Innovation and Government Regulation

I recently read a 纽约时报 article posted on LinkedIn, entitled, "The Real Reason Your Groceries Are Getting So Expensive ," about why food costs so much at present: I find the article both interesting and telling. While there are political issues at play that shift the balance of power to the large players in the market, I would argue that there are small stores that innovate in ways that the big box stores cannot. I cite two examples.

B.T.C. (Be The Change) Grocery in Water Valley Mississippi has positioned itself as an old-style grocery (which in my estimation it has done successfully) and destination dining location with a kitschy in-store cafe. They make their own sauces, pickles and sundry other items that add revenue when people travel to eat in their fabulous cafe. In addition, they sell locally grown dairy, meats and produce, supporting the local agrarian economy and at the same time establishing themselves as a rich oasis in one of the largest food deserts in the U.S.

Papa Jay's is a location I visited just this last Saturday with my father-in-law, Wild Bill Bodily. It is in the small town of Clifton, located in southeastern Idaho, not far from Preston, made famous by the movie Napolean Dynamite and the founder of Crumbl , Sawyer Hemsley

Papa Jay's started as a gas station in the far northwestern corner of Cache Valley, a small narrow agricultural valley spanning across the Utah-Idaho border. It was struggling with competition on the far more populated east side of the valley. They realized that to survive, they had to do something different (read as "innovate"). They began a deli. Each day is a special for $7.99, including an oversized sandwich, chips or a salad of your choice (chicken, macaroni or potato) and a 12 oz. soda. The special last Saturday was pulled pork BBQ, which was as generous as it was good.

The other thing Papa Jay's is famous for is their smoked jerky created from a passion and to draw business across the valley. They have numerous spicy flavors from black pepper to Carolina Reaper. When we pulled in last Saturday, we had hit a peak hour as there were trucks, cars and ATVs everywhere. People were buying jerky, lunch or both. Patrons ranged from locals to tourists who had heard about Papa Jay's from someone else who had been there. I personally bought two "Man Can's" (paint cans without the handles attached) filled with assorted types of jerky, Blue Diamond almonds of your choice and a man-gift (the choice on Saturday was a tape measure and carpenter's pencil or a short stubby version of a twelve-once handle,) for my son and brother-in-law.

These two stores are not on the beaten path. They are both out of the way. Way out of the way. They innovated not because regulation was favorable to their cause, but because it was a matter of innovate or fold. This suggests to me that innovation is not dependent on favorable regulation. It most often thrives as a matter of desperation.

A company with which I am familiar had only 50 employees and no budget for anything other than purchasing materials necessary to the production of the items they made at that plant. They had a label printer that printed individual labels off a roll that fed those labels into the printer. The drive mechanism was the spindle that drew the labels through the printer, from the roll on the other side. This spindle, for some odd reason, quite working and created a great deal of waste. A label would print and then the next would be printing before the label previously printed cleared the print head. This caused waste for a number of reasons. First the label double printed had to be discarded, as well as the label partially printed. The labels had to be pulled through and aligned so that the printer could print labels again in the correct sequence. Wasted effort. The printer manufacturer was consulted for help and support to no avail. A plea to purchase new and higher quality label printers were rejected to do cost.

Frustrated, an operator watched the label printer for some time to see if the problem could be ascertained. After a great deal of time, the operator reasoned that the label printer could be fixed very simply and at virtually no cost. The operator went and got a few rubber bands of the same size and width and placed them around the spindle, resolving the traction problem. Voila! The printer worked, not through capital, but rather by innovation.

Dr. Shigeo Shingo, while still living, was noted to say that improvement, vis a vis, innovation, is not dependent on capital, more people or better equipment. Rather, it is dependent on resourcefulness, and he would always make this statement while tapping his head with his forefinger, suggesting that you needed to use your brain not ask for money.

The three examples above are without a doubt innovative. Somehow, as a society, we have gotten the idea that innovation is grand and big; a step change. We've seen a number of poor behaviors that have given innovation a bad name, such as FTX, We Work and Theranos, to name a few. Innovation is the improvement of a standard, or the creation of a new standard, big or small. In addition, innovation balks at conventional wisdom. Such as the idea that regulation impedes innovation. It may make an environment or market hostile to innovation, but true creators will create, regardless of the environment. They don't think in terms of why. Rather, they think in terms of "Why not?" And why not indeed?