Clean Technology

Growing a Clean Tech Enterprise
An Interview With Russell Ford, President and CEO of ClearEdge Power

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 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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