What Should Innovation Look Like In The Race To Net Zero?
Courtesy : forbes
What Should Innovation Look Like In The Race To Net Zero?
Solar Impulse 2, the solar-powered plane, is seen over the pyramids in Egypt during its … [+]
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The word innovation is overused in business and economics. This is probably because few people are against the idea. It’s a word which conjures up thoughts of human ingenuity, new discoveries, and improvements to our lives. Innovation is what human beings have been doing for centuries and will continue to do as we seek new technologies to advance society.
But it’s worth taking a step back and considering not only what we mean by innovation, but how we want innovation to be tailored to fit the climate emergency.
We face a serious challenge to transform our economies and cut emissions to zero within a generation. Not only do we need to make sure that our research institutions are up to the challenge, but that they are appropriately funded. In the U.K., only 1.7% of the country’s GDP goes into R&D spending. And within this only a fraction, about £0.2 billion, is spent on energy (including water). Aerospace has long been the industry of choice in the U.K. and continues to be one of the winners; latest figures show that, in 2018, the sector undertook R&D worth £1.7 billion, with government in part supporting the effort.
The U.K. lags behind other developed nations for innovation spending. The average across the OECD is 2.4%. Germany spends 3.1%, and the likes of Israel and South Korea reach an astonishing 4-5% of GDP. The U.K.’s position is hard to marry with a commitment to reach net-zero emissions. This needs to change quickly. There is little use in considering the nature of innovation if we are doing so little of it.
For some business leaders innovation is not about new ideas and discoveries. Instead, it’s about efficiency savings and productivity. This is lazy thinking. If we don’t put ambition at the heart of innovation, then we erode the meaning of the word. We fall back on thinking it’s about improving the number of baked bean cans which come off the factory conveyor belt. Innovation is about tackling big ideas and problems. Growing populations, climate change, Covid-19 and future pandemics — we won’t solve any of these with more baked bean cans.
People are often astonished when they see what human beings can achieve when they act like they are in a crisis. Living under the chaos of coronavirus has been a clear illustration of this fact. Consider the F1 teams which started manufacturing ventilators, or the vending machine companies which switched to supplying PPE. Add to this the miracle of developing multiple new vaccines in a matter of months and we are starting to see what innovation can really do.
As Europe starts to recognize the fundamental changes needed to create net-zero systems, innovation will play a central part. Solar and wind power will form the backbone of our future zero-carbon energy mix, but that doesn’t mean we are done innovating with renewable technologies. Marine, floating wind, and green hydrogen could make huge strides with the help of dedicated research teams. And couldn’t the aerospace industry use some of that government funding to invent an aircraft so energy efficient it can fly around the world using only the power of the sun?But innovating to net-zero emissions isn’t just about new technologies, it’s about rethinking how the energy system works and creating new marketplaces to support consumers. The Committee on Climate Change, set up to advise the UK government on reaching its climate targets, estimates that over 60% of the measures to reach net-zero in the UK will need behavioral or societal changes.
Not only is including consumers the right thing to do, it’s urgent and necessary. We need innovation to support the creation of a smart energy system where our homes are enabled to become mini power plants. Smart technologies will allow households to use clean power from solar panels, store it in an electric vehicle, or battery, and send back to the grid at times of low demand.
We need to make sure new policies and regulation encourages this form of imaginative innovation, and doesn’t lead with efficiency, or maintaining the status quo. Making more and doing more of the same thing won’t help us create tomorrow’s net-zero society, even if we all love baked beans.
How New Zealand’s Fastest-Growing City Is Building A Digitalised Future
Behind the bustling streets of Tauranga, New Zealand, a local authority responsible for everything from parks and roads, to water, libraries, and everything in between, has launched the foundation for the city’s digitalised future.
When Tauranga City Council members at the helm of this fastest growing city in New Zealand decided to modernize a 20-year old ERP system, they were fully aware of the challenges they faced in meeting the evolving needs of a burgeoning community. With a population of about 155,000 people and counting, Tauranga is the fifth largest city in the country.
Cities and towns of all sizes are digitalising finance, procurement, and other systems, connecting data and departments to better meet the needs of citizens.
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“Tauranga is growing quickly and we need to think differently about how and where we live, and how we manage the existing and increased housing and infrastructure requirements of our growing city,” said Scott Oehm, head of digital delivery at Tauranga City Council. “Equally important is the need to increase community engagement, getting the community more involved in the decisions that affect their daily lives.”
Modular strategy makes digital journey easier
At the heart of Tauranga’s ambitious digital journey is SAP S/4HANA, which has fostered greater collaboration, transparency, data reliability, and change management across administrative operations. As the local authority responsible for the administration of property rates − otherwise known as taxes − as well as charges for water use, along with managing recreational spaces, plus other license and regulations, the Council opted for a phased-in system update, beginning with finance.
“Having a modular strategy to upgrade our legacy ERP systems is making the transformation much more manageable,” said Oehm. “With this initial roll-out across finance, people in each business unit and the larger community we serve are receiving the benefits of greater collaboration and transparency.”
Measurable results prove value of digitalisation
Already the impact of the new system is palpable. People on the financial team have become more strategic working alongside other business units to improve budgeting, offer valuable financial insights, and increase internal collaboration.
Oehm said that with greater visibility into more reliable data from automated processes, the council can better meet community expectations for transparency and accountability from local authorities. What’s more, the financial team has significantly sped up monthly and year-end processes and project reporting. Automation reduced manual processing tasks for financial analysts by 25 percent, and time spent on capital project reporting by 30 percent.
Going digital also brought more rigor to processes like procurement. Now people are required to obtain up front approval for any expenditures, simplifying procurement while meeting financial standards.
“This project has been very much business-driven, allowing managers and administrators to focus on and drive the results they want to achieve,” said Oehm. “Because the system touches nearly all business groups within the organization, everyone had some input. Working together, the team has realized huge efficiency gains.”
Digital sparks cross-team collaboration for continuous learning
In an unexpected bonus, the “champions”, subject matter experts, and user groups originally created as part of the SAP S/4HANA finance project have morphed into de facto change management teams. Some still meet regularly, not necessarily to talk about SAP solutions, but how they can help each other create further efficiencies.
“In sharing what’s worked and what hasn’t worked, people are continuously learning from each other,” said Oehm. “These aren’t just managers. We’ve empowered administrative staff to work together to find the best outcomes for the organization. People can problem-solve themselves, and also be a source of ideas for IT to make improvements over time.”
Connected ERP platform is strong foundation for growth
Oehm saw SAP S/4HANA as the foundation supporting the city’s growth beyond the finance team to include property ratings and community relations. He said that property ratings constituted the bulk of the city’s revenues, and community relations were integral to multi-cultural relationship building.
“We now have an iterative system to track solid financials and ensure good processes without overwhelming our people,” he said. “We can move at our own pace, evolving the system as city and organisational needs grow, supporting quality of life for an influx of people community-wide.”
Key Issues in The Founder Investor Relationship – And How To Overcome Them
Honeywell Director, Giancarlo Savini
GIANCARLO SAVINI
The relationship between founders and investors can often feel like walking a tight rope. There’s a delicate balance to be found in how much or how little an investor should be involved in the startup’s business beyond investing funds.
It’s a relationship that can often get sticky, with startups left with hopes dashed when promised support beyond funds fails to materialise. Conversely, investors may be disappointed when advice or other support isn’t adhered to or accepted by the startup.
Cleantech investment Director at Honeywell, Giancarlo Savini, is well aware of these potential investing pitfalls. To overcome the key issues, he has taken steps to revolutionise the definition of responsible investing by setting up a contractual framework that pre-agrees exactly what the relationship will look like and how it will support the climatetech startup through a partnership beyond funds.
“It’s a new theme that’s emerging. A lot of VCs are moving in that direction, developing partnerships and business development teams to tangibly help their portfolio companies. Even Sequoia Capital started to move in a similar direction. They created a team called customer partnership,” says Giancarlo.
“The most successful VCs are now deciding they want to further develop customer partnership and help their portfolio companies establish stronger relationships with their clients – that’s kind of telling as to how important it is.”
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However, Savini explains, the reason why pre-agreed partnership contracts often don’t happen is that a lot of corporations aren’t structured in such a way to be able to bridge the gaps in business or product development that a startup may have.
It’s also “a lot of hard work and in the early stages of investments, maybe when it’s yet not clear what the real potential of the relationship is,” says Savini.
For the ideal founder-investor partnership, he says the investor needs to spend some time understanding the skills and capabilities of startups: “it’s quite simple because these companies have 4 –15 employees, you can see where they are experienced and where they need some help to match their skill panel.
“For example, if the venture and the startup are synced in product development, maybe what the corporation can do is to establish a relationship with them to help them develop the technology.”
Honeywell approaches investments by pre-agreeing partnership contracts and licensing agreements with the entrepreneur that map out how the investor firm will support the startup for years to come.
“Through a pre-agreed partnership framework, the CEO has a clear idea of exactly what to expect in the partnership we are offering.
“We co-create a partnership where we clearly frame, for the next 10 years, exactly how our partnerships can support their specific company’s growth – what support we will offer them beyond sole investment.
We’re not here to learn and take information– we can work with a startup to complement their strategies and improve their speed to market.”
His advice to climatetech startups pitching for investment is to be focused in targeting your initial market segment and developing your strengths.
“A lot of companies are running around with different value propositions in different segments in the market, and that is wasting a lot of effort.
“It’s still a maturing market – but by trying to target lots of clients at the same time companies are diluting their strengths. Once you break into the market, you can expand into a different segment,” says Savini.
And while there’s no ‘silver bullet’ to transforming the investor-startup relationship, putting in a bit of extra work to formalise all aspects of the relationship at the start of the investment contract can go a long way to creating a satisfying and successful business relationship.
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