Archive for green innovation
At the Marcus Evans Innovate 2014 Conference in Shanghai today, I met Rosalie Wu, the head of marketing in China for the rapidly growing startup, Uber. Rosalie was Uber’s first hire in China and exemplifies the energetic, entrepreneurial spirit that is driving Uber to global success. She spoke about the development of Uber’s innovative business model and the many innovations they continue to add in their unique approach to “glocalization,” wherein a company going global adapts its products and business model to the unique constraints and opportunities of each local market. I see Uber at the poster child for sound and innovative glocalization.
Uber began when one of its founders and first CEO, Travis Kalanick, attended Le Web in Paris in 2008 and struggled to get a cab in snowy weather. He realized there had to be a better way to use the free market to solve the basic problem of getting a ride. His passion for solving this problem resulted in forming a San Francisco start-up that began in 2010 with a mobile app for ride sharing in San Francisco. Today they offer a refined and clever business model with services in over 200 cities. Beijing was #200, and Uber is marching rapidly across China and other parts of the world. Rosalie’s enthusiasm for Uber is contagious and really stirred the audience here at the Hongqiao Marriott Hotel.
Uber’s business model innovation includes systems for registering, insuring, and rating drivers. It offers flexible pricing that helps tap the power of the free market much better than conventional taxi pricing and taxi systems can. With Uber you can select quality drivers and have simple, positive experiences getting to where you need to go when you want to be there. The business model is being extended with many other innovations such as delivery of products and even services (in China, they have even offered the service of having a traditional Chinese lion dance sent to be performed in your office). The innovate their offerings to meet local needs and adapt to local regulations and customs, while finding clever ways to continually make people’s lives better. This will inspire the competition to do more and bring ongoing innovation that will benefit us all. Amazing what a bad snowy night can do when an innovator is around.
Less than a year ago, Uber was valued at over US$3.5 billion. A few months ago in 2014, Uber was valued at around $17 billion. This is the power of doing something that brings people together in new ways.
Uber has faced and overcome a host of innovation barriers. Funding challenges, regulatory burdens, and stiff competition. But they have forged ahead with a relentless focus on making life better for its customers with green, energy saving, disruptive innovation . May the path before them remain wide open. Kudos, Uber!
In a previous post here, I reported a huge loan to a Chinese paper company backed by its mostly Chinese IP as collateral. The 8 billion RMB obtained by China’s Tralin Paper (Quanlin Paper in Chinese, though they use www.tralin.com for their website), one of the biggest IP-backed loans in the world, not only shows that Chinese IP is coming of age, but is now being used to bring some of their technology to the US and to create over 2,000 US jobs. Tralin Paper, renaming themselves as Tranlin Paper for some reason, has just signed a deal with the State of Virginia, obtaining state support as Tralin/Tranlin/Quanlin invests $2 billion to create a new environmentally friendly paper mill and create over 2,000 US jobs. Recent news from the office of Governor Terry McAuliffe of Virginia proudly announces the plans of “Tranlin Paper.” Also see reports at TAPPI.org and MFRTech.com.
As the West continues to decry Chinese IP and innovation, always viewing China as a source of IP theft and job loss for the US, this story may come as a pleasant surprise. Here is an innovative Chinese company that has created and protected their own IP in a green technology, used innovative financial tools (and plenty of solid Chinese guanxi) to obtain massive financing based on that IP, and then brought their money and their technology to the US to create many jobs. At least some parts of this story are going to be repeated in many ways in days to come. The old paradigm of China lacking IP or lacking valuable IP is fading.
After the announcement at ChinaPaper.net, the first report on this story to the English-speaking world, as far as I know, was my original March 6, 2014 report here at InnovationFatigue.com followed by an update here on the Shake Well blog that gave a translation of the Chinese story. It was picked up by Intellectual Asset Magazine and by World Trademark Review, but is still a generally unrecognized but important story.
China still has a long ways to go in overcoming its problems and strengthening innovation and IP, but the trends here are remarkable and should not be discounted. Meanwhile, we should welcome stories like Tranlin’s, and watch for many more to come. But for some US companies, this will mean even tougher competition that won’t be easily avoided with restrictive, protective tariffs or antidumping legislation.
(Similar account cross-posted on the Shake Well Blog.)
In response to recent court cases, the USPTO has dramatically revised its approach to dealing with a wide variety of patents. Its new guidelines to patent examiners on subject matter eligibility for inventions involving natural products seem to go way beyond the legal decisions on which they are allegedly based, adding extremely high barriers to patentability. If your invention uses natural products, as almost every tangible invention does to some degree, you now must show that what you claim is “significantly different” that what might be found in nature or from natural phenomena. This vague requirement gives examiners a new club. I’ve already seen it abused.
One client from a previous employer of mine was on the verge of having her patent allowed, but instead just received a ridiculous rejection based on the new guidelines. The invention is a real breakthrough in consumer products that replaces a potentially harmful active ingredient with a novel formulation of several natural compounds with unexpected benefits. The value of the invention is potentially huge, but the examiner notes that since all the ingredients are natural and not significantly different from what can be found in nature, the overall invention is not patentable. End of story. I hope this examiner doesn’t realize that every atom, electron, and photon used in any invention can be found in nature.
Those in the biotech industry are highly agitated by this development. “IP Practitioners ‘Horrified’ by USPTO Guidelines on Myriad” is a recent article from Managing IP Magazine with the following:
Sherry Knowles, principal at Knowles Intellectual Property Strategies [said]:
I think the guidelines that were promulgated by the Patent Office are horrifying to the pharmaceutical and biotech industry. That is probably the nicest thing I could say about them. According to the utility guidelines that came out in March this year, not only is no natural product patentable in the US, arguably derivatives of natural products may also not be patentable. That is a clear change in the law.
She said the guidelines include a number of questions to find out if something is patentable. The first is: is it a natural product and does it include chemicals derived from natural sources such as antibiotics and proteins. Knowles noted that 47% of drugs over the past 30 years include derivatives of natural products.
“According to the guidelines, if it is not a natural product you look at whether it is ‘markedly different’ from the natural product. That’s the test. Of course that is clear as mud and that will be defined over time in case law. But let’s say two-thirds of approved drugs that are derived from natural products are markedly different you are still down to 390 drugs over the past 30 years that arguably under the utility guidelines are not patentable. I find that horrifying. I am very concerned,” she said.
These new guidelines, as well as the questionable court cases behind them, reflect a growing anti-patent mentality among our judges, politicians, and bureaucrats. We need to educate a new generation to understand that intellectual property is a critical tool to lift all boats by encouraging innovation and the sharing of secret knowledge obtained by inventors. We need to reverse the popular trend of pointing to patents and trolls as the biggest barriers to progress, when it is not that way at all. Sound patents, properly examined and granted, encourage innovation and lead to gains in knowledge for all.
As we’ve discussed previously on this blog, the West often gets things completely backwards when it comes to China, and the misunderstandings can be serious barriers to Asian innovators seeking global markets. The “Tragedy of Chopsticks” helps illustrate this.
A few years ago while in the US, I became concerned about chopsticks in China. The anti-chopstick publicity from Greenpeace and other groups was pretty convincing. What a shame to read about the vast tracts of precious forest land in China that were being mowed down to fuel China’s reckless, wasteful use of disposable chopsticks. What an environmental disaster! The New York Time‘s famous Green Blog recently reminded us all that “Disposable Chopsticks Strip Asian Forests.”
The article begins with a photo of a Greenpeace demonstration in Beijing where activists are building trees made from chopsticks to highlight how chopsticks wipe out trees. The coverage of China’s deforestation from its horrific chopstick use made me worry about the nation, for I had long known that China hardly had any forests left. Thirty or so years ago, the amount of forested land in China was around 9%. Some say it might have been a little higher, perhaps 10 or 11%, but it wasn’t much. As a young professor at the Institute of Paper Chemistry early in my career, I learned that China had to import most of its wood since there was so little forest land. But since that time, the paper industry and the chopsticks industry in China has boomed. So if we had 9% forest 30 or so years ago, how much, if any, do you think is left today? After all those people using disposable chopsticks for all these years, is there anything left of China’s forests?
That was a question in my mind before coming over here, where one of my first agenda items was to better understand some of the environmental allegations made against China and against the forest products industry here. What I found really shocked me. Take forest, for example. What’s left of China’s forest? What percent of China’s land is covered with forests? The World Bank and other credible sources now put the estimate around 21% – roughly double what China had a few decades ago. In fact, China is on course to achieve it’s goal of 27% forest land, and has what appears to be the world’s highest rate of afforestation, the opposite of deforestation. To provide the raw materials needed for forest products such as paper and, yes, chopsticks, China is ADDING forests, not mowing them down, creating sustainable high-yield plantations that can be planted and harvested repeatedly just like farmers plant and harvest their farmland, while carefully protecting virgin forests. Yes, plantations aren’t the same as wild virgin forests in terms of species diversity and beauty, but they are forests, and it is a good solution to the challenges of development. Yes, there was tragic forest lost in the past and irresponsible actions, but now China has strict policies and enforces strict regulations. Plantations must be approved before they can be created, and further official approvals are needed before trees can be harvested and then before they can be transported. As for chopsticks themselves, most of these come from bamboo, which grows rapidly and is easily planted, just like a food crop. In fact, bamboo is a food crop, with bamboo shoots being one of the most important components of Chinese cuisine. Will Western NGOs next tell us that we have to stop eating bamboo shoots? And then will we need to stop eating rice to save the rice fields?
So while the West is bemoaning the stripping of Asian forests from Chinese chopsticks and paper, the real story in China is a doubling of China’s forest with the help of the forest products industries and aggressive State policies. Why is this story so completely untold in the West? Why is it not part of the debate when Congress is deciding they need to punish the Chinese paper industry with punitive tariffs, when actually, the Chinese paper industry (at least based on my knowledge of APP) has environmental standards and achievements that are typically better than those that are standard for Europe and North America. But recognizing the remarkable environmental achievements of that industry, including its contribution to rapid afforestation through sustainable plantations, does not fit the agenda of some the West.
China has had its environmental problems and still has a lot of progress to make in terms of pollution, but it’s an issue that is taken seriously and remarkable progress is being made. In the forest products industry, the worse polluters are being shut down, hundreds of inefficient, highly pollution paper mills every year are being shut down as standards are progressively tightened. Come see for yourself and visit some of the beautiful, clean paper mills I’ve seen here in China. And before you try telling the people of China how or what to eat because of your enlightened knowledge of all things environmental (if, perhaps, you are as wrong as I was about the realities of China before coming here), you might want to get your chopstick facts straight. Chopsticks and forests are one of many issues where the West grossly misunderstands China.
While flying to Denver recently, I met Nick Davis, Regional Executive Chef for Whole Foods out of Colorado. He handles Whole Foods cuisine for a large portion of the West. Nick has been a champion for innovative offerings based on street foods, and has been approving new products and developing recipes based on the successes of street food. In my experience, the street is where some of the heartiest and most economical food can be found, and Nick agrees. In Mexico, for example, it’s hard to beat the street for flavor and value, with marvelous Oaxaca-style tamales being among my favorites. Street food can be fabulous in the States as well. Crème brûlée in San Francisco is a popular street food, for example, that Whole Foods is bringing to some California stores. Several Whole Foods locations such as the Trolley Square Whole Foods in Salt Lake City are offering “street eats” as a restaurant-style service in the store as well as street food packages you can take out. Nick has been working on the menus for these products. Kudos to Nick and all the innovators at Whole Foods for recognizing the need to bring the street into the store. One more example of innovation based on understanding consumers and trends.
Whole Foods is a great place to go for market research in addition to enjoyable, quality food and other products. One can learn a lot about green packaging trends, innovations in flexible pouches, self-care products, organics, ingredients, and international cuisine.
Formic acid, the compound that provides the sting of ants and stinging nettle, is used to dissolve the nylon. The solution is then injected into a chamber with supercritical carbon dioxide. Formic acid remains soluble in the carbon dioxide but the nylon precipitates out, forming a fine powder. The pressure of the carbon dioxide can then be lowered to take it below the supercritical state which causes the formic acid to separate from the carbon dioxide. Both materials can then be used again. Simple, clean, efficient.
Another group recognized the value of what Dr. Roberts had created and worked with him to commercialize the technology, creating additional intellectual property in the way to bring the technology to an industrial scale.
The polypropylene backing of the carpet, after the nylon has been dissolved away, is also recycled. It can be used to make laminated board materials, for example.
As with most inventions, there is a need for others to contribute further advances to bring the invention forward to the point where it becomes commercial and has impact on society–in other words, to turn the invention into an innovation. Partnerships between industry and universities are increasingly important in solving real world problems in ways that change society (and make real money). And once again, having a patent made the partnership work. Without it, there would have been no motivation to work with the university and less incentive to take on the risk of commercializing an unprotected technology. It’s very basic, but worth repeating: patents can help create partnership opportunities. Patents can make it more likely for research to result in commercially important innovation, not less likely.
The federal government has set bold and challenging goals for future increases in the production of energy from non-fossil fuel sources. Seeking to curb our dependence on foreign oil as well as fossil fuels in general, our nation is encouraging the development of fuels from biological sources. Biofuels, diesel and gasoline made from renewable sources such as agricultural waste, forest sources, and algae, are a top priority and are the subject of extensive government-funded research and tax credits. Biofuels are a rich source of innovation and show an explosion in patent activity in the past 3 years.
Unfortunately, biofuels are also facing daunting challenges from uncertainty in federal regulations and tax policy that threatens to bring many innovations to a halt as industry puts many developments on hold due. The uncertainty in the environment–the regulatory and tax environment created by the government–is actually hindering many biofuel projects aimed aimed at enhancing the environment in the long run. This was the sentiment from several speakers in the midst of biofuels innovation in sessions at BioPro Expo 2011, a major conference on biofuels and forest bioproducts, being held in Atlanta, Georgia, March 14-16. Concern about government barriers to commercialization of biofuels advances was a repeated theme.
One example is federal regarding the definition of “renewable” for those seeking federal incentives for the use of renewable sources of fuels. Municipal solid waste (MSW) has a large component of plant-based materials such as paper and food waste, and is one of the most available and commercially attractive biofuel sources. The technology is proven, the raw material is available and economically feasible, and projects are ready to roll–except they have largely been put on hold until the federal government rules on whether MSW can be counted as “renewable” or not. Then there are strict new rules on boiler operation (the Industrial Boiler Maximum Achievable Technology, or BI MACT, rule) throwing another wrench and major cost burden on the backs of those with boilers generating energy from biomass sources. There are a host of other rules and conflicting definitions and policies adding to uncertainty, risk, and cost in commercializing biofuels. For the innovator, it is a challenging era with the potential of innovation fatigue from external or environmental factors.
Let’s hope that the rich opportunities being uncovered in biofuels can be commercialized rapidly and that the barriers to innovation can be reduced.
During the CoDev 2011 conference in Scottsdale, Arizona, I was impressed with a speech given by a local CEO, John (“Jay”) Rogers of Local Motors in Chandler, Arizona. This small company designs exciting new vehicles using design contests that are open to the public. Their rapidly growing community (12,000 participants so far) contributes designs and feedback to help in the selection of potentially successful concepts that Local Motors will then build locally in a microfactory, with final customization of the appearance being achieved with an environmentally friendly and durable vinyl wrap that eliminates the need for paint and gives the owner freedom to have a unique look. The final assembly is done with hands-on help from the new owner, who becomes intimately familiar with the vehicle and with its maintenance.
I was impressed enough with what I heard that I changed my evening plans to drive down to Chandler and attend an open house at Local Motors hosted by Jay himself. He allowed photography, so below you can see some views of Jay speaking and some shots of his vehicles in various stages of construction. The Rally Fighter that I am standing by sells for $59,000. It’s an incredible rugged, safe, and fun car that is legal on the road but a load of fun off road as well. It’s able to do very nice jumps.
These cars weigh much less than other cars their size, offering a huge bonus in mileage. Great engineering and innovation at many levels makes this possible.
The microfactory concept involves assembly of a small number of vehicles at a time in sustainable, efficient processes.
I’m back from the week-long Annual Meeting of the American Institute of Chemical Engineers (AIChE) in Salt Lake City, Utah, where over 4,200 engineers from around the country and many other nations were gathered. Hundreds of technical papers were presented from researchers and leaders pursuing advanced in energy, biotech, materials, nanotechnology, chemicals, and related fields. Energy was probably the biggest theme, but bio-related R&D was extremely hot as well.
The Division that I Chair, Forest Bioproducts Division of AIChE, had over 50 papers presented on topics related to biofuels and bioproducts from plant resources such as cellulosic or lignocellulosic biomass. We learned about advanced in biomass gasification, in fermentation of biomass to product fuels, in managing feedstock, in converting syngas or pyrolysis products into value-added chemicals, and many other topics.
I was especially impressed with a keynote speech from Ann Lee, Senior Vice President of Process Research and Development at Genentech, the biotech company that is now part of the Roche Group. Ann outlined Genentech’s pioneering work as the first biotech IPO, the first company to market a recombinant DNA drug, the first company to develop at humanized therapeutic antibody (Xolair), the first company to develop a therapeutic antibody for cancer (Rituxan), and the first in many other areas. They were paving new ground time after time, taking on huge risks and uncertainties, and facing the numerous barriers that innovators continue to face on their way to success. Through it all, Genentech managed to cultivate and maintain a culture of innovation with commitment at the top to drive past or through the barriers to achieve success in so many areas.
The development of personalized antibodies and antibody fragments for very specific and successful cancer treatments has involved visionary efforts that tapped the expertise of thinkers across multiple boundaries, exemplifying what can be done when a country eradicates internal “not invented here” syndrome. Herceptin, the first personalized custom antibody treatment for cancer (HER2+ cancer cells in breast cancer) is a remarkable advance, as is the related Lucentis drug for treating age-related macular degeneration (AMD). Chemists and chemical engineers working together made these innovations possible, and I applaud Genentech for their innovation success.
One innovation-related tidbit I picked up in a session of the meeting that I chaired for the Management Division concerns resources to help start-ups. The Wayne Brown Institute (VentureCapital.org) has developed a screening system based on 15 criteria that have proven remarkably effective in gauging the health of a start-up. In one study, 80% of those that scored high on their assessment were still in business 10 years later – a remarkable statistic. I’ll be looking into this resource in more detail in the future.
Say, do you know which university led the nation last year in terms of high-tech start-ups generated? MIT? Close! It was actually the University of Utah, with 23. Nearby BYU had 11, is remarkable given its much smaller level of funding for R&D (they typically lead or are in the top 3 in terms of start-ups per dollar of research). Interesting. I saw plenty of evidence of active innovation in the Utah area. One of the highlights of the visit for me was a tour of Ceramatec in Salt Lake City, an innovation company developing ionic ceramic membranes that support fuel cells and other advanced products.
The world of automobiles today is radically different than it was a twenty years ago, based on several metrics. In the area of fuel efficiency, it was once an automotive maxim that if you wanted good fuel efficiency, manual transmission was clearly the best way to go. Automatic transmission was more convenient but far more wasteful of energy. Today a radically different result has been achieved, and curious observers can wonder what happened to suddenly make automatic transmissions more efficient. The answer, in a simplistic sense, boils down to the combined effect of multiple “incremental” innovations in automatic transmission design that together have propelled automobiles radically forward. In “Why do automatic transmissions now get better fuel efficiency than manuals?,” Green AutoBlog explores the changes that have turned things around so dramatically, but gradually.
In the last 25 years, there have been three major advances to automatic transmissions that have made the biggest difference in fuel economy gains: more gear ratios, lock-up torque converters and electronic controls. Lock-up converters incorporate a mechanical clutch that can hard-couple the pump and turbine when the vehicle is cruising with no transmission shifting. The clutch allows the torque converter to achieve near-100 percent efficiency. In recent years, engineers have also been able to utilize electronic controls to increase the proportion of time that the torque converter is locked, further increasing efficiency.
Those electronics have played a much bigger role than just controlling the torque converter clutch. Since the mid-1990s, engineers have integrated the management of the engine and transmission making the entire system work together. In combination with electronic throttle, spark and fuel control, engineers have been able to optimize how the engine behaves during shifts as well as during acceleration.
Since fuel efficiency is measured on standard driving cycles on a dynamometer, the engineers are able to calibrate how the throttle responds regardless of what the driver actually requests with the accelerator pedal. This way, actual vehicle response can be closer to the demands of the cycle so the transmission typically shifts at lower engine speeds. The increasing number of ratios – automatics have gone from three speeds in the early-1980s to six, seven and eight speeds today – has also allowed engineers to calibrate shift patterns that keep the engine closer to its most efficient speed regardless of vehicle speed.
Despite the mechanical efficiency advantages of manual transmissions, the transmission is controlled by the vagaries of the driver trying to follow the test protocol. The result is that in most cases, the automatic transmission can now match or beat the manual. Going forward, automatics are likely to improve even more as torque converter automatics are gradually supplanted by dual-clutch transmissions (DCT).
Sometimes innovators strike out for radical change all at once. One can imagine brainstorming teams in the 80s talking about doing away with transmissions altogether, or making them purely electronics, or coming up with entirely different systems that could improve performance. The wild ideas may elevate hopes before they are incinerated on the pyres of reality, while realistic engineers stayed focused on improving each element of the automatic transmission. The latter gave us important but arguably incremental gains, but cumulatively, they have delivered radical innovation that turns popular wisdom upside down, giving us automatic transmissions that are not only more convenient but now also more fuel efficient than manual transmissions.
There are lessons in their story for many other fields.