Startup innovation leadership and changing supply chains

In part one of this two-part article on leaders innovating to form startups partly based on the book Homecoming, The Path To Prosperity in a Post-Global World by Rana Foroohar, I discussed the importance and value of having both a short but broad supply chain, and gave a food supply chain example. In this last part, I will expand on it and explain the importance of leaders forming communities and teams that hold similar beliefs.

Similar values of developers, suppliers and users

In most cases, local communities share cultural values and desire the same local achievements. This all leads to job creation at the place of innovation, and the developers can feel that impact in their community. 

The problem is that if the buyer, supplier and developer are in completely different places, human caring suffers as organization leaders can’t get these parties collaborating with each other. This is what you could call "hyperglobalized" where the faraway developer, far away supplier and far away user are overdependent on each other but don’t care much about the well being of each other. The buyers and developers don’t care how badly the workers of the suppliers are treated or how hazardous their work environments are. If the developers, suppliers and buyers are close to each other, they do care and can see and feel all supply chain members’ concerns. Leaders can tap into that caring.

With those above concerns, Foroohar reports that McKinsey research shows that 26% of global goods will have to move to new countries over the next five years, as companies need to diversify suppliers, cut excess emissions of far-flung supply chains and get closer to end users.

Community currency

Imagine a person wants to expand local financial independence through a local currency (or even smartphone cryptocurrency) that is only circulated within its local neighborhood to promote local neighborly interaction. Digital currencies (peer-to-peer decentralized financial systems) could be created that are conditioned on being traded in that local neighborhood. After gathering community leaders that share in this idea, a task force could be formed to promote the idea. 

Moving a little broader than the immediate vicinity, the task force could encourage governments to form local digital wallets, in which all citizens (including unbanked people) could participate. The task force could explain to governments that there will be less outside adverse influences, like inflation, outside credit restrictions or loaning discrimination. This local area currency could be used to provide banking services leading to a wide range of business models. The key issue is that everyone should know each other within the community, and the task force creates a trust confirming system that is put in place and enforced. Issues like repayment become more transparent and addressed quickly and collectively within the community. 

The task forces and its leaders can even go further by promoting and starting "Helpmeet" activities in which people just contribute the skills, items, space and time they have on a barter basis with no money exchanged at all. These activities not only provide support but build community interaction as well. The task force could even work on an app for these local activities.

Fund creation and banking services

In other cases, communities are creating local funds from people with excess money they don’t need (money sitting ideally in banks and not circulating). A fund organization leader could promote that they take that money, deposit it into their local support fund which is managed openly for all depositors and borrowers to see, which leads to basic banking services. This could be far more efficient and human connected than outside, non-local borrowing who never know the final fund users or know what the funds are used for.

Example: Local manufacturing expansion

Consider that the 3D printing market grew by 21% from 2019-2020 and is predicted to double by 2026. More than just services, but manufacturing will be more localized as well and innovative people can take advantage of that for their communities. A lot of that growth will more than likely go to small manufacturers, some in rural areas.

An example is the printing (manufacturing) of anything from disaster shelters to luxury homes, which are not built from scratch on construction sites but by building housing components in manufacturing facilities and quickly assembled on the site. 3D printing of buildings requires shorter building time (in days as opposed to weeks or months), offers lower labor costs, and can use more environmentally friendly raw materials. Apis Cor and ICON can print small homes for $10,000 (as of the date of the writing of Foroohar's Homecoming, The Path to Prosperity in a Post-Global World).

According to Foroohar, the cost of industrial 3D printers have fallen from around $700,000 to $50,000 over the last decade. Now, firms of all sizes can invest in them. This is where innovative leaders can explore a wide range of locally needed items which now can be produced very closely to where they are put to use. Further, this innovative person can look at raw materials that are locally available. Here again, a project manager can bring developers, suppliers and users closer to each other to build a supportive community.

Connecting to local networks

Academic research shows that firms need to be embedded in networks of investors, suppliers, managers, workers and educational institutions (that teach basic equipment use skills required in many industries) to maximize innovation potential. These networks can build "high-tech hubs." They teach people how to communicate well, learn and expand skills quickly. If that is the case, organization leaders, looking for new ideas, should consider what hubs currently exist within their communities. Knowing that, he can work on his startup project team building.

Making these community projects work

If you want to build a local startup community, it is not IQ (cognitive meritocracy in our heads [knowledge]) that counts, but it gets all the praise. What is needed in these communities is EQ (emotional intelligence [our hearts]) and hands-on skills. The leader of this project must have both emotional intelligence and hands-on skills. With that talent, he has to apply it within his team members in the community that share his values. 

Unfortunately, our emotional intelligence and our hands-on skills don’t get the respect they deserve, but that is what the jobs of the future in local communities will require, particularly in the caring professions. This includes traits like character, experience, common sense, grit and hands-on process and techniques. Professional qualifications and degrees may not be as helpful as one would think.

Foroohar believes that it is not large, private corporations that are needed but locally or regionally human focused leaders and networks that know each other very well and know how they can help each other from product development to production to delivery to marketing. More direct, closer suppliers can price compete with imports and better match user-needs. This is the network the leader has to develop.

According to Foroohar, global trade has slipped since 2018 but data and digital cross-border internet information flows have jumped 48% from mid-2019 to mid-2020, a sign that more designs and knowledge and not physical products are being sold across borders. Online platforms can allow small niche products to be marketed across the world. We are moving toward "distributed globalism," in which smaller companies and smaller communities can build a small town creative community, and this all takes leadership to bring it to fruition. Some of these companies will sell 3D printed equipment that makes products rather than selling finished products themselves.

So why is local startup promotion important?

We must find a place within "just-in-time" supply chains (low levels of single sourced, in-process, semi-finished goods) that also considers "just-in-case" disruption scenarios as well. Local startups are one solution, and leaders have to consider this a huge opportunity, which will keep communities adaptable to supply shocks. 

When it comes to adaptability in a continually changing environment, leaders have to avoid disruptive events as just "bad luck." He has to take responsibility and consider it poor leader anticipation and preparation and what could have been done to be prepared beforehand. Whatever is decided, there will be some cost involved to make the organization more resilient to unforeseen events. Resilience must be made visible on business balance sheets to understand how stable a company is.

People just don't move easily when there is a community, neighborhood, city or region in decline. Today's up-and-coming technologies in energy, 3-D printing, online education, virtual meetings and connections, and crowdsourcing/funding can help people redirect their efforts exactly in their current community without being forced to relocate. This is where innovative leaders can come up with ideas that will keep people from being forced to move to find sustainable employment.

According to Foroohar, the best neighborhoods (living and working environment) are more local, sustainable, and mixed-function communities in which people can afford to live and work in the same place. In these neighborhoods, citizens, encouraged by leaders, keep each other safe, even safer than police can.

Relationships and intimacy, cemented by a connection to their neighborhood, is the deciding factor when looking for security. This relationship is developed by a network of voluntary, trusted controls and standards among the people themselves. These conditions are the glue that keep a diverse group of strangers at ease in their communities.