Vision & Execution’s Weblog » cleantech

Creative Destruction to Ensure Value Creation

visionandexecution — Wed, 11 Jan 2012 04:41:58 +0000

Despite the pipeline of 60 venture-backed companies currently in registration for IPO in 2012, M&A is still the most common exit for most startups. And prognosticators forecast an improving M&A market after the slowdown in the 2^nd half of 2011. So how do companies who position themselves for acquisition and those who acquire them deliver on the value they anticipate. Industry data reminds us time and again that the failure rate for mergers and acquisitions hovers between 70% and 90% despite the annual $2 trillion spent every year.

A key criterion for success when acquiring for innovation’s sake, as opposed to scale economies, is laying the foundation for fundamental change in both the business model and the organizational culture. Buying what could be considered disruptive or bleeding edge IP or products means that business as usual doesn’t cut it. Few companies who go on buying sprees soften the beachhead internally for the degree of change required. Incentives and other management metrics are not aligned in advance with the potential of the new technology so old and new management are caught in the crossfire while making important strategic decisions about budget and other business priorities.

Achieving the potential business value of an acquisition means losing the emotional attachment to the cash cow business(es) that enabled the acquisition in the first place. It requires a clear understanding of where the creative destruction within the organization should occur and puts incentives in place for the organization to create a new business from the ashes.

Let Vision & Execution work with your teams to facilitate decisive action around new business models and product roadmaps as you plan for or seek to integrate innovative acquisitions.

Top 2011 trends

visionandexecution — Sat, 15 Jan 2011 15:57:29 +0000

Happy New Year from Vision & Execution! We hope 2010 exceeded your expectations and that 2011 looks even better.

What do the prognosticators say about 2011? Will it be better or worse than 2010? What industries and, for that matter countries, are expected to prevail? It was quite interesting to take a survey of 2011 predictions…the topics of the predictions were generally more insightful than the predictions themselves. Some recurring themes…

Here are some interesting sites to check out for more detailed predictions:

On the economy:

On innovation

On social media

On technology

CNN Tech
Trend Hunter
Infoworld
McKinsey (from August 2010 but still relevant)

On cleantech

On mobile

On business analytics

Perhaps the most interesting report about 2011 predictions were those made 70 years ago by seven 1931 Visionaries.

What trends or predictions will impact your business? And, how can we help?

In cleantech, every solution needs to solve more than one problem…

visionandexecution — Tue, 18 May 2010 12:50:10 +0000

When asked to define Cleantech I usually count off using my fingers to make sure I’ve listed the myriad of industries captured under this umbrella term. Each industry is redefining business as usual to reduce its impact to the environment. Despite sharing a common moniker these industries mostly work in isolation from each other – much to our disadvantage. At Nordic Green II there was broad representation from each of cleantech’s subcategories as companies, commissions and experts updated us on the progress being made by Scandinavian countries. The need for synergy among these industries was identified and well illustrated by Sweden’s Energy Agency in a fun simulation game called SymBioCity. As a mayor for the day you gain an appreciation of how challenging it can be to integrate these industries, and what trade-offs you need to make to increase energy efficiency and optimize utilization of other natural resources all while reducing the carbon footprint of this make-believe city.

While the event kicked off with this holistic view, the numerous presenters seemed to be developing very exciting cleantech innovations in isolation from broader resource or climate affecting issues. Unfortunately I cannot point to any good examples of synergies among cleantech industries outside of Sweden. Can you?

Who takes the risks? The payoff in social responsibility…

visionandexecution — Tue, 11 May 2010 12:41:03 +0000

The nearly 40 year lead that the Nordic countries have on the US in clean technology is a direct outcome of a socially responsible decision by national governments which drove investment in basic research. At Nordic Green II, it was striking how advanced the Nordic countries are when it comes to clean technology innovation. The results are compelling. While the US is hard at work to make up the difference, and we bring many resources to bear on the issues at hand, it will be a costly exercise to match the Nordic success.

What is the cost of playing catch up?
• Korea: “Green New Deal” ? $46 billion over 5 years
• Japan: invests $63 billion over 5 years
• US: plans to invest $172 billion over 5 years
• China: invests $440 billion over 10 years

Fortunately for the US, industry is playing a critical role in funding cleantech ventures: the US represented 21% of 2009 VC investments as compared to China at 14% and India at 6%.

What are other risks we should be taking now? In cleantech? In healthcare? Or In education? Where are the next disruptive ideas for socially responsible innovations?

The Russians are coming…

visionandexecution — Fri, 11 Dec 2009 23:54:53 +0000

Actually they’ve been coming for the past 5 years to Silicon Valley Open Doors – an investor conference sponsored by AmBAR for Russian and Russian-American entrepreneurs. This is my fourth year attending and I’ve found it insightful in terms of the dynamics of innovation and migration of innovation centers. An interesting example was a company that presented in 2006 which designed a product for India, manufactured it in China and came to Silicon Valley for funding – the company was based in Israel.

This year has been notable in terms of the sophistication of the investor presentations and also in the complexity of the offerings. It’s not just twenty-somethings with a Web 2.0 application they coded in their dorm room. There’s more gray hair, more serial entrepreneurs and not so many hockey stick revenue projections.

What’s interesting this year is the migration of financing. A US-based company that started to flounder after receiving its Series A funding went to Russia for its next round of funding. It received funding from Troika Dialog (Russia) and DoCoMo (Japan). It was then able to close a sizable Series B round from Morgenthaler Ventures.

In addition to learning about entrepreneurial activity in former Soviet Union states, there are always nuggets to be gleaned from the high quality VC speakers they secure. A few highlights from my perspective are noted below:

We invest in the entrepreneur’s character more than the idea…we want someone who knows when to zig and when to zag in order to develop a product that will gain traction in the market. Ron Conway, Angel Investors LP

Venture capital is morphing in response to the difficulty going public due to Sarbanes Oxley…a number of venture firms have moved to private equity. Aydin Senkut, Felicis Ventures

Opportunities for vertical applications on top of mobile phone and Facebook platforms are greatly underestimated. Jason Pressman, Shasta Ventures

The second day included a one hour Q&A session with Vinod Khosla of Khosla Ventures who offered his point of view across a wide area of topics but some particularly interesting ones on CleanTech:

Government regulation has both helped and hurt CleanTech….Incentives helped electric cars but because the incentive program was defined too narrowly it hurt hydraulic hybrids … incentives discouraged investment and development in hydraulic accumulators.

In contrast, the renewable fuel standard helped to start a new market and provided the protection needed during the first five years when costs are high.

It’s best to start with a global view …most growth markets for energy (namely the BRIC countries) don’t have any subsidies. Incentives are helpful for the first 5 to 7 years to help achieve scale economies however after that the industry or product category needs to be able to compete without regulation to serve the global market. Successful CleanTech startups start as global companies.

A lot of CleanTech is not fashionable… renewable plastics…internal combustion engine…., waste heat…(non?)-lithium batteries. Most VCs are looking at investments in the latest hot sector….Khosla Ventures tries to focus on the areas that are not hot or sexy. We take the risk of jumping into new areas that no one is paying attention to… trend in venture funding is towards financial investing rather than technology investing but some VCs are going into funding deep science.

Ignore experts…Vinod cited a detailed study by Professor Philip Tetlock, the Mitchell Endowed Professor at the University of California, Berkeley, and the author of Expert Political Judgment: How Good Is It? How Can We Know?, that measured the accuracy rate of notable experts…turns out they had the same accuracy as dart throwing. If we invent the future we’ll get a very different outcome than what the experts had projected.

And after 18 presentations culled from 80 submissions ….The winner is….PTP Group Americas.

Looking forward to SVOD 2010.