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The Long Haul and the Short Run

Attacks against climate science and global warming countermeasures seem to have sidetracked renewable energy and even cleantech.  Public sector funding for solar energy has been almost criminalized in the current Congress. Here at Tula, friends and acquaintances sometimes urge us to find a less beleaguered field.

And yet we are buoyant, even optimistic.  We see a large difference between noise and turmoil in the short run compared with impressive potential in the longer term. Nor are we alone in these hopes, since serious investment is flowing into very long-term cleantech possibilities.

Pension funds and asset managers are committed to cleantech, but the long-term view can best be seen in venture capital and private equity firms.  These patient investors know that picking winners eludes even the savviest.  Thus venture capital firms may back dozens of companies representing a broad variety of technologies. They know that few of them will result in an explosive initial public offering. To justify risking their capital, they just need one to succeed.

Consider one well-known venture capital firm, Technology Partners.  Their portfolio includes both cleantech and life science companies.  Under the cleantech umbrella, they have undertaken more than a dozen investments in energy technology, water technology and advanced materials.

The deeper you delve into their cleantech portfolio, the more varied it appears. Technology Partners has put capital into alternative energies from coal, into exchanges for energy and environmental capital markets, into thin-film solar, into metering and smart grid applications, not to mention energy storage, a new wind turbine design, biodiesel, a methanol innovation with telecommunications uses, advanced batteries, nanomaterials, water sensors, and electric cars.

Several factors unify this diverse list. One is that they fit Technology Partners’ criteria, offering large market opportunities and a unique and defensible technology. Another similarity is no less important. These companies and others like them all need excellent, dynamic managers, as well as leaders who can overcome the harrowing chasm that stretches between start up and IPO.

Maybe it’s our bias as an executive search firm, but we believe that leadership ability is a necessary condition for everything else. Leaders are the ones who can persist effectively in the face of short-term hardship, and keep aiming at the long-term rewards.

Filed Under: Clean Tech, Venture Funding Tagged With: , ,

Time for the Pros?

Beginnings are wonderful, sometimes even exhilarating. In the beginning, a promising idea and enthusiasm can take a company a considerable distance, garnering exciting publicity and generating solid revenues. The business press abounds with tales of visionary companies succeeding on sheer willpower. Circumstances appear more tolerant of mistakes and wrong turns.  Managements can experiment and take more risks.  

In the current environment for renewable energy and cleantech, this sounds like a long time ago.  We are well into the middle phase.  Euphoria is long gone. Companies have a slog ahead of them, often through dangerous terrain that will quickly punish heedless risk-taking.  Sometimes it will even punish careful risk-taking. 

Companies are struggling to devise the right goals and to assemble the talent to implement them. Renewable energy now requires sharp business methods and experienced managers. This kind of management experience was welcome even during the euphoric stages, but now it’s a necessity. 

Take the case of First Solar, the largest US solar company. Its shares have been volatile, hurt by competition from Chinese solar energy companies, but then recovering. The company recently cut both earnings and revenue estimates and announced about 100 lay offs. Some securities analysts cut their estimates. The company has shifted toward providing solar systems for utilities and away from markets supported by government subsidies. Management says its goal is to get “substantially all” of its new revenue from those markets within three years.  

A transition like that doesn’t happen easily, even for experienced leaders.  Under the circumstances, you want managers who have successfully navigated a tense realignment before, who know the pitfalls firsthand. 

One intangible that comes from this kind of experience is a combination of courage and wisdom. Courage is necessary if a company is to endure rough circumstances without getting rattled or flinching at the wrong moment.  Wisdom counts, too, because managements need to quickly tell the difference between a difficult patch and an urgent signal to change strategic direction.

It’s a long way from euphoria, but it’s a realm where professionals shine.

A 1941 photo by Irving Rusinow of the US Department of Agriculture of child carrying water in Taos, New Mexico

A 1941 photo by Irving Rusinow of the US Department of Agriculture of child carrying water in Taos, New Mexico

Filed Under: Clean Tech, Leadership, Renewable Energy Tagged With: , , , ,

A Modest Realism about One’s Gifts and Plans

From the University of Buffalo NewsCenter comes a story about humility in leadership. According to a recent study by Bradley Owens of the University of Buffalo School of Management, “humble leaders are more effective and better liked.”

“Leaders of all ranks view admitting mistakes, spotlighting follower strengths and modeling teachability as being at the core of humble leadership,” says Owens, adding that “these three behaviors as being powerful predictors of their own as well as the organization’s growth.”  It’s a theme that is probably particularly true of renewable energy and cleantech, where the exact path forward isn’t obvious.

The study sounds straightforward: “Owens and co-author David Hekman, assistant professor of management at the Lubar School of Business, University of Wisconsin-Milwaukee, asked 16 CEOs, 20 mid-level leaders and 19 front-line leaders to describe in detail how humble leaders operate in the workplace and how a humble leader behaves differently than a non-humble leader.”

The leaders were from various sectors, including manufacturing, health care, financial services, retailing and religious, and yet they had a common ground: “[T]hey all agreed that the essence of leader humility involves modeling to followers how to grow.”

“Growing and learning often involves failure and can be embarrassing,” says Owens. “But leaders who can overcome their fears and broadcast their feelings as they work through the messy internal growth process will be viewed more favorably by their followers. They also will legitimize their followers’ own growth journeys and will have higher-performing organizations.”

The researchers found that such leaders model how to be effectively human rather than superhuman and legitimize “becoming” rather than “pretending.”

…Owens and Hekman offer straightforward advice to leaders. You can’t fake humility. You either genuinely want to grow and develop, or you don’t, and followers pick up on this. Leaders who want to grow signal to followers that learning, growth, mistakes, uncertainty and false starts are normal and expected in the workplace, and this produces followers and entire organizations that constantly keep growing and improving…

These findings may seem counterintuitive, if you believe in the heroic, larger-than-life view of leaders.  But in cleantech as in other industries, leaders are humans, too.

woman rapelling
A 2002 photo of a woman rapelling down the side of a bridge in Veracruz, Mexico, shot by Gengiskanhg, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license

Filed Under: Candidate Advice, Clean Tech, Renewable Energy Tagged With: ,

Transformative technologies

A recent talk at the Massachusetts Institute of Technology was aimed at students, but it contained encouraging ideas for executives in renewable energy and clean tech businesses.   The message was optimistic: Aided by astute policies, the nation’s clean tech companies are fully capable of expanding our energy supply, reducing the carbon emissions that disrupt the climate, and reviving US manufacturing as a source of jobs.

Addressing MIT’s Energy Club, U.S. Secretary of Energy Steven Chu described “transformative technologies” from the past: Artificial fertilizer and the “Green Revolution,” which enabled the world to feed a much larger population; the automotive assembly line, which dramatically enlarged the market for cars; the transistor and integrated circuits, which resulted in digital everything.

As befits a secretary of energy, Chu called on the nation’s engineers and scientists for new transformative technologies in renewable, carbon-free energy. One lesson from his talk was that predicting winners is hard, but worth the effort because the rewards can be very large indeed.

He cited a telling historical example of the difficulty, according to David Chandler’s informative account of the talk on MIT’s website. The government provided grants to Samuel Langley to build the first heavier-than-air flying machine to carry humans.  After two failures, Langley abandoned the project — “and nine days later, the Wright brothers succeeded in making their first flight, without any government support. ‘Congress was outraged,’ Chu said, charging that the government shouldn’t have been “picking winners” with federal funds. ‘Some things never change,’ he added.”

Chu reminded his student audience that after the Wright Brothers’ success, government funding supported aeronautical technology until the United States had an overwhelming commercial edge. Europe topped airplane production in the early 20th century, but investments from the U.S. military and the Post Office made commercial aviation viable in the US before anywhere else.

The same thing can happen again today, Chu said.  Innovations in a variety of fields have the potential to resuscitate American manufacturing.  Some of his possibilities:

  • Solar technology is changing so rapidly that opportunities abound to regain the lead from China.
  • Improved steel alloys and composite materials could make car bodies, engines and drive trains a third lighter (or more), with no trade-off in size or performance.
  • Buildings can become far more energy efficient. He cited a new Obama administration initiative to cut energy use by commercial and academic buildings by 20 percent. “Most of the technology to improve the efficiency of buildings doesn’t cost any more,” Chu said, and savings on energy expenses can recover the costs in less than 10 years.
  • Improvements in power-conversion technology could result in electrical transmission lines using higher frequencies than today’s 60 hertz, resulting in smaller, less expensive utility infrastructure.

According to Chu, successfully creating “a few new materials or systems” could enable us to master our energy challenges. America could surge ahead of the rest of the world in clean energy, according to Chu.  But invented in America “…should be made in America. This will be the seeds of our future prosperity.”

It’s an inspiring and familiar theme for the leaders of renewable and clean tech companies.  Identifying the right technology path is just as nerve-wracking for businesses as it is for governments, but that hardly means that we should abandon the effort. The strongest executives will use whatever means are available to win big in technology, whether it’s wisdom, or courage, or luck.  Plenty of patience also helps.

Filed Under: Clean Tech, General, Renewable Energy Tagged With: , , ,