Cleantech: top talent defines future success

Sven Michaelis

Sven Michaelis Egon Zehnder, Hamburg

Our world thirst for energy fuels every aspect of the global economy. In rapidly developing nations like China and India growing energy consumption and the scarcity of fossil fuels, often accompanied by rising oil prices, have increased the pressure on global energy supplies. The dwindling supply of fossil fuels and the realization of their impact on our global climate have given rise to new ways of looking at energy usage. It has encourage society to improve energy efficiency in general and to use renewable energy sources, namely solar and wind, to satisfy growing demand for environmentally sustainable energy generation.

Supported by governmental initiatives, European countries like Germany, followed by Spain and others, were among the first to drive the development of “green” technologies. Private investors around the world subsequently jumped on the bandwagon as the sector, formerly dismissed by many as unprofitable and idealistic, emerged as a key area of economic growth. And this may even be an understatement. Many experts see cleantech as the sector with the greatest potential to drive the economy in the future. Indeed, the cleantech revolution looks set to transform business and social behavior to the same extent as the advent of digital technologies did, albeit in a different way.

As we know from other sectors that have emerged and grown rapidly like digital media and biotechnology, mastering the transition from a small-sized firm to a player with global presence depends heavily on how companies approach the talent issue. Numerous studies show that top leaders have the greatest controllable influence over corporate value. This calls for a totally holistic approach to dealing with executive talent – something which is not always a priority on the agenda of rising companies facing very specific investment or marketing challenges. But neglecting people issues during this stage is a bad move, because ultimately, sustainable growth is all about retaining and recruiting top talent.

What is cleantech?

Cleantech is the term used to refer to green and clean technologies for efficient energy and resource usage to support the sustainable use of our environment. The cleantech sector is not one distinct group, but rather an array of diverse sub-sectors that encompasses very obvious fields around renewable energy such as solar, wind and hydro power and biofuels/biomass. However, topics like energy efficiency and storage, regeneration and recycling, distribution and cleantech project management, new materials and water are part of the cleantech spectrum. The common thread is that all of these sub-sectors represent technologies, services or products aimed at reducing greenhouse gas emissions and other pollutants, as well as promoting the sustainable use of renewable resources.

New leadership structures needed

With governments like the U.S. and many others now starting to embrace cleantech technologies, hopes for the future growth of the global industry are high. According to the Solar Energy Industry Association, 314 megawatts of new solar energy systems were installed in the U.S. in 2007, representing an increase of 125% versus the previous year. Smaller increases of 45% and 33% were seen in wind power installations and bioethanol production respectively.

Current growth rates are also turning the cleantech sector into a major employer. In Germany alone the number of jobs in the greentech industry is expected to double to over 2.2 million by 2020. Worldwide experts expect turnover in the sector to double to EUR 2200 billion by the end of the next decade. Even the recent financial crisis will not keep the industry from quickly boomeranging back after its first severe shake-up. Cleantech companies nevertheless face the challenges of coping with rapid expansion and greater complexity. Both call for professional leadership structures and new functional responsibilities (such as COO and CSO), all closely and strategically aligned with the very top of the company.

Going global calls for top senior talent

After years of double digit growth rates the global solar industry, however, is now facing a first major downturn. Structural overcapacity, as well as reduced government funding, could herald the first wave of concentration in the European photovoltaic industry. Indeed many renowned producers have seen their stock prices fall sharply as a result of these developments. Market leaders among solar cell producers are now struggling to keep up with competition from countries like China, which have ramped up their capacity enormously in recent years and are now entering foreign markets. Bigger corporates are beginning to invest into CT-companies and integrate them into their business (like ersol Solar Energy acquired by Bosch).

Players in the wind industry, overall much larger than other clean tech sectors, have already started to internationalize their production and sales strategies, a process that has generated billion dollar revenues for some formerly medium-sized companies. Yet regardless of what the future holds, one thing is certain: many of the companies that began as backyard engineering boutiques are now aiming to become global players and their success will increasingly depend on having the right international leadership talent in place.

Seeking sales experience and management skills

Emerging talent trends in the solar industry clearly illustrate the importance of having the right people in place for companies seeking to survive and prosper in an increasingly competitive global marketplace. At many small to medium-sized companies with global ambitions, for example, founders are choosing to step back into a technical executive role such as CTO and hand over operative responsibilities to leaders with greater management experience.

Larger companies, on the other hand, are now looking for leaders from other industries such as semiconductor manufacturing to head their production and operative divisions. It is hoped that these top managers, who have already gone through a similar cycle of boom followed by market consolidation, will bring their experience to bear in the increasingly aggressive solar industry. Tougher competition is also reflected in the growing importance of the sales role in solar companies. In many cases the focus has now swung from allocation of product and technology to marketing and branding; to the extent that the Chief Sales & Marketing Officer now has a seat on the board and is viewed as key member of the inner executive circle.

As the solar sector matures, it is clear that only the most flexible companies that can adapt fast to rapidly changing market conditions will flourish in the future. This, in turn, calls for innovative leaders who can not only identify with the “garage culture” that gave birth to many solar firms, but who also have the vision, skills and experience necessary to turn them into agile, competitive global players ready to face worldwide competition and growing pressure from multi-national corporations.

A holistic approach to talent management

Talent management is crucial. Companies who merely fill leadership positions as and when they become vacant are not acting professionally or with a view to building long-term success. In today’s competitive market, top management skills need to be on the agenda of the executive team. The latter should be evaluated on a regular basis. This allows the CEO and the board to act quickly when crucial management positions need to be filled, or take appropriate action when strategy has to be reshaped and implemented quickly. Alongside these efforts, it is worthwhile taking a closer look at the dynamics and creativity of the top team, which is a key factor for corporate success.

Driven by a vision

The cleantech sector offers a multitude of attractive business and career opportunities. Indeed, many young high potentials, as well as seasoned management veterans are drawn to this industry. As business guru and bestselling author of “Emotional intelligence,” Daniel Goleman, recently wrote in an online article for Harvard Business Publishing, “True ecological awareness involves going beyond today’s business practices of identifying inefficiencies to save money and involves creating a marketplace where ecological impacts of every kind become a basis for gaining or losing market share. Leading this change in the most basic habits of business and industry will require leaders with daring, great vision, remarkable persuasive and collaborative skills and a keen business sense.”

In fact, the most valuable renewable resources are proving to be human energy and personal drive themselves. Let’s make sure we use them wisely.

Sven Michaelis

Sven Michaelis Egon Zehnder, Hamburg

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