The Renewable Energy Business -- Defining Your Core Competency

Each week, half a dozen or so people write into us at 2GreenEnergy from all over the world wanting some level of help with clean energy ideas. Normally, "help" means "funding." It’s true that we’re connected with a team of boutique investment bankers in Manhattan, and that we routinely pass the business plans that seem most solid to us along to them.

But I have to confess that I have a morbid fascination with the business plans that I consider to be fatally flawed (plans that, of course, I do not pass along).  I've even developed a private set of categories for them.

First, there are the clearly specious ideas in terms of basic physics, e.g., a wind turbine that ostensibly captures three times as much energy as the conventional three blades. Wrongo, sir; this is not possible, since the conventional system already harvests approximately 60% of the wind "flux," i.e., the wind passing through the circle defined by the turning tips of the blades. 

Then, of course, you have perpetual motions machines, of which we receive at least one per month. This category is actually composed, in my mind, of two sub-categories: "crackpots" (i.e., people who seem to believe their story) and "charlatans" (i.e., people who don’t).

The other broad category of fatally flawed plans includes those who have clearly bitten off more than they can chew. They’re inventors who have no sense whatsoever that the hard work is just beginning – perhaps a guy with a legitimate breakthrough who somehow thinks that all the R&D, marketing, manufacturing and distribution are minor afterthoughts.

I sometimes find myself giving someone news that I’m quite certain he’d rather not hear, e.g., "Your concept could change the world. But there is one problem. You’re a visionary …. but you’re not a businessman, nor a financier, nor a patent attorney, nor a human resources executive, nor a manufacturer, nor a distributor. Let me ask you to consider a simple solution, employed by smart people all over the world: sell or license your idea. Let me help you sell it to a large, fully funded organization that wants to bolster its position technologically and gain further competitive advantage. Or let’s talk about setting up a carefully protected licensing relationship with a large enterprise with established manufacturing practices and existing, well-supported distribution channels."

It’s really the concept of core competency that came into vogue in 1980s. Do what you’re good at. Don’t limit your success by turning a personal weakness into a gating factor to your company’s progress.

And in no place is this rule more applicable than in the world of clean energy – destined to become soon a multi-trillion dollar industry. If you can cut a licensing deal for your technology that captures a millionth of that market, you’ll be doing just fine.