Creating a Roadmap for Finnish Clean Tech
Professor Peter Adriaens is used to thinking outside the box. About nine years ago, after a long career specializing in biodegradation and bioremediation, he made a career shift from focused environmental research into bridging environmental engineering with entrepreneurial business development and finance. Today, he is a professor in the Environmental and Water Resources Engineering (EWRE) program as well as a professor of entrepreneurship and strategy in the Ross School of Business.
His work goes far beyond traditional academic work, and beyond the borders of the United States. He is a co-founder of the Global CleanTech Cluster Association, comprised of 52 clean tech-focused economic development clusters and more than 8,500 companies around the world.
Clean tech is an investment category comprised of new technology and related business models that offer valuable returns for investors and customers while providing scalable solutions to global challenges. Clean tech addresses the roots of ecological problems with new science, emphasizing natural approaches such as biomimicry and biology.
Adriaens is on sabbatical with the Research Institute of the Finnish Economy (ETLA) to work on a research project funded by the Finnish Innovation Fund, titled, “Towards Sustainable Positioning for Value Capture and Investability - A Roadmap for Finnish Clean Tech.”
The project lays out a roadmap for strengthening the competitiveness of the Finnish Clean Tech sector. The map marks a path away from the linear value chain model that is characteristic of Finnish Clean Tech and towards an adaptive, value generation- and renewal- driven business ecosystem model. The project’s tagline is ‘Financial Innovation for Industrial Renewal’ – hence, the objective is transformation of the country’s legacy industries into green economies.
In a collaborative effort with several business development, industry, and financial organizations, Adriaens will determine the current value capture capabilities and investability of Finnish Clean Tech companies. This dictates how much of the generated value is actually captured by the companies, and what type of investment model is needed to build and scale them. He will analyze how these capabilities would be improved by a transition to an ecosystem-based portfolio model and draw a road map that will guide and facilitate the transition.
Adriaens explains how the research team will guide the transition:
“Traditionally, investment portfolios are based on a mix of bonds, equities, and either private companies or real estate to result in a certain return: risk profile. Usually, all companies in the portfolio are minimally correlated in their performance such that when one company goes down, it does not take the entire portfolio along. A portfolio needs to be diversified. In the Finland project, we're using companies that are potential participants in these green value ecosystems, and structuring a portfolio around them. The portfolio will be a mix of public companies (e.g. Nokia and others), small and medium enterprises (SMEs), and small entrepreneurial technology firms, to drive specific new industries. Three examples will be demonstrated: smart grids, green chemistry, and adaptive environmental sensing.”
Since the research is overseen by an external advisory board that includes industry groups, pension fund and private investors, the Ministry of Labor and Economics, the Ministry of Finance and the Innovation Fund, there are a lot of opportunities to test the model.
“Components of the transition include national workshops, an international TEDx event, a book on the roadmap and 'engine' behind the model, and a pilot demonstration with the European Investment Fund and the P80 Group (comprised of the World’s 80 largest pension funds). If successful, the model is exportable. Singapore, Ireland and Switzerland have expressed interest to implement the Finnish model.”
During his time in Finland, Adriaens has had a chance to see how their socialized government system works.
“You don't see the extremes of income disparity as in the US; government influence is seen from public services to investment models. The impact of the socialized system is that 'you're taken care off.’ For example, I receive lunch vouchers for every day of the month (worth $15) to go eat anywhere in the city. The government involvement results in everything being over-specified, and taking longer than in the US - lots of red tape. Overall, it is pretty easy to find your groove and work with the system.”
One of the must-haves of Finnish life is the sauna.
“My apartment bathroom has a sauna, the office has a sauna, restaurants have saunas - and all their vacation homes are equipped with saunas. Socials at work involve a sauna and beer, followed by dinner. Taking a week off means going to the vacation home to build/rebuild the sauna. More varieties than one could think possible!”
Even though Adriaens’ sabbatical will be finished in December 2014, the project runs until mid-2016.