R&D tax credit should bring no tidings of comfort...

It was a small gift before the holidays, buried within the extended tax relief package -- a two-year extension of the R&D tax credit. Industrial manufacturing across the country did ok by this, but they can do much better for themselves.

At a time when American innovation continues to decline, having fallen by over 50% as a percentage of GDP since 1964, it seems that a permanent and thereby predictable tax incentive for R&D would be a good idea; but then again, maybe not.

Maybe there are other forces at work. Many say, what's been getting in the way of American industrial innovation are the tax structures in the United States, that industrial manufacturers have for too long been encouraged to create jobs and profits in other countries. If this were true, you would think the U.S. ranked low on the world's innovation totem pole. When the fact is, we are still number one.

Maybe there is another reason why American manufacturers are not reaching their innovative potential, and why a permanent R&D tax credit will make no difference for many, if not most, of them: The R&D tax credit has been renewed thirteen times since 1981. At a time when "uncertainty" is the explanation for so much managerial indecision, the fact is, innovation has been tax-supported in the U.S. for decades.

If innovation as a function of building market advantage isn't paramount to every CEO and his or her core coalition, then perhaps the decline should not be blamed entirely on U.S. tax structures, or a disproportionate number of free trade agreements, or an unfair China. Maybe it is time industrial manufacturers became better marketers, better brand builders, better marketing communication strategists.

Making permanent an R&D tax credit may bring more "certainty" to some industrial manufacturing executives, but it won't make them better marketers.

jb

Uncertainty is a double-edged sword...

Our firm is helping a select few industrial manufacturers grow during this recession and their leaders will tell you, $1.9 trillion is sitting on the sidelines right now for reasons other than uncertainty.

Entrepreneurship and innovation are founded on the marketing management of uncertainty and risk. Remove either, and you are not a marketer, you are a hopeful participant.

Winning manufacturers use marketing and branding to capitalize on the uncertainty of both their competitors and their prospective customers, by defining competitive advantages and strategically leveraging these advantages to solve the needs of a market segment -- even when that segment doesn't yet KNOW it has needs you can solve.

Some observations about uncertainty...

• Uncertainty is proportional to product complexity.

• If your product is close to becoming a commodity, then you are feeling very uncertain right now.

• If you are a manufacturer of more complex products that flow from a genuine depth of innovation and other sources of potential value, then you should be feeling CERTAIN that you are going to crush your competitors coming out of this recession.

If the marketing and selling of complex products were easy, you wouldn't have a sales force or reps or system integrators or distributors. You would have an e-commerce web site and your prices would be listed for all to see.

And THAT is the definition of business uncertainty.

jb
www.centrifuge-now.com

Marcom B2B or not to be, that is the question...

As this recession lingers like a bronchitis, robbing oxygen and decision-making willpower from many B2B organizations, marketing communication managers are in an especially unhealthy situation. The problem for many of these professionals is that they have dug themselves into holes, or roles, they can't easily climb out of now.

"Marcom" and "marketing communications" have become insider terms seldom used outside of marcom office cubicles. Marcom has become a mysterious cost center, tolerated due to its vague connection to sales; and as anyone in sales will tell you, the real action happens a safe distance down the hall from marcom, in the offices of the CEO and the VP of Sales, where plans for next year's growth have been well underway, with little thought as to the relevance of marcom.

This new level of endangerment is what every marcom manager needs.
It is certainly what every B2B company needs.

Marketing and branding communications are essential to business growth, because they are essential to building internal value definition and external value recognition. They are the tools an organization uses to become a preferred brand, to reach its full potential and to stop selling itself short.

But such progress requires change on both sides: Top management and marcom managers alike, are challenged to at last put "marketing" into the marcom equation: Marketing, as in the creation of customers, not the creation of routine marcom tactics and expenses.

It's time for marcom managers to stand up, walk down the hall and get in the game. CEOs and VPs of Sales must do the same.

jb
www.centrifuge-now.com