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Innovation Crisis in Black America Pt. 4: 20th vs 21st century ideology

Posted: 10/05/10 08:54 AM ET

When unemployment in Black America topped 16 percent and Black teen unemployment skyrocketed to an outrageous 45 percent this summer, the voices of outrage were muffled in the pockets of a few media that cared to cover the crisis. The majority of media wrung their collective hands over 9 and 10 percent unemployment challenges in White America, with overall teen unemployment hovering at 23 percent.

Dirty Secret

"A dirty little secret is that many jobs are not going to come back," says Johnathan Holifield, founder of Trim Tab System, LLC, a personal development and organizational leadership methodology, which applies innovation concepts and tools to generate exponential impact.

"Under the old model, recovery meant increased productivity, which meant increased hiring, Holifield said. "That is no longer the case. Because of the ingenious uses and applications and adoptions of new technology throughout our economy, we will continue to experience productivity growth but we will not have the level of job replacement and hiring that our recoveries in the past have been accustomed to."

Dear President Obama ...

Dr. Boyce Watkins, founder of Your Black World, underscores Holifield's point. He wrote a public letter to President Barack Obama that stated in part:

"In addition to massive unemployment, wealth inequality in America remains a persistent problem, causing African Americans to bear the brunt of this economic crisis in ways that are unimaginable to other Americans. Our homes are facing foreclosure more often and we are less able to rely on a source of background wealth to help us get through the toughest times.

"Yet, while we are the least prepared for the recession, we are being hit with a downturn that is twice as forceful as that being experienced by the rest of America. In fact, even after the recession is over, our unemployment rate will probably be as high or higher than the rate that white Americans are agonizing over right now. The United Nations has investigated this issue as a human rights violation, because it appears that we live in a nation that accepts a black underclass as a default way of life.

"To this point, your administration has remained disturbingly silent on the issue of black unemployment. The silence is deafening, but the economic hardship is loud and clear. I am concerned that many of your key economic advisers are unable or unwilling to process and empathize with the depths of black economic misery in America."

Never-Ending Recession

Dr. Watkins called on President Obama to institute political efforts and policy measures that would help create urban jobs through congressional legislation and generate more government contracts with African American companies.

At theLoop21.org, Dr. Watkins made a compelling case that suggests even when the economy recovers, the burden of unemployment for Black America will still be in double digits while the nation celebrates a long-awaited return to prosperity. He states:

"Our country spent 400 years firmly placing black folks at the bottom of the social totem poll, only allowing us to recently participate as laborers in the American economic system.

"The conclusion is that even during good economic times, it is acceptable in the eyes of the Obama Administration for black unemployment to be worse than it is for whites during a recession. The recession will never end for us."

I Have A Nightmare!

2010-10-05-MLKMichaelEricDyson.jpg

In an effort to address the dire situation facing Black America, The Nation magazine took a look back at Dr. Martin Luther King's words when he spoke on the issue of joblessness five years after his famous rallying cry, "I have a Dream." The Nation writes:

"In King's vision of the campaign, thousands of Americans who had been abandoned by the economy would create a tent city on the National Mall, demand action from Congress, and engage in nonviolent civil disobedience until their voices were heard. King argued in one of his last sermons, 'If a man doesn't have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness. He merely exists.'


"Four decades later, as our country struggles with disappearing jobs and growing desperation, much of the critique of the U.S. economy offered in the Poor People's Campaign is newly resonant.

"In a November 1956 sermon, King presented an imaginary letter from the apostle Paul to American Christians, which stated, 'Oh America, how often have you taken necessities from the masses to give luxuries to the classes... God never intended for one group of people to live in superfluous inordinate wealth, while others live in abject deadening poverty.'

"Unfortunately, since then, inequality has only grown."

42 Years of Economic Stagnation

Both Dr. King and Dr. Watkins note the same problem of unemployment and economic disparity persists for Black America. It is a stark reality that one leader spoke obvious truth in the mid-20th century while another continues the same truthful refrain today in the 21st.

There is one other similarity. Dr. King called for a government solution. Dr. Watkins is calling for the same. Yet, the 535 members of Congress are no more moved to resolving the crisis today than the congressional members were in 1968 ... and every year in between.

MLK and Jeremiah Wright: On The Same Page

Dr. Michael Eric Dyson, the author of a new book, "April 4, 1968: Dr. Martin Luther King's Death and How It Changed America," provided a unique look at how Dr. King's message evolved beyond 1963 until his assassination in 1968, when he was preparing to give an upcoming sermon entitled, "Why America May Go To Hell."

Voices like Dr. Watkins, Dr. Dyson and others today are necessary. And the pressure upon congress must continue to be applied from quarters outside of the infamous K Street, where a lobbyist cabal routinely spends hundreds of millions of dollars each year on behalf of their clients to ensure congressional members hear and prioritize their problems.

Economic Katrina

History strongly advises that government will drag its feet until another Black generation has passed on lint-filled pockets to destitute grandchildren. Even a Black president cannot move 535 leaders sitting on their hands and ignoring the plight of Americans hit hardest by the economic crisis.

For example, the National Association of Small Business Investment Companies sent its representative, Carolyn Galiette, to testify before Congress on Oct. 14, 2009. She spoke of the work the SBIC was doing to bridge the funding gap for women and minority businesses, but also warned of the seriousness of the problem that threatened to push investment companies, such as hers, out of the effort:

"Our partnership with the SBA has enabled our portfolio companies to create approximately 4,500 jobs and to increase revenues in these companies by over 50% on average. Moreover, we have accomplished all of this while making 50% of our investments in companies owned and managed by women and minorities and businesses located in or employing residents of low and moderate income communities.

"We have provided capital where larger, more established financing sources would not, some of which are the very lenders and investors who recently received TARP financing. Despite the success of the SBIC program and of Ironwood Capital, if the program is not reformed we and many other funds that are bona fide experts in growing domestic small businesses will be forced to leave the program.

"... despite the efficiency of the SBIC credit facility, the program is dramatically underused. Fiscal year 2009 used only about 20% of the SBA's $3 billion in capacity, denying domestic small businesses over $2 billion in SBA leverage and $1 billion in private growth capital.

"Today more than ever, the patient capital, market experience, and governance guidance that SBICs provide fill a capital chasm that threatens the ability of small businesses to emerge from the current recession. Congressional action is needed from you to realize improvements that are critical to providing capital to small business."

Galiette's plea highlighted the slothful, lazy and ambivalent processes employed by Congress. Government may support an outside solution, but government will not initiate nor embody a solution to the unemployment crisis in America; that's the job of innovative entrepreneurs and investors.


DIYS: Do It Yourself Innovative Solutions

Innocentive is one such effort by innovative leaders who decided to take on the challenge of job creation by investing in deserving entrepreneurs. Innocentive claims it "harnesses collective brain power around the world to solve problems that really matter."

Innocentive brings together "seekers" (those with problems) with "solvers" (those with the means to address problems). So, how's it going for this 9-year-old organization? Here are some quick facts from the Innocentive website:

  • Total Solvers: 200,000+ from 200 countries
  • Total Challenges Posted: 1044
  • Project Rooms Opened to Date: 294,865
  • Total Solution Submissions: 19,346
  • Total Awards Given: 685
  • Total Award Dollars Posted:24.2 million
  • Range of awards:5,000 to1 million based on the complexity of the problem
  • Total Dollars Awarded:5.3 million
  • Average Success Rate: 50%

Developing Innovative Infrastructure in Black America

Where is the Innocentive of Black America?

If a single organization can bring together more than 200,000 collaborators to invest in economic solutions through the efforts of innovative entrepreneurs, what could Black America achieve by bringing together business, education and policy leaders, teachers and community organizations, entrepreneurs and investors?

What amount of productivity could Black America contribute to the Age of Innovation if a concerted effort was made to focus on creating an innovation infrastructure through which students were taught and motivated, entrepreneurs were mentored and supported, and investors were attracted by the development of high-growth companies?

Organizations like the Global Entrepreneurship Monitor (GEM) produce data that show conclusively innovative high-growth entrepreneurial ventures are the driving forces behind significant job creation.

Call for Innovative Entrepreneurs

The well-respected Conference Board offers data in its report, "Entrepreneurs, Inventors and the Growth of the Economy," which underscores the need for innovative entrepreneurship.

The Conference Board report, written by William J. Baumol of New York University and Princeton University in January 2008, points out there is a difference between an entrepreneur who opens a local store, barber shop or community restaurant, and a visionary risk-taker who develops a high-growth innovation that improves upon an existing idea or introduces new technology and captures a share of the market:

"Generally, entrepreneurs have been defined as individuals who create a new firm or some other economic organization or who launch some economic activity that they will carry out at least initially. A replicative entrepreneur is someone who organizes an enterprise of a variety that has been launched many times before, and of which many other examples are currently extant--e.g., a new retail shoe shop or another limousine service. Replicative entrepreneurship has proven its effectiveness as a way out of poverty, as dramatically illustrated by the immigrant peddlers who often ended up sending their children to college.

"The innovative entrepreneur, as the name implies, does something that has not been done before. She may market a new product, or may sell licenses to other firms to make use of intellectual property in her possession, the specifications of new products, or new production processes. But she may innovate in other ways as well, for example, recognizing new uses for an old product or a new market for that item, or a novel and more efficient way to organize the firm.

"Indeed, I will note presently that the options available to the innovative entrepreneur are much broader than that. This is important because it is the innovative entrepreneurs who are the key to economic growth, since it is they, rather than the replicative entrepreneurs, who ensure that invention is put to effective use. Without innovative entrepreneurs, the innovations that promise rapid economic growth have been left to languish. But such an outcome can be prevented only if the prevailing economic forces provide the incentives for the innovative entrepreneurs to carry out the necessary activities."

These innovative entrepreneurs are largely missing in Black America. With failing educational systems, under-represented numbers in the science, technology, engineering and math (STEM) fields, severely under-represented numbers in high-growth entrepreneurship and SEC-qualified investors, the crisis of innovation in Black America threatens to undermine progress and productivity well into the 21st century.

Steps Toward Producing Black Innovators

But there are efforts being made to address the problem:

Today, the Network for Teaching Entrepreneurship (NTFE) is concluding its $10,000 high school entrepreneurship contest, which included an elevator pitch contest and business plan contest. The contest, sponsored by Oppenheimer Funds and Southwest Airlines, will hold a celebration for its finalists tonight (October 5, 2010) and they will ring the opening bell at the stock market tomorrow.

On the professional level, Unity, Journalists of Color association is a strategic alliance of four journalists associations representing the spectrum of Black, Hispanic, Asian and Native American journalists. Unity coordinated a new program funded by the Ford Foundation for journalists of color who want to become entrepreneurs called New U.

Sixteen participants attended two-day "boot camps" to learn entrepreneurial skills and pitch their ideas to a group of mentors and industry experts. Unity is currently hosting a 30-second pitch contest online for its journalists-turned-entrepreneurs who participated in the New U entrepreneurship mentoring program. As one of the New U mentors, I was thrilled to participate in a developing infrastructure for journalists to help transition their professional talents and networking skills and into the world of entrepreneurship.

"This is a 'solutions-based' project," said Doug Mitchell, program co-director. "There is much to know and there are many people we've discovered who are eager to help from all corners to close the gap between who gets funded and who does not."

Change the Equation is an education effort focused on channeling students into the STEM fields of learning: science, technology, engineering and math.

2010-10-05-JohnathanMHolifield.JPG
Johnathan Holifield, Founder
Trim Tab System, Inc.

I interviewed Johnathan Holifield to get his perspective on the pathway from 20th century processes to 21st century innovation. Holifield offers a visionary pathway that leads Black America from the dark portrait of the 20th century painted by Dr. Martin Luther King Jr. and highlighted by Dr. Boyce Watkins into a new frontier of 21st century opportunity.

Prior to establishing the Trim Tab System, Holifield served as:

  • President/CEO of the Urban League of Greater Cleveland
  • President of the Buffalo Olmsted Parks Conservancy
  • Executive Vice President of Council for World-Class Communities in Benton Harbor, Michigan
  • Vice President of New Economy Enterprise for the Cincinnati USA Chamber of Commerce
  • Founding Executive Director of CincyTech

Additionally, Holifield practiced civil litigation with the Manley, Burke & Lipton firm and the Hamilton County, Ohio Prosecuting Attorney's Office and was a member of the National Football League's Cincinnati Bengals.

Q: What is the key to helping Black Americans become more productive in the arenas of innovative entrepreneurship?

A: Imagination is the mother of innovation. I remember I was over someone's house and the mother told the kids, "Go outside and play." And the kids said, "Play what?"

Have we become so reliant on being entertained, structured play, that we no longer have the kind of imagination that ultimately feeds innovation?

The imagination equation is: education, which includes but is not exclusive to academic training, plus unstructured play.

Q: What is the core challenge for Black America to achieve progress and attract investments?

A: We don't talk about innovation as a life skill. We're not nearly well-represented in the science, technology, engineering and math (STEM) disciplines that feed a lot of the explosive growth companies either through the production or application of new technology. Increase the demand for angel investment groups. That's the core challenge.

Q: CB Insights issued a report this summer that revealed Black American entrepreneurs received just 1% of angel and VC funding through the first half of 2010, while Asian American entrepreneurs received 12% and Whites 87%.

A: It's interesting to me that the report identified Asian entrepreneurs at a 12 percent level of receiving VC funding during that period, which I have no doubt is disproportionately high compared to their numbers in the population.

What's also disproportionately high among Asian students is high achievement in math, science, engineering; the STEM programs. And if you extrapolate that out to what gets funded, its high and explosive growth companies in the innovation economy. Most of those companies are using, or producing, technology that's grounded in science, mathematics and engineering. That's what it looks like.

And I think our challenge, in order to increase the numbers of African American, Black entrepreneurs, high-growth or explosive growth entrepreneurs, we have to increase the numbers of African Americans who are immersed in the STEM disciplines.

Q: What's the answer to the lack of funding information and access?

A: For the funding model, these entrepreneurs will need access to leadership and management talent, ultimately to attract the kind of growth capital they need, plus clusters of what I call "peer networks" and a robust infrastructure around them of service providers and institutional support.

That's how states like Ohio, for example, are growing the innovation economy.

We (African Americans) have very little interaction with those networks from my experience. And in our community of support services to help African Americans achieve a level of equitable contribution to the national economy, none of these things are present.

Q: Business plans are a big part of attracting funding, either from institutional investors like angels and venture capitalists or nonprofit resources and potential clients. What's your recommendation on writing a business plan?

A: Business plans should be focused on cash flow and growth. Not growth for the sake of growth and not mindless growth but growth consistent with the business plan along with outstanding management talent focused on explosive growth.

Q: Education leaders in Black America are concerned about the low levels of Blacks in the STEM fields, which produce the highest number of explosive growth companies. To add to the challenge, there are growing numbers of universities that have separate entrepreneurship centers, like Harvard, Stanford, UC Berkeley and others that recognize the need to nurture the entrepreneurial energy that propels innovation. Where is Black America in this fast-paced push for productivity?

A: In the education field, particularly higher education, it has been a continuing struggle to evolve the American higher education model. It is exceedingly difficult for universities that are largely not-entrepreneurial to build, not just an entrepreneurial center, but exude a culture of entrepreneurship throughout the university, throughout the faculty, staff and student body. It's one thing to have an isolated entrepreneurship center within a university and another thing to have an entrepreneurial university that in many cases manifests breakthrough ideas through the entrepreneurship center ultimately for commercialization in the marketplace.

I think there's still a disconnect between the old model institution and the 21st century needs of all of our national assets.

* * *
Johnathan Holifield is inviting a collaboration of leaders to join him and Dr. Chad Womack of tbed21.org in developing an innovation infrastructure for Black America. To join the growing number of collaborators, contact Johnathan Holifield via email: johnathan@trimtabsystem.com.
(Ask about the Trim Tab)

Read the entire four-part series:
Pt 1: Innovation Crisis in Black America
Pt 2: Where are Black Entrepreneurs and Angels?
Pt 3: The Challenges of Tech Entrepreneurship

 

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