A long time ago Adrian and I both worked at Yourdon Inc. in various roles. We taught method seminars, consulted with clients, and eventually joined the ranks of management in the company. After leaving Yourdon, Adrian began a career as an industry analyst, working for and starting up a number of firms. Most recently, he founded the Sustainable Insights Group (SIG411).
John - Thanks for taking the time to speak with me today. Before we launch into the core questions around "Pattern of Success", could you tell us more about the kind of work you do and the areas you focus on?
Adrian - I advise end users on emerging technologies that will help them grow their business, and vendors on what the end users are looking for and are willing to accept. And occasionally I will advise investors on where I think the technology markets are going. Over the years the types of technologies have changed. I started in application development and enterprise systems, then I spent a number of years on regulatory compliance and risk management. Now I have combined those with my interest in sustainability. So I tend to look at technologies that reduce energy consumption, improve the carbon footprint, and general business technologies that make a business more sustainable. I look at sustainability as having three pillars:
1. You have to be in the black. It does not matter how green you are if you are not in the black.
2. You have to be sustainable in terms of ecology. If your business is the oil business, then at some point you have pieces of it that are not sustainable, yet if you look at your entire ecosystem including carbon credits you should be green.
3. And the last part that I started on more recently is the relationship between security and counter terrorism and sustainability. It does not matter if you are making money on an effort good for the ecosystem if you get blown up.
John - As you were talking about the insights you offer to end users and vendors on emerging technologies I got the image of the Gartner Hype Cycle in my head. Do you have an opinion you could offer on the hype cycle?
|
Adrian - The hype cycle... I tend to be working in the leading edge and the next big thing, so a lot of the time I am ahead of the market on things. For example, in the 1980's I was working on artificial intelligence and participated on the Air/Land Battle Management team from RCA, and everybody was saying that AI would solve this or solve that and Knowledge Systems blah blah blah and then everyone said it’s a failure. Well the fact is, by the time it is a success you are not talking about it anymore, it is just an accepted part of the fabric in the solution.
So in going green I have seen this as well. Recently on Twitter, I got into an exchange with someone from the New Jersey Tea Party, who said green jobs are a hoax and it is a good thing that the American public has woken up to that. So we are in that phase where people are discounting the impact of sustainable technologies.
John - I think in the last few days I saw an interrelated set of articles in the New York Times. One was about how China had dominated the world supply of rare earths and had put a export tariff on them. The second was about how rare earths were used in the creation of wind turbine generators. And the third was how China had brought in a Spanish wind turbine company to manufacture and sell to the Chinese market, but required them to use local component suppliers,who in turn sold these components to Chinese manufactures who were now dominating the Chinese market and beginning to export to America. So it seems the Chinese government had a long term strategy to dominate the wind generation business. While in America we have an ineffective policy.
Adrian - There was a Republican from South Carolina beat out in the last election by a more conservative Republican. In one of his last speeches on the floor he said that even if Americans did not believe in the science of global warming, that they should see that there is an economic benefit to be competetive in a green market because the rest of the world does believe in global warming and will be buying sustainable technologies and products.
John - Lets look at some patterns of success. What have you seen in the last several years with your clients, where they have been successful in embracing an emerging technology?
Adrian - Probably the theme that has been most successful across technologies is where companies understand that only a small part of what they do is going to differentiate them and give them success in the market. You can model your business identifying strengths, and that’s what you want to own. You don't want to necessarily own that forever, because everything you do will have a half life of innovation where the competition will be able to copy it with or without IP protection. But I think that the people that have done well have focused on the differentiators and shared everything else.
Back in 1994-95 when I was working on application development we all thought that Object Technology would be THE NEXT BIG THING, particularly the concept of reuse. The problem was that everybody wanted to build reusable components and nobody wanted to use them. But the concept of reusable components, I think led to a successful trend, the Open Source Movement.
I have spent many years working with clients and figuring out their value chain models looking for the percentage that they should own versus share. I have some friends who own one of the best marketing firms I know called Zoom Marketing and their whole business is to help clients find the point that matters... what’s going to differentiate you.
One of the best things I wrote was one of the things fewest people read over the years. When to share IP, which came out of a round table in 1993 with several banks participating. In financial services they learned it made sense to build systems that could could work well together.
John - Is there an example of a client in sustainable energy who has demonstrated this pattern of focusing on that which differentiates and share that which is common?
Adrian - Right now I don't have anything I can talk about... I have a wall full of NDA's here. I am tracking about 20 companies in the Energy and Carbon Management segment. It is still early enough that there are no clear winners or losers, but I would expect that at least 5-8 will not exist in their current corporate form in 3-5 years. There will be a shakeout.
John - Because of the competition?
Adrian - Yes, and also because some were formed to provide solutions for pending government regulation that went away because of a change in the administration. And this is not just in the US; it happened earlier in Australia. Right now anything that will require a significant government investment is not popular.
John - I am certainly not a geo/economic/political expert. But is this why the centrally managed economies like China are able to take a longer investment view on these technologies?
Adrian - It is no secret that democracy is messy. And our particular brand of democracy could be among the messiest in terms of long range planning. The fact that we have an Interstate highway system is amazing - it was done in a simpler time. I don't know of any President today or going forward who could put forward a program of that magnitude.
John - It seems to me that the political will to make that happen, or the Landing on the Moon program was because of the perceived external threat of the Soviet Union. Will we need such an obvious threat to get large infrastructure investments to be successful?
Adrian - At least within my lifetime, I think that will be the case. However, for innovations that require less significant investment, I think government still takes a proactive role. For example, the internet and GPS were both military programs that spawned commercial applications.
John - On the topic of Failures to Launch, have you seen examples of fall-on-your-face failures?
Adrian - The biggest failures I have seen over the last 5-10 years have been with companies that have tried to leverage the internet and become a completely on-line business, but with the assumption that the world will look like their own backyard. An executive from the mid-west leaves his high paying job to start-up an online exotic cheese business. Unfortunately, the broader US market does not share the passion for stinky cheeses.
OR the fact that with an internet business you need to still follow through on basic business processes. Just one example, one of my clients I started out with in 2010 will be off the books by the end of 2010. They thought that because they had a lot of cool ideas they would be successful. They were under capitalized and not able to execute an effective marketing campaign in a crowded market segment.
Another issue is trying to offer too much. I recently attended a briefing from a futurist who said that Google does not have a strategy. I commented that a year or so ago I heard Steve Mills answer a question "What about Google?". He replied, "Google is like a blind dog in a meat house. If they get a sniff of something they are going to go after it". Google is a venture capitalist who makes its money on one investment and is looking for other places to invest.
John - So you think that Google's pattern of success is the genius to know what areas to experiment in and which experiments to cancel earlier then later?
Adrian – That’s a good point. Successful companies will try a number of things but know when to quit. I think a lot of companies go out of business because they try to keep things going too long.
John - What do you think will be THE NEXT BIG THING about three years from now?
Adrian - I think there will be three important things:
• Business Analytics
• High capacity energy storage
• Enterprise Energy and Carbon Management (EECM)
Adrian - I think that the top three businesses in any segment will have grown in their segment relative to competition because of their use of predictive analytics.
John - And how will these companies grow because of analytics? What will they do differently?
Adrian - For example, a large data base company had looked at data from a very large number of patients with heart disease. They think that they have found indicators that would give you several hours early warning of a heart attack. This was done as a individual project because the wife of the Principal Investigator had a heart attack and he was looking for a way to understand what went on leading up-to, during, and after an attack. He found patterns in the data that his doctors had never considered. Unfortunately, the company he works for will not commercialize the solution because of liability.
John - What about the high capacity energy storage?
Adrian - One of the problems with sustainable energy is when the wind doesn’t blow or the sun doesn’t shine the generation capacity can not meet the demand. The Center for Autonomous Solar Power at Binghamton University is working on the next generation of super capacitors which could allow the Smart Grid to store energy for later use.
John - And the EECM?
Adrian - This will be a product that allows companies to manage energy and carbon production and use just like they use an ERP system to manage production and use of products. Just like we know what exactly goes into the manufactured product in terms of a bill of materials, we will know the cost of energy or carbon emission associated with that product. This will allow companies to make informed trade-off decisions during design, manufacture, and transportation.
With carbon, we have had a number of false starts, but now we are seeing the state of California putting in place carbon trading laws.
John - For this to work three years out in the US, would it require the passage of Cap-and-Trade?
Adrian - While Cap-and-Trade would accelerate it, I don’t think that is necessary. More and more businesses are connected with companies overseas. So when those companies require green products or components, the US companies will need an EECM system to compete internationally, also while Cap-and-Trade may not be a federal law, the GSA may add green requirements to its procurement process.
There is an entity that has more power then the Federal government in regulating energy and carbon in consumer goods. Can you guess who I am thinking of?
John - No.
Adrian - Walmart. I call it the Walmart effect. If Walmart tells toaster companies that they will get more shelf space for their product if their supply chain is green, then if you are Mr Toaster Manufacturer you will listen to that. I know of one appliance company I can't name, that was not at all interested in carbon and energy and rebuffed all the EECM solution providers. But when Walmart issued their guidelines, the company suddenly saw the light.
John - I am not an expert on Walmart's green guidelines but answer me this. One of Walmart's biggest suppliers is China Inc. And we both know that the companies in China are some of the biggest polluters in the world. Do they get an waiver to the guidelines?
Adrian - There is no waiver for made in China. Even with American companies much of there content is Chinese. I am talking to you on my iPhone4. It probably says designed in Cupertino, made in China.
The problem is that when you try to measure the entire scope of impact it gets very complicated. That’s why we need EECM systems.
John - Adrian, thanks for taking the time to share your insights.
No comments:
Post a Comment