Region's Business 14 February 2013 by Independence Media

COUNCIL TAKES AVI DEBATE TO PUBLIC DESIGN THINKING NEEDED IN WORKPLACE

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REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

MASTERING THE FINE ART OF ECONOMIC

IMPACT

A world-class fine arts scene provides more than a point of pride for Philadelphia, it helps drive the creative economy.

EVERYONE CAN WIN WITH GOV. CORBETT’S TRANSPORTATION PLAN HOW TO AVOID COSTLY WAGE & HOUR ISSUES NON-PROFITS GET DOWN TO BUSINESS RegionsBusiness.com $2.00 U.S.

FEBRUARY 14, 2013

14 FEBRUARY 2013

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CONTENTS

Philadelphia Masters Art of Economic Impact

The region’s emergence as one of the country’s (if not the world’s) top destinations for art is more than simply a point of pride. It’s an economic driver that has not realized its full potential. Yet.

Robots, pervasive screens, speech interaction will all change the way we look at ‘computers.’ Once seeing, hearing, and reading (including handwriting) work very well you will interact in new ways.”

Michener Gets Royal Treatment A Bucks County museum will play host to a royal exhibit ... and royalty.

BILL GATES ON REDDIT

2013: YEAR OF THE INNOVATOR

Franklin Partnership Distributes $1.4 in Grants Nine companies received grants ranging from $30,000 to $250,000 from Ben Franklin Technology Partners of Southeastern Pennsylvania. In all, $1.43 million was distributed. !

Not Just Changed, But Transmorgified From Puppy Wars to payment tracking to health care, the four members of Transmorgify have a simple plan: You give them something and they make it, in their words, ‘awesome.’

REGION’S BUSINESS Independence Media Corp. 600 West Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 feedback@regionsbusiness.com Online: RegionsBusiness.com To subscribe: 877.700.6245 or 215.627.6397 Circulation & Distribution: CCN - www.ccndelivery.com Advertising information: 610.940.1656

Transportation Plan Funded By Consumers

2040 Market Street Precision Realty Group is pleased to announce that the Pennsylvania Liquor Control Board (PLCB) has signed a long term lease for a flagship location at 2040 Market Street. Fine Wine and Good Spirits will join National Penn Bank to complete the retail portion of the former AAA Building on the corner of 21st and Market Streets. Shaun M. Lyons, President of Precision Realty Group handled the transaction on behalf of PMC Property Group. The PLCB will occupy 10,000 SF with the premium state store set to open in late Spring of 2013.

Gov. Corbett closely followed the recommendations of his advisory commission when it came to solving the state’s transportation woes.

Here’s How Corbett’s Plan Could Benefit All The governor’s transportation plan has come under fire from both parties. But scratch below the surface and everyone could win, politically. !

PRESIDENT AND PUBLISHER James D. McDonald EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Brandon Baker CONTRIBUTORS LisaBeth Weber, Vinny Vella, Don Lee,

Charles Gerow, Timothy Holwick, Eric Boehm

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© Copyright 2013 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited. Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com. The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.

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EDITOR’S DESK

Lack of Empathy Just Cost You Money

Karl Smith is the Editorial Director for Region’s Business. You can contact him at ksmith@regionsbusiness.com.

Our cover story on museums provides the perfect context for a little personal story. We are members at a kid-friendly museum, which we’ll leave as nameless other than to say it’s not in Philadelphia, but obviously close enough to drive to from our home in Bucks County. This museum was having a membersonly event on a Friday evening and my wife thought it would be a perfect opportunity to take our daughter and her friend for a nice, educational-but-fun, night out. They left early, allowing about two hours to make a trip that normally takes an hour, even with some traffic. But the weather was bad, so she figured “better safe than sorry.” Well, we all know what happens to Philadelphia when there’s weather - drizzle, rain, fog, a snow flurry, whatever - total gridlock. It took my wife more than an hour to get about one-third of the way there and it looked like they were barely going to get to the museum before it closed, let alone in time to enjoy the

special exhibit. So I called the musuem. Certainly, my wife couldn’t have been the only one stuck in traffic. Certainly, a museum that relies so heavily on its members would be empathetic and lend an understanding ear, even if they couldn’t stretch the event out another half-hour or so. Certainly, I overestimated this particular museum, in particular their empathy. I told them the story and said I wasn’t sure what to tell my wife. “I’d tell her to get off the freeway, turn around and go back home,” came the response. I picked my jaw up off the ground and said something about maybe staying open an extra 30 minutes past the scheduled 7:30 p.m. closing time. I could have just as well asked for a spleen because the person on the other side of the call was completely aghast at the mere thought. “Absolutely not,” she said. “In fact, we’ll be out the door at 7:30 on the dot.”

Now, did I really expect them to stay open a little longer for my wife? No, not really. All I was looking for was some empathy, a sign that the fact that we take some of our hard-earned money and dedicate it to this museum was appreciated. And a signal that the fact that we took a Friday evening and decided to spend it at one of their events mattered. Clearly, it wasn’t appreciated, nor did it matter. When I told my wife, she looked at the membership card and said, “well, it expires in March and we won’t be renewing it. In fact, I’ll never set foot in that place again.” In the end, it won’t matter. We weren’t a big donor or contributor, just another family membership. But in tough times, you would think that every nickel counts. It wouldn’t have cost this museum a single penny to save our membership dollars. All it would have taken was a few kind words and a little understanding. Saying thanks - meaning and showing it can be your most positive marketing tool.

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DEVELOPMENT

Student High-Rise To Be Constructed in University City

WEEKLY BRIEFING

LCB Privatization Could Mean New Markets for Pa. Wineries BY MELISSA DANIELS

Brandywine Realty Trust, Campus Crest Communities, Inc. and Harrison Street Real Estate Capital are jointly planning a 33-story, 850-bed student housing tower at Brandywine’s Cira South development in University City, Philadelphia. The Grove at Cira Centre South — being developed at 30th and Chestnut Streets — has a cost of $158.5 million. The targeted completion date is fall 2014; leasing should begin in fall 2013.

Mayor: Hospital Key to Revitalization of West Philadelphia Mayor Michael Nutter said the grand opening of the Nicholas and Athena Karabots Primary Care Center at 48th and Market streets in West Philadelphia symbolized that the hospital and Market Street are keys to West Philadelphia’s comeback. The $27 million, 52,000-square-foot children’s hospital has 56 child-friendly rooms.

Drexel Constructing Perelman Plaza After $5M Donation Drexel University will create The Raymond G. Perelman Plaza after a $5 million gift from the Raymond and Ruth Perelman Education Foundation. Construction on the plaza, which will be designed with sustainable stormwater management and rainwater usage in mind, will begin this summer. Full Disclosure: Mr. Perelman is an investor in Region’s Business.

HARRISBURG — If Linda Jones McKee wants to sell a bottle of wine from Tamanend Winery at liquor stores in Maryland, she knows just what to do. Call up a distributor, and make an appointment. Bring in some samples to find out what the distributor likes. If they’re interested, negotiate a price and shipment details, and that’s it. “Six weeks after that, if they like your wine, you’re in business,” she said. “Even less than six weeks if they really want it.” If the distributor doesn’t like it? It’s an open market. “You go down the street to the next distributor,” Ms. Jones McKee said. In Pennsylvania, that’s not that simple. Here, the Pennsylvania Liquor Control Board is the sole decision-maker behind what gets on the shelves of state-owned liquor stores. If they don’t like it, you’re out of luck. For Pennsylvania-based wineries like Tamanend, located in Lancaster, that means there’s just one shot at success. Gov. Tom Corbett is leading the latest charge “get out of the business” of selling booze. Critics on both sides of the aisle have come out saying privatization could ignite safety issues, negatively impact rural areas or cause the state to lose money. But polls show voters support privatization. Gov. Corbett’s plans could double the amount of wine and spirit stores in the state, offering up to 1,200 wine and spirit retail locations. Grocery store, and big box retailers like WalMart, also could have the option of selling wine. This would put Pennsylvania in step with most other states. A study from the Food Marketing Institute says 33 states and the District of Columbia allow food stores to sell wine. It would be a new world for alcohol consumers in Pennsylvania, the pros and cons of which lawmakers will

JONATHAN SMITH

inevitably debate. But it also would mean a new chapter in the Pennsylvania wine industry. “It would give us a whole new avenue to market our wines,” Ms. Jones McKee said. Under state laws, here’s how the PLCB product selection works: Applicants have two shots a year to get the Pennsylvania Liquor Control Board to review their products for placement – for a $150 fee. If the product doesn’t make the cut, there goes any shot at distribution. And the PLCB keeps the $150. Stacy Kriedeman, deputy communications director for PLCB, said there’s about 100 Pennsylvania wines in the state system. When PLCB selects a product, store placement decisions are made based on factors like past sales, demographics, marketing strategy and what store managers believe will sell best, she said. Price is negotiated on a variety of factors, but Pennsylvania wines can’t be sold at a higher price in the state store than at the winery, Ms. Kriedeman said. And the PLCB has a mandatory 30-percent markup that sellers must consider. And as the laws presently read, Pennsylvania wineries do have other options to legally sell their products. Wineries like Tamanend — legally considered “limited wineries” due to the amount of wine they produce —

can sell directly out of tasting rooms. They also can operate up to five retail locations, either on their own or in conjunction with other wineries. Pennsylvania wineries can sell 365 days a year, if they want. Because the state stores operate on a special schedule that involves closing on federal holidays, and many are closed on Sundays, wineries have a leg up on those days. The official trade group representing Pennsylvania wineries hasn’t said whether it supports Gov. Corbett’s privatization proposal. Jennifer Eckinger, executive of the Pennsylvania Winery Association, said the group is reviewing the proposal. But, as the debate to privatize ramps up in Harrisburg, PLCB and PWA recently announced a new distribution plan for select wineries. It applies to those who are designated “PA Preferred” by the Department of Agriculture. Right now, that’s about 75 wineries, and they will be able to place up to 10 of their wine varieties in up to 10 stores. Ms. Eckinger said many wineries don’t necessarily have the stock to be able to get into state stores. The PA Preferred program is a way they can reach out to new audiences, she said. The program also will allow for direct store delivery, which could pare down shipping costs. — Pennsylvania Independent

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WEEKLY BRIEFING

BUSINESS

CEO of the Year: Trevena’s Gowen

Convention Center Board Seeking Operations Privatization Proposals THIS IS A PROCESS WE SHOULD BE GOING THROUGH EVEN IF WE WERE LEADING THE NATION IN BOOKINGS.’

Maxine Gowen, president and CEO of King of Prussia, Pa.-based Trevena, Inc. has been named the 2013 Frank Baldino Jr. CEO of the Year by Pennsylvania Bio, the statewide life sciences industry trade association. Ms. Gowen will be honored at the Annual Dinner and Awards Celebration and Ceremony March 13 in Philadelphia.

—GREGORY FOX, PCCA CHAIRMAN

Parx Casino Revives City Bicycle Race Parx Casino pledged $100,000 to keep a bike race in Philadelphia after the cancelation of the 2013 International Cycling Championship. The Parx Casino Philadelphia Cycling Classic will be held June 2, 2013, the original race date. “It’s much easier to get things done when you have a top cast that want to get this to happen and various people making sure that we don’t lose our tradition,” Congressman Bob Brady, who organized the revived race, said, according to a Metro report.

204

Transactions settled by the Philadelphia Industrial Development Corporation (PIDC) and the Philadelphia Authority for Industrial Development (PAID) in 2012

$877M $1.2B

Union Takes Pay Cuts in Two-Year Contract

SPORTS

Year-End Review

Financing involved in PIDC and PAID’s 2012 transactions

MEDIA

The Newspaper Guild voted last week to approve a two-year contract with the parent company of The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com. Un i o n o ffi c i a l s approved a 2.5-percent wage cut in a 200-35 vote at a Center City hotel last week, according to an Inquirer report. “Our local ownership is confident about the future and remains very committed to continuing to make our company a successful enterprise,” Interstate General Media said in a statement.

PIDC 2012

Total project costs involved in the 2012 transactions

The Pennsylvania Convention Center Board of Directors voted last week to approve the issuance of Requests for Proposals for private operations management services. Gregory J. Fox, chairman of the Pennsylvania Convention Center Authority (PCCA) said it is in the Center’s best interests to hear how private groups would more efficiently manage operations. “We’re concerned about the number of bookings in the future, but this is a process we should be going through even if we were leading the nation in bookings,” Mr. Fox said before putting the resolution to a vote in a brief public session.

ENERGY

State’s Legal Fees Over Drilling Law Top $550,000 A case over the legality of the Marcellus Shale gas drilling law has cost Pennsylvania more than $550,000, according to the Pittsburgh Post-Gazette. Philadelphia-based Conrad O’Brien is representing the state Department of Environmental Protection and the Public Utility Commission.

An RFP would ask respondents to detail how they would recruit and retain current PCCA staff members, according to a statement. Board members hope to formally issue the RFP in mid-March and will ask respondents to respond in early May. Mr. Fox said in his statement that a contract for private management of Center operations could be signed by the end of June. The resolution passed with only one ‘nay’ vote cast by Heather Steinmiller, who said she was “afraid this RFP will confuse the marketplace.” “We need to get serious about negotiating with our unions,” she added.

500,00

Square feet of leased space involved in the 2012 transactions

Emerging Business Loan and Guarantee Program transactions closed by PIDC in 2012

Growth Loans given to businesses, developers and nonprofits in 2012

Transactions executed by the Navy Yard in 2012

New leases at the Navy Yard signed in 2012

For the future we’re building…

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14 FEBRUARY 2013

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WEEKLY BRIEFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

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Risk to Succeed In today’s volatile economy, the average unemployment rate in U.S. continues to hover around 8 percent. According to recent studies, nearly two-thirds of Americans are unsatisfied at work. Simply, many Americans, regardless of their skill level, education, or experience continue to struggle to find meaningful employment and overall job satisfaction. In an effort to help Americans develop a realistic plan of action and achieve their career goals, Ricky Cohen, highly successful business owner, lecturer, and author presents his new book, Risk to Succeed: Essential Lessons for Discovering Your Unique Talents & Finding Success (McGraw Hill).

RESTAURANT ROUNDUP

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Sheetz Vs. Wawa Goes National The New York Times recently ran an article detailing the rivalry between convenience stores Sheetz and Wawa (or, more specifically, their fans). Even though in this state, Wawa is mostly limited to the Southeastern corner, its loyal customers boast about Wawa’s morning coffee or customer service while traveling across the state. “I’m here at least 10 times a week,” one Wawa fan told the New York Times while holding a 24-ounce coffee cup. When it comes to Wawa’s famed touch-screen ordering process, though, Sheetz boasts having the technology first. “I have to brag and say we beat Wawa,” Sheetz spokeswoman Monica Jones told the New York Times. “This is undisputed.”

14 FEBRUARY 2013

REGIONSBUSINESS.COM

GAMING

Borgata to Allow Gambling Via TV

WEEKLY BRIEFING

Study: Philadelphia, Other Cities Struggle to Use Closed Schools

Six groups seeking Philadelphia’s second casino license descended upon the city Tuesday to make their case before the Pennsylvania Gaming Control Board at a hearing held at the convention center. Each applicant was given about 45 minutes to present its plan to the board. A winner will be selected this year, according to the PGCB.

AC Casino Revenue Drops 13.2 Percent

Revenue at Atlantic City’s casinos dropped 13.2 percent in January when compared to a year ago, highlighted by Revel having its second-worst month yet, according to the Associated Press. This could turn out to the be the seventh consecutive year that Atlantic City sees a decline in casino revenue.

BY THE NUMBERS

Top 10 Investing Neighborhoods Philly.com listed the top 10 neighborhoods in Philadelphia for investing, based on data from Trulia. com. 1) Kensington 2) Northeast Philadelphia 3) Manayunk 4) Center City East 5) Point Breeze 6) Washington Square West 7) Overbrook 8) West Mount Airy 9) Rittenhouse Square 10) Roxborough

Atlantic City’s Borgata will become the nation’s first casino to allow guests to gamble using the television in their hotel room, the casino announced. Beginning February 18, guests can use their player’s cards to risk up to $2,500 each day, according to an Associated Press report. Guests will be able to play slot and four kinds of video poker.

Philadelphia Casino Applicants Place Bets

10 Most Taxed Cities in the USA

The old West Philadelphia High School building sold last year for $6 million.

School districts in Philadelphia and big cities across much of America are struggling to find productive new uses for hundreds of school buildings closed due to declines in enrollment and school-age population, according to a new report from The Pew Charitable Trusts. “Shuttered Public Schools: The Struggle to Bring Old Buildings New Life” examines the school disposition process in 12 cities that have significant inventories of decommissioned schools. As of the end of 2012, the 12 districts had sold, leased or otherwise reused 267 properties since 2005 and still had 327 unused sites on their hands. Inventories will grow in the months ahead, with Chicago, Philadelphia and Washington considering large-scale closures. “The challenge of finding new functions for old buildings is a daunting one for school districts, because typically they’re just not set up to buy and sell real estate,” said Emily Dowdall, senior associate for Pew’s Philadelphia research initiative. “But letting vacant schools sit idle poses significant problems. An empty building can cast a pall over a neighborhood, attract illegal activities, and be costly to seal, maintain and insure.” The study found the most common reuse of the surplus properties is as charter schools. Yet there is disagreement among

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districts — and within districts — over whether this is desirable. Charters are obvious candidates to use the buildings and often have access to the resources needed to acquire them. But the flow of students to charters can further reduce enrollment in district-run schools, helping create more empty buildings in the future. Other uses include housing, both market-rate and subsidized, as well as higher education, homeless shelters, churches, community centers, and offices. There are a number of factors that make the buildings hard to sell, including the conditions of the structures, many of which are old, large and decaying; layouts not conducive to new uses; and locations in residential areas suffering from depopulation and decline. Sale prices for shuttered schools often come in well below initial projections. And the act of selling a vacant school building, even at a low price, does not guarantee successful reuse, only a change of ownership. In 2012, Philadelphia had 12 properties on the market and sold six, with prices ranging from $1 to $6 million. Another six, shut down last year, have yet to be put up for sale, and many more are likely to be added to the list after March, when the School Reform Commission votes on Superintendent William R. Hite Jr.’s proposal to shutter 37 buildings, nearly 15 percent of the city’s district-run schools.

Philadelphia dropped one spot in the list of most taxed cities in the nation, produced by H&R Block. In 2013: 1) Bridgeport, CT 2) Newark, NJ 3) Philadelphia, PA 4) Columbus, OH 5) Los Angeles, CA 6) Chicago, IL 7) Louisville, KY 8) Providence, RI 9) Burlington, VT 10) Boston, MA In 2012: 1) Bridgeport, CT 2) Philadelphia, PA 3) Louisville, KY 4) Detroit, MI 5) Newark, NJ 6) Columbus, OH 7) Providence, RI 8) Los Angeles, CA 9) Milwaukee, WI 10) Boston, MA

Energy Switch

Customers who have switched their energy providers in Pennsylvania, according to the state Public Utility Commission

14 FEBRUARY 2013

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DEALBOOK

E-COMMERCE

HEALTH CARE

ICG Group Sells Channel Intelligence to Google

Crothall Acquires CREST Services

Radnor, Pa.-based ICG Group Inc. sold Channel Intelligence Inc. to Google Inc. for $125 million in cash. The e-commerce company headquartered in Orlando, Fla., tracks almost 15 percent of U.S. transactions online for companies including Target, HP, Neiman Marcus and Best Buy. The transaction is expected to close in the first quarter of 2013, according to a company press release.

Wayne, Pa.-based Crothall Healthcare recently announced it had acquired CREST Services, a medical equipment maintenance company based in Coppell, Texas. “We are excited about adding CREST Services to Crothall’s clinical equipment solutions (CES) operating division,” said Crothall Healthcare President Steve Carpenter. “CREST is a well-known, high-quality Clinical Equipment service company with strong leadership. We believe that our cultures align and that the people of CREST Services will become valuable additions to our teams.”

Mohegan Sun Tapped for Market8

Mohegan Gaming Advisors has joined Market East Associates as a partner and will operate the gaming/entertainment portion of the proposed Market8 entertainment center on the block of East Market Street between 8th and 9th Streets. The Mohegan Tribal Gaming Authority operates Mohegan Sun in Connecticut (pictured above) and Mohegan Sun at Pocono Downs in Pennsylvania.

PUBLISHING

Eureka Acquires Law School Publishing Co. Philadelphia-based Eureka Growth Capital recently announced it had acquired the Law School Publishing business of Thomson Reuters through the newlyformed West Academic Publishing, of Eagan, MN. Eureka Growth Capital is a private equity firm that focuses on partnering with market leaders with up to $75 million in revenue, according to a company statement. West Academic publishes legal textbooks, casebooks and study guides in print and digital formats.

14 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Council Members Begin Taxpayer Fairness Initiative

Timothy Holwick is a freelance writer covering Philadelphia government. Find more coverage at citycouncilmatters.com. CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Last week, City Council’s newest members — Cindy Bass, Bobby Jenon, Kenyatta Johnson, David Oh, Denny O’Brien and Mark Squilla — launched the Taxpayer Fairness Initiative in response to constituents’ frustration over the implementation of the Actual Value Initiative (AVI), the city’s plan to create fairness in real estate taxes and property assessments. The Initiative officially kicked off February 7, when the six councilmembers introduced resolutions authorizing the Committee of the Whole to hold a series of hearings on the issue of real estate tax delinquency. Hearings before the Committee of the Whole amount to hearings before the entirety of City Council. Each councilmember involved

with the Initiative selected a topic to focus on during the series of hearings: Understanding Real Estate Tax Delinquency (O’Brien), Delinquent Vacant Property (Bass), Delinquent Commercial Property (Squilla), Delinquent Residential Investment Property (Johnson), Delinquent Owner-Occupied Property and Understanding National Best Practices, Next Steps (Oh). The motto of the Initiative is “It’s Only Fair.” The call for collection of delinquent taxes has been growing louder since the time AVI was only a plan. Now that AVI has arrived, councilmembers continue to pursue the basic fairness that delinquent taxes should be collected if the city is going to ask many dutiful taxpayers to pay

more real estate taxes under AVI. AVI represents its own kind of fairness in that a more streamlined system for assessing property values, and therefore real estate taxes, will be implemented. Some properties in Philadelphia have not been assessed in decades, and the assessment on those properties no longer reflects the actual value of the property. That being said, Philadelphia has a less-than-sparkling track record when it comes to collecting delinquent real estate taxes. At last week’s council meeting, Councilwoman Bass pointed out that in 2010, Philadelphia ranked 24th out of 25 cities in real estate tax collections, which she called “a massive delinquency problem.”

Councilwoman Bass went on to cite an estimate that between $282 and $518 million uncollected property taxes exist in Philadelphia. More information can be found on the website launched by the six councilmembers behind the Taxpayer Fairness Initiative at taxpayerfairness. com. The website features information from all six councilmembers, a blog, and a form where Philadelphians can submit questions to the Initiative. While collecting delinquent taxes is a priority, the Initiative also seeks to ensure that Philadelphia taxpayers have all the information they need to confront AVI, including what to expect and how to address payment plans and other relief.

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14 FEBRUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

Doctor’s Speech Brings Moral Arguments to Tax Talks

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm. CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Rarely does a single speech have long-lasting impact. Those that do generally come from people well known within the political/activist world. So it’s unusual that a speech from a doctor, renowned in his profession but not in politics, has caused as much stir as Dr. Ben Carson’s at the 61st Annual National Prayer Breakfast. With the president and vice president of the United States watching, he began: “It’s not my intention to offend anyone. But it’s hard not to. The PC police are out in force everywhere.” He proved his political incorrectness by making the leader of the free world squirm with two well-considered ideas. First he challenged the wisdom of a progressive income tax by invoking a source not often raised in the tax reform

debate: the scriptural concept of a 10-percent tithe of income. “...we need something simple. And when I pick up my Bible, you know what I see? I see the fairest individual in the universe, God, giving us a system. It’s called a tithe,” said Dr. Carson, a devout Christian. Dr. Carson pointed out that 10 percent was not a magical formula, but rather the principle was the key. He called for a simple and fair tax system that would eliminate the labyrinth of loopholes, deductions and credits that bewilder even the most seasoned tax preparer. By then on a roll, the good doctor built a moral case for the flat tax, saying, “Some people say, ‘Well that’s not fair because it doesn’t hurt the guy who made $10 billion as much as the guy who just made $10.’ Where does

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it say that you’ve got to hurt that guy? He put a billion dollars in the pot. We don’t need to hurt him. It’s that kind of thinking that has resulted in 602 banks in the Cayman Islands.” In a steady and authoritative voice, he tackled health care and made the case for a simple solution: individual medical savings accounts, assigned at birth and managed by the patient. Saying contributions to these accounts could be made using tax dollars for indigents, he noted such a plan would eliminate “death panels,” a jab hardly lost on the president. The “mainstream media” largely ignored the remarks. But across the world the reaction was massive and galvanizing. “Ben Carson for President,” shouted the Opinion Page of the Wall Street Journal. Across the

digital media there was effusive praise and all sorts of chatter about Dr. Carson and his political future should he choose one. What “made” his speech was its simplicity and clarity. He didn’t attack the president. He didn’t have to. The moral case he made for free markets and a fair tax system spoke for itself. At a time when we are more likely to hear attacks or mere platitudes from the opposition, the power of common sense solutions and specific proposals carried the day. Good policy has always been good politics. And good policy is not that difficult to formulate. Dr. Carson gave us real food for thought, ideas for debate and a solid case for a viewpoint far different than the current administration’s. Let’s hope we hear a lot more from him.

14 FEBRUARY 2013

PENNSYLVANIA POLITICS

REGIONSBUSINESS.COM

Everyone Can Win Politically With Pa. Transportation Plan

Eric Boehm is bureau chief/news reporter for Pennsylvania Independent.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

HARRISBURG — Insufficient. Too small. Timid. In the days following Gov. Tom Corbett’s new transportation infrastructure proposal, lawmakers from both sides of the aisle have openly criticized the plan as coming up short in terms of new revenues to fund roads, bridges, mass transit and a host of other transportation-related items. Gov. Corbett’s plan would raise about $500 million in new revenues next year, climbing to $1.8 billion annually by the time it is fully implemented five years from now. But that’s a far cry from the $2.7 billion to $3.5 billion figures the governor’s own transportation commission recommended in 2011 when it released a final report detailing Pennsylvania’s infrastructure woes, say lawmakers. That report recommended two main sources of new funding, along with a litany of smaller changes that we’ll gloss over here for the sake of brevity. First, the commission advised uncapping the oil franchise tax. Technically, the tax is paid at the wholesale level, but it all ends up being built into the final price at the pump. Currently, that tax is only applied to the first $1.25 of each gallon of gas. The commission said — and Gov. Corbett has now proposed — the cap should be lifted to capture the full price of each gallon of gas. The second major funding proposed from the transportation commission was to increase the cost of vehicle registrations and drivers’ license fees in line with inflation. They have not been

COURTS

Two Judges Plead Guilty Two Pennsylvania judges have pleaded guilty in an alleged “ticketfixing” scheme in Philadelphia Traffic Court. H. Warren Hogeland, 75, of Richboro, Pa. and Kenneth Miller, 76, of Brookhaven, Pa. pleaded guilty to mail fraud. Mr. Hogeland pleaded guilty to conspiracy. Nine judges were named in the January 31 indictment. 2014 GUBERNATORIAL ELECTION

JOHN J. RAFFERTY

upped since the last statewide transportation overhaul package in 1997. But Gov. Corbett left that piece out of his proposal last week. And lawmakers noticed. Already, Senate Transportation Chairman John Rafferty, R-Montgomery, said Gov. Corbett’s plan is “insufficient” and has called for an increase in the cost of fees (and fines for moving violations). Democrats — never ones to shy away from additional revenues — agree that driver and vehicle fees should be increased to better fund the transportation package. So here’s how it should all go down: With a low initial proposal, Gov. Corbett minimized the political damage he will take for suggesting that taxes and fees should be increased. That’s essential for him since the “no tax pledge” has been a central part of his administration. Then, lawmakers can crank up the overall spending total, while crowing about how many more potholes and bridges can be repaired by their actions. And more money in the pot means more ribbon-cuttings for newly repaired bridges in their home

districts, something they all like. Finally, Gov. Corbett can sign off on the higher funding figure by blaming the legislature for the higher fees on motorists, and he can say he was forced to sign it because it is better than nothing or because the General Assembly held another of his proposals (liquor privatization, the state budget, etc.) hostage for the transportation plan. Everyone wins — except those of us who will be paying more for gas and more for license renewals. Of course, nothing in Harrisburg is ever that simple and nothing in politics happens in a vacuum. Gov. Corbett — and, to a lesser extent, the members of the General Assembly — will take hits for increasing taxes and fees at a time when motorists are already paying more for gas and tolls than they would like to. There will be — appropriately — questions raised about whether the new transportation spending could be used more efficiently and effectively. But in the end, there should be enough common ground for everyone to take a share of the credit — and the blame.

Rep. Schwartz ‘80 Percent’ In Rep. Allyson Schwartz is “80 percent of the way in” to the 2014 race for Pennsylvania governor, Montgomery County Democratic Party Chairman Marcel Groen told PoliticsPa. com. Rep. Schwartz has more than $3 million on hand in her congressional campaign and would be allowed to transfer 100 percent of that into a gubernatorial bid. POLLING

Obama Approval Rating Slips in Pa. President Barack Obama’s approval ratings have dropped slightly among Pa. voters according to this month’s Franklin & Marshall poll. Forty-two percent of registered voters believe the president is doing an ‘excellent’ or ‘good’ job. That number is down from 46 percent in an October poll. Job approval appears to be faltering among Independents, of whom only 33 percent rated the president’s performance favorably. It is also low among men, who disapproved of his job 50 percent to 43 percent. — PoliticsPa.com

14 FEBRUARY 2013

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Governor on PA Transportation: Costliest Move is Doing Nothing BY VINNY VELLA

BY THE NUMBERS

fter nearly two years of discussion and analysis, Governor Tom Corbett has revealed his plan for solving Pennsylvania’s transportation budget shortfall. And if his budget, released February 5, is any indication, the solutions for generating this much-needed funding will be fueled by consumers. “Our most costly option would be to do nothing,” Gov. Corbett said in an address last week in Harrisburg. “It will cost us in repairs, it will cost us in rebuilding, and it could cost us in tragedies we might have avoided.” Using a similar model to the one first laid out in August 2011 by the Transportation Funding Advisory Commission (TFAC) — a panel of experts assembled by Gov. Corbett to propose a solution to closing the commonwealth’s funding gap — the governor hopes to generate $5.3 billion in transportation revenue over five years using a threepronged approach: uncapping the oil company franchise tax, lowering the tax on liquid fuels and altering state Department of Transportation policies on vehicle registration and drivers’ licenses. Currently, the tax on gasoline at the wholesale level is capped and is applied to a fixed price of $1.25 per gallon. Uncapping it would increase it to the average wholesale price of a barrel of fuel, which for 2013 is $3.114 per gallon, according to the state Revenue Department’s data. If uncapped all at once, the adjusted tax would cost consumers an additional 28.5 cents per gallon of gas. However, Gov. Corbett hopes to slowly phase in this change, uncapping only

SAFER TRAVEL — I THINK THAT’S WORTH A FEW EXTRA CENTS AT THE GAS STATION.’ —STATE SEN. JAKE CORMAN

$6.4B

Total of all funds in the proposed 2013-2014 transportation budget

$6.2B

Total of all funds in the 20122013 transportation budget

$6B

Total of all funds in the 20112012 transportation budget

$3.8B

a third of the cost this year, and the rest in 2015 and 2017. With that in mind, the commonwealth’s drivers would pay 9.6 cents more this year at the pump. However, the second “prong” of Gov. Corbett’s budget alleviates some of the pressure felt at that pump. He plans on lowering the commonwealth’s liquid fuel tax by two cents per gallon (from 12 to 10), resulting in a final, 7.6cent increase on every gallon of gas sold in Pennsylvania in 2013. For the “average motorist” — defined by TFAC as someone who drives 12,000 miles in a 24 mpg vehicle — that means $38 more in fuel costs for the year. “Transportation funding is based on user fee,” said state Sen. Jake Corman, the chairman of the Senate appropriations committee, whose own attempt at passing funding legislation based on TFAC’s report was ultimately tabled during the last legislative session.

“At the end of the day, consumers are going to pay more to travel in state. There’s no way to get around that, and anyone who thinks otherwise is naïve,” he said. But, if Gov. Corbett’s budget is to believed, that extra $38 will go a long way, helping to fund dozens of PennDOT improvement projects to the state’s roads, bridges (more than 4,000 of which are considered “structurally deficient”) and mass-transit systems. Those projects will be greatly assisted by the third piece of Gov. Corbett’s plan of action, the doubling of vehicle registration and driver’s license renewal cycles to two and eight years, respectively. “Any time you increase a user fee, the reaction of the users ultimately comes down to ‘What am I getting out of this?’” Sen. Corman said. “The short answer is safer travel; I think that’s worth a few

extra cents at the gas station.” As estimated by TFAC in its 2011 report, those changes will generate $4.7 million and $47,000, respectively, in savings for PennDOT, a one-time boost of revenue that can help get some of the department’s most crucial projects off the ground immediately. “In the past, federal stimulus money was, out of necessity, spent on bridge painting projects, bike trails and acquisition of SEPTA buses — good uses, but things that don’t generate jobs and don’t address the state’s crumbling infrastructure,” said Rob Wonderling, president of the Greater Philadelphia Chamber of Commerce and former TFAC panel member. “What the governor has essentially done is create a structure for future funding, putting these larger-scale projects in motion and creating jobs for transportation workers,” he said.

Program funding going to highways and bridges in the 2012-2013 transportation budget

$4B

Program funding going to highways and bridges in the proposed 2013-2014 transportation budget

$4.3B

Estimated program funding going to highways and bridges in the 2015-2016 transportation budget

$4.5B

Estimated program funding going to highways and bridges in the 2017-2018 transportation budget

14 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

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BY THE NUMBERS

BioTech Industry Pipeline Launches At Jefferson

Percentage of the world’s population living in the United States

33%

Percentage of high-tech researchers working in the United States

91,150

Full-time foreign graduate students in science, engineering and health fields in the United States in 1990

148,900

THOMAS JEFFERSON UNIVERSITY

WorkReady Philadelphia’s newest industry pipeline program recently launched at Thomas Jefferson University. The innovative program for science, technology, engineering and math (STEM) skills was introduced January 30 Quest is managed by Philadelphia Academies, Inc. and funded by GlaxoSmithKline and The Philadelphia Foundation. Twenty-five students from Roxborough and Lincoln high schools will be connected with mentors from Thomas Jefferson University to engage in educational programs focused on biotechnology science applications and clinical molecular diagnostics.

Local News Sites Shut Down

Full-time foreign graduate students in science, engineering and health fields in the United States in 2009

24%

Percent growth of nonSTEM bachelor’s degrees between 2000 and 2007

16%

Percent growth of STEM bachelor’s degrees between 2000 and 2007

Annual increase of STEM Master’s degrees awarded from 1993 to 2007

Annual increase of all Master’s degrees awarded from 1993 to 2007 MANUFACTURING.NET

Two websites dedicated to a new grow audience, we needed to increase attempt at Philadelphia news have the frequency and array of stories and topics covered. However, that requires recently shut down operations. more money than I have The grant-funded been able to raise.” Metropolis, run by longtime EveryBlock, which ran Philadelphia reporter Tom news websites for 19 citFerrick, Jr., emailed its last edition February 10 with a ies including Philadelphia, note from Mr. Ferrick. closed down with a final post “The reason is simple: titled “Farewell, Neighbors.” I have run out of money,” “It’s no secret that the Mr. Ferrick wrote. “Like news industry is in the midst Blanche DuBois, this site has of a massive change. Within depended on the kindness of the world of neighborhood strangers. We were a cheap news there’s an exciting pace Tom Ferrick, Jr. date — our total budget runs of innovation yet increasing $80,000 a year — and we were lucky challenges to building a profitable busito have various local foundations and ness,” the final post reads. other entities provide financial support. “Though EveryBlock has been able to “With our latest grant running out, I build an engaged community over the considered trying to get another round, years, we’re faced with the decision to but decided against it. In order to wrap things up.”

Steadily, but almost quietly, Philadelphia has become a hotspot for entrepreneurs. The combination of great ideas, available capital and a welcoming environment have set the stage to make 2013 a breakout year for innovation and new businesses. To Learn More ... For more information on sponsorship opportunities or to suggest story ideas, call our main office at 610-940-1656. The web: RegionsBusiness.com Facebook: Facebook.com/regionsbusiness Twitter: @RegionsBusiness Sponsored by

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2013: YEAR OF THE INNOVATOR

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Use Caution When Dealing with Wage & Hour Issues

Mark A. DiAntonio, Esq. focuses his practice on civil litigation and employment law matters. He can be reached at mark@diantoniolaw.com or (215) 609-1563.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Employers have yet another reminder why they should be very careful when dealing with Wage & Hour issues — 20.9 million reminders, to be more precise. Rite Aid Corp. recently settled claims brought by about 7,500 assistant managers nationwide, claiming they were misclassified as exempt employees under the Fair Labor Standards Act and state Wage & Hour laws. They were salaried, thus, they didn’t receive overtime pay. After four years of litigation, the parties settled for $20.9 million. The lawyer’s cut is almost $7 million. Each employee will receive about $2,000. This is the product of a statutory scheme that’s not so employer-friendly. Employees may seek back pay for up to three years in double the amount owed. However, the real financial pain comes with attorney’s fees. Indeed, it’s not unusual for an attorney’s fee award to greatly exceed the client’s recovery. The astounding figures being thrown around in this and other recent Wage & Hour cases emphasize the importance of assuring employees are properly classified and accurate records are maintained. It’s worth reviewing your payroll practice and asking these questions: Have you conducted a classification audit lately?

Job classifications deserve a closer look if, for no other reason than to confirm you’re doing it right. Have someone knowledgeable about the recent status of the law and regulations regarding employee classifications involved in this review. Do you have updated job descriptions? Payroll administration is just one area of your company’s employment practices where thorough, updated job descriptions will come in handy. The importance of clearly expressing what employees do, and don’t do, can be of great value in a land full of “gray” areas. Have you maintained time sheets for the past three years? It’s the employer’s responsibility to maintain accurate payroll records. Without them, you may be trying to shoot down an employee’s recollection of hours worked with no ammunition. Do your employees know your policies

regarding working at home, and using electronic devices after hours or while on vacation? With telecommuting and 24/7 connectivity becoming the norm, the lines blur between work time and time off. Inform employees when they should — and shouldn’t — be working, and enforce that policy, even for salaried, exempt employees. Keeping them off the clock at the right times will keep you out of trouble and, ultimately, save you money. Are you aware of time your employees may be working off the clock? Secretaries working over lunch, billing clerks taking work home “to catch up,” machinists arriving 15 minutes early to get equipment ready for their shift … the list goes on. That hourly employee could be one of hundreds in a lawsuit demanding back pay. Multiply 15 minutes by the overtime rate, by five days per week, by 50 weeks per year, by three years, by 100 or so employees — and double that. Now you’re talking some real money. Evaluate what activities are on and off the clock, and make sure your employees don’t cross that line, even with good intentions. Reviewing job classifications and payroll practices can reap quantifiable rewards. When it comes to Wage & Hour issues, an ounce of prevention may very well save your company a pound of flesh.

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2013: YEAR OF THE INNOVATOR

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ZumiCare

DIARY OF A STARTUP

CALENDAR

Finding a babysitter is hard enough, but finding one to care for a child with special needs is even harder. Amarachi Enwereuzor hopes to change that.

In Their Own Words: Saunter Hires Developer Adam Kearny, founder of contemporary art Web guide Saunter, has been determined to find the development talent to transform his ideas into a tangible and fully-functional product. Since speaking with Region’s Business in January, Mr. Kearny has been searching across the region for the perfect fit for the job and now reports having finally found a winner. In his own words, he explains both the qualities he looks for in a partner, as well as why building a business from the ground up means embracing a willingness to quell your ego. I have always found if you embrace humility it will pay dividends, both intellectually and financially. I have two current examples in relation to Saunter. While searching for a technical cofounder, I came across many individuals who certainly had the skills to develop the website and app I have been envisioning, but who lacked the necessary passion and ambition. Ultimately, I needed the technical cofounder to be smarter than myself. After many months, I met Greg Sterndale, a seasoned developer with [more than] 10 years of experience in the startup world. Though he carried a quiet demeanor, he exuded a loud ambition. I instantly knew he was the individual I was looking for. Greg has since joined the project and accelerated Saunter’s momentum, direction and intention to disrupt the status quo. For every problem to solve, there are dozens of bad solutions. With humility, you must embrace that your solution may be wrong even though you know the problem is real. One must personally meet and listen to your users (or potential users) about your idea. I have been reaching out to art enthusiasts, artists and [more than] 650 art establishments in Philadelphia. I have learned so much from these meetings and conversations — some of which have lasted five hours. The quality and value of these conversations are tremendously greater than the quantity that can be computed.

Startup Weekend Health 6 p.m. Friday to 9 p.m. Sunday Venturef0rth, 417 N. 8th Street, Callowhill. $99-$119 (20 percent off spectator tickets with Technically Philly’s discount code “TechPhilly”) Anyone is welcome to pitch a startup idea and receive feedback from peers. Teams form around the top ideas before a frenzy of business model creation, coding, designing, and market validation. HEALTHPHL.STARTUPWEEKEND.ORG

Health, Wellness Entrepreneurial Opportunities SUBMITTED PHOTO

CAPITAL SEEKERS

Business: ZumiCare Founder: Amarachi Enwereuzor Contact: amarachi@ wharton.upenn.edu

BY BRANDON BAKER

marachi Enwereuzor’s nephew, a 9-year-old with autism, is a child with few qualified babysitters to watch over him. Frustrated by this and driven by conversations with parents who struggle to find dependable sitters when in a bind, she decided to take action. In October 2012, Ms. Enwereuzor gave birth to the Web-based babysitting convenience service, ZumiCare. “My sister is on staff at Georgetown University, and they have a [parent-babysitter program] as a backup care agency, but because her child has special needs, she’s not really able to use the service,” Ms. Enwereuzor said. “They provide a warm body when you need it, but not necessarily someone who has the experience.” Ms. Enwereuzor, alongside two developers she met at a hackathon event, have put their brains together to develop a Web app that would create a community of parents and babysitters who can, in addition to submitting user reviews, synchronize their schedules to the app for the ZumiCare

6 to 8 p.m. Monday, February 18 Novotorium, 900 Wheeler Way, Langhorne, Pa. There will be brief presentations from entrepreneurs who are building businesses in this area. There will also be time for participants to discuss their ideas with others. MEETUP.COM/

community to see. The app, she said, is designed to help both parents who need a sitter in a pinch, as well as to aid parents who are seeking long-term care for their children by viewing referrals and recommendations from like-minded parents. “In two years, I’d like this to be a way that families are finding babysitters for last-minute situations and non-urgent situations,” Ms. Enwereuzor said. “What my sister needs in a babysitter, in terms of doing the job, may not necessarily be the same as her best friend, but some of these sites you go to, you have no sense of what you’re actually looking for.” Ms. Enwereuzor is hoping to raise $100,000 for the pilot launch of the app at the University of Pennsylvania, which will be followed up with launches in other local universities and, eventually, a launch to the masses. “It’s kind of like OkCupid: That’s an interesting way to date, and this, this is an interesting way to find a babysitter.”

ENTREPRENEUR-LEARNING

Foodie vs. Techie

7 to 10 p.m. Tuesday, February 19 Drink Philly, 239 Chestnut Street, 2nd Floor, Unit B, Philadelphia In the past several years food tech has brought molecular gastronomy, crowd funding platforms for food entrepreneurs and big data mobile apps that allow consumers to make more informed decisions. MEETUP.COM/ ARTSTECHPHILLY

14 FEBRUARY 2013

2013: YEAR OF THE INNOVATOR

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Ben Franklin Technology Partners Offers $1.4M in Funding Ben Franklin Technology Partners of Southeastern Pennsylvania recently approved $1,430,000 in funding for nine early-stage companies, including six IT companies, two life sciences companies and one alternative energy company. HealthQx of Wayne, Pa.: $150,000 HealthQx, a healthcare technology company, wants to turn Americans into more informed consumers of healthcare services, and facilitate cooperation between payers and providers. HealthQx uses its software and data analytics to develop a system for the fair and objective benchmarking of payers and providers throughout America. The goal is to achieve better healthcare outcomes at a reduced per capita cost.

iMomentous of Horsham, Pa.: $250,000 iMomentous delivers a highly scalable mobile technology platform that enables companies to recruit, retain and engage their talent. The companyâ&#x20AC;&#x2122;s technology provides a more intuitive and convenient way of interacting with prospective and existing employees. The system is capable of facilitating job applications, employee referrals, employee communications and collaboration. MBF Therapeutics of Ambler, Pa.: $50,000 This veterinary oncology company is advancing the quality of care for companion animals with innovative and humane therapies for treatment of dogs and cats with cancer.

Miria Systems of Norristown, Pa.: $200,000 Miria Systems is a provider of Enterprise Content Management (ECM) solutions and Energy/Environmental Management applications via cloud computing. QLIDA Diagnostics of Philadelphia, Pa.: $250,000 QLIDA develops next-generation biomarker diagnostic tests. The companyâ&#x20AC;&#x2122;s proprietary platform can be used for diagnosis of life-threatening diseases such as cancer and cardiovascular disease, through the use of a nanotechnology-based protein detection. Rumble News of Philadelphia, Pa.: $150,000 Rumbleâ&#x20AC;&#x2122;s technology platform is designed to give news-

Providing the most unique meeting and event experience. MEETING AND CONFERENCE RENTALS WHYY offers multi-purpose convenient meeting and event spaces with recording, production and distribution capacity. % ! % % " SPECIAL EVENTS AND PARTIES Now available for special events such as holiday parties, wedding receptions and mitzvah celebrations. Contact Revah Anzaldua, 215-928-2428, ranzaldua@whyy.org

WHYY.ORG/hamiltoncommons

paper publishers a rapid, lowrisk, scalable solution to reach, engage and monetize mobile consumers and extend the brand relationship. Solar Grid Storage of Philadelphia, Pa.: $250,000 Solar Grid Storageâ&#x20AC;&#x2122;s mission is to assemble, deliver and finance a solar photovoltaic (PV) energy storage system as an integral component of solar plants placed behind the meter for commercial and industrial hosts. tapCLIQ of Philadelphia, Pa.: $100,000 tapCLIQ, developed by Transout, is a user engagement and advertising platform for mobile devices that offers contextual interaction at moments when the user is most receptive.

Zaahah of Philadelphia, Pa.: $30,000 Zaahah, developed by StartUp Productions, instantly connects users with shared interests. It allows users to create separate profiles for different interests (i.e. business, personal, academic, etc.) and connect with others searching for the same topics.

art

MASTERING THE

OF ECONOMIC IMPACT A robust fine arts scene replete with world-renowned works is more than just good for Philadelphia’s pride. It’s a major economic force that may yet to be fully realized.

Text by LisaBethWeber Illustration by Don Lee

14 FEBRUARY 2013 REGIONSBUSINESS.

14 FEBRUARY 2013

REGIONSBUSINESS.COM

enaissance art. Medieval armor. Gowns from the iconic group The Supremes. More Renoirs in a public collection than anywhere else in the world. The rise and fall of prohibition. Cutting edge contemporary art. Rodin sculptures. Einstein’s brain. Asian antiquities. The art of Maurice Sendak. A collection of art by over 150 women artists. An artifacts exhibit of Titanic proportions. A beating heart. Dinosaurs. And oh yes, the Liberty Bell.

What do they all have in common? They’re all on display across the city of Philadelphia, they’re all attracting tourists, and they’re all doing their part to further Philly as a destination city for art and culture. All that AND a place to stay over. Tourism and the arts have grown exponentially in Philadelphia with the help of The Greater Philadelphia Tourism Marketing Corporation (GPTMC), which sees room for even more growth. Though each museum does their own marketing, the cross promotion of organizations like the GPTMC bridges it all together. In fact, they’ve put their money where the art is, in the implementation of the “With Art” campaign, specifically about seeing art and staying over. The Visit Philly website (VisitPhilly.com) has dedicated an entire section to the pairings of center city art and overnight accommodations with attractive packages for a variety of budgets. From tra-

ditional advertising to new media, (where website visitors are encouraged to “curate” their own itinerary of exhibits), the two year campaign launched in conjunction with the opening of the Barnes Foundation in May of 2012. “The definition of art and culture has greatly expanded in Philadelphia, in terms of the content, where you find it, how you learn about it, and how you talk about it. People who thought they knew Philadelphia are now seeing it in a whole different light and they are coming back for more,” says Meryl Levitz, President of GPTMC. A trend was observed during the recession when numbers were actually increasing in the city with regard to arts and culture. “Attendance for individual tickets as well as memberships and subscriptions in fact rose during that time, says Tom Kaiden, President of The Greater Philadelphia Cultural Alliance. “There aren’t many industries that can say that, but in Philadelphia, arts and culture can.” Heike Rass, Executive Vice President of

PEOPLE WHO THOUGHT THEY KNEW PHILADELPHIA ARE NOW SEEING IT IN A WHOLE DIFFERENT LIGHT AND THEY ARE COMING BACK FOR MORE.’ —MERYL LEVITZ

Marketing and Communications at the Pennsylvania Academy of the Fine Arts (PAFA) concurs, saying, “Individual giving was still there even when people had less money to give. Donors wanted to make sure art establishments could stay open and continue their work.” Citing how the recession actually helped boost art and tourism in the city, Levitz adds, "That’s why the ‘With Love’ campaign was started. We felt it was time for a new message that took into account people staying closer to home. With the wider success of that campaign, along with the economic factors that compelled people not to travel as far, the city’s growth in overnight visitors has been six times faster than the national average.” Cara Schneider of the GPTMC talks about the “domino effect.” “When people come here, they’re surprised at how walkable, artistic, and beautiful center city and the neighborhoods are,” she said. “They’re not expecting to see the murals, the public art or the creative spaces. You feel the art vibe going on before you even set foot in a museum.” Diversity is a key player in the art scene in Philadelphia, which shows in the range of offerings. There is truly something for everyone, when one city hosts museums galore housing art from ancient to contemporary, a Jewish museum, an African American museum, a Mummer museum, a museum of archeology, a museum of the sea, science museums, not to mention Independence Hall and the houses of history around its perimeter. That’s something to be proud of and

BY THE NUMBERS

Philadelphia’s Artistic Side Philadelphia’s reputation as a hot spot for art has grown rapidly over the last several years.

Number of Henri Matisse (left) paintings housed in Philadelphia.

Number of Henri Matisse paintings housed in Paris.

300,000

Pieces of art in the Philadelphia Museum of Art. More than 63,000 are available to view online at philamuseum.org, including a number of drawings by Henri Matisse.

1984

Year the Mural Arts Program started in Philadephia.

1876

Year the Philadelphia Museum of Art was founded as a museum of decorative arts.

Organizations that joined the city of Philadelphia and the Greater Philadelphia Tourism Marketing Corporation for the “With Art Philadelphia” marketing campaign.

14 FEBRUARY 2013

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Royal Exhibit Coming to Bucks Museum Later this year, royalty watchers, film buffs, main liners, fashionistas, tourists and locals alike will be all a buzz in Bucks County for the much anticipated opening of the Grace Kelly exhibit at the James A. Michener Art Museum in Doylestown, Bucks County. To top it all off, Prince Albert will be present for an opening reception. Lisa Tremper Hanover, the new Director and CEO of the Michener is enthusiastic about the Prince’s visit. “My hope is that Prince Albert has a visual presence with as many members of our community as possible, to see how we are honoring his mother with dignity and integrity and that we want to tell their family story with authenticity,” she said. Grace Kelly, star of stage and screen, turned Princess when she married Prince Rainier III of Monaco in 1956, and is much beloved in this area. Born and raised in Philadelphia, Grace got her start right down the road at the Bucks County Playhouse, which will be featured in the exhibit. Though programming is still in development, all aspects of the iconic actress and princess are being explored, and the mystique of anticipation will be watched closely as the date gets closer. The Michener is partnering with tourism organizations like Visit Bucks County and The Greater Philadelphia Tourism Marketing Corporation (GPTMC). Kathleen McSherry, Director of Marketing at the Michener, knows having partners like these are crucial to their success. “We do our own marketing,” she said, “but when we partner with a tourist and travel arm, we can spread the word more and they have been very helpful to us.” The wider economic benefit will be felt through visitors patronizing restaurants, B & B’s, hotels and shops. “There’s an ongoing give and take of commerce that happens when you have an art institute and it helps everyone,” Ms. McSherry said. That goes both ways. “We are honored that Bucks County was chosen to host such a blockbuster exhibit this year,” says Jerry Lepping, Executive Director of Visit Bucks County. “The Michener Art Museum is an ideal location to house the Grace Kelly exhibit as this area holds a strong connection to her life and legacy.” There is a lot going on at the Michener beyond the exhibit walls. This year marks the 25th anniversary of the museum’s opening and the recently unveiled Edgar N. Putman Event Pavilion at the Michener won the Gold Medal from the American Institute of Architects. Designed to

function as a multi-purpose space, the 3,400 square foot addition to the museum is ideal for public and private events. The huge success of the recent Uffizi exhibit helped open the door to a wider audience, putting the already popular museum on another level. Gina F. Rubel, CEO of Furia Rubel Communications, is well-versed on the impact of art in Bucks County having assisted with media relations Princess Grace’s famous wedding gown will play a role in the exhibit, whether or not it is and marketing strategy for the actually present at the Michener Museum. Uffizi exhibit. Hanover understands this significance and has spoken “Art in Bucks County has a significant economic with the PMA about the dress. impact locally and on the region,” Ms. Rubel said. “In The reality is that the garment itself is quite fragile, so Doylestown alone, we have some of the region’s most the Michener is planning a program surrounding the trafficked and established museums outside of a met- dress, whether or not it is actually present. ropolitan area.” There will be other personal artifacts on display This sets the stage well for the Grace Kelly exhibit, and including the Oscar that Kelly won for her performance Ms. Hanover is focused on marketing to an appreciative in “Country Girl”, film clips, playbills, letters, photoaudience. Considering that Grace Kelly’s wedding dress graphs, couture fashion, jewelry and more, along with lives nearby at the Philadelphia Museum of Art, that is an online fashion contest. one piece of the puzzle that people are curious about. Indeed, Grace will again be amazing in Bucks County.

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PHOTO BY R. KENNEDY FOR GPTMC

Controversy Behind, Barnes Thriving No one knows what Albert Barnes would be thinking were he alive today, but one thing is clear. Whether you were for or against the move, the new Barnes Foundation is a runaway hit and with its success comes the benefit to art lovers and to the economy. People come back. Again and again. Executive Director Derek Gillman cites different reasons people visit The Barnes. First, for the art, of course, but the other is for the sheer curiosity when people hear it is a “must-see.” The first group knows the collection and knows they would never be able to absorb everything in one visit. The second group encompasses the more conventional tourist who would treat it as a destination. In its former Merion location, there was often apprehension of visiting a “private country house,” but on arriving, visitors were surprised to see such an incredible collection of world-renowned art. Mr. Gillman remarks that it’s obviously different when you move a collection into the middle of a city. The Barnes was never meant to be a “one-time” visit, and now, something that

was psychologically remote before has become very central. So what’s the impact? All of a sudden there’s a shift in the perception of the Barnes. It’s become more like a major gallery and more embedded in people’s lives. The Barnes has been full since the opening and Mr. Gillman said he is very pleased with the results. The membership numbers have grown from around 400 members in 2009 to more than 25,000. More classes are being offered and outreach programs for Philadelphia schools are being piloted. Creating the conditions for success is key, and Mr. Gillman knows the importance of engaging the audience and being novel within an environment that houses a permanent collection. “Though the collection had credibility, the institution didn’t always,” he said. “That has changed and now they are both credible. You have to continue to maintain that credibility. Part of that is being creative. The collection speaks for itself, but it’s what we do around it. We need to continue to maintain creative programming, creative energy, and attracting good

people.” The current special exhibit, “Ensemble: Albert C. Barnes and the Experiment in Education,” carefully covers behind the scenes history and lore. Told in exhibit cases filled with letters, archival materials, and actual invoices with breathtaking prices like $1,500 for art such as Renoir and Picasso, visitors experience an indepth perspective of the mind behind the man. Dr. Barnes wanted his collection to be for students and audiences of less means, and he was not a fan of the rich and famous. There are letters from Barnes dismissing would-be visitors that he felt were too well-to-do. Barnes even wrote letters cleverly disguised as “Secretary” or “Fidele” (Barnes faithful dog) explaining to potential patrons why they would not be granted entry. The exhibit is slated to end on March 18. For those who think the exhibit should be permanent, Mr. Gillman agrees. “We feel the same way,” he said. “We’d love to see it have a longer life, and we are looking at ways to continue to present it in an engaging way online.”

Philadelphia represents this well to the distinctive audiences it serves, from loyal members of the art community, to new visitors coming to the city for the first time. All of this has helped put Philadelphia on the highly regarded map of art destinations in the country, shedding a different light on a city that has oft been known for its manufacturing, industry, sports and cheesesteaks. With its relative affordability, plethora of art schools, studios, galleries, and countless resources for careers in the arts, this helps shape why Philadelphia has grown as an art center. Artists also study, live, and work here, adding to the revenue of the city, while opening their studios, displaying their work enhancing the living breathing art environment that exists here. Ms. Schneider said she sees Philadelphia as somewhat of an “arts ecosystem” complemented by the restaurants, shops, and neighborhoods of this culturally diverse metropolis. This is being recognized nationally as evidenced by Travel & Leisure magazine’s 2011 annual survey of America’s Favorite cities, naming Philadelphia as the number one destination for culture in North America. Tom Kaiden knows this first hand. “Arts and culture are hooks for Philly. They are not amenities, they’re a driver for visitors and that is a critical component of what makes Philadelphia attractive to tourists,” he said. “Clearly the breadth of cultural offerings here is behind our number one ranking.” The numbers are clear and impressive. Tourism and the arts are woven together in a tapestry of benefits for the city and surrounding countryside. According to a recent study by The Philadelphia Cultural Alliance, the arts and cultural sector in Philly has a $3.3 billion impact on the region’s economy. On top of that, Philly is outperforming the nation as a whole with revenues spreading throughout the travel and hospitality industry. The cultural sector alone is responsible for 44,000 jobs, and returns $1 billion to local residents, while the arts and culture industry generates $169 million in tax revenues for state and local governments. Cultural tourism is a valuable asset

26 to the region, with visitors spending almost $240 million on food, and nearly $85 million on hotels. Perception is a key element in this success. Focus groups have shown a cultural shift that has changed from a public perception of Philadelphia being rough and tumble, to having more of a cultural appeal. In fact, just over a year ago on the famed Frommer’s travel website, Arthur Frommer himself said he’d learned of upcoming developments in Philadelphia that would, “make it a real contender for the top American position in the world of art.” Referring to Philly as a “remarkable American city”, Frommer titled his article, “Philadelphia is on the Brink of Becoming an Art Capital of the U.S.A”. When it comes to understanding the economic impact of art on a city, that says it all. Philadelphia is a nexus of history and art, and the challenge for the business side of the equation is to convince visitors to spend another day. Philadelphia is still relatively new to the travel market and for a long time had the reputation of being history only. Ms. Levitz says that is not to minimize the history at all, but to give a much broader view of the city. “When trying to communicate a sense of place, you need to be able to describe it quickly and that’s what the major museums do as ‘destination definers’. Every museum has its core collection, plus traveling exhibits. That’s what is needed, the tried and true collections that have become classics, and the novelty exhibits and programs that help round things out.” Take for instance the important exhibit currently at the National Museum of American Jewish History (NMAJH). “Beyond Swastika and Jim Crow: Jewish Refugee Scholars at Black Colleges.”

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“We're thrilled to be presenting this exhibition which has been an opportunity for us to reach out in a more assertive way to our neighbors and the African American community here in Philadelphia,” said Ivy Barsky, Executive Director and CEO of NMAJH. “Much of the exhibit is spent exploring the encounter of these two populations, what happens when they meet and empathetically understand each other's histories and build authentic relationships with one another.” That’s diversity in culture. That’s Philadelphia. There are 16 museums in Center City Philadelphia, 102 Museums in the five counties of Southeastern Pa., and more than 150 in the Metro region, along with 419 arts and cultural organizations in Center City, and 2,024 in the five surrounding counties. Compared to other major cities, Philadelphia ranks second in number of museums. Programs such as “Pay What You Wish Wednesday Nights” at the Philadelphia Art Museum and “First Sunday Free at The Barnes” make the art accessible to all. David Brigham, President and CEO of PAFA sees the expansive scope, saying, “Philadelphia offers a very rich set of opportunities for cultural tourists, with its full cycle of artistic activities, including the chance to meet student artists, all the way to career and master artists.” People may come here for the history but they stay for the art. Adding to that is the local infusion. “It’s hard to talk about tourism and the art scene in the city without talking about the local impact that feeds the city as a tourist destination,” says Heike Rass. “Philadelphians believe in the arts, and they can see that it’s part of the everyday life here. We’re not just saying that we love the arts, we live it.” An institution like PAFA sees the writing, or art if

you will, on the walls, from their stellar art collection to teaching the next generation of working artists. Continuing the consistency of diversity, as the first fine arts school in the country, PAFA also has a long tradition of opening its doors to women artists and artists of diverse ethnic background. It was the first museum in the world to exhibit the work of an African American artist, Robert A. Douglass in 1834, and female students were admitted in 1844, before any other school of its type. History matters when it comes to art in Philadelphia, and that matters to tourism. One happening tourist event is the annual student exhibition at PAFA. There is a free public opening on May 10th, and the show runs through June 2nd. With up to 1100 pieces of art from about 130 students, it is possibly the largest student art exhibition in the country. Philadelphia has proven itself as an art destination, from the Philadelphia Museum of Art’s permanent collection of nearly a quarter million objects to the street mosaics of Isaiah Zagar. Art, culture, and tourism are as intertwined as the breadth of diversity within the exhibits. “It’s remarkable that we have so many international cultural icons that are both urban and rural in a region that’s so approximate,” Tom Kaiden said. This drives the inertia of visitors and has given this city a well-earned reputation as one of the best places to see art in the country or, dare we say, in the world. Freelance writer LisaBeth Weber lives in Bucks County. Learn more at CreativeBizHub.com

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FINE ESTATES PREVIEW

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REAL ESTATE

What To Watch For When Buying A Vacation Home Buying a vacation house is a complex matter with more and more people being interested in purchasing a home each and every day. Below are 10 factors to take into consideration when buying your new beach house: 1. Picking your agent Finding a long established agent with a good reputation is important in your future purchase. Do some research before you settle with one person, as you’ll want to ensure they aren’t going to close down the day after you hand them your life savings. Making a huge investment like this means you need to be sure of who will be in charge in helping you make your decision. 2. Select an independent lawyer Whereas your agent will be making recommendations, the independent lawyer will be ensuring that your desires and interests are met.

VISIT THE PLACE WHERE YOU INTEND TO BUY PROPERTY DURING EACH OF THE FOUR SEASONS.’

Their role is to make sure that you have obtained translations of all documents for your purchase and to ensure you are getting the best out of your agent and your Realtor experience. 3. Know what you can afford With the use of the Internet and mortgage calculators, you will be able to establish the amount banks can lend you based on what you make as well as what you owe. This will tell you how far you can go with the investment and what you can afford. 4. Factor the extra costs in After establishing what you are able to afford as a loan, study the total costs that you will incur for running the house. Knowing the insurance, taxes, maintenance and utility costs will ensure you can pay your bills. In mountain and beach regions, wind, salt, ice and sand can raise the costs of maintaining a home substantially.

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REAL ESTATE 5. Buying a home is cheaper and easier than buying land In resort regions, the idea of constructing a new house of your dreams can be a nightmare. This exercise also involves the coastal authorities, homeowners associations, and local building restrictions, among others. The process of building a new house will rarely come under budget. 6. Timeshare purchases Timeshares are difficult to sell even during times of a good economy. To know what timeshares are a good purchase, talk to your agent about your options. 7. Ensure the site and house make a good rental People renting a house for a vacation want a location and building with amenities that meet their standards. Know what you want and what you can forego. 8. Research on seasons before making a purchase Visit the place where you intend to buy property during each of the four seasons.

You will know which roads are impassable at specific times of the year, when the weather is unbearable for you and other contributing seasonal factors. 9. Know state and country laws Rules on titles and ownership differ in various countries. For example, in some countries you can purchase a house but only lease the land. The entire land belongs to the government. Outside your country, you have a bigger risk of having your property ransacked or nationalized. The same goes with state laws. Different states have different laws, so research is necessary. 10. Payment Do not pay the deposit until you are sure that that is the home you want. The moment you give out a deposit, you will have made a commitment of purchase. Withdrawing will cause you to lose your deposit money. This column, which originally appeared at www.phillyliving.com, was brought to you by Florida State Realty, specializing in South Florida realty options.

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Q&A

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INTERVIEW BY MELISSA BROOKS

As the city’s first chief innovation officer, what’s your elevator pitch? Technology is the glue that holds government operations together. People expect the same customer service experience from government that they’ve grown accustomed to getting from the private sector. Innovation can help get us there. Innovative thinking in how we engage constituents, re-think a business process, collaborate with entrepreneurs and the tech community will help us innovate with intent and apply the right technology solutions. I lead a team of champions to manage the process of how and where to apply innovative technology solutions. How will you help develop a stronger sense of entrepreneurship and innovation within the city, and attract entrepreneurs and innovators to Philadelphia? As historically acknowledged “City of Firsts” Philadelphia has taken the lead in innovation since its founding. That’s because innovation in Philadelphia is part of a much larger ecosystem. Government, especially my office, plays a vital role: enabler, facilitator and convener. In playing that role, we can strategically manage our innovative programs and helping Philadelphia create an exemplary convening model for generating, incubating, and coordinating innovation in cities. How does your role help bring the greatest impact at the least cost?

I view my role as that of a matchmaker — a solutions broker, if you will. By helping to align motives across different agencies, supplier community, tech startups and entrepreneurs and the community, we can produce better and more sustainable outcome, showcasing Philadelphia as the preferred place of choice to visit, live, work and play. Now that you’ve settled into the job, what have you decided are the key ingredients for innovation and IT success in Philadelphia? Nurturing a business model based on convening, collaborating and recognizing that many crucial resources lie outside of government. Government can be a customer and a supplier. A customer when it needs access to innovative ideas and process for creative problem-solving. A supplier of open data to energize civic innovation and community engagement. Framing these issues as a coordinated network of initiatives rather than a series of individual efforts is a key ingredient for success. What priorities have you set for 2013? Continuing to advance the innovation ecosystem model with a focus on data democratization to energize authentic community engagement, visual analytics to help citizens visualize their data, and an innovation academy/ lab to create a ripple of hope so that innovation can thrive beyond government’s typical attention span.

PHOTO BY REBECCA SAVEDOW

ADEL EBEID’S

INNOVATIVE ROLE

Philadelphia’s first Chief Innovation Officer is leading a ‘team of champions’ to engage the community and promote the ‘City of Firsts’ as a place to visit, live, work and play.

14 FEBRUARY 2013

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CHAMBER REPORT

DELAWARE COUNTY

MAIN LINE CHAMBER OF COMMERCE

Morning Mindshare

Economic Advice in 2013: ‘Consider Fiscal Austerity’ The housing, auto and oil industries are on the rebound, and business owners should “consider fiscal austerity,” Bernard Francis, president and CEO of Valley Forge Asset Management Corp. and Senior VP of Susquehanna Bancshares Inc., said at the 2013 Economic Forecast Breakfast in January. Stephen Mullin, president of Econsult Solutions, also spoke at the Main Line Chamber of Commerce meeting. Mr. Francis said the country avoided the fiscal cliff but there is still work to be done, calling it more of a “fiscal drag.” He said stocks were up 5.5 to 6 percent in the first 30 days of

2013, showing that the market is disconnected from reality. However, Mr. Francis expects the economy will grow 1 to 1.5 percent as the year progresses. In the second half of the year, which he called the “recovery phase,” the nation should see growth of 1.75 to 2 percent and potential interest rates of 2.5 to 2.7 percent. Mr. Mullin said an energy boom is expected in the region for 2013 as well as an increase in capital infrastructure spending and improvements. He said the region will have to find ways to meet an increased demand for public transportation in 2013.

Head Backstage at the Flower Show Two days before the 2013 Philadelphia International Flower Show opens to the public, the Pennsylvania Horticultural Society will welcome the Arts & Business Council for a sneak peak. Tickets to the February 28 event are $50 and can be purchased at www.greaterphilachamber.com.

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“Morning Mindshare: Avoiding the Six Mistakes That Can Destroy Your Business And Your Future” will be held 8 to 10 a.m. February 26 at the Delaware County Chamber of Commerce, 1001 Baltimore Pike, Suite 9LL, Springfield. Tickets are free for chamber members and $30 for nonmembers. *** Some mistakes include thinking: “I know what my business is worth” *** “That’ll never happen to me” *** “There’s plenty of time for that” DELCOCHAMBER.ORG

14 FEBRUARY 2013

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OPINION

Design Thinking Needed in Collaborative Workplace

Karin Copeland is the Executive Director of the Arts & Business Council of Greater Philadelphia and the Vice President of Strategic Alliances for the Greater Philadelphia Chamber of Commerce. More at artsandbusinessphila.org.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

Fostering and managing innovation is a continuous Design challenge for businesses. Thinking To meet this challenge it is critical to build a workplace teaches culture that supports failure that finding as an inevitability on the path to innovation. Artists and solutions designers are taught that their requires best work is a result of these failures and progress can be the ability made by revisiting old ideas to identify from a fresh perspective. From the iterative methproblems odologies found in industrial or patterns and software design to the formalized critiques of a fine that others arts classroom, the concept of cannot see. Design Thinking is a learned skill in fields that we traditionally define as creative. This way of thought is crucial to developing an innovative business sector that is both agile and collaborative. Design Thinking has been around for decades but it has made a resurgence in recent As a graduate of the University of the Arts’ years as swiftly changing technologies and a Industrial Design program I can attest to this global marketplace force us to adapt the way fact that these concepts are being taught in we do business and adjust our corporate cul- Philadelphia’s esteemed art and design schools. ture. Business now requires creative talent to They are, however, also finding their way into generate the innovative solutions and products MBA curriculums throughout the region. of tomorrow. The Strategic Design MBA at Philadelphia This talent is often multidisciplinary, with University (PhilaU) is producing hybrid thinkthe ability to problem-solve a diverse project ers; individuals that sharpen their business set while still holding a vision of the big picture. acumen through the analytical tools of tradiThis superstar talent is a rare commodity but, tional business while developing their problem with the adoption of Design Thinking and a solving skills and adaptability by using the push toward a collaborative workplace, a com- tools of a designer. pany’s culture can be redesigned in such a way The Wharton School’s SEI Center for that it can nurture its current staff to become Advanced Studies in Management also borthese superstars. rows ideas from the world of design through Design Thinking teaches that finding solu- its exploration of creativity and innovation in tions requires the ability to identify problems business. The education offered by institutions or patterns that others cannot see. Moving like PhilaU and the SEI Center are creating a through a project with a structure of Design new generation of design minded business Thinking leads to constant user feedback, leaders, while ensuring a pipeline of innovation flexibility, collaboration and improvisation. In in the years to come. a global marketplace, where customers have In the real world of business, we look to many choices, the products and innovations IDEO and SAP for thought leadership in the created through this process are inherently area of Design Thinking. It’s not surprising more customer focused, responsive and, as a that these companies are, at their heart, design result, more desirable. firms, producing products that users interact

with daily. Each company, however, is an excellent source for a cutting edge discussion of applying Design Thinking to traditional business. These resources, which I find myself referring to often, can be found at www.ideo. com/by-ideo and www.sapdesignguild.org. At the Arts & Business Council of Greater Philadelphia (ABC), we are exploring the concepts of Design Thinking, cross disciplinary idea generation and business innovation. The very nature of our organization requires us to spend time in both the creative and the business sectors of the Philadelphia region. We believe that our best ideas come from the conversations we have each day with this diverse group of people and, since we are at are most productive when we come together to solve a problem, we view this group as Philadelphia’s greatest innovators. ABC’s programs and events aim to cultivate the collaborative spirit that is integral to Design Thinking. As the region’s only convener of the business, legal, technology, nonprofit arts and for-profit creative sectors, the Arts & Business Council is uniquely positioned to lead the discussion about cross industry collaboration and innovation.

14 FEBRUARY 2013

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OPINION

Non-Profits Should Always Be Getting Down to Business

... excellent non-profits recognize that their vision and their mission give them no room to be anything other than disciplined, thoughtful, strategic, inspired, caring - and dollar conscious - in all of their decision making. for our particular case): “What is best for the school as a whole?” The result of this process is that there will always be those in the community who are disappointed with a given decision. In many ways the morale within a non-profit will be driven by the quality of those funding allocations and the ability of non-profit managers to be convincing about why those choices are made. For excellent, well-run non-profits this tension never lets up, and it is intensified by the fact that many who work in the nonprofit world do so out of a love and passion for the cause to which they are committing their life’s work. It makes decisions, which do not go their way, all the harder

to manage and accept. Knowing this pushes effective non-profit managers to strive to ensure that there is not a single dollar going to waste. Before coming to GA 20 years ago I worked at a small public finance investment-banking subsidiary of a large California bank. We worked crazy hours, and we knew that we only got paid if we closed the deal. Closing a large deal was always sweet, but it did have the ability to overshadow tight financial management. And as I looked at the larger bank as a whole, it became clear that so much money was being made day-in and day-out on car and home equity loans that hard decisions about effectively managing every dollar could be avoided. It was not hard to find people who spent 8 hours at their desk but who were not vital to the bottom line. A member of the Board of Trustees at GA once commented that, as difficult as it was for a business to go through a recession, it had the inevitable consequence of forcing businesses to be lean and to make tough, effective decisions about both their short and long term strategies. I believe that the difficult choices facing businesses in a tough recession is the place that good non-profit administrators find themselves in everyday of every year. Added to this is the fact that instead of the simple measurement of net profit, non-profit administrators have a much more complex set of challenges in measuring their success. As an example: Did the additional reading support in 2nd grade mean that 10 years later the students graduating were better prepared to face college and their lives beyond college? Hard to measure indeed. Inevitably there are some non-profits which see their non-monetary goals as justification for being casual about tough financial management. However, excellent non-profits recognize that their vision and their mission give them no room to be anything other than disciplined, thoughtful, strategic, inspired, caring - and dollar conscious - in all of their decision making. PHOTO COURTESTY OF TAX CREDITS ON FLICKR

Tom Taft is the Chief Operating Officer of Germantown Academy. More at GermantownAcademy.net.

I work for the Board of Trustees, teachers, staff and students of Germantown Academy (GA), and our collective reach exceeds our grasp. Always has. Always will, and we are proud of that. It really means that our vision and our mission have an endless capacity to grow and to react to the demands of a changing society. A direct result of this is that, as the person assisting our Head of School with the financial management of the Academy, I see us forever dealing with the reality of scarce resources. There are 125 full time teachers at the school, and they all have inspired ideas about programs and curricula they would like to pursue. We can’t afford to pursue them all. That is not, in the end, a bad thing. As a matter of fact, if there is a non-profit somewhere not facing the crunch of scarce resources, then I would say there is something wrong with the scope of its vision. The clear conclusion to be drawn from this reality is that our school, like all healthy non-profits, has to be better run and managed financially than for-profit companies. Yes, we must be more business-like than businesses! This sounds wrong to the ear of many in a non-profit community, but it is accurate and essential in order for us to move toward the never-ending goal of fully meeting our evolving vision. This push to be very business-like needs to be seen in the correct context in order to be more palatable. The image of being business-like for many in the non-profit world implies that actions are being taken just to save money. In order to change that impression, those running nonprofits must be able to explain this notion of “scarce resources forever” effectively to the entire community. Cutting funding in one area of a nonprofit needs to be explained clearly and transparently as having been driven by the greater value of allocating those funds to a new program or an enhancement of an existing one. And in order to be accepted by the community, the driver of those funding decisions must always be (as worded

14 FEBRUARY 2013

REGIONSBUSINESS.COM

OPINION

Museums’ Success a Model for Growth Through Diversity

n an economy that saw the real estate market bottom out, manufacturing all but disappear and construction all but stop, Philadelphia saw a sector not just survive, but thrive and prosper. The region’s tourism industry boomed during The Great Recession and poured hundreds of millions of dollars into the economy, including local, state and federal taxes. Certainly a fair share of that came because of the region’s inherent historic status. Being Ben Franklin’s home town and being able to show off the Liberty Bell will always help draw a crowd. Historic sites and large conventions would not have been enough, though, to generate the kind of numbers the region has seen over the past several years. Revenue from leisure travelers significantly boosted those numbers and there’s a lesson to be learned from that. Philadelphia could have sat back and rested on its historic sites to draw a steady stream of tourism revenue. But like a good mutual fund, it’s important to diversify to maximize yields and that’s exactly what happened. Philadelphia is no one-trick art pony. The historic sites remain a tremendous draw, but the arts community has flourished and now the city is regarded as one of the top spots in the world for art. While that may be a great source of pride, it is more importantly a great source of revenue. A large and diverse collection of museums draws a large and diverse group of people,

with two things in common - a love of art and disposable income. The development of that community of museums came about through a series of actions both large and small and, often times, not directly related. There are high-profile events like the opening of the National Constitution Center and moving the Barnes Collection into the city. But it is the region’s breadth and diversity - the Rodin collection, UPenn’s Museum of Archaeology and Anthropology, the National Museum of American Jewish History, not to mention the contributions in the suburbs (the arrival of the Grace Kelly exhibit to Bucks County’s Michener Museum, for example) that provide the true marketing opportunity. The same model has served professionals sports in the region, too. The major draws remain - the Eagles, Sixers, Flyers and Phillies, but the field has diversified with the Union and Soul as well as nearby offerings in Trenton (the Thunder and Titans). During Dell’s recent Philly Think Tank, a panelist talked about helping a cabinet maker save his business and the 40 jobs that went with it. Large manufacturers are great assets, but businesses like this cabinetmaker must be part of the mix. This museum community has produced a model worth replicating across the region and across economic sectors. For long-term economic strength and viability, Philadelphia needs to nurture multiple industries.

COMMENTARY FROM ACROSS THE WEB

Corbett’s Move Will Increase Prices at Pump Governor Corbett is promoting legislation to tax service stations to raise revenue for repairing roads and bridges in Pennsylvania. The roads have been neglected because the government has used some of the money now collected through gasoline tax for mass transit subsidies. The Governor is asking the service station industry to not pass the tax along. How can they not pass it along? It is a business with a small mark up in order for its products to stay competitive. The Governor is an Attorney by profession. If the state decided to tax telephone calls by attorneys, he would have to pass that tax along to his clients. WILLIAM D. KAUTZ ON PENNLIVE.COM, 11 FEBRUARY 2013

State Should Expand Medicaid Coverage Gov. Corbett claims, paradoxically, that Pennsylvanians can’t afford to receive some $37 billion over the next decade to expand Medicaid and enhance health care access in our state. Perhaps he considers this good politics at a time when far-right supporters

EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey

@MutedPhillyPhan

What’s telling is @ sheetz talked about @wawa to appear on @wawa’s level, whereas @wawa didn’t even acknowledge the lesser brand. #TeamWawa. 11 FEBRUARY 2013

believe that government shouldn’t care for our most vulnerable residents. But it’s bad policy -- for consumers, for health care providers and for our state finances, which would suffer much more from our refusing to extend health benefits than they would by our serving more people in need. The federal government would pay 100 percent of up-front costs and 90 percent of long-term costs for all the Pennsylvanians newly eligible for Medicaid under the Affordable Care Act. Many are older adults who have not yet qualified for Medicare: people like veterans or older working adults whose children have grown up. STATE. REP. DAN FRANKEL, D-SQUIRREL HILL ON POSTGAZETTE.COM, 11 FEBRUARY, 2013

HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

14 FEBRUARY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

Philadelphia’s 2011 ranking among America’s MostTaxed Cities, according to the Office of the CFO in Washington, D.C. This is a slight improvement over 2010, when the city was second. Bridgeport, Conn. retained the top spot.

16.7%

Average amount Philadelphians pay in taxes according to the Office of the CFO in Washington, D.C. Bridgeport residents pay 24.5%, averaging $10,256 in property taxes. Philadelphia residents pay an average of $3,731 in property taxes.

.398

The winning percentage of six assistant coaches hired by new Eagles coach Chip Kelly when those coaches were not with the Eagles. The coaches have a combined 19 jobs in 44 years in the NFL, meaning they average about 2.3 years on each job.

$3,500,000

Number of Super Bowl rings won by new Eagles head coach Chip Kelly and his 21-man assistant coaching staff. Also the number of Eagles players with a Super Bowl ring.

The 2013 base salary for Eagles QB Michael Vick as part of a restructured contract that, with incentives including a Super Bowl appearance, could be worth up to $10 million.

$740,844

The 2013 base salary for 49ers QB Colin Kaepernick.

Eagles coaching staff info via Reuben Frank (@RoobCSN) PHOTO BY B. KRIST FOR GPTMC

26%

Percentage of Americans who say they trust the government according to January research by the Pew Research Center. That’s one percentage point higher than March 1980.

73%

Percent of Americans who said they trust the government in November 1958, the first time the question was asked by the American National Election Study.

Philadelphia’s rank among U.S. cities for number of museums.

Philadelphia’s rank among North American cities as cultural destinations, according to Travel & Leisure’s 2011 survey.

$3,300,000,000 44,000 Annual economic impact on the Philadelphia region from the arts and culture industry.

$169,000,000

Number of jobs related to the arts and culture sector in the Philadelphia region.

State and local tax revenue generated annually by the arts and culture industry.

30,000,000

Number of U.S. workers who work from home at least once per week.

3,000,000 Number of U.S. workers who never set foot in an office.

Telecommuting info from Bolt Insurance

$11,000

$30,000,000

Amount a company saves by allowing a worker to telecommute. The average worker saves between $2,000 and $7,000.

The estimated cost to implement telecommuting across the federal government, less than than a third of the cost of a snowrelated shutdown in Washington, D.C.

63%

79%

Predicted increase in the number of telecommuting workers by 2016.

Percent of workers who would like to work from home at least part of the time.

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