Measuring Successful Innovation – It’s not about the Benjamins*

Now we’ve got around seven thousand people working, and that to me is fantastically satisfying.. more than dollars and cents, because I just believe that the greatest thing you can give someone is a job.
- Janet Holmes à Court (one of Australia’s richest business people)

I was having a conversation over lunch recently about ways to attract investment into small businesses and communities with David Kalow (Founding partner of Kalow & Springut, LLP and Founder of the Cleantech Corridor – CTC in NYC) and John Reaves (Founder of the Learning Worlds Institute and creator of the Storycapture.) The topics flowed freely from considering up-and-coming sectors for investment, to the types of people that need to be involved. We were discussing the differences between innovators and the people who invest in them and began to talk about the standard measures of success – ROI, EBITDA, and sundry other acronyms and initials. Then it struck me that while those measures are meaningful, wasn’t it keeping score primarily in that manner that created so much of the current economic turmoil. As one sharp-tongued friend noted, “At least we’ll remember these times as ‘great’ now that the general consensus has landed on an appropriate title for it – ‘The Great Recession.’”

So, I propose that we keep score in the most tangible and ultimately meaningful manner possible – count the number of jobs created by investments. With an unemployment rate North of 10% at this stage and with no signs of it dipping below in the near term doesn’t it make more sense to apply the bragging rights to those investors who create the most jobs? After all, no one is going to catch up to the likes of Bill and Warren any time soon, are they? So, let’s reset and start counting things that are more universally meaningful.

I know that a large part of accounting for the expenditure in the ARRA (American Recovery and Reinvestment Act – aka. The Stimulus Package) is to account for jobs and that most local government economic development departments use that as a key measure. Certainly we have all seen state government leaders crowing about procuring hundreds of jobs when they attract a new manufacturing facility (usually by offering amazing tax breaks and poaching from other states). But in the world of business job creation is not a measure of any note. In fact, in order to maximize the value of investment “synergies”, job consolidation (read: elimination) is desired.

One recent positive note is that Goldman Sachs is pairing up with Warren Buffett (who, I believe sits on their Advisory Board) to foster small business investment for job creation. In this situation the bank is teaming with the legendary investor to boost financing and lending programs for under-served business owners. The $500M investment in the program called “10,000 Small Businesses” seems huge, but given that Goldman Sachs made $3.2B in the last quarter alone let’s just call it “a start,” shall we?

The key is that the investments being made go to the right area. I’m working on local effort to do exactly that in my community through the Princeton Job Creation Forum. We recognize that investing in million-dollar tax breaks to entice a large corporation to import a few hundred jobs into a state simply doesn’t cut it. Job creation is going to occur in the tens-of-thousands of small enterprises that can add employees in single digits, essentially creating 50% or 75% or even 100% job growth through judicious investments in their enterprises. If we can direct the investment dollars to the smallest innovators and accelerate their growth the economic ramifications are tremendous. Let’s count what matters. Not people counting Benjamins in their bank accounts. Instead let’s count (on) people creating value through their work.

*For those of you not familiar with the term, “Benjamins” – Benjamins are USD $100 dollar bills and the reason people call them Benjamins is because Benjamin Franklin’s face graces one side of the note. He was a publisher, a philosopher, a scientist, and the first major American inventor (read: innovator.)