Innovators Dilemma Revisited in Renewable Chemicals and Materials

By Daniel Lane and Joel Stone, Lee Enterprises Consulting, Inc.
Special to The Digest

This is the fourth in a series of articles prepared by the experts at Lee Enterprises Consulting (LEC) who will be speaking at the ABLC 2018 conference in Washington DC, February 28 to March 2.

Previous installments in the State of the Advanced Bioeconomy 2018 series
Part 1: Extraction of Valuable Oils from Algae and other Green Plants: Challenges, Opportunities and Commercial Landscape
Part 2: Case Study: 1MW to 3MW Anaerobic Digester Upgrade in Only 6 Months!
Part 3: Advanced Biofuels: Now? Later? Never?

Daniel had an interesting discussion recently with his 8-year old son, in which he inadvertently recalled the history of the telephone, backwards. It started with his son finding an old ‘flip’ style cell phone in a box of junk and asking just what one would expect (“What in the world is this?”). As they talked, Daniel recalled step changes in the technology to him, each time dealing with an incredulous “Really!?!” The discussion started with smart phones (with apps and games), moved on to cell phones (which at least had texting), then big cell phones, and finally car phones. From there, the discussion moved to a brief history of land line phones, including touch tone versus rotary, and even dialing versus talking to an operator. According to Daniel, it made for a nice discussion, although his son probably believes half of it was made up.

Later, he got to thinking about that conversation relative to a concept he had been discussing with a colleague. After the invention of the telephone, technology advances were basically the advent of the rotary dial and later DTMF “touch tone” dialing. These were sustaining innovations that evolved a product and made it easier to use. Then in 1983, the first cellular phone was released, and things changed. This was a disruptive innovation that completely changed the telephony landscape. Innovations that evolved that first “brick” phone tended to focus on size and battery life; then, in the early 2000s, another disruptive innovation – the smart phone was introduced. Disruptive innovations such as these are often not only life-changing for consumers, but for manufacturers, as well. Apple was trading for about $1.50 a share in early 2004, today it is worth over $170 a share, in no small part due to the iPhone.

These disruptive technology innovations have happened many times throughout history and are discussed in the popular book The Innovator’s Dilemma, by Clayton Christensen. He coined the phrase in describing a process by which a product or service moves up market in a step change and displaces established competitors; and highlights characteristics of these innovations, such as lower gross margins, smaller target markets, and simpler products or services that may not appear attractive when compared against traditional metrics. More recent examples of these innovations include 3D printing, LED light bulbs, flat-panel displays, digital media (including MP3s and streaming video), and CRISPR genome editing techniques.

For those unfamiliar with CRISPR, it is technology that allows simplified genome editing. Compared to earlier genome editing tools, CRISPR is fast and cheap and as a result, it is revolutionizing the synthetic biology industry. This technology will impact agriculture, renewable chemicals, as well as pharma, biofuels and food ingredients. It provides the ability to target and study particular DNA sequences in an enormous genome, with unprecedented ease. In industrial biotech, that means that ability to improve microbial production strains to produce new enzymes and biochemicals.

The investments in synthetic biology have ramped up quickly over that past three years and this trend is likely to continue and vastly impact how the chemical industry will evolve to step wise changes in performance and specialty chemicals and materials. This chart prepared by synbiobeta offers a visual perspective.

Many synthetic biology companies are focusing their efforts on applying these new technologies to production of bio-based materials by fermentation, but they aren’t in the manufacturing industry. Similarly, there are companies that are determined to bio-produce industrial chemicals, but do not have the depth of capabilities that the synthetic biology companies have. Both of these groups have the potential to create a technology that will produce a high value chemical or specialty ingredient, in some cases not previously available from renewable, bio-based, or natural sources; in some cases, not previously available by fermentative methods. There will be an increasing need for engineers, scientists, and commercial business savvy professionals to fill a gap of determining cost and capital efficient ways to scale the science of these developments from the bench and digital biology concept to the commercial product and delivery.

Synthetic biology (or what is being coined digital biology) technology is accelerating and soon will become more common; and it is likely that it will supplant other established technologies. We envision that we will undergo a reinvention and diversification of the chemicals and biobased materials industry to see small facilities producing specialty chemicals from renewable sources via fermentation as the standard. It is likely that the existing North America infrastructure of low cost sugar feedstock from existing ethanol plants could support the biorefining commercialization of the future and harnessing the agricultural biotechnology innovations occurring on a parallel path. We could truly be closing in on a convergence of industrial biotech in both agriculture and industrial fermentations. The gating question is who will provide the commercial capable expertise and subject matter experts to perform the planning and execution to carry idea to reality. The need for biochemical engineers, chemical engineers, and project managers who have experience will come into great demand during the coming years to support the investments in these new biology innovations.

With the rapid growth of the synthetic biology industry and the advent of tools such as CRISPR, it is becoming easier to take an idea and outsource its development. Early-stage companies can collaborate with synthetic biology platform providers to develop fermentative organisms that produce desired bioproducts, then work with engineering and operations experts that understand how to scale up technologies and progress to commercial production with a production collaboration partner as well as a business deployment partner.

About the Authors: Dr. Daniel Lane and Joel Stone are both members of Lee Enterprises Consulting, the world’s premier bioeconomy consulting group, with more than 100 consultants and experts worldwide who collaborate on interdisciplinary projects, including the types discussed in this article.  The opinions expressed herein are those of the authors, and do not necessarily express the views of Lee Enterprises Consulting. Daniel and Joel will both be guest speakers at the ABLC 2018 Conference commencing on February 28, 2018.

The next article in this series is Lorenz Bauer’s A Decade Later- Advanced Biofuels: Status, Opportunities and Challenges.