Listening to Bill Ford on Technology

Bill Ford is talking about innovation today at the Ford Trends conference.

He started with two quotes that struck me:

Henry Ford – “If I’d asked my customers originally what they wanted, they would have said a faster horse. ”

Bill Ford – “The car industry back then was the ultimate disruptive industry.”

Ford says when he recruited Alan Mulally as CEO and they talked about the restructuring that was needed at Ford, they agreed two things:

“We wanted to be the fuel economy leader, which was interesting, because the reason customers rejected us was fuel economy, and we wanted to be the leader in technology.  And the first probably depended on the second.”

Part of the issue back then according to Bill was when you wanted to be green, a passion of Bill Ford’s, you had to give up something, for example horsepower, until technology progressed.  Ford envisions that Ford is changing that now.  Among other things by investing in the Ecoboost platform combining direct fuel injection and turbochargers and the Energi platform to supercharge the hybrid and plugin products, and driving these hyper efficient meets high performance technology platforms to be basically standard across all models.  But technology is a lot more than drive train these days, as Ford is heavily into information technology, communications, and networking.

Ford says the rate of innovation in automotive today is something that he hasn’t seen in his working lifetime.  Basically Ford views us undergoing a revolution back to disruptive technology in the auto sector. I love this idea.  And having driven the Ford Energi platform cars, I totally agree.

Ford CEO Admits the C-Max Underperforms EPA Standards in Real World Test

Last night I was at a dinner with Ford CEO Alan Mulally at the Ford Trends conference in Detroit.  After taking a couple of questions on electric cars, emissions, and mileage standards, Mulally touted the C-max platform with the words:  “I want to tell you a funny story”.

The punch line of which is as follows, Mulally had one of their product executives drive a C-Max hybrid in real world conditions to test out the concern that in actual driving experience the cars were not getting the target gas mileage. Mulally stated they found that when driven perfectly, the executive could hit the 47 mpg EPA rating, however the experience was horrible, quote “spent the whole time terrified driving in the right lane.”  When driven with the normal flow of traffic and not adhering strictly to a driving protocol designed to enhance mileage, he underperformed the EPA rating on the same trip by 3-5 mpg.

Mulally seemed highly entertained by this story.  I love the C-Max, great technology, amazingly cool car.  I was not entertained by this story.

Cleantech by any other name

How relevant is the term cleantech today? Has it had its day in the sun?

It’s a heretical question for someone who’s spent much of the last 10 years of his career furthering the cleantech meme globally. A former Managing Director of an organization that gets much of the credit for coining the phrase to begin with, I’ve been a big proponent of the term, to the intentional subordination of others.

But having just returned from a week of meetings with Silicon Valley investors, lawyers and others, I find myself facing the reality that intelligentsia in the sector are distancing themselves from the phrase.

In five days last week, I met face-to-face with two private equity investors, four venture capitalists, two lawyers, an entrepreneur and one of the heads of innovation for a global multinational—all with name-brand firms, all power players associated with some of the biggest deals cleantech has seen. I asked them each about the topic. And while all were quick to affirm their belief in strong future demand for what we think of as clean or green technologies, the term cleantech has undeniably fallen from favor, they said. Why?

  • Cleantech has become built into every sector, with clean/green propositions in many technology verticals, from industry to IT to water to energy to agriculture; “cleantech no longer means anything new anymore,” one said
  • Cleantech is simultaneously “too broad” (i.e. somatic shorthand for too many vertical industries) and “too narrow” (i.e. become too closely associated with renewable energy to those who don’t recognize the intended breadth as defined by Kachan & Co. and others) to be useful any longer, another said
  • But the biggest reason—that we’ve written about for some time herehere and here—is that venture funds’ Limited Partner investors have been underwhelmed (some used the term “burned”) by cleantech too much for too long, and the term is now poisonous for some venture partners; some are distancing themselves from it. Some have let go of their teams. So while there may still be relatively wide general industry momentum for the term cleantech, because lexicons don’t change overnight, those at the very center of the space that we’ve thought of as cleantech are quietly starting to use other phrases. Deloitte, for instance, rebranded its annual invitation-only Napa Valley cleantech event last week as Energy Tech. Is it just a matter of time until others start picking similar monikers?

Virtually all I met with agreed that what we’ve thought of as cleantech to date is still an investable thesis: There’s still resource scarcity. Governments are still seeking energy independence. Climate change is accelerating, not abating. Large corporations continue to have an appetite for clean technologies for cost savings, differentiation vs. competitors and as high margin product offerings. So the markets for clean and green technologies are expected to be sustaining and long-term. But will there continue to be a unified name for the sector? Will the term cleantech rebound in popularity? Cleantech, at the time of this writing, appears to be in what IT analyst company Gartner calls the “trough of disillusionment” in its widely-referenced “hype cycle” model:

Cleantech & the Gartner hype cycle

Cleantech is arguably suffering a correction from hyperbole that also characterized the early PC, Internet, networking and other technology sectors—all of which recovered in some form as expectations mapped more realistically to execution. Will cleantech as a term do the same? Source: Gartner.

So the question appears to be: Will cleantech as a meme emerge on the other side of this trough, regaining market momentum and credibility much like PCs, the Internet, networking and Internet applications did when they went through the trough themselves? As another datapoint, if cleantech is indeed in a trough, it’s been slipping into it for a while, now. A historical look at Google search data for the term cleantech, current up to the time of this writing:

Cleantech term Google search history

Google search history of term “cleantech” over time. Interest in the term peaked in late 2009 and has been declining since. What does this mean for companies positioning around the term? Will it recover or not? What would YOU bet? Source: Google.

Will cleantech re-emerge, regain in popularity and follow the Gartner curve back up? Or has its usefulness as a distinction ended? If the term is no longer fashionable, what should this space be called? What would you advise entrepreneurs in this sector to position around? We’re very interested in your thoughts here at Kachan & Co., where we work exclusively with cleantech companies… or what we used to call cleantech companies! Leave a comment on the original version of this article on our website.

This article is reprinted by permission and was originally published here.

Ta-Ta (For Now)

I am pleased to announce that, as of last week, I have assumed the position of President and Chief Executive Officer of MAR Systems.

MAR addresses some of the most challenging wastewater treatment needs, cost-effectively removing highly toxic contaminants (e.g., mercury, selenium, hexavalent chrome, arsenic, antimony, etc.) from discharges into the world’s water bodies that are generated by commercial activities such as refineries, powerplants, mining operations, and other industrial facilities.  Compared to competing approaches, MAR’s technology is more economical and achieves greater degree of contaminant capture down to lower concentration levels.  Because MAR’s proprietary Sorbster media permanently captures these contaminants from water streams, the resulting spent material holding the captured contaminants does not need to be treated as a hazardous waste.

Of course, if you are aware of any client situations where MAR’s solutions could be of help, I would welcome your contact.

By taking the helm at MAR, I am no longer in a good position to serve as your intrepid reporter.  Rather than writing provocative missives here each Monday, I will need to spend all my time and attention on leading the company.  Indeed, while provocation is usually a good thing for a blogger aiming to build a following, it’s not necessarily a good thing for a business leader trying to sell wares to customers in the marketplace.  Moreover, my professional focus of attention will narrow dramatically to solely those topics of relevance to MAR, and consequently I will be less exposed to good blogging fodder, which I had been culling from a broader spectrum of cleantech-related issues that I had been casually monitoring.

So, with this note, I’m signing off from CleanTechBlog.

In closing, I would like to thank Neal Dikeman and the team at Jane Capital for providing me this forum.  I’ve enjoyed posting weekly for the past eight years, and hopefully have been able to inject something positive into the cleantech discourse from doing so.

I suspect that, someday, as U.S. Army General Douglas MacArthur once proclaimed, “I shall return.”  Until then, I bid you all adieu, and thank you for your readership.

Worlds of Differences

I’ve always known that Americans hold a pretty different view about the state of the energy sector than elsewhere in the world, but never really knew how to characterize those variances.

Today, I write in gratitude, thanking the efforts of Sonal Patel, senior writer at Power magazine.  Patel developed this helpful visual framework summarizing the recent issuance of the World Energy Issues Monitor, a a global survey undertaken annually by the World Energy Council posing the question “what keeps energy leaders awake at night?”

For each of three regions — North America, Europe and Asia — Patel has drawn circles for each major issue area of potential concern to the energy sector and placed them on a two-dimensional chart, where higher indicates more impact and right represents more certainty.   The size of the circles is proportional to the urgency of an issue.

Perusing Patel’s graphic is an illuminating exercise.  Of note:

Only in North America is the topic of “unconventionals” — meaning producing oil and gas from unconventional sources such as shale and oil sands — viewed as a particularly big deal.  In Europe, unconventionals are somewhat lower on the radar screen, and in Asia barely on the screen at all.

Conversely, energy prices are a critical topic in Europe and Asia, but deemed only of modest importance in North America.

Similarly, energy efficiency is high on the agenda in Europe and Asia, not so much in North America.  Even more starkly, renewables are seen as only a low-impact issue in North America, and a more significant issue elsewhere.

Perhaps because of the high penetration of renewables there, energy storage is of most interest in Europe, but of less interest in North America, and of hardly any interest in Asia.

Nuclear energy is viewed as a high-impact issue in North America, moderate impact in Europe, and (perhaps surprisingly) low-impact in Asia.  So, for that matter, are electric vehicles.

The so-called “hydrogen economy” — involving the use of fuel cells for power generation and transportation — retains a bit of interest in North America (though with low urgency), but has fallen off the map elsewhere.  Carbon capture and storage (CCS) follows somewhat of the same pattern, although Europe does hold it in higher esteem than hydrogen.

True, there are some commonalities to acknowledge:  the smart grid and policies to deal with climate change and energy subsidies are seen in approximately the same light globally.

However,  more than anything else, Patel’s framework shows that leaders in the energy industry live in very different worlds, depending upon which part of the world they live and work in.