Executive MBA assignments lead to new unique biofuels project

Nikolai Germann

EMBA Class of 2006

“It was the best and worst day of my life.”

These were the words Nikolai Germann used to summarize his Silicon Valley Venture Capital pitch exercise, a component of the IMD Executive MBA Discovery Expedition. Back in 2006, Germann and five of his Executive MBA colleagues put countless hours into preparing a pitch to a group of Silicon Valley venture capitalists on behalf of a start-up nanotechnology company based in Zurich. Not wanting to let his colleagues down, Germann endured a sleepless night prior to the morning pitch to a group of real Silicon Valley venture capitalists.

The VC exercise is intended to be a practice scenario benefiting the Executive MBA participants, the company and the venture capitalists. However, after the team’s 15-minute presentation and a 15-minute Q & A session, one of the VCs actually contacted the entrepreneur so that he could invest real money in the project.

“It was something incredible,” Germann explained. “This was supposed to be just an exercise.”

This experience, along with the various Executive MBA strategy assignments, provided Germann with the confidence to push forward with an ambitious biofuels project in Africa for his Swiss-based oil and gas company, the Addax & Oryx Group. Germann presented his biofuels project in front of the Addax board in December 2007. After surviving the VC pitch exercise in California, Germann was more prepared than ever.

“I am much less nervous now when I present,” he said. “Silicon Valley was a turning point for me. We actually saw with our own eyes the path from idea to wealth open up before us. There are not many events in your lifetime when you are able to look back and see crystal clear years later a life-changing experience.”

Germann got the green light and funding from the Addax board for a full project feasibility. Now Managing Director of Addax Bioenergy, Germann and his colleagues are hoping to set up sugarcane plantations and ethanol distilleries in African countries with the goal of producing ethanol for export to the EU market.

For Germann, there are a number of correlations between the project and his Executive MBA work. An oil trader for 10 years with Addax, Germann knew he wanted a new challenge, but while still staying within the same company. The Executive MBA was the ideal route to explore new possibilities.

As part of the distance learning project, Germann and his colleagues used the Five Competitive Forces Model to analyze and rate the attractiveness of the water utilities industry. In Project Enterprise, they spent 48 high-pressure hours understanding and defining the key success factors of the telecom industry and eventually came up with a new strategy proposal.

“It gave me the opportunity to go outside the comfort zones of the business in which I had been working for years to learn about something totally new and transform that into a decision process,” he said.

After building the foundation of formulating a strategy in an industry that he was not familiar with, Germann then applied the same principles for the strategy assignment related to his own company later in the Executive MBA program.

“The Blue Ocean Strategy and Diamond Strategy Model were a source of inspiration and guidance for the task of identifying a strategic diversification in my company. The IMD Executive MBA provided the tools and the fertile learning environment to explore new frontiers based on a thorough analysis of the industry in terms of business system, market segmentation, core competencies and competitive advantage.”

After analyzing the strengths of Addax vis-à-vis the competition, Germann came to the conclusion that his company’s distinct capabilities were in its know-how of investing and operating businesses in Africa and its expertise in the energy sector.

“With these three capabilities, it became clear that we had a good solid base for expansion into biofuels in Africa. The fundamentals of strategy, i.e. developing a competitive advantage on cost and benefits, really come to life in view of the current debate over biofuels. From the beginning we selected the most productive feedstock to be able to compete on production costs and not depend on subsidies. On the other hand, we have shaped the whole project to exceed the already strict EU criteria on environmental and social sustainability as well as greenhouse gas reduction performance. Customer awareness on global warming and the recent food crisis will trigger demand and yield a premium only for sustainably-produced biofuels.”

Since completing his Executive MBA, Germann is going full speed ahead on the biofuels project. His day-to-day responsibilities at Addax have significantly changed. From being an oil trader, where deals are struck quickly and the pace of work is fast, Germann is now thinking more long-term about sensitive political issues with various environmental and social ramifications. While he has graduated from the Executive MBA program, Germann is still benefiting from the lifelong learning IMD offers.

“One of the top qualities of the Executive MBA is getting to know quality people,” Germann concluded. “My EMBA leadership group still connects regularly and enables us to share ideas and problems with trusted colleagues and receive their feedback for projects and business situations we are all dealing with today. These are people who I have developed friendships with and who are experienced, senior level managers able to offer solid advice because they go through the same issues. This continuous learning is really important. I imagine at some business schools it is a matter of collecting as many business cards as possible. At IMD, you are able to develop deep, trusting friendships and then rely on these people. This is truly a unique aspect of the program.”