Corporate execs: Unsettled times affect nature of innovation

FORT COLLINS — High inflation, the prospect of a recession, and a general sense of instability in the economy may very well be affecting the degree and nature of innovation that companies are experiencing.

That was the assessment of several executives from innovative companies in Northern Colorado who participated on Tuesday in BizWest’s CEO Roundtable on Innovation.

The event was held at the Elevations Credit Union conference space above the branch on Mountain Avenue in Fort Collins.

“I keep saying to people that ‘we’ve never been here before’ so the projections people are making are just projections,” said Jan Harrison, founder of Compass Community Collaborative School, a private school for students in grades six through 12 in Fort Collins.

The school attempts to innovate how education is delivered and has had success in its five years of existence despite the shutdowns of COVID-19.

“Most of the people [still on staff] helped design the school so they have their hearts in it,” she said. “They feel they have a voice as part of the innovation team. We’re not so hierarchical. Even students feel that buy-in and ownership.”

Tamara Wesley, site manager for Intel Corp., which employs about 350 people in Northern Colorado, said she has seen a slowing of hiring among technology companies as they attempt to see into the future. “We’re hunkering down for what is coming,” she said.

She acknowledged that companies such as hers have had to factor into their innovation plans the nature of the workforce that was dramatically affected by the pandemic. And that’s been an innovation in and of itself.

“COVID grounded people in what’s important to me [the worker.] You have to give the team flexibility to work when they want to work,” she said. “You have to have a different work plan for each employee.”

Issues with the supply chain — the ability of tech companies to get the materials needed to manufacture products — has meant that companies have started to look at bringing operations back to the United States and to areas of the country where workers might be more available than in the tech hubs.

“I never thought that Intel would open a spot in the Midwest, but it’s happening. That will revitalize that location and the people who live there,” she said. “These are times you take those big bets.”

Andrew Hendrickson, chief executive of Loveland company SurgiReal Products Inc., a manufacturer of lifelike silicon materials used to train surgeons and veterinary professionals, said the company has had to innovate to keep materials on hand for production to continue but has found, with regard to its workforce, that having them inhouse much of the time — rather than working remote — is necessary. An experiment with hiring remote, distant workers didn’t work out and none of the people hired in that program has been retained. Hendrickson said it has been important for SurgiReal to maintain in-person connections between manufacturing workers and sales staff.

Innovation in Estes Park takes on multiple challenges, according to Jana Sanchez, who is CEO of Business Accelerator Services of Estes Park, a program of the Estes Park Economic Development Corp.

“How do we help the best minds innovate the solutions we need for problems that will be with us for the next 10 years,” Sanchez asked. Estes Park faces supply-chain issues just like most other communities, but talent has been particularly difficult because of the small size of the permanent community coupled with high costs of living. “What’s a living wage in Estes Park with the housing costs,” she asked.

And while housing is critically important, so is child care so that people can comfortably innovate in their work.

“When are we going to start valuing that work [childcare],” asked Harrison.

“Or subsidize it,” said Sanchez.

Josh Moser, co-founder of LaborJack LLC, a Fort Collins-based innovator in the staffing industry, said that economic conditions have forced LaborJack to innovate in a way that has broadened its impact in the marketplace.

While it may have been an employment agency for workers at its start, now fully half of its business is business-to-business as it helps employers find workers to fulfill their obligations. Technology it has developed has helped the company take off and expand into new markets. Moser said the company is on the cusp of its first fundraise — $7 million to $10 million — that it needs to bring its technology to big-city markets elsewhere in the country.

“We built a platform for what the workforce wants in daily life. … We think we’re poised very well for the future of the gig world,” he said.

Economic conditions have had an impact on raising money for expansion and innovation as funders have become more cautious.

Tim Jones, who works with Innosphere and is a general partner in the ICI Fund, said Innosphere is closing in on completing fundraising for a new fund, but it’s been challenging.

“From an institutional standpoint, most institutions have an allocation that they’re fiduciarily responsible to maintain,” he said. As public markets have compressed, the amounts available in other fund allocations also have dropped, meaning less money for entities that fund innovation.

“We might be less likely to write checks to new companies that aren’t in our portfolio because we might need it to support companies already in the portfolio” [given potential economic times,] he said.

Roundtable sponsor Brent Peterson with accounting firm Plante Moran said his firm has noticed that investors are more cautious.

“In the software and technology space, there’s caution. Investors who might want to be in a deal might decide not to because of the caution.”

Sanchez said that institutional investors are extremely difficult to find to support businesses in Estes Park. As a result, “we’ve turned to grant funding to help with this. As banks tighten up, as more collateral is needed, we’re looking for government funding sources,” she said. “That money has somewhat increased from before.”

The opportunities for innovation in Estes Park are there, but not in traditional areas, she said.

She listed growth industries as sustainable tourism, the outdoor industry, “things not tied to ski resorts” like ice climbing.

“We’re not as pricey as towns with ski resorts,” she said.

Given the large wildfires of recent years, she said, fire suppression is a potential growth industry. “What does fire suppression look like around multi-million dollar homes? There are opportunities there; it’s just not sexy.”

CHIPS Act, remote work

Passage of the federal CHIPS Act — Creating Helpful Incentives to Produce Semiconductors Act — which was signed into law Tuesday by President Joe Biden, could have an impact on innovation. Wesley expects it to affect Intel, for example.

“We’re the R&D branch for Intel,” she said, which CHIPS should positively affect. “It changes the game and helps us establish more stability in our lives [if more semiconductors are produced domestically.]

Innovations that come out of those federal incentives have to be overlaid on the changing nature of the workforce, which Wesley attributes to workplace flexibility that became important during the pandemic.

While the Fort Collins Intel facility has about 350 workers attached to it, most don’t work from the office. Wesley said only about 50 or 60 scan in in-person daily and the rest work from home.

“When people come to a building, there’s a reason,” she said. “We need to rethink how we use our office buildings. Working remotely requires building relationships and trust. You have to exercise vulnerability to lead through a computer screen.”

Are remote workers as productive?

“Word on the street is that it [remote work] doesn’t have an impact [on productivity, creativity.]  But personally I think that not having people in front of the same whiteboard has an impact. There’s an opportunity for a software company to create better software to enable that collaboration. I do think the human elements are getting lost.”

Still, today’s workforce coming out of the pandemic requires companies to find ways to engage with employees who don’t necessarily report to the office daily.

“A culture of flexibility is a precursor for a culture of innovation,” Sanchez said. Rigidity in some companies that require workers to return to the office doesn’t reflect today’s workers. “The world doesn’t work like that anymore,” she said.

Harrison, the educator, said students who will make up tomorrow’s workforce are comfortable working through computer screens. “But it’s a very small percentage of students in the country who liked to work on screens. Young people are social and like to be around their peers. I don’t think they like to learn remotely. … The jury is still out on what young people will want,” she said, which will require “more flexibility and sensitivity.”

For its part, Harrison said the Compass school attempts to teach students to think on their feet.

“We don’t want to raise kids to be compliant but to be thinkers and doers.”

BizWest’s CEO Roundtables are sponsored in Northern Colorado by Plante Moran, represented Tuesday by Brent Peterson, Chris Otto and Sean Nohavec; Elevations Credit Union, represented by Darin Atteberry; and law firm Berg Hill Greenleaf Ruscitti, represented by Ashley Cawthorn.

This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2022 BizWest Media LLC.