Why Iowa needs to think like an oil company

- Brent Willett, CEcD is Executive Director of the Cultivation Corridor.

In its first quarter earnings rollout on April 30, oil giant Exxon Mobil Corp. revealed that its refining and chemicals units- think lubricants and chemical compounds used to produce things like plastic- together represented 48% of its profits in the first three months of 2015.

In 2014 those units represented just 19 percent of profits [oil and gas production made up the rest]. Across the pond, France’s Total SA, Europe’s largest refiner, said its first quarter refining and chemicals income improved three-fold while production earnings plummeted 56%. Similar trends jumped off earnings pages of oil companies across the globe. 

What’s going on here?  And what does it have to do with economic development in Iowa?

As oil production earnings continue a not-so-slow-motion collapse- oil prices have lost half their value since August- an emerging bright spot for the industry has been the durability of its higher-margin refining and chemicals units. 

How big of a shift is this?  In 2012 ConocoPhillips, amid an industry rush to decommission a refinery inventory thought to be over capacity, decoupled its chemicals and refining businesses from its drilling businesses in a loud-and-clear bet on long-term profitability in the business of oil and gas production. 

It was a bad bet; the derivative business, Phillips 66, is now throwing off higher profits.  For decades, the petroleum industry has honed a refining/chemicals product diversification strategy which not only offers a hedge against intense commodity market pressures like it’s experiencing today, but one which has produced a expansion and diversification model that biofuel-producing states like Iowa have begun to take notice of.

Currently, less than 10% of the world’s chemical industry is bio-based, but estimates suggest that could adjust upwards to close to 25% by the end of the next decade [creating as many as 20,000 new jobs in the US in the process] as rapid biochemical innovation and commercialization begins to create cost parity with petroleum-based solutions. 

Iowa’s vast biofuels industry- and the biomass supply chain, physical infrastructure and research and human capital which has cropped up as a result- positions the state to capitalize on this growth industry more competitively than virtually any domestic peer. 

Iowa’s more than 40 ethanol and biodiesel facilities- many in rural communities- in many cases represent potential buyer/supplier opportunities for a biochemical industry which has been rapidly developing in Europe for years and is poised to grow its relatively small position in the North American market.  

In short, we’ve got a window to leverage Iowa’s dominant biofuels position to diversify into chemicals and materials derived from Iowa biomass.

That’s why economic development and industry groups like the Iowa Biotechnology Association, Iowa Chamber Alliance and the Cultivation Corridor are supporting a bill currently before the Iowa General Assembly to create a first-in-the-world economic development incentive specifically targeted at this nascent industry. 

House File 656 would create a tax credit program administered by the Iowa Economic Development Authority to help support the growth of biochemical investment in Iowa over the coming years. 

The bill would create a tax incentive for the production of a prescribed set ‘building block’ biochemicals which are derived from biomass feedstock abundant in Iowa as either raw materials or co-products of a bioproduction fuel or other process like starch, sugar and lignin.

As the legislature debates the merits of a bill, research and economic development efforts to firmly establish Central Iowa as a global center of excellence in biochemical and biomaterial research and, ultimately, production are well underway. 

Take, for example, the Center for Biorenewable Chemicals [CBiRC] at Iowa State University in Ames, one of the nation’s largest multi-disciplinary and industry-led biochemical research installations, and the new Center for Bioplastics and Biocomposites [CB2] at Iowa State, a pioneering research partnership with Washington State University and private industry.  Indexing these two superb research assets with the physical and supply chain assets already in place in Iowa and, potentially, a global first economic development incentive produces a compelling argument for Iowa to a new and important industry poised to expand.  

  

Want innovation? 5 Steps to Invest in and Empower Employees

Max Farrell is the co-founder of Create Reason, an innovation experience firm that instills a culture of intrapreneurship inside established companies.

There’s a great office argument that I’m sure many of you have come across: Investing-in-employees

CEO - “Why are we spending all this money on training if people will likely leave?”

VP - “Because what if we don’t train them and they stay?”

It’s a new era in our working world. The average employee only stays 4.5 years now. For millennials it’s 18-36 months on average. Permanent employment is dead.

This same dilemma applies when tackling new, unexplored initiatives and products for organizations. 

What if we don’t give ourselves time to think or a chance to venture into unexplored areas?

The hard truth is that in 2015, markets and customer demands evolve faster than we can high five over our recently polished products.

And this isn’t just for businesses, this is for nonprofits too.

Many of us are volunteers or board members of some fantastic nonprofits, but even they have to keep on their toes as donor dollars can rapidly shift to new organizations.

So here’s the big question:

What are you doing today so that your company will thrive in 5 years, let alone 1 year?

Many companies will quickly retort — “we’ve got a brilliant strategy”.

But the world changes faster than we’re comfortable with.

How can you set a strategy for the next 5 years if your team doesn’t have the tools to innovate today?

The biggest decisions and the brilliant concepts will not always come from the top, which is why I think now is one of the most exciting times to be an employee within an established company.

Talented individuals have the opportunity to be the intrapreneurs (internal entrepreneurs) and the change agents that steer great companies to stay great. 

How can you make it happen?

1. Get the senior leaders to “give permission” for staff to bring ideas to life. You can never underestimate the power of simply sharing the notion that you need support to help the company thrive.

2. Showcase that senior leaders believe the initiative is important. It’s one thing to say innovation is important, but we have to show that it’s a key company initiative. This can be in the form of internal idea pitch competitions, continued mention in company communication or innovation events. Ripples turn to waves.

3. Have a process to facilitate bringing new ideas to life. Brainstorming sessions aren’t the solution, but they’re a start. There need to be steps for what to do with good ideas and a process to kill bad ideas.

4. Make sure to bring at least one new initiative to life with this focus. The excitement for innovation can die quickly if no results come to life.

5. Celebrate like crazy! Instilling a culture of innovation requires continuous reinforcement of the initiatives. Boasting wins is a great way to do this.

To close:

I really like an article from Patrick Kalaher of Frog Design for his take on the future of work:

“Forward-thinking businesses must hire for flexibility and then provide tools that enable their employees to act in a variety of contexts.”their employees to act in a variety of contexts.”

We’ve got awesome opportunities in front of us to re-think work. It’s gonna be a fun ride.

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Let's keep the conversation going: 

Max startupEmail: max@createreason.com

Twitter: @MaxOnTheTrack / @CreateReason

Web: CreateReason.com

FB: facebook.com/createreason

Everyone is and needs to be creative

CreativeversusStrategyDrew McLellan is the Top Dog at McLellan Marketing Group

I don't care what you do for a living, it requires a level of creativity. Lawyer, stay at home dad, mechanic, ad guy, marketing director, teller or veterinarian.  

Every professional needs fresh thinking, new ideas and the ability to see things a little differently.

Want to boost your ability to connect the dots for a whole new picture?  Check out the Iowa Creativity Summit on May 28th.

Registration includes:

  • Workshop
  • Collaboration Exercise 
  • Notebook
  • Name badge
  • Hors Devours + cash bar
  • New friends

Session 1: keynote / workshop with Nancy Lyons 
Nancy Lyons founded Clockwork in Minneapolis. Under her leadership, Clockwork has received more than 16 “Best Workplace” awards. Clockwork has also won the Psychologically Healthy Workplace and Best Women Owned Business awards. Nancy speaks all over the place including the inaugural White House Summit for Working Families in Washington, DC. Watch the NBC Nightly News Feature on Clockwork or read Nancy’s full bio.

Session 2: Creativity Collaboration Exercise
Tap the diverse, creative brain power of every attendee in a way you’ve never experienced. Have others solve your biggest challenges or solve someone else challenges. Questions are gathered anonymously and are then fielded to our “flash panel” assembled on the spot per question. Ask questions, be on the answering panel or do both.

It's being held at Sussman Auditorium, Olmsted Center, Drake University, 2875 University Ave., Des Moines.

If you'd like to goose your creativity -- register and soak it up!

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