Future Energy

Innovation (only for the Fortune 500?)

Source: PSFK.com

In a new book on innovation (The Other Side of Innovation: Solving the Execution Challenge. Harvard Business Review Press, 2010), Vijay Govindarajan and Chris Trimble have laid out some well thought out rules for the corporate set. Most importantly they knowledgeably illustrate the difference between creativity, AKA generating ideas, and the hard work of executing innovation initiatives that can have a real impact on the world. 

"Companies think far too little about the other side of innovation, and we are not the first to say so.  In 2007, IBM ran an advertisement intended to convey that it could help its clients innovate.  It featured a pudgy mock superhero sporting a capital "I" on hi outfit who introduced himself as "Innovation Man".  A bemused colleague asked, "And your job is?"  The superhero replied with gusto, "I for ideation!  I for invigoration!  I for incubation!"  The onlooker replied, "What about I for implementation?"  Innovation Man answered "I knew I forgot something."  ..... It captured so humorously and yet so perfectly the off-balance approach to innovation that is commonplace in corporations around the world.  There is too much emphasis on ideas, not nearly enough emphasis on execution.  Thomas Edison made essentially the same observation more than a century ago: "Genius is 1 percent inspiration and 99 percent perspiration."  Nobody listened."

While innovation in the form of software start-ups by 20-Something digital wizards is now the stuff of popular myth and legend, this book provides a detailed a recipe for the rest of the business world.  In a treatise that seems directed primarily at the Fortune 500, Govindarajan and Trimble make three key points:

• Business organizations are not designed for innovation, they are designed for ongoing operations, with deep and fundamental conflicts between the two;
• Innovation requires a dedicated team with its own structure and processes; and
• innovation initiatives should be run like a disciplined experiment.

Govindarajan and Trimble contrast their approach to innovation, which is most relevant to major innovation initiatives, to innovation strategies that lead to incremental or process innovation.  Interestingly, they define the different possible innovation models with four different "equations" (with the authors' characterisations of each):

• innovation = idea + leader + team + plan (their approach) 
• innovation = ideas + motivation (people working in their spare time to generate many small initiatives, but unable to get much beyond the idea stage);
• innovation = ideas + process (small steps that may accumulate into a meaningful result);
• innovation = ideas + leaders (based on talented leaders to overcome the organizational barriers to execution - flawed in the authors' opinion).

I was surprised at how dismissive they were of the approaches other than their own.

Briefly, looking at the authors' three key points:

The Conflict

Referring to them as Performance Engines, they make the case that the ongoing operations of established businesses "instinctively swat down innovation initiatives - or any project, for that matter, that cannot make an immediate contribution".  Hence their first rule of innovation: Innovation and ongoing operations are always and inevitably in conflict.  This isn't a characteristic of a poorly run business - on the contrary, its a part of every succesful Performance Engine's approach to optimizing its business:

"The most powerful conflicts between innovation and ongoing operations ..... lie in the method of the Performance Engine.  The method is the same, in every company and in every industry.  To maximize results, the Performance Engine strives to make every task, every process, and every activity as repeatable and predictable as possible."

A Dedicated Team

The solution: building a fit for purpose team with its own, custom organizational model.  In their view, an innovation team, to be successful, must leverage off of the skills and resources of the Performance Engine but must have the independence to strike its own path, unencumbered by the biases, habits and business models of the mothership. While the innovation team will be structured, managed and measured differently from the Performance Engine, successful innovation requires a partnership between the two.  Three key steps are identified for building the innovation team:

• Divide the labour between the dedicated team and the shared (with the Performance Engine) staff;
• Assemble the dedicated team and assign roles and responsibilities; and
• Manage the partnership between the dedicated team and the shared staff.

A Disciplined Experiment

Govindarajan and Trimble advocate a learning based approach to innovation, arguing that the goal of an innovation team should be to learn from innovation experiments as quickly and cheaply as possible.  Following a process that sounds a lot like the scientific method, they suggest three key steps:

• Formalize the experiment following a disciplined process that maximizes the opportunity for learning.  The core of the process is a clear hypothesis of record against which progress can be measured;
• Break down the hypothesis 
• Seek the truth

The approach is good (the disciplined experiment element is also directly based on the scientific method, a point the authors never acknowledge) and could be used to bring discipline to almost any organization's innovation initiatives.

What I liked about the book was the recognition that the real challenge for innovation was not generating new ideas.  Contrary to  popular understanding, eureka moments are just the beginning, with the greatest challenge being the hard work of execution or implementation - and the authors lay out a convincing approach for overcoming the execution challenge.

What I didn't like about it was the degree to which they dismissed approaches other than their own.  Not all innovation takes place in the Fortune 500 and involves transformational change.  I think I would have appreciated a greater recognition of this fact once they had established the focus on execution.  Some suggestions on applying that focus to incremental and process innovation might have been nice too.

On balance, the book is well worth reading if you have an interest in how innovation occurs and how to drive it in an organization (stepping back to look at the prescriptions a bit more generally, it also has lessons for implementing change of other sorts). 

Enjoy.

Controlling Risk with Malcolm Sparrow

Last week while trying to get some information on a recent book by Malcolm Sparrow, I came across an interview with the man himself.  I was trying to make up my mind about ordering his book, The Character of Harms, and had hoped to find enough information to make a decision.  However, the interview was interesting in its own right and seemed worthy of a quick post.

I first came across Sparrow, a researcher at Harvard and ex-British cop, in an earlier book entitled The Regulatory Craft.  As a consultant that focuses on regulatory management, I am always looking for good writing on the subject and Sparrow's book was one of the best I've come across in recent years.  (Very quickly, his thesis in The Regulatory Craft was that regulators should "pick important problems and solve them" as part of a focus of focusing on the delivery of obligations.  It strikes a counterpoint to the many prescriptions for regulatory reform that focus, in his view wrongly, on customer service, process improvement, etc.)

In his interview, (and I suspect in his most recent book) Sparrow again focuses on the careful identification and solving of regulatory and other risk related problems, extending the direction advocated in The Regulatory Craft.  In discussing this approach, he hits on three key themes, including:

• Catastrophic risks, much in the news these days, lack the frequent, low-level events that would normally provide a basis for training, practice and prevention.  Put another way, there are too few events to support a a feedback loop.  To successfully manage catastrophic risks then, regulators and others must shift their focus to near-misses and precursor events.

• Regulators should focus on spotting emerging problems and suppressing them quickly before they can do much harm - "that doesn't mean waiting for three years for new legislation, but using available tools and enlisting relevant partners and getting into it quickly, devising a solution ..."

• This approach is not just for regulators, it applies equally well to corporate risk management and in fact any forum in which managers are struggling to manage risks relating to potential harms.

I am a strong advocate of designing and building proactive management systems to address the risks that affect companies and regulators.  However, I do believe that the practical, evidence-based approach advocated by Sparrow makes sense for addressing those problems that inevitably squeeze through even the best management systems.  So I recommend reading the interview for yourself - its short and won't take you long.  I recommend Sparrow's books even more.

Incidentally, I did buy The Character of Harms and with 30 minutes invested in reading thus far, it looks like it will be good.

Illustrating the Need for Sustainability: 100 Places to Remember Before They Disappear

After 15 years of working with companies and sometimes governments, helping them to manage the sustainability and the issues that affect sustainable development, I still oftentimes find it a fuzzy concept.  So I really appreciate it when something comes along that helps even me to put a real image to the issues. 

This time, that image has come from (for me) a surprising place.  Not too long ago Newsweek released a special issue that looks at some of the places that could disappear or be radically changed as global warming exerts a growing influence on the world in which we live (100 Places to Remember Before They Disappear; Newsweek Special Issue, Spring 2010). 

While I would have liked to see a stronger link between global warming and the descriptions that accompany each picture/location, the magazine is a great illustration of why environmental sustainability and sustainable human development is needed.

"To read this book is to be reminded that, like the tea bushes, human beings also occupy a narrow ecological niche .... the distribution of human settlements around the globe is crucially dependent on specific patterns of rainfall, sunlight, temperature and wind, all of which will be affected by global warming.  Mountain glaciers may seem like a remote concern to most city dwellers, but if you live downstream from them - in Southern California, say - it matters a great deal how and when they form and melt."

And unlike many pictorial statements of whats at stake, Newsweek demonstrates that it is not just natural ecosystems that are at risk.  With photos of many of the worlds most populous or beautiful urban settings, they make the point that global warming poses risks to  the places we have constructed and live in - indeed to civilisation itself.

"This book isn't about atmospheric chemistry or carbon emissions; its about people, the places they inhabit and the places they have made, and a heart-tugging evocation of what we may lose if global warming proceeds apace ... this book is a reminder of what's at stake if we are complacent in the face of a rapidly changing climate."

And the photos illustrate some beautiful locations ...........

 

The Maldives                                                 Paris, France                                 Ontong Java Atoll, Solomon Is.

Newsweek is to be commended for publishing such a high profile look at just what is at risk as a result of the current official paralysis regarding efforts to reduce emissions and other carbon releases to the atmosphere. 

[Well I'm slow, but I get there eventually.  I still appreciate Newsweek's effort at publishing the 100 Places ... issue but it seems that its based on a project by a Danish media group Co-Life developed for and presented at the Copenhagen COP meeting last fall.  The main website for the initiative, including a place to by the books and posters, is here: 100 Places to Remember Before They Disappear.]

Future Directions for U.S. Electricy?

                     

                  Source: Involvium Energy Ventures

The most recent Electric Perspectives, published by the Edison Electric Institute, includes an article looking at the research needs of the U.S. electric power industry if it is to aggressively cut carbon dioxide emissions between now and 2030 (see The Full Portfolio by Revis James, January/February, 2008).

(If you haven't come across them before, the Edison Electric Institute is the industry association for U.S. shareholder owned electric companies.)

The article outlines four technology groups to be addressed if the industry is to significantly reduce its emissionss by 2030, including:

• distribution enabled technologies

smart distribution grids and communications infrstructures to enable widespread end-use efficiency technologies, distributed generation (e.g. renewables) and PHEV's (plug-in hybrid electric vehicles).

• transmission enabled technologies

transmission grids and associated energy storage infrastructures with capacity and reliability to operate with 20-30% intermittant renewables.

• nuclear

advanced light water reactors, continued safe operation of the existing nuclear fleet and a viable strategy for manageing spent fuel.

• advanced coal & CO2 capture/storage

commercial-scale coal-based generation units operating with 90% CO2 capture and development of ways to transport and sequester the captured CO2.

This looks to a somewhat limited, status-quo oriented list of research requirements - there is no mention of research into renewable technologies or end-use energy efficieny for example.  Recognizing the limitations, its still an interesting (and brief) take on the challenges facing the U.S. electric sector with respect to greenhouse gas emissions reductions. 

Making Sense of Clean/Green Energy Technologies

The 2008 Greentech Market Taxonomy

Back at the end of November, Greentechmedia provided a pictorial and accompanying article (see The 2008 Greentech Market Taxonomy, November 30th) that segmented and explained the growing clean tech, or in their words "greentech", market.  I had quickly looked at the diagram (I've copied it above, but a more legible view can be accessed here) a couple of times but never taken the time to read the accompanying article until recently. 

Now that I have, it strikes me as a very good starting point for anyone trying to understand the explosion of new technologies relating to sustainable energy and the firms that are pursuing them. 

The taxonomy divides the greentech/cleantech market into eight sectors, including Power Generation, Green (largely energy) Services, Transportation, Energy Infrastructure, Energy Storage, Materials, Recycling & Waste and Water.  Five of these sectors are completely or primarily about energy.  The sectors are then further divided into a total of 34 segments.

The authors point out that their approach was to try and make greentech understandable in an intuitive way.  To do so, they organized the taxonomy to reflect how an end user might interact with the range of technologies, processes, appplications and services flowing into the market.

There is a lot of information packed into a relatively short article.  For each of the 34 market segments, the authors have provided a brief description and often opinions as well, together with examples of both well established and newer companies ("well established" is a relative term, with few of the companies having been around for very long at all).

Taxonomies must be the flavour of the season.  It was only a month earlier that Wired Magazine introduced their "Wired Flowchart", that provided a pictorial of the emerging clean tech industry, mapping the connections between the entrepreneurs, venture capitalists, tech companies and green companies.  Wired didn't try to explain their flowchart very much, but in some ways, Greentechmedia's taxonomy and accompanying article help to fill that gap.

Greentechmedia says that they are seeking an interaction with their readers that will allow the taxonomy to evolve to reflect their readership's knowledge.  If you are interested in sorting out the different strands to the clean/green energy market I suggest you take a look at this and perhaps take them at their word by providing some comments back.

Are Fossil Fuels sustainable?

Sustainable Fossil Fuels : The Unusual Suspect in the Quest for Clean and Enduring Energy, Mark Jaccard, Cambridge University Press, Cambridge, U.K., 2005.

[OK, its not new, but even though its been around for over two years, I wanted to bring this book to your attention because it has helped me to seperate what belongs in this blog and what doesn't.  It addresses some good questions about what we mean by sustainable and what that mean in a practical sense.]

There is no doubt that renewable power, energy efficiency and (most) biofuels  fit within the scope of sustainable energy as defined for this blog.  However, do fossil fuels and fossil fuel providers also belong?  Do they belong in any definition of sustainable energy? 

In his 2005 book Dr. Mark Jaccard focuses squarely on this question.  And he concludes that fossil fuels should be a key part of our future clean, sustainable energy system .... but with strong caveats on their production and consumption.   In doing so he provides some useful criteria for assessing the sustainability, or lack thereof, of fossil fuel providers.

Dr. Jaccard, is part of Simon Fraser University’s School of Resource & Environmental Management and a former Chair of the British Columbia Utilities Commission.  Long an advocate of energy efficiency and renewable power, he admits to a significant shift in his views as a result of his research in recent years. 

This becomes apparent early in the book when he characterizes the current consensus among many with concerns for sustainability and the environment:

“more and more people believe we must quickly wean ourselves from fossil fuels – oil, natural gas and coal - to save the planet from environmental catastrophe, incessant oil conflicts and economic collapse.” 

Dr. Jaccard believes that this view is misguided.  While explaining why he takes the time to point out why our current system is not sustainable, define what a sustainable energy system must achieve and outline what must change to get us there. 

In a nutshell, he argues that with more than 500 years of conventional and unconventional fossil fuel resources available, it would be more cost effective to address the environmental effects of fossil fuel use than to discard their use altogether.  In particular, he suggests that technologies to allow zero-emission use of fossil fuels are possible in the near-future.  By extending our dependence on fossil fuels into the next century, we would be allowing renewable energy sources and alternative energy sources the time needed to address issues with low energy density, intermittency and inconvenient location that limit their use today.

Some might consider his conclusions a slap in the face to efforts to address global climate change.  However, he sets some significant criteria for their continued use. 

“A sustainable energy system must have negligible impacts and risks of extreme events and any negative effects that occur should be ones from which natural systems can fully recover in a reasonable time.”

This is a detailed presentation of the technical issues that will govern our future energy directions and a good antidote to some of the less thoughtful hype surrounding alternative energy investment today.  To make his case more concisely for less patient readers Dr. Jaccard includes a synopsis of the book as an appendix.

While I believe the book to be worthwhile reading and a useful analysis of the issues before us, I think that Jaccard maybe oversimplifying the effort required to get to zero-emission fossil fuel use.  He could also be accused of skating a bit too quickly over the fact that zero-emissions doesn’t mean sustainable.  Mountain top removal for coal and the vast swaths of land affected by oil sands development won’t be mitigated by emissions reductions.

Interstingly, while Dr. Jaccard appears optimistic about our ability to achieve a sustainable energy future using fossil fuels, he closes the book with a much less positive statement about sustainability in general. 

“Unfortunately, however, clean energy is a necessary but not sufficient condition for a sustainable global economy.  Indeed clean and low cost energy would free people to live and travel where they want, and to consume as much as they want, which could intensify the pressure on valued ecosystems and the depletion of other non-renewable resources.  A sustainable fossil fuel future does not guarantee a sustainable human presence on this shrinking planet.”