or vocational training. Germany’s dual vocational training systems, which pairs apprenticeship with practical classroom learning, has long been a global gold standard. More recently, China has made major investments in talent to address the exponential growth of its manufacturing sector.
Around the world, educated people are the one single indispensable ingredient for innovation. This starts with elementary education and early opportunities to cultivate the necessary creative mindset—think Maker Faires and FIRST Robotics. At higher levels, the public sector can address the need for talent by boosting the availability of graduate fellowships for qualified students. Industry can also work with local technical schools to customize classroom training and experiential learning programs—particularly in areas of identified talent needs.
The common denominator to all these strategies is patience. From the examples above we can see that real innovation takes time. We understand that this is difficult. With the overwhelming pressures of quarterly profit reporting and short-term election cycles, it’s hard for business leaders and policy makers to focus on long-term strategies for strengthening innovation ecosystems. But history does show us: with a foresighted, sustained, cross-sectoral strategy it is possible to both invent and manufacture at home. Strong economies depend on it.