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MBIE Master of business innovation & entrepreneurship 1
New myths for a very new world:the “heroic journey” of a kiwi high
technology enterprise
Peter J Mellalieu
Director: MBIE Master of business
innovation & entrepreneurshipUNITEC Faculty of Business, Auckland
MBIE Master of business innovation & entrepreneurship 2
Prologue
In early 2001, Ilion Technologies will raise almost $NZ 300 million from its initial listing on the NASDAQ high technology stock exchange.
Ilion, formerly Pacific Lithium, was established in Auckland in 1994 drawing on the funds of 26
foundation investors.
MBIE Master of business innovation & entrepreneurship 3
My job: Unitec’s MBIE programme director
To create the most valued masters programme in business innovation and entrepreneurship in
the Asia Pacific region
MBIE Master of business innovation & entrepreneurship 4
Key question
How do we learn from New Zealand’s best entrepreneurs and innovators so we can
improve our success in growing new business ventures?
MBIE Master of business innovation & entrepreneurship 5
Key question - academic style
How does a young, peripheral country develop the ‘cultural infrastructure’ - the myths and legends - it needs to inspire creation of the
heroic forces for creating successful business enterprises in a hypercompetitive, globalising
world?
MBIE Master of business innovation & entrepreneurship 6
Overview
The mythic heroic journey
The story of Cinderella as a heroic journey
Lessons from the Cinderella story
The case of Pacific Lithium
Lessons from the Pacific Lithium case
Creating masters of enterprise
Conclusions
MBIE Master of business innovation & entrepreneurship 7
The mythic heroic journey/1
Heroes are introduced in the ORDINARY WORLD where they receive the
CALL TO ADVENTURE.
They are RELUCTANT at first, or REFUSE THE CALL, but are encouraged by a MENTOR to
CROSS THE FIRST THRESHOLD and enter the Special World where they encounter
TESTS, ALLIES and ENEMIES.
MBIE Master of business innovation & entrepreneurship 8
The mythic heroic journey/2
They APPROACH THE INMOST CAVE, crossing a second threshold where they endure
the ORDEAL. They take possession of their REWARD and are pursued on THE ROAD
BACK to the Ordinary World.
They cross the third threshold, experience a RESURRECTION, and are transformed by the
experience. They RETURN WITH THE ELIXIR, a boon or treasure to benefit the Ordinary World.
MBIE Master of business innovation & entrepreneurship 9
Cinderella’s heroic journey/1
C enjoys happy family - ORDINARY WORLD
C’s mother dies - THE CALL
Stepmother’s family takes over
Fairy godmother - MENTOR
FG helps C to get to the ball
The ball - SPECIAL WORLD
C meets the prince
MBIE Master of business innovation & entrepreneurship 10
Cinderella’s heroic journey/2
C runs home late, loses slipper
Prince searches for C.
C kept hidden by stepsisters - ORDEAL
Prince finds C - REWARD
C forgives step family
All live happily ever after - THE ‘TREASURE’
MBIE Master of business innovation & entrepreneurship 11
Lessons from Cinderella
Goodness and virtue - even in times of trial - eventually bring prosperity and happiness -
even to those who don’t really deserve it!
MBIE Master of business innovation & entrepreneurship 12
Pacific Lithium’s heroic journey: the ordinary world /1
Auckland 1970’s - Robin leaves school aged 16 to join family clothing business.
After several business successes he makes substantial losses following the 1987
sharemarket crash.
MBIE Master of business innovation & entrepreneurship 13
Robin’s call to adventure /2
Inventor John Broome seeks finance from Robin to develop a prototype process for
extracting lithium from seawater.
MBIE Master of business innovation & entrepreneurship 14
Investor’s are reluctant at first /3
Robin “walks the streets” for nine months, eventually raising money from 26 investors to
construct a lithium extraction plant.
MBIE Master of business innovation & entrepreneurship 15
Robin is encouraged by mentors /4
Robin recruits a board of investor directors including several well-known business leaders
MBIE Master of business innovation & entrepreneurship 16
Pacific Lithium crosses the first threshold /5
August 1995: PL raises $NZ 7.5 million from shareholders.
Secures $26 million forward contract with Japanese trading company.
MBIE Master of business innovation & entrepreneurship 17
PL encounters tests, allies… /6
After 8000 experiments, PL’s seawater extraction process fails to achieve optimum
results.
A commercial project manager, and a research engineer join the company - Mennolt Regtien
and Dr Paul Pickering.
Sony approves the company’s product.
MBIE Master of business innovation & entrepreneurship 18
… and enemies! /7
Three new companies enter the industry, and existing player FMC doubles its capacity.
The price of lithium carbonate falls from $ US 2.00 to $1.40.
Planned world capacity is twice world demand.
MBIE Master of business innovation & entrepreneurship 19
80000
70000
60000
50000
40000
30000
20000
10000
0
Capacity
tonnes
PLL Gwalia Minsal Cyprus Foote FMC All Demand All Supply
Figure 1: World Lithium Supply and Demand
Planned
Existing
MBIE Master of business innovation & entrepreneurship 20
The ordeal of long nights /8
PL shelves construction of the seawater extraction plant.
The PL team assess the achievements of the company and realise they need a new vehicle
to pursue their quest:
‘to provide lithium-based energy storage systems that will generate environmental
benefits across the globe’.
MBIE Master of business innovation & entrepreneurship 21
PL takes possession of its reward /9
PL uses its purification process to convert low grade lithium-containing feedstock into very high purity lithium carbonate required by the
Japanese lithium battery industry.
PL secures feedstock from Toxco, one of the new entrants, who bought up a US government
stockpile of lithium material.
MBIE Master of business innovation & entrepreneurship 22
The pursuit /10
By 1997, PL has built an ultra high grade lithium carbonate refining plant focussed on the lithium
battery manufacturing industry.
Accumulated losses $NZ 3.8 million.
Lithium battery market now $US 140 million/month, up from $US 10 million/month in
January 1995. Five fold growth expected between 1997 and 2004.
MBIE Master of business innovation & entrepreneurship 23
Forecast Battery Cell Demand For Major Portable Applications Only
0
200
400
600
800
1000
1200
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Cell
Dem
and
(mill
ions
cel
ls
per a
nnum
)
Camcorder
PHS/PCS
Cellular
Notebook PC
MBIE Master of business innovation & entrepreneurship 24
Resurrection and transformation /11
PL begins seeking strategic relationships to maximise the return from its proprietary
technologies.
MIT collaborates with PL to produce solid lithium-polymer battery cells - the cheapest, lightest and
safest batteries possible.
In 1997, Robin visits China, and a year later signs an agreement to carry out a five year exploration
of the world’s richest lithium resources.
MBIE Master of business innovation & entrepreneurship 25
The treasure /12
October 1999: PL effects a reverse take-over of NASDAQ bulletin-board listed Lithium
Technology Corporation - which was facing serious cash flow problems. PL now has 600
shareholders, and their $US 25 million investment is now valued at $US 90 million by a
US investment house. The merged company, renamed Ilion Corporation, expects to list on the
NASDAQ in early 2001.
MBIE Master of business innovation & entrepreneurship 26
Lessons learned so far
1. Think global! Act global!
2. The unpredictable happens
3. Management team > technology > game plan
MBIE Master of business innovation & entrepreneurship 27
Creating masters of enterprise
Unitec’s MBIE
Target participants
Project-based learning
Enterprise MasterWorkS
On-line learning support
International academics
Part time
MBIE Master of business innovation & entrepreneurship 28
Conclusions /1“As a technology company, Pacific Lithium has to operate on different rules. These include the
ability to change and capture a marketplace very quickly...People misunderstand [the
importance of building management]. They think venture capitalists invest in technology.
They don’t. They invest in the management team, then they look at your technology, and
then your game plan.”
Robin Johannink