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10 lessons from VERGE on the new ecosystem of innovation

<p>Convergence of technologies and organizations takes a lot of TLC. Especially C: collaboration, collision, and community.</p>

I had the privilege of moderating a stellar panel on “The New Ecosystem of Innovation” at the recent GreenBiz VERGE conference in San Francisco. My panelists were: Cheryl Martin, Ph.D, Deputy Director, Commercialization of ARPA-e (the innovation arm of the U.S. Department of Energy); Ricardo Angel, Ph.D., Senior Vice President of GE Energy Financial Services; Jim Davis, Director of KPMG’s Sustainable Enterprise unit in San Francisco; and John Argo, serial entrepreneur and incubator specializing in cleantech.

Here are 10 lessons from the front lines of the new ecosystem of innovation:

1. Collaborate, collaborate, collaborate – As Angel put it, “The world is changing and companies are noticing that they need to collaborate with start-ups and other corporates that bring complementary value and expertise.” The example he cited is called Energy Technology Ventures, GE’s 18-month-old joint venture with ConocoPhillips and NRG Energy to deploy $300 million in the energy space, where “The union is much stronger than the three companies independently.” Through ETV, an entrepreneur with an oil-and-gas-related technology that is funded by them can gain the benefit of GE’s oil and gas capabilities, an understanding of the end-user through ConocoPhillips, and can conduct early tests of the technology in the field with ConocoPhillips as well, taking them through the development stages.

In the same vein, ARPA-e has Memorandums of Understanding with Duke Energy, the Electric Power Institute and the Department of Defense, “the largest user of energy in the U.S.,” according to Martin.

2. Ask “if it works, will it matter?”: Martin explained ARPA-e’s focus on “early-stage technology investment with a focus on deployment. And if you’re going to play at the early end of the funnel and focus on the end of the funnel, then you always have to ask, ‘if it works, will it matter?’ ” Is it relevant?

3. “Have knowledge and network”: Martin added, “The reality is that from the entrepreneur all the way through to the customer, you have to have knowledge and network. The entrepreneur has got to know more about what they are investing in than I think they did before, so they can do a better job of transferring their technology” into the marketplace. She asks entrepreneurs, “Where are you going and how are you going to get there?” I’d argue that this applies to corporate executives who have to keep on top of their game as well.

4. Develop new financing models: Davis suggested that “The next wave of innovation is going to take place in the area of finance, and how business really starts to build new business models.” He talked about collaborating with cities and the emergence of the city-states where local leaders are driving innovation with limited budgets. Sustainable cities was one of the VERGE conference themes as well.

5. Spend that cash on infrastructure: Cities have the ability to mobilize resources, but are cash-strapped, and they can collaborate with corporations who are sitting on cash, looking for opportunities. Infrastructure investments can be a win-win-win.

6. Get outside your walls: Whether you’re an entrepreneur with a “great idea that will change the world,” or a corporate executive charged with keeping your company competitive, Argo stressed that “at the end of the day, it’s up to you to “find honest answers… and start vetting your ideas, trying to find collaborators and validators.”

One place to find new ideas is at incubators, such as those that are members of the Clean Energy Alliance (CEA), the national association of clean-energy incubators. Incubators are organizations that mentor and support burgeoning businesses, often with support from government or other outside funding. Angel talked about staying in touch with incubators as a way to build relationships with promising entrepreneurships as they grow through the early stages. “I am a big fan of incubators and business plan competitions. At that early stage of development you start to see what’s promising and going to be coming down the road in the next 18 to 24 months. So, if those entrepreneurs want my point of view, I’m happy to lend a hand, and keep in touch until it’s the right time for me to invest.”

Next page: Everybody needs to be challenged

7. Be realistic: Since the economic downturn, evaluations are more realistic. Corporates and venture capitalists are waiting for breakthrough technologies, what Angel called “revolutionary technologies,” but the numbers in general are lower than before the recession.

8. Leverage sustainability reporting systems: As Davis pointed out, “what gets measured, gets managed,” and sustainability reporting helps build the business case for sustainable business practices, “running it through the enterprise risk management system to really help understand what is most material to the company, what really drives performance in these areas, and how we can put programs in place where we can actually measure financial results.” This includes the opportunity costs: “What opportunities are you missing in new markets that are being created?”

9. Have a “diversity of thought”: “When I think about moving ideas forward, no matter what you’re thinking about…you need a diversity of thought,” Martin suggested. Everybody “needs to be challenged” by those who think differently from them. “If you don’t have a lot of different viewpoints around, you’re going to be less valuable than someone who does. So, we can take it to gender, or race or background, education level, or part of the country, but the more you get out there and get that breadth of perspective the better off you’re going to be. No matter what you’re trying to do … I think we do need to have more people out there talking about what they did and how they got there, the more you see that you can succeed in a variety of ways, they picture themselves in that forward future.”

10. Build your own ecosystem: “You can’t be fed this stuff … you have to get out there and figure out what you need and build that personal ecosystem.” Argo added in an email, “Particularly in energy innovations, the real deficiencies are effective strategies to instill a culture of a resourceful explorer, to provide practical tools for navigating…with minimal resources and assistance, and cultivate the survivor's instincts needed to be successful. Traversing that (terrain) takes place outside of the lab or workshop walls, where entrepreneurs need to build their own, tailor-made ecosystems.”

Everyone needs their own ecosystem, whether you work in a corporation, an academic institution, in government, as an entrepreneur, or in the media.

It reminds me of Tony Hsieh’s presentation on the second day of VERGE. The CEO of Zappos said it’s all about “collisions, community and co-learning.” He said Zappos measures “return on community.” Building our own personal ecosystem requires regularly getting out and having “collisions” with new people with whom you build “community” and “co-learn.”

Photo by Goodwin Ogbuehi/GreenBiz Group

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