Unfortunately, so far, despite real concerns, pocketbooks globally simply cannot afford higher prices from most of today’s green and clean start-ups in a globally suffering, highly competitive, ever changing economy. Government activism via subsidies, however well intended? That’s just a shell game of who, when and how we pay higher prices, whether one supports the idea or not. Most of today’s green and clean investments simply are not delivering large-scale features that deliver large-scale benefits. Today’s clean and green product costs generally exceed the incumbent products’ costs, not just directly, but holistically. Most products look like they will never get low enough to beat the incumbant’s costs. We all know that future simply will not sell. It’s actually amazing how many are still running off the cliff like lemmings.
What’s the bottom line? Throughout history, when a new technology truly delivers a big breakthrough, cost structure are inexorably, irreversibly transformed, driving virtually 100% of participants to the new way to receive the very clear, highly quantifiable benefits being delivered. The bottom line to green and clean investments – If you are not delivering an absolutely simple, clear, quantifiably beneficial, deployable product that can utilize your customers existing systems of regulation, manufacture, production and use, you will inevitably fail.
What’s great about this? It makes, in theory, clean and green investing incredibly simple. If the product would sell without being clean and green, it’s a great clean and green investment. Why? Because almost no one, unless forced to, buys clean and green just because it will save the planet, save the seas and or save ourselves. Consumer market research and business-to-business sales are to be blunt, ruthless in the search for the lowest price for the maximum benefit. That same research shows better products sell and if they are clean and green, that just may provide a decision tipping point, especially at equivalent costs.
Luckily green and clean practices are generally logical, solid business practices as well. Minimize and eliminate waste. Use the least energy. Maximize material choices, enabling the lowest cost materials. Produce faster, at ever-higher rates per machine, per person, per dollar invested and dollar spent to run the process. Reducing environmental contamination reduces remediation costs, cuts health costs, enhances and lowers the cost of agricultural productivity. The list goes on and on.
What is the real issue then? Honesty with ourselves coupled with looking at each clean and green opportunity holistically transforms how we avoid the green and clean wheat from the chafe. If a biofuel costs $50 a gallon, stop asking about when the plant is on line and when it will be. Stop talking about the sterling management team or the cool chemistry. The business in this case has only one single question to answer first: Can a very large volume of a consistent fuel useable in a major market’s essentially existing engines be made at scale at a competitive or preferably much lower cost and then price using relatively simple assumptions based upon known inventions within the investment’s targeted return lifetime? If not, no one will want it – ever.
Elon Musk so far is doing a great job at something no other has – making a clean car that after people drive it they say “Oh my god, that’s an awesome car!” He’s not fully proven as being profitable yet, and he may never be, but Musk started out saying that if we cannot make a truly awesome car, a car that people will buy for what it is, we will never succeed. Musk knows that, by example, he must produce battery technology that is very low cost, safe and recyclable to keep costs down. He also knows that if does all of this, he will contribute to making money while simultaneously helping to save the planet, save the seas and or save ourselves. But what he has first in mind is wowing the buyer with an experience they cannot get from another car. Period.
At the start-up Sirrus, formerly Bioformix, a firm I founded, they are taking the approach of “Advanced manufacturing through chemistry!” What does that mean? Green and clean or not, Sirrus’ chemistry allows by example coating and bonding with no heat at high speed with high performance. In automotive, 60% or so of an automotive plant’s cost to build and run is tied up in energy for the heat to cure and evaporate solvent from the car paint. In total, with some great chemistry, some have estimated that fully penetrated – not just in the process, but in these new material’s effects, such as light-weighting vehicles at low cost – Sirrus’ technology could save 5 quadrillion btus annually or 5% of American energy consumption alone. Now that’s a life cycle analysis finding a very large, crystal clear, cost saving, performance enhancing, existing infrastructure employing features exhibiting a big bunch of quantifiable, profit producing benefits. In another assembly example, a customer had a -$260 net use cost per pound of adhesive used while producing a product element literally 120 times faster with no heat. Now that’s cool. What a key to doing all of this? Adaptive innovation.
Adaptive innovation is about taking this holistic view, a full life cycle analysis of an idea within the context of major global trends that by default often end up being clean and green as well. Holistically solve those trends’ implied needs at a lower total cost than the incumbents and we all win. Examples include eliminating chemical or liquid handling, eliminating solvents to reduce energy input, like heat and the transport of a non-contributing material, enabling the use of a vaster array of materials, both lower cost and often better performing, by eliminating damaging heat and so on. Stick to the big ideas for the big investments and run from those investments that simply never can tell that simple, one line story.
When one takes this full view, the “what must be trues” of Arie De Gues come alive and free the mind to explore idealized products and then to back into them with technologies, not the other way around. With that, lower cost, less resource intensive innovation, ideation and product development can occur. Idealized idea, story and then specification conception do not initially require big labs, expensive equipment and rare materials. What they do mandate is highly varied people from a wide range of backgrounds with terrifically wild imaginations and a magnificent story teller to process, distill and then communicate both the theoretical product and it’s “what must be trues”. The key to all of this is not simple what we hear but also what is implied by what we heard – what was never said at all.
We can solve how we can save the planet, save the seas and save ourselves – and make some money doing it. A lot of money in fact. We can do it sooner, some say in time to avert disaster, by being far more honest with ourselves about what ideas are truly worth backing, truly worth spending time on. Doing so will prove more money in a shorter time frame and get us there far more effectively and quickly. Maybe in time to some say save the planet, save the seas and save ourselves.