LanzaTech is on the cutting edge of biotechnology. Founded in New Zealand in 2005, it announced it was moving to the US earlier this year, and in October was named the 2014 Global Cleantech 100’s North American Company of the Year. A month later it landed the top slot in Biofuels Digest’s Hot 50 Companies in Bioenergy.
Turning waste carbons into low carbon fuels is certainly exciting stuff. It’s easy to get caught up in the LanzaTech fairytale of a business born in an Auckland basement and grown to a global organisation with offices in USA, New Zealand, Europe, China and India.
Delve beyond the headlines, however, and LanzaTech’s story is about collaboration. With French industrial biology company Global Bioenergies over developing isobutene technologies, for example, or China’s Henan Coal and Chemicals and the Chinese Academy of Sciences over a project to turn coal into biological fuel. With Invista in the US, with SK Innovation in South Korea, with Germany’s Siemens Metals Technologies. The list goes on.
The importance of partnerships is expressly recognised on the Lanzatech website, with a significant section dedicated to acknowledging the relationships with the entities described affectionately as “Our Friends”.
When Lanzatech co-founder and chief scientific officer Dr Sean Simpson spoke
recently to a room full of students and alumni from the University of Auckland’s Master of Commercialisation and Entrepreneurship programme, the role that effective collaboration played in Lanzatech’s success was an ever-present underlying theme in the discussion.
Of course, collaboration – the action of working with someone else to produce something – is an essential success factor for every business. Working with customers to create (or co-create) value is core to business activity. Delivery of products and services by a business demands collaboration with suppliers and between staff.
Successful business models can be built on changing traditional models for collaboration in these areas. TranscribeMe, named Best Tech Start-Up at the 2013 ExportNZ Awards, does this spectacularly by drawing on a crowd of more than 7,000 people worldwide and using software to rapidly and accurately convert audio to text for a wide range of big-name international clients including Oracle, Cisco and Harvard University.
Collaboration with strategic partners can provide opportunities to extend a company’s product range, access additional skills and capabilities and gain entry into new market segments and geographies.
Or it can do the opposite – destroy value. This risk can materialise for even the most sophisticated of corporates.
Fonterra’s partnership with Chinese company, Sanlu, ended badly when it was found Sanlu had contaminated infant formula by adding melamine. This action led to at least six infants dying and thousands falling ill.
Fonterra has recently formed a new partnership with Beingmate Baby & Child Food Co to gain access to distribution in the Chinese market. This is a move that Fonterra’ CEO Theo Spierings has described as “...an important building block in Fonterra driving volume and value.”
The Fonterra experience highlights how critical it is to collaborate with the right partner.
Finding a strategic partner requires construction of a well-considered short list and careful evaluation of the potential risks and rewards associated with the possible alliance. The key question is whether there is alignment.
Alignment needs to be grounded in more than a shared view that there is an economic opportunity. The economics must be compelling but the compatibility of goals and cultures is equally fundamental. Validating the capability of the partner should not be overlooked. Determining whether something does what it says on the tin requires more than reading the label.
Counterparty due diligence should be appropriate and sufficient to enable an informed judgement to be made.
By its nature this exercise is backward looking, undertaken to establish credibility for the potential partner’s stated future intentions. Purpose and intent can, however, change over time. Successful collaboration also needs to take place within a framework that will accommodate the evolution of the relationship and any changing priorities the parties may have.
PowerbyProxi is a company drawing on a significant suite of patents to provide wireless power solutions. Think of charging your mobile phone without plugging it into a socket. As a member of the Wireless Power Consortium, PowerbyProxi is collaborating with other stakeholders including Microsoft, Samsung, Huawei and LG to influence industry standards for this developing technology.
This reflects PowerbyProxi’s current intention to build applications for products adopting the Qi standard. However, Power by Proxi has indicated that it can succeed if the competing standard, Rezence, which is being developed by the Alliance for Wireless Power (A4WP), were to emerge as the dominant one. In these circumstances PowerbyProxi’s priorities and model for collaboration would undoubtedly change.
Collaboration with aligned strategic partners provides the potential to accelerate business development. New Zealand businesses that can take a proactive and deliberate approach to the selection of suitable partners, taking care to structure those relationships appropriately, will be in the driving seat as they pursue their goals.
Jonathan Boswell is the CEO of boutique law firm TGT Legal. He has a keen interest in innovation and entrepreneurship.