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WEeditorial – Global Clean Tech Challenge

Clean Tech and Innovation – An Issue of Scale

by Jochen Kleef

@jochenkleef51515151515151

Hong Kong

Let’s start with a definition “Clean technology includes recycling, renewable energy (wind power, solar power, biomass, hydropower, biofuels), information technology, green transportation, electric motors, green chemistry, lighting, greywater, and many other appliances that are now more energy efficient. It is a means to create electricity and fuels, with a smaller environmental footprint and minimize pollution.”

Having listened to numerous presentations, talks and discussions around clean tech, innovation and what society needs to address the world’s problems in the future such as water shortage, energy generation, food supply and a global population of 9.0bn people, there is a serious need for innovation. Innovation of cleaner technologies as outlined by Wikipedia is what is called for and on a big scale.
However, the challenges for these clean technologies are many ranging from simply the human resistance to change or accepting new approaches, engineering as well as technical hurdles and the running of a business professionally with commercial success.

Three Exemplary challenges

Looking at the first challenge of driving change, this has improved over the last three decades not the least because of the Internet which made environmental issues and the need for a more sustainable life style much more known.

Twenty years back and without the Internet, there was not the scale of common knowledge or the rising awareness that something needed to change. This I guess is underway and will probably accelerate to gain more scale.

Secondly, the technical issues seem to be well taken care of as the inventiveness of people who take the sustainability challenges serious deserves applauding. There are many bright, talented and experienced people who are coming up with promising approaches and solutions to today’s and tomorrow’s needs of society.

A lot of interesting ideas have been developed to prototype stage and are at various levels of readiness for commercialization. Successful examples are showing the way such as China’s solar sector or companies such as Atlantis Resources Corporation and its tidal energy technology

The main issue surrounding these ventures is one of business approach and commercial success. There are two routes that seem to be shaping up.
One is for these clean tech start-ups to apply and hopefully get accepted into the so called incubation programs of big global players who are market leaders in a particular environmental sector.

This is a very promising approach as the start-ups join a network of specialists in their fields and get financial backing to take them to the next level of scale in their aim to commercialization.

The argument however is whether the motivation of these multinationals is actually as humble as it seems. There’s a school of thought that thinks big organisations and innovation – or to use a more general term: change – do not necessarily go together that well. So the idea of the big organisations to simply innovate by attracting smaller, cutting edge innovation technologies and to potentially incorporate them as a profit center after an extensive due diligence during the incubation programme is one that can work to mutual benefit if the entrepreneurs are eying for a buy-out.

Third, there’s another train of thought though that hints to the buying-out of inconvenient innovation to ensure a particular corporate business model  or a certain product stays in business and the innovation disappears into a drawer.

Which leaves us with the organic growth path from inception via R&D to prototype stage and then through various investment rounds to full commercialisation. This is a very honourable and the most controllable but yet hard way of developing a clean tech business and therefore ultimately innovate.

The major challenge is one of obtaining funds be it at seed or angel stage or later on VC money and ultimately listing. The disconnect between the entrepreneurial clean tech community on the one and the investor community on the other side seems to be what is hampering innovation.

There seems to be a lack of common understanding and probably even language (technical vs. financial, let alone cross boarder) on a large scale as clearly a need for more innovative technologies in a larger variety exists.

Scale and innovation

Since setting up our consulting business, we have been in contact with a significant number of clean tech companies that were either looking to enter into the Asian markets or for funding or both. This is good news as it means there is innovation and the innovative businesses want to be close to potential markets which makes commercial sense. The Asian markets are appealing because this is where growth is happening now – and for the foreseeable future maybe with the exception of Germany given recent performance – but there is an issue.

In general, small clean tech firms from the US or Europe do not know how to do business in Asia unless one of the founders or investors has Asia experience. It is difficult enough to innovate in one’s home territory as “to innovate” at the very heart means leaving the conventional for something new and ultimately change. But to do this in a completely new cultural environment with all its unknown protocols and behaviours, potentially at first with people whom one has not met in person but only virtually to start with is adding yet another dimension of the challenge.


The Question

The key question is whether this “long distance innovation” is actually feasible and a recipe for success or does it prolong the time these small clean tech firms take to grow? Would it perhaps be better to focus one’s efforts in one’s local community / economy and once the business model is proven with revenues to back this up prior to stepping out of your back garden? Or are economic – and investment funding – circumstance such that clean tech firms outside of Asia will fail if they don’t tap into the Far East’s momentum and economic growth potential?

That leaves another question open: Is there enough clean tech innovation happening in Asia or do the growing and developing countries indeed need input, IPR and experience from the more mature economies to maximize a combination between innovation and commercial success?

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Author’s Bio:

Jochen Kleef, Chairman of Ecopoint LTD. is an environmental services company that provides an Internet platform for the environmental business community throughout Asia.  He is also the founder and chief executive officer of Kleef and Co, a strategy and management consulting firm specialising in sustainable business.

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