Wednesday, June 3, 2009

Clean Tech: Call It Like It Is! ............. (part 1 of 3)

Ever since I decided to slap the label "clean tech" on my consulting and advisory practice, I find myself having to explain what ON EARTH I mean by that. And apparently it's not just the people in my immediate circle who find the term confusing. Recently I had the opportunity to attend a panel discussion with several very sharp Silicon Valley investors with (naturally) strong opinions on technology trends. Some of their comments about clean tech truly resonated with me, questioning whether it was the right term to describe what's really going on. So I figured I may as well launch my blog with some basic definitions.

So let's get started:

1) What's the problem with the term clean tech?

2) Why can't the intelligent, articulate, and passionate people who care about this issue come up with a better term?

3) Should we fix it, and if so, how?

The Problem

The term clean tech--or cleantech, or greentech--may sound cute, but, upon reflection, is very confusing. Typically one would expect, when talking about a huge business "space" like cleantech--which calls for dramatic investments--to see

  • a market, defined by a common customer need (e.g., "entertainment"), or
  • an industry, defined by a common technology (e.g., "electronics").

Which one is clean tech?

Evidently, neither. "Clean" suggests a desire to have a clean environment (a need)--but are CUSTOMERS really willing to pay multiple billions of dollars for "clean" or "green" vs. other solutions? "Tech" sounds like a product--but is this space really defined by common technology products? Actually, the technologies involved are extremely varied, and many of the solutions are very low-tech (and have more to do with econonomics, business models, etc.).

In effct, it seems that "cleantech" was designed as a hybrid (pun intended):

  • It's "clean"--so environmentalists and everyone who watched "Inconvenient Truth" (myself included) should be happy
  • It's "tech" (ostensibly high tech)--so investors should fund it and politicans should like it.

So, unfortunately, "clean tech" is a highly confusing term. It's neither a need, nor a solution; it provides little clarity (for example, what would be EXCLUDED from this space). Why are we using it then?

The Root Cause

The overall intent of "cleantech" seems intuitively obvious: The desire to provide a healthy, safe, productive place for us (and generations to come) by making the most efficient use of our shared natural resources (like air, water, and land). But at this level, this sounds like a political campaign or a social movement for sustainability--not like an industry or a market; more important, not like something where VCs should invest.

Indeed, the term "sutainability" seems to not be in vogue anymore, for exactly this reason. Terms like "climate change" or "global warming" were supposed to somehow fix that, but people seem to have grasped that these are just euphemisms for the good ol' "sustainability." So what is one to do? Enter CLEAN TECH.

The confusion surrounding this term is not a coincidence. Many years of consulting and strategy work have taught me that confusing terms tend to stick around when someone has something to gain--economically or politically--from the confusion. As I'll show next, the loose terminology of "cleantech" bundles segments which are very different in their attractiveness to business and public policy; this bundling raises the desirability of the less-viable propositions in the mix.

The Solution?


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