It was an interesting project.  First, businesses are in Vermont for the simple reason they want to be.  Businesses do not typically locate in Vermont because costs are low or the resources they need for their work are here — mines or ports for instance.  Of course many are:  Omya, Rock of Ages, etc.  For the most part, though, businesses locate in Vermont because of Vermont.  Second, even though many factor costs cause businesses pain, all but one tested factor cost falls into one of two categories:  (1) the pain is acceptable and normal cost of doing business; (2) the pain is severe but, for businesses feeling that pain, the costs would need to come down so dramatically to reduce the pain is so great it is not realistic to see the reduction and therefore it is not good policy to pursue the goal of ‘pain reduction.’  Third, one factor cost could well drive significant numbers of businesses away and that is Vermont tax policy.  It is not Vermont’s decisions of how to spend its money that came through as the issue — Vermont businesses are here because they like Vermont ‘the society,’ not just Vermont ‘the postcard.’  It is the disconnect between the vision the state wants to achieve for itself and the lack of investment in attracting enough of the right businesses to create the revenue to pay for the society we want to be.

We would love to hear your reaction to the article and the survey report.

Here is a scenario: A young couple starts a small business with a unique position in an industry. It becomes a labor of love. They are on the cutting edge in the industry and become experts. They take care of their employees, inspire deep loyalty, and they each occupy a hallowed place in the business as it grows. The founders’ personas become so embedded that in reality the mission of the business is simply to support the founders as they grow the business.

Fast forward to the twilight. The couple’s children are out of college and decide to come home and work in the family business. Soon they are making preparations to take over. The transition is bumpy. Morale sinks, production slides and the founders linger, trying to preserve their legacy, equity and effort. Without intending to, mixed messages emerge for the employees and the ability of the new team to drive growth and value is eroded. This also assumes that the new team – the founders’ children – has the skills, training, attitude and capacity to take the business to the next level.

Quite often for people who have built their own business their vision for the business is intuitive. When that is the case, for the rest of the team, the mission becomes a game of follow the founder and objectives are set by their instincts.

Companies face the greatest risks in times of transition. The departure of founders is just such a transition. When founders leave, the alignment around the values, vision and mission of the business will often leave with them, because the founders personify the vision.

Sustaining the vision may sound simple, but it is never as easy as we expect it to be. There is the very hard question of whether a next generation is – or can become – adequately developed to take over a business or whether a better approach is to develop professional management or consider a merger, acquisition or sale to realize the founders’ vision. But for any course of action to succeed, there is a need to take the personification of the vision and articulate what is intuitive to the founders and those around them. There is a need understand what it is about the founders that brought home the mission for all the employees.

Having the mission and vision clearly articulated at the moment of transition builds confidence, and allows the decisions of the new leadership to be strategic, either grounded in history, or a deliberate and conscious departure from that history. As long as that choice is grounded in the vision, the hard work of succession planning and execution can build a strong foundation for a business to sustain its value through these difficult transitions.

Most Americans agree that the public education system in the US could use some improvement.  

Here is what the Business Roundtable says:

The Business Community is concerned that far too many students in our nation’s schools are not prepared to succeed in the world economy.  More public-private efforts will be needed, particularly in programs that raise student achievement and interest in math, science, and engineering- the fields that drive future innovation.  Dedicated federal support must rise to the top of the list of funding priorities.

Change the education system.  Now there’s a complex problem if ever there was one.  It is not the system is corrupt or the stakeholders are wrong, it is that there are thousands of entrenched stakeholder groups.  Parents and teachers, administrators, state and federal policy wonks, state and federal regulators, unfunded mandates from Congress, underfunding from local school districts, local school districts themselves.  All of these stakeholders and more create a system not in stasis but in grid-lock. 

Through a work experience, a book and a local decision my business partner, had an epiphany and acted on it.  We decided to act on Craig’s impulse and concluded the way to change the system was really to embrace it and create a dynamic educational opportunity for students worldwide.  We have built this voluntary, international program, to inspire young students to change the world and learn by aiming at the one stakeholder group which embraces change:  the kids.

This model for change was the brain-child of Craig’s work solving complex problems for corporations and institutions.  It is the approach we take on problems at The Arno Group and the boldness of the idea epitomizes Craig’s willingness to try something fresh when confronted with what appears to be a gordian knot. 

This case study starts by identifying the solution, describing why we took on the challenge and finally outlines what you can do if you are inspired to want to join us through the Challenge.

The Global Challenge:

We are in our fifth year of the Global Challenge.  It has changed much since we piloted it in 2005 in two high schools in Vermont and handful of high schools in China and India.  You can learn a tremendous amount about the Global Challenge on its website.   We have an outstanding and dynamic new CEO, Aparna Katre and we suggest you reach out to her to learn details about our program.  

The fundamentals of the program are: 

• High School students form their own team of two from their own school;

• Each area team must find two students in an equivalent grade in another school somewhere else in the world (with a focus on India or China although any student team anywhere in the world is welcome to join the Challenge; 

• Each team is mentored by an adult to guide their efforts;

• The combined teams will have one academic year to collaborate in the creation of a business plan;

• The business plan will be to develop a product that contributes to solving some aspect of a problem global in scope (we are in our fifth year focusing on global climate change);

• The plan must describe a manufacturing process and a global supply chain that uses at least three countries and the teams must explain what aspect of their product each country will make, and why they have chosen each country; 

• Teams must describe the underlying physics, environmental science, and math that make their product work and how it impacts global climate change; 

• Teams must describe the geopolitical issues that must be addressed for their product to be adopted globally; and

• Teams may use any resource they choose (parents, teachers, members of the community, experts, etc.) and in the plan, they must cite every resource used and how they were used.

It sounds daunting, but two truths have won out:  First, students love the challenge and impress us every year.  Second, by doing the Challenge it is no longer daunting, setting students up to change the world.

As you will see in this case study, every one of you will have an important opportunity to help in the project’s success.  But first a story that led to the creation of The Global Challenge:

In 2004 Craig sat in a board meeting for a high-tech company in which Craig served as a director and M&A advisor.  Twenty years ago most of the client’s customers – computer and electronics makers – were US based.   All of the competitors were US or European.  Today, almost all of the client’s products are sold into Asia and the competitors are Asian. 

Management and the board determined that not only must the company outsource manufacturing to China, but should take a look at designing there as well.  This decision is critical:  the company did not want to outsource because Chinese engineers are cheaper (though they are), but because they were good and we could not find enough talent in America.  The company could very well go out of business if it didn’t  find a way to compete on an even footing with Asian competitors.

As it turns out they were in good company.  According to a recent NYTIMES article by Steve Lohr:

“In a survey of more than 200 multi-national corporations 38% plan to change substantially the worldwide distribution of their R&D work over the next three years – with China and India attracting the greatest increase.  The same study contended that lower labor costs are NOT the major reason for hiring researchers overseas, nor are tax incentives.  Instead companies are looking for the best talent.  As an engineer trained at one of the world’s best institutions this is hard to believe, but sadly, it’s true.”

The good news is these trends do not necessarily mean that the US will fail in the global economy:  Tom Friedman makes a very compelling case for how we can thrive in the 21^st century economy.  

Craig happened to read Friedman’s book, The World is Flat,  on his flight home from the board meeting. 

Craig came back to the office the next week and said three things:  first, our client was going to outsource not only manafucturing but research, design and engineering because the work was as good or better than work we would get from American staff; second, Friedman’s book laid out an argument America needed to participate in this global workplace and there was tremendous work to do to make us competitive, to raise the level of commitment from schools and students, to inspire school kids to get the importance of challenging themselves and driving to succeed; and third, while all this is going on our local school board is deciding to delay buying science and math books for another year.  Craig sat at his desk and smoldered.  ”We need to fix this,” he said.  ”Well, that’s what we do, so go ahead,” I said.

* * * * * *

Technology, especially the internet, is accelerating the pace of globalization, democratic reform, and the growth of foreign businesses across all industries.  China, India and others are not just sources of cheap labor, but are quickly emerging as leaders in design, engineering, manufacturing, services and innovation.  Many in the US consider globalization and foreign competition to be a threat.  We believe that the changing global landscape creates an opportunity not just for developing countries, but for the US and indeed all nations, an opportunity to strengthen and expand democracy everywhere, and to solve the world’s most intractable problems, including global climate change, poverty and disease. 

To participate in our future world we need to graduate kids who understand fundamentals of math and science, have competency working in teams, understand the interactiveness of the world and experience working with different types of people across vast distances.

Craig’s thesis was clear:  We can turn the “problem” of global competition into an opportunity if we develop a global perspective and respond with the same energy and creativity that put us first on the moon, led the computer revolution and spawned the internet age.  If we do not accept this challenge, we will lose ground and our leadership role in world business.  The economic future of our children and grandchildren is at stake.

The challenge was not how to design a solution.  The challenge was to figure out how to create a solution which the vested stakeholders in education would embrace.  How could we hit all of the disparate receptors and not set off any alarms or negative reactions?

As with any change problem, you must define the problem, set goals, define success and then build your change process.  

First, Craig developed a list of the most critical skills students need to develop to succeed in the global economy and he vetted it with world buisness leaders.  Here is the list:

1. A Global Perspective
   1. How are countries evolving politically, socially and economically
   2. How will this evolution drive global alliances
   3. What opportunities do the dynamics of the global environment create.
2. Ability to collaborate Globally
   1. Undersand langues and cultures
   2. Understand communication and work styles
3. Ability to Thrive in a technological world
   1. Strong science, math, tech and engineering skills no matter what their job is.

Defining Success:

Obviously changing the education system in this country is a long-term prospect.  However, there are short-term milestones that can be created.  Piecing together a series of short-term successes on a path to the long-term goals is the best approach for creating lasting meaningful change. 

The key is measurement.  Today, social entrepreneurs must create measurable results the same way that for-profit executives do.  Craig went into this project asking, “what will be the social return on investment?”  He wanted to create the most cost effective way of meeting the goals just described.  We will assess kids’ knowledge and skills at the beginning of the program and then again at the end to demonstrate efficacy.

Devising the path to success:

We proposed a project that addresses all of the issues raised above.  It focuses the energy and creativity of parents, teachers, and most of all students to build a global perspective and develop the skills to succeed in a 21^st century global economy.  It uses the best practices as articulated by The George Lucas Education Foundation based a distillation of research among educators, business leaders and parents who are making positive changes in our education system.  There are 10 key elements:

1. Project-based learning
2. Integrated studies
3. Cooperative learning
4. Comprehensive assessment to ensure results
5. Teachers as intellectual and emotional guide
6. Teachers learning from other teachers in an apprenticeship model
7. Use technology were appropriate
8. Restructure and redeploy resources for better return on investment
9. Involve parents
10. Involve community

Finally, we created a pathway for the project to be embraced, not challenged by the systems:

Change is difficult and risky in the best cases and in complex systems change is often rejected simply because of what it is:  a difference.  Human systems are just like the human body — they crave stasis.  Advococy, therefore, is often best delivered not as advocacy but as statements of simple truths accepted by all.  This approach builds on trust to see truth accepted even if it bucks conventional wisdom and embedded systems.

This approach avoids a common mistake of advoacy:  rather than creating a dynamic where someone must be wrong, it creates a dynamic where everyone gets to satisfy critical goals within their set of ‘must haves’ and core beliefs.  If there is no buy-in from disparate stakeholders it becomes easy for embedded interests to subvert rational change efforts. 

Grace Hopper, the inventor of the software language COBOL nailed it when she described the resistance to a new way to make computers do what we want:  “In matters like this, you don’t run up against logic, you run up against people who can’t change their minds.”

 In the case of our education reform project we determined that the only way to change the system was to work at the edges and offer something people would not reject but would in fact embrace:

• We do not ask for money or help (although we willingly accept both);
• We engage the kids and their parents directly through the Internet (and each other);
• We engage the schools through teachers and parents who become excited by the wealth of learning contained on the Global Challenge website and through the mentoring program;
• We are agnostic whether this project becomes integrated within a school or remains an outside project, whether it is for credit or just something fun for the kids to do, whether it is a one year or two year project;
• We meet with any school looking for understanding of what Global Challenge is about.

Through this we create a pulling force.  Because we devised a system all of the stakeholders will embrace they become the engine pulling the program forward.  And, at the end of the day, the real forces pulling the program forward are teenagers world wide. 

What You Can Do:

• Help us raise money
• Contribute money (you can get the particulars on the website)
• Become a mentor to a team
• Become a sponsoring organization.

Conclusion:

In our first year some few hundred students spent a year thinking hard about how to make the world better; rather than protesting what was wrong with our world they sat down to figure out solutions.  Thousands of students now take the challenge annually.  Our vision?  Millions of students conquoring problems as diverse as the groups of kids forming teams:  hunger, drinking water supplies, childhood disease, AIDS, climate change, slavery.  You name a problem and we will find you four students willing to work all hours, day and night, to craft a solution.

And in building this program we have found no resistence or nay-saying; no complaints from schools or students; no resistance beyond ability to grow.

Ideas only flower when nurtured.  They are best nurtured through interaction, dialogue, debate, pushing, building and cajoling the best idea.  When this happens the ideas do not only flower but seed and spread.

Please investigate our new site, let us know what you think, ways we might be of more use to you, topics you want us to discuss.  Generally, start a dialogue.  Send us ideas or suggestions to information@thearnogroup.com. 

You will also have the opportunity to comment through our blog.  We would like this tool to be particularly dynamic and engaging.  Of course we need to put ideas onto the blog space which are timely, interesting, helpful and generate interest. We welcome the challenge.

The Arno Group is in its seventh year and remains a focal point of our lives, a dynamic experience for us and our clients and an engaging way add value to a wide array of people, companies and institutions.  We are excited about this new tool at our disposal — a tool not available to us seven years ago.   Just as Word Press now offers new, fresh, insightful and powerful ways to interact thoughtfully on the Internet, we strive to add similar value through our work and interactions.  We are excited to get this avenue open and see where it takes us.

We want to thank Doug Rekenthaler and his team at MythSmiths for helping to articulate our story through the new website and for introducing us to Word Press.  He and his team did an excellent job refining our ideas and giving us the tools we need to make this happen.  Thank you.

David