Tags: Cleantech, Pacific Northwest
Only a few years ago the searching question for the then emerging Cleantech industry was how the pace of growth in the industry was going to be constrained by the availability of talent. The breakneck speed of the industry and the urgency in driving to a low carbon economy was such that everyone in the industry knew there to be a war for talent. What we have seen over the last five years is that the Cleantech industry has, in fact, been able to attract the talent it needs (the solar sector from semiconductor, hardware, electronics and software; the bioindustrials sector from chemicals, life sciences, ag, etc). In fact, so much so, that we can declare that the war for talent is over! Of course, there will always be short term spikes where demand exceeds supply as when a spate of energy storage companies chase specialists in electrochemistry.
Tags: Carbon cost, renewable energy
In 2009, "sustainability" was all the buzz. Companies such as Woodside Petroleum, one of the world’s leading producers of petroleum and liquefied natural gas, appointed sustainability directors to manage the broader sustainability issues, such as the role of Woodside in the community and its environmental footprint.
But in 2010, the looming economic imperative is carbon, emissions trading schemes and the potential carbon has to impose huge costs on business.
Don Voelte, head of Woodside, understands the necessity to have the right talent in place to manage these risks.
"Issues such as greenhouse gases, the environment and sustainability are like a 1000-piece jigsaw puzzle," Mr Voelte told us. "We need somebody able to manage that entire, integral package - somebody who can put all the pieces together."
""Until there's a global solution, until our other competitors have the same costs that we have to bear, there really needs to be a no net increase in cost,"" Don says.
In a study by the Investor Responsibility Research Center (IRRC), Carbon costs would amount to about 1 percent of earnings for 203 companies, while 71 companies could see their earnings fall by 10 percent or more.
The financial risk to companies in the S&P 500 is likely to vary greatly under a cap-and trade program that requires the purchase of carbon emission credits.
According to the United Nations, "Carbon as an asset is still somewhere in between infancy and childhood."
Fortunately for businesses, we’re finding a few adults out there experienced in understanding and grappling with the issues involved. And, with billions of dollars at stake over the short- to medium-term, a new kind of leader is required – the ""carbon executive,"" an executive with strong strategic and financial skills. They need to have the ability to navigate the complexities of whatever schemes government policy will impose on their operations.
We’re finding executives with these skills in a wide variety of sectors, including banks and financial institutions, consultancies, utilities and oil and gas companies.
And they’ll be well placed to benefit from a global market for carbon credits and offsets that is predicted to be at least US$1 trillion – and maybe double that – by 2020.
Honeywell’s executive training program includes a big focus on flexibility.
As Honeywell chairman and CEO Dave Cote told us recently: "You never know how all of your markets are going to evolve, so you need to place lots of bets in lots of places. Our executives need to be flexible in terms of planning the future."
During the recession, Honeywell continued to work across all of its geographies on improving major processes and continuing its functional transformation plans.
"We deliberately didn’t cut critical R& D or sales teams on the street, so we’d be well-positioned to take advantage of the recovery. We continue to expand offshore. We’ve gone from 40 to 50 percent of our sales outside the United States, but because two-thirds of the world’s GDP is outside the US, we still have plenty of room to grow."
While second-tier companies and organizations without a strong executive bench or executive talent pipeline used the recession to pick up external talent, Cote said Honeywell chose to look deeper internally.
"We wanted to recognize the people who had worked hard and stayed with us and we gave them the opportunity to step up."
Leadership requirements didn’t change in tough times, Cote said. "A good leader is still a good leader, so we are always looking for the same things, people who can be flexible, do the tough things and do them in the right way, people who understand the reality of their market and adjust accordingly. But the ability to do that might become more visible during tough times. It is easier to be a hero during easy times."
We agree. Flexibility and operational excellence go hand in hand. Winning companies of tomorrow will be those to recruit and develop such leaders as a major source of competitive advantage.
Tags: Executive, Operationally Excellent
The age of the operationally excellent senior executive has dawned.
It wasn’t so long ago that management consultants were telling their clients that CEOs needed to be visionaries and charismatic heroes and that those who were merely technically knowledgeable had reached their limits and should probably remain as plant managers.
If this was ever true, it’s certainly not true now.
As a leadership advisory firm, every day we deal with executives who are reinventing their industry through innovation. These new leaders will have built their careers in operations, gotten their fingernails dirty on the plant floor, overseen operations and been immersed in the inner workings of an organization. But they will also have leadership savvy and the business acumen needed to run a large company, based on experience in running and owning P& Ls, divisions or regions.
Traditionally, the path to CEOs has been through finance, sometimes strategy and more often through commercial roles in the sales and marketing streams. But we believe that the industrial companies of the future will be led by more people who have been grounded in the operational side of the business.
More than a third of Fortune 1,000 CEOs have backgrounds in operations. Most developed their opex capabilities in industrial companies where they were rigorously trained in core principles such as Six Sigma, Kaizen, Total Quality Management and Lean Manufacturing.
These leaders drove their companies to perform strongly in the recession and in this still-challenging, post-recession world. They have improved margins, identified efficiencies and even enhanced cashflow and overall profitability.
Organizations including Honeywell, Siemens, GE and Toyota have a strong foundation in training and developing opex leaders. They are investing in their leadership talent as a way of maintaining competitive differentiation.