In our survey of case studies in the course we encountered several types of entrepreneurial approaches that range from Living PlanIT’s system-level IT solution and Masdar’s top-down support of cutting edge technology to Sarvajal’s business model innovation for clean water delivery to individual rural Indians. These and other examples demonstrate approaches that vary across many dimensions, two of which, I would like to argue, are most important: the degree of technology innovation and the scope of the solution (i.e. room, apartment, building, neighborhood, city; not scope as in size of addressable market). [Maybe “ambition” or “scale” would work on this axis too? – John M]
There are numerous reasons for why these dimensions are particularly important. The degree of technology innovation has vast implications on upfront R&D expenditures, time-to-market, level of customer education and required guarantees on one end and competitive barriers-to-entry, asset intensity and costs of operation on the other. The scope of the solution influences scalability, level of coordination and concentration/fragmentation of the customer base, among other things. Overall, these are chief in determining the go-to-market strategy, profit formula, availability of funding and other elements of the opportunity that impact the probability of success for a new venture.
With this in mind, I believe that the middle-ground of these two dimensions are the “sweet spot” for entrepreneurship in the fields we have been discussing, especially for applications in existing cities. The following diagram illustrates my rough evaluation of some of the examples we discussed in class and others :
One approach that delivers on these dimensions is that of repurposing existing information technology tools and capabilities to new applications. Such applications can be asset-light, fundable by VCs and with short and demonstrable payback periods, yet provide a clear customer value proposition to industrial and commercial corporations, utilities and even residential customers.
§ Hara is one such company. Hara developed a cloud-based software platform to solve the energy efficiency “bottleneck” for corporations. By using primarily existing big data analytics and visualization tools, it helps companies collect, analyze, interpret and act on energy and resource data. The company has raised $45M of funding to date from prominent investors (assuming that is at least a loose indication of progress/success).
§ TaKaDu is another example. The company has developed a SaaS solution to detect water leakage in existing water infrastructures, based on existing utility data (i.e. no new sensor installation necessary). Water loss is estimated to account for 25-30% of the world’s water production . Flagship Ventures’ general partner Jim Matheson recently wrote: TaKaDu’s SaaS model is a cleantech investor’s dream with low burn rate, high gross margin, and massive global scalability.
TaKaDu video here, about 3 mins: http://www.youtube.com/watch?feature=player_detailpage&v=D6fRJJqiWNQ
There are many different viable forms for innovation and entrepreneurship. I argue, though, that some are better fit for infrastructure markets, given their many inherent complexities (as we have discussed extensively in class), than others. Such approaches are more likely to gain investor and market acceptance, while providing significant value to customers. Though they might not lead to the most disruptive innovations our future holds, I believe they will account for the vast majority of progress made in resource efficiency and can become important enabling components in larger scale planning and development.
 Clearly this is a specific interpretation of the framework presented in the course The Entrepreneurial Manager.
 This is subjective and highly debatable but meant to illustrate the idea.
 Company’s statements. For reference, it was mentioned as 40% in Mexico’s water infrastructure in the Mexico case we read.