It’s hard to comprehend how $3.7 trillion is divvied up among countless Federal agencies and programs. To better understand President Obama’s 2013 budget proposal, both The New York Times and The Washington Post have created helpful interactive data visualizations.

The New York Times slices the data four ways: All Spending; Types of Spending; Changes; and Department Totals. Clicking from one view to the next creates an animated tour of the budget. Scroll over each circle to see which department is gaining or losing funds.

All Spending


Changes


Department Totals

The Washington Post uses boxes to show both revenue and spending. Click on a box to see trends in each category since 1981.

By:Brian Palmer
Via: Slate.com

Mitt Romney eked out a win in Michigan’s Republican presidential primary Tuesday, overcoming criticism of his opposition to the automotive industry bailout. Why are all major auto manufacturers headquartered in or near Detroit?

Because Henry Ford lived there. Detroit and its environs had a lot to offer the nascent auto industry around the turn of the 20th century. Iron ore was available from the Mesabi Range in Minnesota, and there was ample timber in Michigan itself. (Early car frames were made of wood.) Rail and water routes made it easy to ship cars to Chicago and New York. And Detroit already hosted heavy industry like machine shops and stove works. Toledo, Cleveland, Milwaukee, and Buffalo could have made similar claims, yet none of them became Motown. Detroit’s eventual dominance probably had more to do with a couple of historical accidents than any geographic advantage. First, innovators like Henry Ford and Ransom Olds happened to live in Michigan. Second, automotive executives in early-20th-century Detroit behaved a lot like Silicon Valley executives today: They regularly switched companies and launched spinoffs and startups. This culture of cross-pollination spread innovative manufacturing and design ideas among the Detroit manufacturers. Distant competitors couldn’t keep up with Motown’s research and development operations and eventually failed or sold themselves to Detroit.

There was no indication that Detroit would come to dominate car making in the industry’s early years. According to economist Steven Klepper of Carnegie Mellon University, none of the 69 companies that entered the auto industry (PDF) between 1895 and 1900 was located in Detroit. Olds Motor Works became the city’s first major carmaker when it relocated from Lansing in 1900. Ransom Olds then made a decision that would shape the course of the industry—rather than creating hundreds of small components in-house for his Curved Dash Runabout, he subcontracted much of the work to companies in Detroit’s flourishing manufacturing sector. The people who built the car’s parts eventually learned so much about automotive manufacturing that they went on to launch their own brands. Olds’ subcontractors included the Briscoe brothers, who helped build Buick, and machinist Henry Leland, who created Cadillac and Lincoln. The Dodge brothers also cut their teeth making parts for both Olds and Henry Ford. Ransom Olds, himself, eventually left Olds Motor Works to found the REO car company. A few other executives from Olds founded Chalmers and Hudson. William Durant, the man behind General Motors, was twice forced out of the company, forming Chevrolet and later Durant Motors while he was away. All of these ventures were based in or near Detroit.

The number of U.S. carmakers peaked at 272 in 1909, including major manufacturers in New England and Ohio. During the 1910s, however, the Detroit brands pulled away. In 1915, 13 out of the country’s 15 most popular car brands were in Detroit. Motor City executives, particularly Ford, invested heavily in research and development, distancing their products from the out-of-towners.

The industry further agglomerated—an economics term for the consolidation of an industry in one geographic area—in Detroit, and parts suppliers and skilled laborers followed the largest manufacturers to Motown, making it harder for companies in other regions to compete. Many of the largest remaining non-Detroit carmakers, including Nash (Kenosha, Wis.), combined with Detroit-based brands in the 1950s to form American Motors.* George Romney, father of the GOP presidential candidate, eventually helmed the company, which was bought by Chrysler in 1987.

Correction, March 1, 2012: This article previously stated that Studebaker became part of American Motors. In fact, the plan to merge Studebaker-Packard with American Motors was never completed.

By: Nilofer Merchant
Via: Harvard Business Review

Imagine that you wanted a new home theater system. But instead of spending hours in Best Buy or on Amazon comparing configurations and assembling the parts you needed, you could signal what you wanted and a company would create it for you. You might simply Pinterest the elements you liked, including information about your space or noise limitations (“One-bedroom apartment on busy street in New York,” or “suburban space that needs stuff protected from little kids”), and then have a retailer give you a personalized, optimal configuration.

Right now, social is largely seen as a way to amplify messages (“Like” us on Facebook!) or to create conversations around customer service (“We’re so sorry you’re having a problem,” the persistent tweet from @ComcastCares). These two key functions — Marketing and Service — are regularly discussed as shaped by social era dynamics.

But the social era can — and will — be more than that. It will help us decide what we make, how much we make, and how we finance that production. While social media doesn’t shift Porter’s model, the social era surely does.

Big Isn’t Enough

This is the third part of a series on what it takes to win in the social era: being fast, fluid, and flexible. (Part one is here; part two is here.)

Let’s think about the way that changes our modes of production. Size once gave organizations purchasing power. Being big used to enable high barriers-to-entry, keeping out potential competitors. Big had the dollars to buy the mass-market access to consumers back when mass media was the only way to reach an audience. But when the capital requirements to enter markets have declined, the marginal cost of reaching consumers is effectively zero, and one-off production is not hard to do… being big offers a much smaller advantage than it used to. Being big ain’t enough, anymore.

Most existing big organizations — the 800-pound gorillas — subscribe to Michael Porter’s value chain framework. As I mentioned in the first part of this series, this model optimizes for efficient delivery of a known thing. Organizationally it means Z follows Y, which follows X. It carries with it one fundamental assumption: that customers are tangential to the process.

There is no question that Porter’s work has helped shape (some would say, “invent”) modern-day strategy. I’ve used his ideas for over 20 years of running companies big and small, and I consider myself a fan of his thinking. But, to put it bluntly, Porter’s value chain is antiquated in the light of the social era. It was created at a time when being big and having scale was in itself a key aspect to competitive advantage and profitability.

Generic vs. Distinct

People buy two categories of things: The distinct, and the generic. The distinct items are the things that have a limited quantity, that are artisanal in nature, and that are worth paying a premium for. The generic items are, well, the things you might find on Amazon.

When companies like Best Buy or Target are simply aisles of what you can find online, then it’s easy enough to become a storefront for Amazon. Everything that is undifferentiated is going to be delivered in ever more efficient, low-cost ways. Porter’s value chain is well suited for this mass-market, cost-driven approach, where customers remain at the end of the value chain.

But for organizations wanting to thrive in the social era, being distinct is key to both profitability and winning. While there has always been a market for bespoke, differentiated items, until very recently that market served a tiny fraction of the uber-rich. But today, both macroeconomic forces, and technological advances mean that customized products aren’t just for the one percent. Instead, customized products and experiences can be for everybody, at least some of the time.

How will the smartest, nimblest companies move away from less-profitable generics and into more-profitable distinct goods and services? By using the rules of the social era.

Social Becomes Central to What We Build

During Fashion Week in September 2011, Burberry did a direct campaign with an everyday consumer (not just the editors and fashionistas) to showcase their new line in what they called a #tweetwalk, letting users tweet about what they liked (or didn’t). It created an immediate signal between the company and its broad users.

It was an interesting first step.

Every brand already has the ability to get direct feedback from consumers on what they like; the friction cost of doing this is effectively zero through a social media conversation. But Burberry stopped short of doing what makes the most sense to their bottom line. Imagine if they’d actually created a video of a runway walk that enabled click to order. They could produce only what was ordered, and thus reverse their supply chain to produce only what is already sold. They could even allow customers to request products in particular colors at premium prices. Social gives companies more control to operationally adjust their offers and create zealots by better collecting and amplifying even weak signals.

This puts the customer at the center of the company much more than any lip service about being “customer centric.” Today, we see brands asking consumers to “like” them on Facebook as a way of getting permission to push them information. The brand is still the central part of that communication. Imagine what that dynamic becomes when using the power of pull. Ask yourself, what would it look like to put customers at the center?

Many of you already know of Kickstarter as the largest funding platform for creative projects in the world. Several other platforms exist to allow community to fund expansion. When no one funds you, you know there’s no market for your idea. This changes more than the economic source. When a community invests in an idea, it also co-owns its success. In other words, it’s not just socially funded; it’s socially meaningful.

Now, let’s go back to that imagined home entertainment system. What if you — and everyone else shopping for a similar system — could signal your desired systems and have Best Buy choose one of hundreds each week to showcase (or perhaps choose the most popular per region). You would then have a reason to check out that configuration in a retail store — to see it and feel it — and then order it so they could come set it up at your place. See how that changes the retail experience from generic long aisles of commodity items to customized and community experiences? That is what social allows.

A Cycle of Profitability

When companies figure out how to shape their design, production, and manufacturing cycle from rigid planning and production systems to unique customer-driven experiences, they’ll design a way to respond in smaller bursts of more profitable cycles.

By allowing customers to directly fund an expansion, companies will know exactly what to build, and what is extraneous. By allowing signals to direct production, there’s an opportunity to learn immediately what the market responds to. Organizations can be in a constant conversation to learn what is working and what is not, and adapt on the fly. These nimble organizations consistently try new things, adapt to what works and thus improve the bottom line. What is interesting about this approach is that no company has to get it “right” the first time, as much as know how to learn and discover what works for growth.

The 800-pound gorilla dominated at a time when companies needed and used more capital, when the value chain could be profit maximized through vertical integration. To run this kind of organization, leaders had to be focus on being big enough to enable scale — because that’s where the profits once were. Once an organization got big, it took a lot to displace it. But the social era demands something more of our organizations. Something that is qualitatively different. The social era rewards the gazelles — the ones that are fast, fluid, and flexible.

Younger, wealthier students pick community college, bringing expectations

By: Paul Fain
Via: Inside Higher Ed



Community colleges are hot these days, and not just with photo-op seeking politicians. They’re an increasingly popular choice for 18-22 year-olds from the upper middle class, thanks to cheap tuition, a career focus, smoother transfer options and growing public respect for the sector’s academic chops.

Nationwide, 22 percent of college students with annual family incomes over $100,000 attended community colleges last year, up from 16 percent four years ago, according to a study by Sallie Mae.

“Community college gradually is gaining wider acceptance as the default option out of high school,” said Stephen G. Katsinas, director of the University of Alabama’s Education Policy Center.

Relatively affluent young students are typically better-prepared academically and have a good chance of earning a degree. They are also more likely to attend full-time, require less remediation than their peers and can be cheaper for community colleges to educate.

But this group is also demanding, as traditional-age students want a full campus experience with amenities like fitness centers and extracurricular activities, which can mean new buildings and strained student service budgets. They are also more likely to seek out counselors, experts said.

“You have more students coming to our campuses who see themselves transferring,” said James Jacobs, president of Macomb Community College in Michigan, and who sometimes view community college as a “stepping stone.”

Raritan Valley Community College, which is located in a suburban swath of northern New Jersey, has welcomed a surge of young students. Many of those students would have attended a nearby four-year college in the past, administrators said, such as Rutgers University or Fairleigh Dickinson University.

Over the five years before 2011, Raritan Valley’s total enrollment went up by 32 percent. But the number of students under 21 years old increased by 49 percent, from 2,472 to 3,675, while older students accounted for a much smaller portion of the growth. (See table here.) Full-time students are also gaining ground in the mix.

Casey Crabill, the college’s president, said the college hasn’t studied which four-year institutions students are passing up to come to Raritan Valley. They know, however, that more students are arriving from two wealthy counties.

Historically about two-thirds of Raritan Valley’s students have come from Hunterdon and Somerset Counties — which are among the top 10 most affluent counties in the U.S. — and that proportion hasn’t changed as overall enrollment has grown.

“Our market share from those counties is reaching deeper into the high school graduate markets,” Crabill said.

The recession has played a big role in Raritan Valley’s recent enrollment bump. “A lot of Wall Street lives in our counties,” said Crabill, and many of those families suddenly had less money in 2008, making community college a more appealing option.

New Jersey’s public universities have increased their tuition in response to state budget cuts, but they remain a cheaper option than most private colleges. The state has also seen a large population increase in the traditional college-age bracket, which means more competition for slots at public institutions, particularly at the increasingly selective flagship, Rutgers.

The competition is contributing to the growing number of young students at Raritan Valley, Crabill said. “It’s like a wave.”

New Jersey’s experience is not unique, Katsinas said. The research center estimates that the total number of 18- to 24-year-olds nationwide increased by one million between 2009 and 2012.

“A lot of folks in the middle class are taking a look at community colleges,” said Walter G. Bumphus, president of the American Association of Community Colleges. “The increases are significant.”

Fielding Teams

Raritan Valley has had plenty of recent success stories, including students who have transferred to Cornell University, the University of California at Berkeley and other high-profile institutions. Crabill said the publicity has helped convince more traditional students that the two-year college is a good choice.

“Our profile peaked at the same time” that the the recession began, she said.

The college has taken many steps to respond to the changing demographics on its main campus. To improve student amenities, college officials remodeled the cafeteria and expanded and updated the fitness center. The college also created a first year experience office and related programming. A new student life and leadership center is in the works, with a related fund-raising campaign launched in 2010.

The increase in full-time students has helped to offset those costs, said Crabill, because part-time students use student services, too, without paying full-time tuition.

So while the Obama Administration talks up job training programs at community colleges, many of which are aimed at helping workers update their skills, Raritan Valley has added some of the trappings of a four-year college.

To wit, the college recently added men’s and women’s varsity soccer teams, and a club ice hockey team. It’s a big change for a community college that has often struggled to field teams.

“I don’t think we’ve had to forfeit a game this year,” Crabill said, “which was not our tradition.”

Older students are still a strong, visible population at Raritan Valley. Jill Marie Winters is one of them. She’s in her fifties, and is working toward an associate degree in social work. Winters said she sees plenty of students like her on campus. But she likes going to class with young students, and interacting with them through Phi Theta Kappa, the honor society for students at two-year colleges.

“I just love the young kids,” Winters said. “I think they like being around us.”

Crabill said the college predicted its enrollment growth, but was surprised a bit by the numbers of students who are just out of high school. And while those students expect more campus life options, the increased energy has been a plus.

“Young students are demanding and that’s what makes it fun,” she said.

Via: Ocala.com

There is more to successful economic development than aggressive recruitment, doling out incentives and putting down new utility lines and roads. A lot more.

That was the message this week from consultants for Ocala/Marion County business leaders who are orchestrating the merger of the Chamber of Commerce and the Economic Development Corp. To be competitive, said Jon Roberts of TIP Strategies of Austin, Texas, requires a “holistic view” that creates a unified strategy for both “short-term fixes and long-term transformational initiatives.”

That holistic view, Roberts told a gathering of Chamber and EDC board members on Wednesday, should incorporate quality-of-life issues in our community. He said his organization had interviewed some 45-plus “stakeholders” in the Chamber-EDC merger and came away with “projects and ideas” they believe will make Ocala/Marion County a better, more appealing, more competitive community. Absent from the list, he noted, were jobs, industry or sites.

Instead, the consensus of those interviewed was that Ocala/Marion County needs to focus on the following, and jobs will follow:

- The innovation corridor in downtown Ocala.

- Tourism, especially eco-tourism, and that includes Silver Springs, as well as outdoor events and recreational opportunities to attract visitors.

- Tapping the wealth of knowledge and expertise that our large retiree population offers.

- Completing and marketing our commerce parks.

- Downtown revitalization.

- Improving our public schools.

What is increasingly important in business location decisions is that a community is a place people want to live with plenty of things to do. They have to be fun places to live that are aesthetically appealing with good cultural amenities and quality public services, not the least being good schools.

“Talent, that is, educated and skilled workers, are picky about where they want to live,” Roberts said.

Beyond that, Roberts talked about other communities where mergers such as the Chamber-EDCs have occurred — places like Asheville, N.C., Nashville, Austin, Texas, and Oklahoma City. Those communities became more competitive in attracting new and better jobs because their mergers gave them a unified voice that established a leader on both quality-of-life issues as well as economic-development ones. In each case, the resulting organization was private sector-led with public partners.

There is much more to economic development than jobs, jobs, jobs. Ocala/Marion County has a leg up on other communities because it offers wonderful location and already is a good place to live. It also knows what it is to be a great place to live; it was an All-American City selection in 1996. That needs to be the goal again.

Maybe more important right now is establishing a definitive leader, a go-to organization on economic development. Today, no one, not prospective businesses or our own business community, knows with certainty who is in charge of economic development here — the EDC, the Chamber, the city or the county. They all are doing some economic development, sometimes together, sometimes not.

There is still work to do on the Chamber-EDC merger that is being led by EDC board Chairman Doug Cone and Chamber board Chairman Brian O’Connor, but the direction the effort is heading is highly encouraging. We are eager to see the final result. It should make us a better place to live and competitive in the economic-development game.

by Adam Davidson

via NPR Planet Money


Every week, Robert Stout of Kings County Jerky slices meat by hand. Photo by Adam Lerner/adamlerner.net

One day Chris Woehrle decided to finally leave his corporate job and pursue his dream: to become an artisanal food craftsman. And so, every day at home, he’d basically pickle stuff.

“I had a refrigerator full of plastic food buckets that were full of pickles and kimchee and sauerkraut and harissa and salsa and ketchup and mustard and, you know, any kind of craft food you could make,” Woehrle says.

Woehrle lives in Brooklyn, where shops are filled with handcrafted, grass-fed, organically raised whatever. Too much of it, in fact. Every time Woehrle had a good idea, he found eight other companies were already making precisely the same kind of mustard or pickled radish.

“You don’t want to play a marketing game where it’s just like, let’s out-market the other pickle people,” Woehrle says.

Eventually, though, he and his partner found a hole in the market: all-natural beef jerky. Kings County Jerky was born. Two guys, a small warehouse in Brooklyn and 25 pounds of beef a day.

The Kings County approach is a model for how manufacturers in many sectors can do better. Ignore low-priced commodity products. Focus instead on customizing high-quality goods for a select audience willing to pay a premium.

It works even on something as simple as a spring.


Photo: Dan Kedmey/NPR Juan Delgado (left) and Steve Kempf of Brooklyn’s Lee Spring company stand with a 50-year-old coiling machine, still in use today.

“Springs are critical to the day-to-day functioning of everybody’s lives,” says Steve Kempf, CEO of Lee Spring in Brooklyn.

My eyeglasses have springs. Our audio recorders have springs. And each of those springs has to solve a slightly different problem.

“You take this wrench here for example,” he said, picking up a wrench from his desk. “It’s got a very unique L-shaped spring design. And so the product designer wants to come up with an elegant design, and he also has a very specific force he wants when you let go of this wrench so that it opens in your hands and feels comfortable.”

Think of this as an artisanal craft wrench. And a craft wrench needs a craft spring. This is good business, by the way. Companies will pay more for a spring that precisely meets their needs than they will for some off-the-rack spring.

The springs at Lee Spring are gorgeous displays of ingenuity and skill. Making them requires knowledge and artistry. It’s a true craft. Craft jobs typically pay more, so the workers at Lee Spring tend to do better than workers who don’t have all those spring skills.

Even big manufacturers — like Toyota, General Electric, Dow Chemical — are focusing more of their business on custom-making products for customers willing to pay more. It’s one of the best alternatives to competing with China and other low-wage countries, which have perfected the commodity business of turning out lots and lots of identical products as cheaply as possible.

Forget that model. In America, we can focus on craft. That’s where the money is, and that’s where the hope lies for American manufacturing.