Innovation Process for Scientists and Engineers



ENGR 521– CleanTech Entrepreneurship

COURSE NUMBER: ENGR 521 Instructor: Peter Adriaens, Ph.D., P.E.

Fall 2011 Phone: (734) 763-8032

TTh 4:30 – 6:00 PM E-mail: adriaens@umich.edu

1121 LBM (after Fall Break: Ross TBD)

Overview

CleanTech Entrepreneurship encompasses technology, service and business model in innovation in the energy, water, transportation, building, and IT management space. Historically, technology revolutions have emerged in times of economic austerity on a roughly 50-year cycle. From cotton, to steel, to transportation, plastics, biotechnology and information technology over the last 200 years, the last five years has seen the growth of a nascent area of social and economic value creation. Global policy initiatives are catalyzing research and development to build a clean energy future through next generation plug-in hybrid cars, renewable energy and energy efficiency technologies, smart grid innovations, and market-based instruments to manage energy emissions. This opportunity has accelerated corporate innovation, as well as investment in entrepreneurial startups in the CleanTech space. Ultimately, acquisitions and public offerings allow these new companies to create value in the corporate environment.

Innovative companies, both new and well-established, accelerate their growth by transforming sources of innovation, such as new knowledge, into valuable products and services. It is therefore imperative that researchers understand how to communicate the value of their work in the decision-making framework used by corporate managers. Understanding the business framework beyond “cost” is key to both creating value for the organization—from small entrepreneurial to large corporate organizations—and having that organization understand the value of your efforts. Transcending from a “cost” to a “value” proposition requires understanding and quantifying how the elements of your efforts impact revenue, top line effects. The entrepreneurs’ challenge is to identify early whether the venture is positioned such that it has the potential for maximum value creation.

As a thread throughout the course, we will track A123 Systems () as a venture from a strategic and financing perspective, and assess its value capture and sustainable competitive differentiation potential.

Course Model: In CleanTech Entrepreneurship, we introduce you to technology-based business ventures in the CleanTech space. A project is required whereby teams will work with startup companies in a wide range of CleanTech domains, take apart their business model and product positioning, rigorously assess the company’s strategy, and reposition their products for competitive differentiation.

The class format is unlike a typical engineering problem solving class, is highly interactive and multi-disciplinary, and is centered around a real life project/company. This team-based project is focused on applying and integrating strategic, finance, and marketing tools to assess and reposition startup companies. Because entrepreneurship looks ahead at creating new markets, we will focus on what is happening now, and therefore be informed by blogs and other leading on-line resources.

The perspective provided in this course will be valuable for students that are both looking to form or join startup companies as well as for those that are looking to create corporate value via industrial research. Students will learn to develop business strategies along the value chain of this nascent growth opportunity. They will be provided strategy, financial and marketing tools to screen cleantech ideas/ventures and formulate a testable business hypothesis (revenue capturing model).

ENG 521 CleanTech Entrepreneurship

Course Materials

This course will use a leading blog, GreenTech Media (), a CleanTech Business Intelligence site (), and free content of Environmental Finance (), in addition to a select number of engaging and informative readings posted on CTools, as well as business cases. The cases can be purchased from Harvard Business OnLine.

GRADING STRUCTURE

The grading will be based on the following metrics:

Homeworks (or in class assignments): 10%

Class participation (particularly being prepared for and participating in case discussions): 30%

Midterm and final project report: 40%

Project presentation(s): 20%

Primary Instructor: Peter Adriaens, Ph.D., P.E., BCEEM

Dr. Adriaens is a professor in Civil and Environmental Engineering - Program of Environmental and Water Resources Engineering, and professor of Entrepreneurship and Strategy in the Ross School of Business. His research emphasizes industrial sustainability issues and corporate value creation along the water-energy nexus (). On the business development side, he is president of Global CleanTech LLC, and is Director of Asia Operations for LimnoTech (), an environmental engineering consultancy serving public utilities, private corporations, and the financial services sector. On the investment side, Professor Adriaens serves as CleanTech Advisor to the Wolverine Venture Fund and Frankel Fund, is a Director of CleanTech Acceleration Partners (), a buyers side acquisition firm, and Global Head Judge to the Global CleanTech Custer Association (GCCA), ‘The Global Voice of CleanTech’.

Guest Lecturer: Tim Faley, Ph.D., MBA

Dr. Faley is the managing director of the Zell Lurie Institute for Entrepreneurial Studies and Adjunct Professor of Entrepreneurship. He was formerly the director of technology transfer for UM’s College of Engineering. Prior to his arrival at UM, he spent 15 years with the Dow Chemical Company, his last assignments being in technology licensing and corporate venturing.

SYLLABUS

Part I. CleanTech Investment Domains

Tue 9/6 Course Introduction: CleanTech in ‘11

Topics:

CleanTech Scope and Status

Course objectives and metrics

Readings:

The State of CleanTech Investments: CleanTech Investment Monitor

Adriaens, P. 2010. Leading Innovations: CleanTech. Published in: Encyclopedia of Sustainability, V2: The Business of Sustainability (Birkshire Publishing)

Th 9/8 CleanTech Systems and Technologies – A Value System Approach

Topics:

Value System: Transactions and the power of leverage

IP Positioning: What do you have - what do you need?

Externalities: Policies, corporate strategy and the venture environment

Readings:

GTM - The Solyndra Story

Hargadon: A history lesson for the cleantech revolution (CTools)

How to Jump-Start the Clean-Tech Economy (R0911D-PDF-ENG)

T 09/13 CleanTech 2.0: Business Model Innovation - Investor Perspectives

Topics:

Business model: How do you create and capture value

What does the money want? Working from ROI (or other economic driver) expectations

Readings:

The Role of Corporations in CleanTech: Investments and partnerships (CleanTech Group)

China Environment Fund: Doing Well by Doing Good (410142-PDF-ENG)

Th 09/15 CleanTech Adoption Policies

Topics:

Direct and indirect subsidies

Tariffs, taxes, and carbon markets

Readings:

CleanTech Investment and Policy (CleanTech Group, 2007)

FERC and feed in tariffs (news article)

T 9/20 CleanTech Domain 1. Electric Vehicles

Topics:

Value system

Technology/process innovation

Business models

Readings:

Li-Ion Battery Value Chain in the US (2010)

'Plugging In' the Consumer: The Adoption of Electrically Powered Vehicles in the U.S. (510076-PDF-ENG)

CleanTech and the Future of GM

Th 9/22 CleanTech Domain 2. Batteries and Storage

Topics:

Value system

Technology/process innovation

Business models

Readings:

Energy Storage Industry: Overview and Segmentation Analysis (CleanTech Group, 2011)

T 9/27 CleanTech Domain 3. Biofuels

Topics:

Value system

Technology/process innovation

Business models

Readings:



GTM research paper on next generation biofuels (CTools)

The promise and challenges of algae biofuels

Th 9/29 CleanTech Domain 4. Solar Energy

Topics:

Value system

Technology/process innovation

Business models

Readings:

HBR Case #: IB98-PDF-ENG: Nanosolar 2009

Khosla on thin film solar/IEA technology roadmap

T 10/04 CleanTech Domain 5. Wind Energy

Topics:

Value system

Technology/process innovation

Business models

Readings:

IEA wind technology roadmap

US small wind technology roadmap

Th 10/06 CleanTech Domain 6. Smart Grid

Topics:

Value system

Technology/process innovation

Business models

Readings:

A Grid for Green Energy (MIT Technology Review, Jan/Feb 09)

IEA Smart Grid Road map 2011

T 10/11 CleanTech Domain 7. Water

Topics:

Value system

Technology/process innovation

Business models

Readings:

IBM Global Innovation Outlook Report

Ontario 2011 Water Summit Takeaways

Th 10/13 CleanTech Domain 8. Green Buildings and EcoCities

Topics:

Value system

Technology/process innovation

Business models

Readings:

Scientific American Earth 3.0 (2008): Eco-Cities: Urban Planning for the Future

IAE building technology roadmap

T 10/18-Th 10/20 Fall Study Break + Midterm

Th 10/25 Global CleanTech 1. CleanTech Innovation and China

Topics:

Overview – venture investment in CleanTech

Competitive differentiation in China

Reading:

The Rise of Homegrown Cleantech Innovation in China (CleanTech group report

China: First country-wide feed-in tariff for solar power

T 10/27 Global CleanTech 2.

Case Study: LimnoTech China: For cleantech entrepreneurs, is China a pot of gold or giving away the golden goose? Prepared by Cameron Smith and Xiaolu Zhao for Professor Peter Adriaens.

Part II. CleanTech Investment Strategies (MBAs join: ES 520)

T 11/01 CleanTech 2.0: After the Gold Rush - Trends

Topics:

CleanTech investment paradigm

Drivers for the green economy: Policy, pricing signals and investment

Trends

Readings:

EcoRadar 2011 – a Global Perspective

CleanTech Group 2010 Annual/Q311 report

Th 11/03 CleanTech Finance. 1. Overview

Topics:

Overview of the value-creation perspective

Valuation, capitalization tables

Readings:

Risk and Reward in Venture Capital (811036-PDF-ENG)

T 11/08 CleanTech Finance. 2. Case Study

Topics:

Cost/sources of capital

Valuation and investment structure/metrics

Reading:

fortu PowerCell GmbH (805159-PDF-ENG)

Th 11/11 Investing in the EV Value System

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

The Connected Car, Inc Magazine (November 2009)



Guest Lecturer:

Oliver Hazimeh, Director and Head of the Global e-Mobility Practice at management consulting firm PRTM (Confirmed)

T 11/15 Live from London: Climate Investment Strategies

Th 11/17 Investing in Energy Storage

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

Energy Storage Industry: Overview and Segmentation Analysis (CleanTech Group, 2011)

Energy Storage Investing – Seeking Alpha 2011

T 11/22 Investing in the Biofuels Value System

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

Amyris Biotechnologies (E331-PDF-ENG)

Investing in algae biodiesel (CleanTech Group)

Th 11/24 Thanksgiving Break

T 11/29 Investing in the Wind Power Value System

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

HBR Case #: 905A04-PDF-ENG: Wind to Energy: W2E

Guest Lecture:

Jeff Peterson, GoldWind USA Inc. (confirmed)

Th 12/01 Investment in the Solar Energy Value System

Topics:

Technology basics and alternatives

Technology and strategic drivers

Challenges and investment momentum

Readings:

SunTech Power Holdings A (Pre-IPO; E347A-PDF-ENG) and B (Post-IPO; E347B-PDF-ENG)



T 12/06 Investing in the Water Value System

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

The State of water Innovation (Mia Javier, Veolia Innovation, Confirmed)

2011 Ontario Water Summit – Key Takeaways

Th 12/8 Investing in the Smart Grid Value Systems

Topics:

Capital allocation

Business models

Policy uncertainties

Readings:

Bloomberg Business Week smart grid article

Smart Grid Notes Q3 2010, CleanTech group



Th 12/13 Project presentations

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