Clean Tech

Partner:  Stephen Crolius

Clean-tech companies seeking footholds in traditional markets for products with superior environmental performance face a common hurdle.  Despite offering environmental benefits relative to existing technologies, the companies’ lower production volumes push their costs to uncompetitive levels, and high selling prices prevent gaining the volumes needed to become price competitive. This raises the ante, as large investments in market development and production optimization are necessary to carve a space in the competitive arena.  However, our work suggests that many companies miss a key opportunity: to enlist the public sector and other constituents of civil society to share in the investments and rewards of early adoption.

The most critical strategic considerations faced by clean-tech companies fall into three categories:

  • Trajectory.  Many essential questions are bound together in this concept:  How soon can a clean-tech product find widespread market acceptance?  What circumstances might allow it to do so?  Is acceptance contingent on regulatory action?  Or does industry have the power to create a market opening through its own actions?  Could unilateral action by a single company succeed?  Would governmental support or subsidy accelerate the process, and, if so, what type of assistance is most effective?
  • Transition.  Careful management of the transition process is essential when a company develops a clean-tech product as a replacement for a conventional analogue.  The optimal approach involves a complex set of considerations, including maintenance of existing production assets vs. investment in new ones; the defense of existing market share vs. the chance to go on share-acquisition offense; and how to market the clean-tech version without morally undermining the conventional one.
  • Advantage.  Product managers may find the process of establishing a clean-tech product in the marketplace so challenging that they give little thought to the foundations for eventual competitive advantage.  However, the time to formulate this aspect of strategy is “the earlier the better”.  Further complicating the question is the idea that the basis for future advantage must be maintained even while cooperating with prospective competitors during the early stages of market development.

Our Capabilities

We approach all of these topics with a deep grounding in the principles of business strategy and an up-to-the-minute awareness of the trends driving clean-tech industries.  We bring a strong technical orientation, grounded in both science and economics, to the assessment of products and production processes and how they can create value for customers and advantage for companies.  We work with clients to boil the challenge down to its essentials, illuminate opportunities, characterize the rewards for success, and develop plans for action.

Stephen Crolius’ return to Alliance, after six years with the Clinton Climate Initiative, gives us a unique perspective in this area.  Stephen has spearheaded work that is shaping markets in the transportation, energy, and building products sectors.