On Sunday I walked the length of the Nanjing Road Pedestrian Walkway, about 45 minutes round trip. Near one end of this upscale retail mall I came across a large crowd pressing its way into a huge Apple store.

It looked like the sort of crowd you'd expect the day they release a new iPhone model. The fist floor was filled with long tables set up with iPad, iPhone, and Mac demos. Downstairs was filled with counters where you could consult with technical associates about your Apple purchase.

Judging from the crowd at the store, and the number of iPhones and iPads I see on the street, in restaurants and on the trains, Apple’s growing influence is as big in China as it is in the US.

At the top of today’s business section of the English language China Daily, a headline proclaimed “Chinese manufacturers’ interest in innovation was fanned by Apple products, Shanghai Expo.”

In the story, China Daily’s Cai Jing reports “the popularity of the iPad and other Apple products has awakened Chinese manufacturers’ passion for creativity.” The news story also credits the recent Shanghai 2010 Expo as playing a role in boosting the area’s creative industry. Yang Jeiming, a product designer with his own company, says he constantly hears manufacturing clients tell him, “I want something as chic as an iPad.”

The article reports that Shanghai’s so-called creative industry employed 1.08 million people, mostly design professionals. These creative companies accounted for 10 percent of Shanghai’s GDP in 2010, according to the Shanghai Municipal Statistics Bureau.

Advertising and exhibition services achieved the highest growth rate (71.4 percent in 2010), followed by industrial design (25.2 percent). Higher growth is expected for both advertising and industrial design studios as a result of the economic problems in Europe and the US, which has prompted Chinese manufacturers to look to domestic markets to fill in for declining exports.

Wang Yang, a product designer in Shanghai, told the newspaper, “Since the outbreak of the global economic crisis in 2008, an increasing number of domestic manufacturers have asked us to improve the design and function of their product.”

A Drive for Higher Quality in the Domestic Market
Yesterday, I met with William Wu, General Manager of the Colormax equipment manufacturing plant in Wuxi, China. He has also seen an increase in business this year from Chinese manufacturers serving the domestic market. He said Chinese processors are purchasing higher-quality equipment, particularly loss-in-weight feeders, that can help them improve the quality of their end products.

Colormax is a K-Tron company that offers Chinese process industries an affordable combination of Western control technology and locally-produced mechanical components. Wu says China’s manufacturers are attracted to the higher Western standards Colormax follows in the quality of the equipment it makes, the level of service it offers and faster delivery times.

Quality in Food and Pharmaceutical Industries Through Automation
Today I met with William Tang, General Manager and Sales Director for China in K-Tron’s Shanghai office. He told me he is seeing a significant increase in interest from China’s food and pharmaceutical industries. “Quality through material handling automation is their priority,” he said, as they strive to meet higher government standards and win consumer confidence.

Tang said Chinese food and pharmaceutical manufacturers need to upgrade their material handling systems on a number of fronts. “They are replacing manual systems with automated conveying and feeding systems,” he said. “Automated conveying systems lessen the possibility of contamination,” he said, which is “a very important consideration.”

Tang said K-Tron’s gravimetric feeders are helping to upgrade the critical end-quality of Chinese food and pharmaceutical products, and the feeder controls provide validation of what went into the product.

Need to Earn Consumer Confidence Illustrated
The importance for Chinese manufacturers to win domestic consumer confidence was brought home to me in a very personal way when a Chinese friend took me to a nearby pharmacy. I wanted to buy a Chinese herbal remedy for cough and sore throat. I’m taking an antibiotic, but I’m leading workshops over the next three days and want to be sure I don’t lose my voice.

She recommended a bottle of heavy black syrup with 18 different herbs. The most important selling point, she said, is that the medicine is made in Hong Kong, not mainland China.

The remedy, by the way, tasted surprisingly good and seems to be helping. Wouldn’t it be a delicious remedy for the Chinese domestic industry, if with the help of Western feeding and conveying technology like K-Tron’s, China’s consumers start buying Chinese processed foods and medicines with confidence. And they are actually made in China.

Confidence in Water, Too
Another personal encounter with China Daily, this time in Europe, brings the quality issue home to the water and waste water treatment industry in China. In June I was flying from Germany to Italy on a discount German airline. Among the free papers they handed out was the English language, European edition of China Daily.

The China Daily's inside feature was all about the country's efforts to clean up Lake Tai (Tai Hu), one of China's five largest lakes. An important tourist and recreational attraction,it had been poluted by industrial waste and Wuxi's exploding population. The article explored the broad range of efforts being taken to clean the lake up.

According to a recent online China Daily story, the city has spent 10 billion yuan ($1.5 billion) in each of the last three years to improve water quality, and the green algae that covered the lake in 2007 has been brought under control.

Don Dunnington
Blog Moderator

With all the news of political upheavals, rising energy prices and natural disasters, it can be hard to believe that the recent spate of good economic news can last. Yet in the long run, a strong upward trend in the world economy may be the bigger story.

According to a 150-page study released by Standard Chartered Bank (PDF, 4.78 MB), the world is in "a sustained period of high economic growth, or super-cycle" that started in 2000 and is expected to last for another 20 years or more. Despite two global recessions (2001–2002 and 2008–2009), the report shows global output increased more than 50 percent in the last decade. By 2030 Standard Charter predicts the global economy will reach $300 trillion, up from $62 trillion today.

The report defines a super-cycle as a period of exceptionally high global growth, "lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation and characterized by the emergence of large, new economies, first seen in high catch-up growth rates across the emerging world." The report points to two previous super-cycles: from 1870 to 1913 and from the end of the Second World War to the oil crisis of 1973.

This new, 21st century super-cycle is expected to last until at least 2030.It is being propelled by emerging markets such as India, China, Indonesia, the Middle East, Africa and Latin America. "Hundreds of millions of people are likely to enter the global workforce," the study reports, "driving urbanization, high rates of investment and technological innovation. While earlier super-cycles were driven by the comparatively small populations in the West, the current super-cycle will involve 85 per cent of the world population."

Asia in particular is expected to see sustained and dramatic growth. The study forecasts that living standards, measured by real per capita income, will have increased nine-fold in China and India between 2000 and 2030. "Rising personal incomes will push billions of people into the middle classes and drive consumption which will spur domestic economic growth," according to the study. China is predicted to be the largest global economy by 2030, passing the United States. India is expected to be the third largest economy.

Standard Chartered was formed in 1969 through a merger of the Standard Bank of British South Africa, founded in 1863, and the Chartered Bank of India, Australia and China, founded in 1853. The bank reports that 90 per cent of its income and profits come from operations in Asia, Africa and the Middle East.

The Short Term Economic News
March was indeed a good month for economic news around the world, with capital equipment sales strong across the globe.  U.S. government reports for March showed a continued upward trend in the economy and unemployment continued downward, though still high compared to pre-recession levels.

In March the Conveyor Equipment Manufacturers Association (CEMA) reported that 2010 shipments in North America were up 9.6%. CEMA estimates that shipments totaled $6.642 billion for 2010, an increase of $584 million from 2009 shipments of $6.058 billion. New orders were estimated to total $6.85 billion in 2010, up $1.14 billion over 2009, an increase of 19.96%.

Equipment Sales in the Short and Long Term
Economists have long considered industrial equipment sales to be a lagging indicator of the business cycle: the equipment business can remain strong for many months after a recession starts and remain in the dumps long after the larger economy has recovered. When it comes to longer-cycle trends, however, we might expect to see equipment sales to be a leader in sustaining a super-cycle. Certainly we should see a significant increase in demand for water and waste water processing capacity as we progress to a $300 trillion world economy by 2030.

Don Dunnington
Blog Moderator

John Hagel III had just 10 minutes to tell us how he's found a "third path" to growing an organization's success. Hagel was the Keynote speaker at the awards ceremony for Deloitte's 2010 Greater Philadelphia Fast 50. The 10-minute limit was a self-imposed constraint Hagel placed on himself so the audience could get home in time to see the Philadelphia Phillies play the San Francisco Giants. It turned out to be the last game the Phillies would win this year.

I was at the Deloitte event with Bob Wisniewski who was accepting an award for K-Tron International. For the second year running K-Tron has been named to Deloitte's annual list of the fastest growing technology, life sciences and clean technology companies in the region. Though his presentation was cut short, Hagel's message resonated loudly for those who were present.

While Hagel was adressing a business audience, his insights have broader application; especially to those in the water and waste water industry who must keep up with fast changing environmental and technology challenges. Hagel said it's not development of major new products or services (the first path) that's going to drive success in the future. While innovation remains important and is a good starting point for growth, good ideas are quickly copied  and improved upon and don't remain a competitive advantage for long. Major acquisitions (the second path) present their own challenges, and the business landscape is littered with big mergers gone wrong.

The third path is what Hagel calls "leveraged growth," and he's quick to add that doesn't mean financial leverage. It's leveraging your organization's capability to add more value for your customers. The path to more customer value, he says, lies in your organization's talent development. This secret to future growth is at the heart of a major new book Hagel has written with John Seely Brown and Lang Davidson: The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion (link to buy book on Amazon.com). 

You can learn more about Hagel's books and his ideas on his website, Edge Perspectives. If you sign up for the authors' newsletter, you can instantly download six e-booklets :

• Pursuing Passion
• Shaping Serendipity
• Talent: The Dilbert Paradox
• From Passion to Potential
• Three Levels of Pull
• Passion versus Obsession

I have not yet read the book but I did download and read the six booklets. In Booklet Three, Talent: The Dilbert Paradox, you can learn more about the authors' view on talent development:

"Putting talent development center stage… forces a reassessment of business strategy, particularly growth strategies. Companies that aren't growing rapidly often fail to provide a rich set of opportunities for their employees to develop. This occurs because slower-growing companies confront fewer new performance requirements and generally offer slower advancement opportunities than faster-growing ones. Slow growth companies are thus at a disadvantage in developing the talent of their employees. Over time, they will likely find it harder to attract and retain world-class talent.

"Consider Google's ability to attract top quality talent from slower growing technology companies. And notice how even Google has more recently been losing its own talent to still-faster growing companies like Facebook….

"At another level, the broad-based shift in many markets from product-based to service-based businesses also informs how well and how fast companies develop talent. Services typically offer the opportunity for richer and quicker market feedback loops and more rapid iterations on the design of customer offers than products do. As a result, companies with a higher percentage of services relative to product businesses will have a talent advantage."

Is your organization taking the "third path" to optimizing your services? Do you work to develop your employees' talent advantage? Are your equipment and systems suppliers adding value through their development and application of talented associates devoted to solving your process problems?

Don Dunnington
Blog Moderator

As predicted in a March 2009 article, the water and waste water sector of the economy seems to have been little affected by this recession. A review of this site's news center shows the rate of acquisitions for those serving the water and waste water industry has been steady since the beginning of 2007: No decline in M&A activity in late 2008 and 2009 as the recession made its way through the economy. No increase in the first quarter of 2010 as the economy grew stronger.

In any recession, you expect to see some impact on mergers and acquisitions. In the early stages strong companies that may have been looking to sell at a profit will choose to wait until business picks up and they can get the premium they feel they deserve. At the bottom you may see weaker companies unable to weather the downturn get bought out by stronger companies, an early indicator of the economy picking up. A recent article on the sister site Powder and Bulk dot com confirmed the impact this recession had on acquisitions of companies serving the process industries.

There were seven acquisitions announced on this site's news center between January 1 and April 15, 2010, compared to nine acquisitions for the same period in 2009. The total number of acquisitions came to 21 in 2009, compared to 20 in 2008 and 22 in 2007. Following are the acquisitions announced so far in 2010.

Badger Meter Acquires Cox Instruments & Flow Dynamics: The acquisition combines the 3 companies into a wholly-owned subsidiary of Badger Meter, Inc. named Cox Flow Measurement, Inc.

MASSI Acquires North East Aquastore: Mid Atlantic Storage Systems, Inc. (MASSI) announces the acquisition of North East Aquastore (NEA).

Atlas Copco acquires Quincy Compressor: Atlas Copco plans to further develop the Quincy brand independently, in line with the Group's brand portfolio strategy.

Calgon Carbon to acquire Japanese joint venture: Calgon Carbon has signed a definitive agreement to acquire the shares of Calgon Mitsubishi Chemical which it does not currently own.

ITT acquires Nova Analytics: ITT agrees to purchase analytical instrumentation leader Nova Analytics.

Calgon Carbon acquires Hyde Marine: Calgon Carbon acquires Hyde Marine, manufacturer of UV light technology systems used to treat marine ballast water.

Infiltrator Systems acquires E-Z Set Company: Infiltrator Systems continues its septic industry leadership with the acquisition of the E-Z Set Company.

Don Dunnington
Blog Moderator

In "3 Tips for Becoming an Energizing Team Member" I discussed Rosabeth Moss Kanter's take on how the best leaders lead with positive energy. I recently came across research that suggests creativity and innovation may be an organization's most important source of positive energy.

Harvard Business Review contributing editor Bronwyn Fryer posted this interview "How Do Innovators Think? " with Professors Jeff Dyer and Hal Gregersen. In the Q&A interview the professors discuss the results of a six-year study in which they surveyed 3,000 creative executives and conducted an additional 500 individual interviews to discover how "Innovators' DNA" works.

The study identified five "discovery skills" that distinguish innovative leaders from all the rest:

• Associating: "a cognitive skill that allows creative people to make connections across seemingly unrelated questions, problems, or ideas."
• Questioning: "an ability to ask 'what if', 'why', and 'why not' questions that challenge the status quo and open up the bigger picture."
• Observation: "the ability to closely observe details, particularly the details of people's behavior."
• Experimentation: innovators "are always trying on new experiences and exploring new worlds."
• Networking: innovative leaders "are really good at networking with smart people who have little in common with them, but from whom they can learn"

I think one of the profound discoveries the professors made was that more people possess these skills than we recognize. Professor Dyer said, "We think there are far more discovery driven people in companies than anyone realizes. We've found that 15% of executives are deeply innovative, meaning they've invented a new product or started an innovative venture. But the problem is that even the most creative people are often careful about asking questions for fear of looking stupid, or because they know the organization won't value it."

We Need to Celebrate Invention and Innovation
One of the unanticipated satisfactions I discovered in moving from political Washington to industrial South Jersey was finding my office across the hall from K-Tron's R&D department.  You don't have to be a technology junkie to feel the positive energy coming from a creative group of engineers like this.  K-Tron is a company where a lot of its positive energy has started with invention. In fact, the company wouldn't exist as it does today if it hadn't introduced the world's first digital weigh belt feeder in 1972. 

I asked my long-time office neighbor Jim Foley to describe his process of discovery as he spearheaded one of the latest innovations to come out of the K-Tron R&D department, the new Acti-Flow material flow aid for gravimetric feeders. Getting cohesive or other difficult materials to flow from a hopper is an age-old problem for all process industries. The consequences of bridging or ratholing are especially costly in continuous feeding applications where reduced or interrupted flow can degrade product quality and even halt the process.

Before Acti-Flow, mechanical agitation provided the most reliable way to deal with material that didn't easily flow from a loss-in-weight feeder hopper. Mechanical agitation works but needs secondary motors, gear boxes, added headroom, and presents additional cleaning challenges. These downsides led Foley and his staff to ask if there is a better way.

"Vibrating the hopper is another option everyone's known about for a long time," Foley explained. "We know vibration is good. The problem is that too much vibration is bad. It compacts the material and actually promotes bridging and ratholing. Since constant vibration created more trouble than it solved, the best you could do with it was wait for a mass flow alarm and then turn on the vibrator. "

Making Smart Vibrations
It's a fascinating story, which I'll save for another time, of how Foley and his R&D engineers in Pitman, NJ and Niederlenz, Switzerland took a completely fresh look at all the ways vibration might be employed to make difficult material flow. There were a number of breakthroughs the team discovered.

The most important innovation, and the one that has lead to a pending patent, was the idea that the loss-in-weight controller could control and fine-tune how the vibrator (or any other device) interacts with the feeding system. "It's only because our loss-in-weight algorithm is so smart," Foley said, "that we can make vibration work with us--not against us."

As a result of having a smart controller to manage the vibration, Acti-Flow is able to vibrate continuously at a low-level, optimum amplitude and frequency that prevents bridging and ratholing. "The controller changes the amplitude all the time," Foley said "When material is moving well it runs at the lowest possible level of vibration."  If the controller senses a change, it adjusts the vibration right away before it becomes a problem.

"That's the beauty of it," Foley said. "It's a preventive strike: it lets you act, not react. "

Innovation Gives Life to Organizations
Invention and innovation keep a company engaged with its customers. It gives employees renewed purpose. It keeps sales people excited about their products and services. It gives existing customers and potential new customers confidence that they're dealing with a company that keeps getting better.

If it's a really cool design, or a striking innovation, invention gives us pleasure in simply perceiving the thing itself. Finally, invention gives us all hope in the future.

The Personal Innovation Imperative
You don't have to be an R&D engineer to be an inventor. You don't have to work for an engineering-oriented company to need invention. The truth is, in a global networked world where continuous innovation is sweeping across all industries, all the time, we all have to be innovators. The most important innovation we have to work on is ourselves.

What are you doing to reinvent yourself today?

While blogs and social sharing sites have gotten most of the media attention when it comes to the newer Web 2.0 applications, Wikis may have more practical application for business.

A good example was recently brought to our attention by Gerardo Méndez, the quality manager at Geometrica, builders of large column-free enclosures based on efficient geometric shapes. The company has posted an article that narrates their journey to ISO 9001 certification and describes how a wiki can actually help not only to comply with ISO's requirements, but to capture volumes of tacit knowledge in an organization and manage it effectively.

Geometrica has its headquarters in Houston, Texas and its main plant in Monterrey, Mexico. Through seventeen years, the organization has provided affordable and environmentally-friendly dome and space frame structures worldwide.   

Don Dunnington
Moderator