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Automating Innovation

September 13, 2011

Each day, Inc.’s reporters scour the Web for the most important and interesting news to entrepreneurs. Here’s what we found today:

Your virtual suggestion box. Companies are spending more money on employee innovation. A lot more money. Today BusinessWeek reports that companies spend an annual $250 million on software that mines their workforce’s “collective intelligence,” organizes the resulting suggestions, and predicts which ones are most likely to succeed. Luis Solis, executive vice president of Imaginatik, which creates this kind of software, estimates that the market for these products is growing by as much as 30 percent a year. Primary motivators for the initiative include improving customer service, spurring innovation, and taming research costs. AT&T is spearheading the movement, offering incentives to increase employee participation, like virtual currency that can be used to bet on which ideas are most likely to succeed.

What we can expect from Obama. In Ohio today, President Obama is expected to push for incentives that would let small businesses write off all spending on new equipment and plants between today and the end of 2011. Officials say it could benefit 1.5 million companies, amounting to the biggest temporary investment incentive in history. Whether we’ll actually see businesses making significant investments remains to be seen – especially since existing Section 179 expensing already allows for small businesses to write off $250,000 in certain equipment expenses. Pay attention to what the president says about the research and development tax credit: It’s been extended more than a dozen times since it was created three decades ago, but it could be expanded and made permanent now.

Shots fired at big VC firms. Hunch co-founder Chris Dixon is both an entrepreneur and early-stage seed investor, so he’s experienced both sides of the investment equation. And now, via a blog post titled “Things I’d do if I ran a big VC firm,” he’s taking large VC firms to task for the way they operate. First on the list: “lower management fees so that they cover necessary expenses an[d] reasonable salaries (e.g. 200K, not 3M),” Dixon writes. “[B]asically be like a startup and only make money when your investors make money.” And our favorite: “keep a database of every employee of every company I invested in,” Dixon says. “[S]o for example when a company goes under, you can help their employees and your investments by finding jobs for the best employees.” If that’s not already being done, it should be.

When bedbugs attack…the office. Lately, business owners in the Big Apple have been dealing with a big problem — bedbugs. According to The New York Times, the city’s recent infestation should be a wake up call to small business owners around the country who need to be more proactive about keeping bedbugs at bay. The Chancellor Hotel in San Francisco, for example, is a model of bedbug awareness. It has a “bedbug technician” on staff, who’s responsible for checking every room for bedbugs, and any employee who spots one gets a $10 reward. Catching the critters early not only prevents the infestation from spreading (and driving up extermination costs), but it keeps customers from finding them first, and, says the hotel manager, “the value of a good reputation is infinite.”

Chicago businesses nervous about Mayor’s exit. With the recent announcement that after 21 years in office, Chicago Mayor Richard Daley would not seek re-election in 2011, Chicago-area businesses who have had a close working relationship with the Mayor are worried what the future may hold. Known for his pro-business agenda and his ability to lure corporate headquarters such as Boeing and MillerCoors to Chicago, Daley will leave office with the city facing some dire economic challenges. As the Chicago Tribune reports, the city faces a budget shortfall of more than $600 million and large liabilities for underfunded employee pensions. The next mayor will have their work cut out for them. As the president of the local Chamber of Commerce explained, “We need someone who can hit the ground running. The economy is not going to sit back and wait for someone to catch up.”

Economy stresses states. An annual study by the Associated Press found that Nevada has been hit the hardest by the recession, and is particularly feeling the pain from unemployment. The analysis found that two in nine Nevadans were either unemployed, owned a home in foreclosure, or had filed for bankruptcy. Who’s doing well? Look north to North Dakota (No. 1 in the ranking), South Dakota, and Nebraska.

Issie Lapowsky

Issie Lapowsky is a reporter at Inc. magazine. She has covered lifestyle and entertainment for the New York Daily News, and her work has been published in BlackBook magazine and The Brooklyn Rail. She lives in Brooklyn, New York.


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