Over the course of his 25-year career, Russell Ford has gained extensive experience
building world-class manufacturing and service organizations through roles as CEO
of Prestolite Electric, chief operating officer of Holley Performance Products, senior
vice president of operations for Lockheed Martin’s Aeronautics Division, and general
manager of Allied Signal’s Gas Turbine Division. This experience has served him well
as president and CEO of ClearEdge Power. The company had 30 employees when he
joined it in May 2009, but now has more than 200. In his short tenure, Ford has also
guided the company’s flagship power-generating fuel cell product for small businesses
and residences, the ClearEdge5, from concept development to initial commercial
production and more than $50 million in sales backlog.
Now, the company is looking forward to even greater growth leading to an IPO. In
addition to its current focus on California, where government incentives and high
power costs are forming a strong market for new energy technologies, the company
recently signed a $40 million agreement with Korea-based LS Industrial Systems
focused on the sale, distribution and service of more than 800 ClearEdge5 fuel cell
units in Korea. Spencer Stuart recently spoke with Ford about changing perceptions
of hydrogen fuel cells and the challenges associated with building a high-performing
senior executive team in a nascent yet rapidly-growing industry segment.
ClearEdge Power at a Glance
- ClearEdge Power was founded in 2003 as Quantum Leap Technology before taking
its current name in 2005. The company’s primary investor is Kohlberg Ventures.
- The company’s flagship ClearEdge5 (CE5) product generates power using hydrogen
extracted from natural gas. Aside from generating electricity, the heat produced by the
system is recaptured for use in water or space heating. This gives the fuel cell 85 percent
efficiency, whereas only 40 percent of energy generated from a power plant is used. The
rest is lost in heat dissipation at the plant or in transmission to the point of consumption.
In addition, the CE5 produces 35 to 40 percent fewer
CO2 emissions than traditional
gas-fired power generation.
- The ClearEdge5 is the first product to scale down existing fuel cell technology for use by
light commercial businesses, data centers and large residential applications. ClearEdge
estimates a typical payback period of less than five years for the product in these
applications.
ClearEdge Power is the first company to bring
fuel-cell technology to the residential and small
commercial markets. In what kinds of applications
do you expect to see the most growth in the
coming years?
The primary markets for the ClearEdge fuel cell
will be in data centers and other fault-tolerant and
mission-critical applications, due to their reliable,
clean, continuous power production — as well
as in schools, commercial offices, multitenant
housing, restaurants and health clubs. Our product
can be expanded in five-kilowatt increments to
precisely match the power requirements of these
applications and grow with them.
What role do you expect fuel-cell technology to play
in the energy landscape moving forward, as
compared to other forms of clean energy and
traditional energy sources?
The primary advantage of a fuel cell is that you
can put power directly at the point of use, thus
eliminating the need for expensive additional power
transmission lines. In addition, our fuel cell runs
24/7, thus reducing the need for energy storage
equipment associated with other intermittent
sources of power such as wind and solar. This
product and technology will also dramatically
reduce the environmental impact of traditional
forms of energy production and our reliance on
foreign oil. Additionally, since this technology
operates in the gas infrastructure, it provides
additional security and diversity of risk.
The research firm IntertechPira estimated that the
fuel cell and distributed hydrogen markets would
grow from $2 billion in 2009 to more than $20
billion by 2019. How is ClearEdge uniquely
positioned to take advantage of this growth?
The ClearEdge5 fuel cell is the only product in
the world of this type and size that is commercially
available. There is a large segment of customers in the five- to 100-kilowatt-hour electricity demand
range that traditionally had no option for
continuous power other than the conventional
grid. Our product offers those customers an
alternative — it is a patented hybrid technology
that offers the efficiency, durability and economic
model that previously was not available.
ClearEdge serves and maintains its product in
California, but has also granted overseas distribution
rights to other companies. Which approach do you
see as offering the greatest growth potential in the
coming years, and why?
ClearEdge Power launched our products initially
in California for a number of reasons, including
the fact that the state has some of the highest
energy costs and a growing demand for power,
and we need to answer this call through modern
clean alternatives. The power-production market
is the largest market in the world at $6 trillion
annually, and is also the greatest pollution
generator. This truly is a worldwide issue we
are taking on, and the growth is global.
You came to ClearEdge with deep expertise in lean
manufacturing techniques and leadership experience
in the automotive, aircraft and industrial engine
sectors. How has this experience benefited you in
your new role?
My background in leading-technology, high-quality,
volume production is especially well-suited to the
maturity path of ClearEdge Power. Fuel cells are
new-generation technology, and successfully
promoting acceptance of such a fundamental
shift requires a focus on reliability and quality.
From my aerospace industry experience, I learned
about extreme attention to consistent production
quality and supply chain accuracy using worldclass
techniques such as lean and Six Sigma.
My automotive background, and that of my
colleagues, has enabled us to create a production
system that is rapidly scalable to handle the explosive production growth we are seeing with
this game-changing product.
As someone who came from well-established
industrial companies, what advice would you give
other leaders entering a venture-backed environment
for the first time?
Well-established industrial companies provide
an excellent backdrop for how all of the complex
pieces of a business must work together.
Knowing how to fit the puzzle pieces together
is an acceleration factor in a new business. My
advice for someone making this transition is that
speed of execution in a venture-backed business
is the most important attribute. You must operate
in the mindset of hours and days, rather than
weeks and months. Good prioritization skills
help you get this done.
What do you see as the key talent requirements for
this emerging market sector, and how do you attract
people who possess these skills?
A number of success factors are required
in this market segment, as well as in any
technology shift. You need people who have
a high tolerance for technical complexity and for
the ambiguity of market requirements and,
above all, an extreme sense of urgency to
overcome obstacles. In a new business, there
is always a race to complete development, build
market acceptance and scale up manufacturing,
while at the same time raising and conserving
cash. Being able to manage cash and the balance
sheet are critical for an emerging company.
How do you balance the need for executives
who know the sector with the need to have the
best talent?
Attracting management talent for a launch
technology has both pros and cons. It is difficult
to find people who have deep experience, because the experience base does not initially exist. The
benefit of this, however, is that you can look for
people who are technically savvy, are fast learners
and aren’t hampered by the “mindlock” of preset
notions about how to structure the business.
You truly have an open field to run and to structure
the business in the most optimal configuration
possible without historic monuments. This
condition presents additional freedom within
which to operate and is very powerful in
establishing velocity in execution.
What do you see as the most important leadership
competencies for the future in this dynamic, rapidly
growing market?
Once a new product or technology is brought
forward and the initial technical hurdles are
overcome, there needs to be a shift toward extreme
focus on product quality. If the market has an initial
poor experience with a new product, the incentive
to adopt this new technology is gone and the
market will spring back to the former solution.
Business leaders must ensure that the processes
are in place to produce high-quality products
consistently, while also maintaining a culture of
innovation. Consistent quality builds trust and
confidence, which translates into future price
elasticity, and innovation is the fuel to keep the
organization moving toward the next breakthrough.
As a result, leaders must be expert in the areas
of focus and prioritization, speed of execution
through lean methods, and robustness of design
through Six Sigma tools.
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