Jim Lane

By Biofuels Digest columnist Dr. Rosalie Lober

Yes, the economy is in a recession by all standard definitions. Most businesses are having difficulties. Those with money are cautious too. Lack and scarcity become self-fulfilling prophecies that become the ‘feedstock’ for portending doom and gloom. Your current strategy may not be appropriate any longer. What do you do? Let’s continue our journey with POET – the company that adapts through twists and turns as the ground shifts beneath it. Yet POET doesn’t topple. It was the little engine that could – that is now one of the two largest Ethanol producers in the world. What accounts for its resiliency? The PROFITS Principle, Test and Revise, provides the clue.

We continue to apply the seven PROFITS Principles as a guide for how operate and manage a business effectively, (from the newly released book, Run Your Business Like a Fortune 100: 7 Principles for Boosting PROFITS, by Rosalie Lober, Ph.D.

7. TEST AND REVISE

You probably took a great deal of time to determine the scope of your business and the strategies you have in place. Nothing zaps a company’s energy like “scope creep,” which denotes the tendency companies have to slowly but surely take on projects tangential to their purpose. The inevitable result is loss of focus.

Leading for Excellence….Challenge the Plan

If you’re like most leaders, the strategy you have in place for your company is quite a bit more ambitious than what you may have accomplished so far this year. The economy refuses to cooperate with your plans!

Let’s continue our exploration of how POET Energy operates. Neither the price of corn, nor the price of oil is of their choosing. As mentioned in the previous column, Jeff Broin and Wesley Clark illustrate a unique solution in dealing with the markets. They took the reigns in changing government policy, leading the biofuels community to a new level of participation. Their premise is - not only is pubic carbon reduction considered a ‘nice to have’, they elevated the conversation to one of national security and energy independence, not only from the Arab oil nations, but also from the politically unstable regions in other parts of the world, including Russia and South America. In fact, POET launched a new proactive grassroots policy reform group, Energy Growth; which many times, clashes head-on with the foremost national trade association for biofuels, RFA (Renewable Fuels Association).

Another area for test and revise are the new way gas pumps will operate.

The new ethanol blender pumps will be owned by gas stations and the gas stations get the subsidies. In some states, this is already occurs. What happens if the stations no longer get a tax credit and discount? What is the effect this has on petroleum companies? What incentives exist for the consumer, if any in this arrangement? Influential leaders will remain alert to the feedback and adapt accordingly.

When new information challenges their existing strategy, POET adapts. This does not change their focus of producing ethanol – even though it may modify the way the company achieves this goal.

Continue to review….dig deep

In the bio-space, new technologies frequently surface in private and university laboratories – in many diverse fields of biofuels, pharmacology, genomics and applied engineering, to name a few. Review your strategy and decide if a strategic partnership makes sense.

POET has a long standing relationship with Novoenzymes as they now continue to collaborate to commercialize ethanol from corn stover. Their previous collaboration for creating raw starch hydrolyzing enzymes for the POET BPX™ process was highly successful. The BPX™ process, when combined with Broin’s fractionation technology (BFrac™), will provide the foundation for the biorefinery of the future. The patent is still pending. The effects of this discovery mean that starch can convert to sugar and ferment without heat (because of the use of enzymes). This reduces energy use in the plant by 8 -15% and also reduces the need for cooling water.

This process took years of development and revising of both the technology process and strategy – as POET and Novozymes continued to review and revise by digging deeper.

Continuous review and revision is necessary in regards to licensing agreements, IP laws (which sometimes change) and industry changes such as inventions and new product commercialization. Neither POET, nor you, can afford to become complacent.

Discover other perspectives

POET – and other successful companies exploit (in the most positive sense), the achievement of other companies. They study what worked and what didn’t work.

POET, in planning the refinery of the future, studies other ethanol refineries built throughout the world. They learn how using alternative feedstocks (sorghum, organic waste, biomass, algae, etc.) differs both in process and outcome from corn feedstocks.

POET studies waste management company technology as it seeks to reuse, treat and recycle water from their ethanol process to power production in other plants. They found there was not only one ‘right’ way. At one plant POET recycle sthe water, at another they use one third of its water from a wastewater treatment plant and another draws all of its water from an adjacent quarry that discharges it as part of their normal de-watering operation.

Discovering other perspectives also means thinking about how your strategy can be interdependent with the strategy of other stakeholders. POET considers how to stimulate the economy, create jobs, generate government (Federal, local, county state tax revenue). They calculate subsidies vs. economic stimulus and how to utilize that in the calculations of their own plants. POET also works with farmers and equipment manufacturers, developing alliances and supplier relationships for the best interests of all involved.

Not only can innovative businesses survive and thrive during an economic downturn, they can be the driving force for economic recovery, according to Stephen Betts, at the Proceedings of the Academy of Entrepreneurship.

In Summary

The desire and ability to Test and Revise can make or break a company over the long haul. POET has been especially vigilant as it stays abreast of policy and market reality. The company and its leadership demonstrate remarkable flexibility as it quickly adapts to changes in policy, new technologies and public sentiment about environmental issues. There is always risk for small companies and there are no guarantees for success. However, POET’s nimbleness and willingness to change tact provides a model for learning.