Think of Apple, Google, and GE and what comes to mind? Perhaps, you think of visionary leaders surrounded by smart people who create products and services that consumers demand. What is the greatest competitive advantage for these companies? It’s their people without a doubt. The ability to attract, recruit and retain talented people is how companies achieve phenomenal results, year after year. Look into their cultures and you will find environments that foster “intrapreneurs.” Whether you’re a small company with fewer than 25 employees or midsize, you can achieve stellar results by following their example. Well, how do you find and keep smart people? You simply have to attract them by becoming a talent magnet. It’s really not as difficult as it may seem. The first step required is to create a culture that fosters “intrapreneurship.”

Read the full story

For 76 years, Detroit’s General Motors Corp. (GM) was the world’s leading seller of automobiles. Then last year, in a photo finish, Japanese rival Toyota Motor Corp. emerged as a close number-two, nearly clipping GM’s title. GM sold 9.36 million cars and trucks worldwide last year, only about 3,000 more than Toyota.

What happened to GM isn’t unique. Other industries traditionally dominated by the United States have watched their market share steadily erode to foreign competitors.

Consider Eastman Kodak Co. (Rochester, NY) For much of the 1980s and ‘90s, Kodak was the world’s number-one maker of cameras. But today, Japanese camera makers such as Canon Inc., Sony Corp. and Olympus Corp. have eclipsed Kodak thanks to the growth of digital cameras and Kodak’s slow transformation from film to digital imaging. In the past decade, Kodak lost almost 80% of its market value. In recent years, Kodak has laid off about 28,000 employees and spent nearly $3.4 billion in restructuring. Earlier this year, Kodak executives said they expected to increase sales of digital products, including cameras and printers, to between 10% and 12% annually through 2011, or between $9.8 billion and $10.5 billion.

The competition among personal-computer makers is even tighter. International Business Machines Corp. (IBM), Dell Inc. and Hewlett-Packard Co. (HP) are in a three-way race, not so much against each other but against Asian rivals Acer Inc. and Lenovo Group Ltd. for the top position in the world’s personal-computer market. Both Asian firms are expanding rapidly. Last year, Acer purchased Netherlands-based Packard Bell BV to increase its presence in Europe and Irving, CA-based Gateway Inc. to expand within the U.S. Meanwhile, China-based Lenovo increased its sales in India and Eastern Europe and China, outpacing HP and Dell.

To compete, last year, Dell began selling PCs through retailers including Wal-Mart Stores Inc. and Best Buy Co., abandoning a long-standing tradition of direct-only sales. Dell also began selling to retailers such as Carerefour SA in Europe and China’s GOME Electrical Appliances. Driven largely by its laptop sales in Asia-Pacific and Japan, Dell’s revenue in the Pacific Rim grew by 41% in its most recent fiscal quarter, the company announced last month.

“Fifteen years ago, the U.S. was seen as the dominant economy in the world. But that has changed,” says A. LaMont Eanes, global vice president of BT Conferencing, a video-conferencing company. “It’s clear, at this point and time, the U.S.  as the dominant position in the world economy is somewhat in doubt. We are competing on a global basis.”

Eanes cites several examples of how 10 years or so ago, companies in various countries banded together in their respective country such as Latin America or Europe to compete against the U.S. Those efforts are now are paying off.

Another reason U.S. companies are now playing catch-up to foreign-based firms is, in large part, due to sheer arrogance, Eanes said. “Detroit [auto makers] did a very poor job of innovating during the 1960’s and 1970s, which was their heyday,” he says. “They continued to turn out basically the same product without concern for quality because there was little competition. Then Honda came out, and then Nissan. They studied the American market and applied principals of quality. Asian companies were better and faster to apply innovation and technology than U.S. companies were. U.S. automakers were caught sleeping and continue to lose market share.”

Domestic Changes

As U.S. businesses expand overseas, there will be greater scrutiny on what happens to jobs stateside. During the recent Democratic presidential race, one of the top issues for candidates was the loss of jobs in the U.S. as corporations not only look for revenue outside of the U.S., but also seek cheaper labor. Both Senators Barack Obama (D-Ill.) and Hillary Clinton (D-NY.) proposed ways of re-examining how U.S. businesses can survive. Clinton’s admission that the North American Free Trade Agreement, or NAFTA, which helped U.S. companies employ workers in Mexico and Canada, needs some additional work and may not have been as positive for the U.S. labor market as once thought, was even more startling, considering her husband signed the policy in 1993 as president.

With the weakened U.S. economy on the brink of a recession, domestic companies in danger of losing market share to foreign companies are aggressively expanding to emerging foreign markets including India, China, Russia, and Africa – the same thing foreign companies have been doing for decades in the U.S.

Angel L. Pineiro, a senior operations manager of Citi, the Cincinnati-based global financial services company and one of the nation’s largest financial multinationals, believes as the economy continues to strain, many U.S. companies will reduce their spending on U.S. marketing, advertising, and even business travel and instead focus only on operations that are geared to attracting business and employees outside of the U.S. Foreign companies, he says, will also use the weakened state of the dollar to aggressively invest in the U.S. through mergers and acquisitions.

Pineiro is in a unique position to witness how the economy will impact businesses, particularly from the side of consumer spending. Through Citi’s subsidiary, Citigroup, he oversees Macy’s Department Stores credit card services. Citi also competes with larger banking institutions such as American Express, Bank of America and Wachovia. When consumers fall behind on their credit card bills, or homeowners begin falling behind on their mortgages – especially those involved in the sub-prime mortgage market – or car-owners begin missing their payments, banks such as Citi feel the pinch.

“We’re going to start seeing affects on the bottom line,” Pineiro said. “We’ll have more write-offs for money that we can’t collect.”

Executives from one U.S. based multinational say the near-term future growth has to be foreign markets. For IBM, 63% of its revenue in 2007 came from outside of the U.S., says spokesperson Ian Colley. In fact, in the fourth quarter of 2007 alone, sales in Europe and Asia outpaced domestic sales. IBM is now focusing on meeting its foreign demand. It’s increasing its staff in China, India, Russia, and Brazil, where sales jumped 39% in the first three quarters of 2007. “The fast growth is occurring on a more rapid rate outside of the U.S.,” Colley says, adding that one of the firm’s biggest areas of growth is infrastructures for cell-phone users in India. Telecommunications companies are flocking there because residents are beginning to purchase cell phones nearly as quickly as U.S. residents.

The biggest challenge for multinationals today, Colley says, is changing the corporate mindset that U.S. companies only have to bring their brand to a foreign country to achieve success. That type of insular thinking no longer works in today’s market. “It’s not enough anymore just being a multinational corporation where you set up a copy of yourself in another country,” he says. “You have to establish a global footprint. You have to draw on talent from around the world. And the talent coming out of emerging markets today is very highly skilled.”

In other words, for U.S. multinationals to be successful, American. companies have to become entrenched in their new markets’ cultures rather than just establishing an office there with U.S. born employees and interpreters.

“It’s about global integration,” Colley maintains. “It’s all about integrating your assets around the world, rather than just creating local replicas of yourself. That’s how they will survive.”

Every business dreams of leaving a legacy. These days, making it past your first year is tough enough. Many forward thinkers have ideas they hope will change the world, but hardly any will ever see their dreams come true. Hard work and focus is the vehicle that might get you there, but innovation is the gas necessary to keep your engine running.

Boston Consulting Group recently surveyed 1,060 executives and found some convincing facts about what are driving big businesses today. Innovation remains a top strategic precedence for many companies, with 72% of executives ranking it a top-three strategic priority. More than half of the executives were dissatisfied with returns on investments in innovation. Although blue-chip CEOs may be spending huge budgets on innovation, this shouldn’t mean small businesses cannot compete with them. Small businesses can adapt and react quickly, and often don’t get toppled in the deadly process of killing innovation with “no change” attitudes from risk-averse shareholders.

Donald Sheelen, an innovation consultant, has created and managed over $1 billion worth of innovative products. “Innovation is the lifeblood of any organization.” he emphasizes “Without it, not only is there no growth, but inevitably a slow death.”

Only two-thirds of new small businesses survive at least two years, and just 44% survive at least four years, according to a study by the U.S. Small Business Association. Here are some innovation principles that every entrepreneur should consider if they don’t want to be another startup casualty.

Jump the next curve. Great innovators don’t try to do things 10% better; they try to do it 10 times better. Innovation is the act of introducing something new. The power of the web means startups no longer have to build global infrastructure to reach a worldwide market. This allows for companies like Google, eBay, Facebook, and YouTube to scale their businesses unconventionally quickly. They have jumped the next curve and invented new curves to jump on. They are reorganizing how society operates in brilliant and novel ways. It is their awareness of what’s upcoming that are allowing these young entrepreneurs to be worth billions.

So how can you start thinking like a great innovator? First, you must be versed on what are the latest innovations. The success elite are lifelong learners. Talk to your customers or potential markets and ask what they want. Consumer-centric innovation may be the most powerful way to raise a company’s innovation success rate because you’re producing exactly what your customer wants.

Get fresh eyes. Most entrepreneurs never think outside the box because they’re trapped under their own self-created glass ceiling. The busy daily grind with its built-in stress pollutes their natural creativity. Take the time to re-evaluate your goals with some fresh perspectives.

Start by switching roles. This is a good way to learn and understand what’s out there or in there. If you’re a manager, become an employee. If you’re the product manager, become the product. Change your perspective. This bit of role-playing can allow you to find new innovative ways to look at the same problem, and find a solution you never thought existed before.

Stuck with a creative block? Try beginning your day with Starbucks in one hand and a pen in the other. Build a daily routine brainstorming new ideas first thing each morning to get your creative mojo going. Before the hectic day starts is when you’re most creative and your mind is less cluttered and strained.

Swim in the blue ocean. In the groundbreaking book Blue Ocean Strategy, authors W. Chan Kim and Renée Mauborgne say that a major focus should be on creating competitor-free market space. Unlike “red oceans,” which are well explored and crowded, “blue oceans” represent opportunity for highly profitable growth.

Take Cirque du Soleil, for example. It took an old circus model, which catered toward middle-class families, and created a phenomena focused entirely on an upper class Broadway-type audience. Cirque du Soleil eliminated the cotton candy and expensive circus animals. Instead, it rented high-class venues and crafted a themed storyline underlining its astounding acrobats and performers. It was able to reconstruct the market boundaries for an aged circus industry and has since entertained over 70 million people.

Start looking across time, alternative industries, or complementary products or services. Your goal is to find the customer values of today, then re-evaluate traditional outdated models and their old values. Are you after a market that is small enough that larger competitors aren’t already going after it, and big enough so that if you’re successful, you can reach critical mass and profitability? Once you’re on to something, you can start paddling in the open waters.

Think big, start small. If you’re going to change the world, you cannot do it with boring products or services. In the Art of the Start, Guy Kawasaki suggests, “Your goal is to catalyze passion…the only result that should offend (and scare) you is lack of interest.” He also recommends you not doing it alone. Most successful companies are started and become successful with at least two “soul-mates.”

Your positioning and messaging should be simple, elegant, and deep. It must be easy enough that your grandmother would understand it, and intuitive enough for a fifth grader to figure out. If your business model cannot be described in less than 10 words, start over until it can.

Move swiftly. Busyness doesn’t create business. Don’t spend all your time trying to find the perfect business model and the perfect big idea. Marketing guru Seth Godin, discusses this in his book, The Big Moo: Stop trying to be perfect, and start being remarkable. Your initial goal isn’t for perfection. It just needs to be attractive to a large group of people.

Most businesspeople would suggest that you must understand your market and product very well, then go as fast as you can. Make as many mistakes early on and react quickly. This will be your best way to be able to compete with the business giants.

The revolution of forward-thinking innovators has just started. The race to build creative, innovative companies will be decided by who will choose to start and who will finish strong. Perhaps one day, more companies will be leaving a legacy after all.