Adam Bernstein, Managing Partner at New Energy Capital: the second in a series of articles with an international perspective on Developing Managerial Capabilities: what talent is needed?
Founded in 2004, NEC was one of the first private equity investors to focus on clean energy and infrastructure assets and has provided support and financing for many projects throughout the USA in solar, water, biogas, ethanol, biodiesel, landfill gas and fuel cells. Adam Bernstein, Managing Partner of New Energy Capital, was asked to speak on the subject of present and future management capabilities for the energy sector at the Council on Business & Society international forum in Boston, September, 2015.
When contributing, Adam Bernstein chose to articulate this article around two perspectives: recommendations for students and graduates seeking employment in the energy sector and what NEC sees and expects of management capabilities.
For students and graduates: Chance favors the prepared mind
From New Energy Capital’s perspective, Adam Bernstein begins by urging students and graduates to foster intellectual curiosity. It is tremendously rewarding to work in such a multi-faceted field, and with endless learning opportunities. Energy is an erudite sector incorporating many disciplines that include science, technology, politics, markets, environment, finance, and global dynamics. “As Louis Pasteur said”, quotes Adam Bernstein, “chance favours the prepared mind”. Read and understand your power bills. Read your car owner’s manual and your hot water tank instructions. Install your own light fixtures. Energy is a physical business that exists in real space: therefore, root your analysis of energy business problems in first understanding the physical parameters.”
Starting up and starting out: the energy career path
Adam Bernstein sends an initial note of caution to would-be young hopefuls wishing to work in the energy sector, recommending that students be wary of working for start-up companies directly from school and encouraging them to get more industry familiarity first. “Unless it’s a special situation that you’re extremely familiar with and have a personal connection to, it can be difficult to really understand the risk/reward proposition you’re signing up for at a start-up.”
If students are MBA, it must be understood that most MBA entry positions in the energy sector are largely financial, either within a CFO reporting line, or working on business development/M&A. Energy companies are usually levered and highly structured entities. Adam Bernstein urges hopefuls to know their accounting for the job interview and hints: “be able to tell someone the difference between income and cashflow”.
As a career in the energy sector progresses, former students will find that they’ll be working less directly on models and numbers, and spending much more time dealing with government bodies: from local permitting agencies to the federal DOE and Treasury, and possibly also international bodies. A rule of thumb here is to avoid neglecting basic understanding of policy and regulation and seek relevant available coursework.
Be excited about the future
The past 10 years have seen an energy revolution in both fossils and renewables, says Adam Bernstein. Going forward, smart technologies will continue to reshape energy on even an individual level and it is interesting to think about questions such as the energy usage impact of being able to turn your thermostat up and down remotely from your smartphone. Be excited about the future, concludes Adam Bernstein.
From a company perspective: when the wind blows…
Picking up on excitement, Adam Bernstein and NEC consider themselves very lucky when it comes to recruiting as talented employees, many of whom have cycled through various technologies to get there, are genuinely excited to work in the industry. “When I moved to the energy business 10 years ago,” states Adam Bernstein, “wind was the growth employer, and today many people that started in wind are spread across the industry. For the past 5 years solar has been a huge driver of recruiting and talent incubation within energy. “Storage may be the next growth technology”, asserts Adam Bernstein when questioned on the probability of a future industry driver.
Success is turning chaos into energetic coherence and action
Above all, and from NEC’s perspective, the company focuses on hiring Creators with a capital C: that is, both junior and senior individuals who can generate work production on their own without relying on experienced partners to micromanage workflow, a far removal from a “paint-by-numbers” approach that is sometimes the norm. “Employees should be able to impose structure on chaos and be able to turn a disorganized soup of information, people, and documents into a coherent thesis and action plan when working on deals”, states Bernstein.
It can sometimes be challenging for companies to hire new MBA’s. Whereas pre-MBA analysts can effectively undertake work such as doing financial models, reconciling portfolio company reporting, and gathering information, strategic decisions like negotiating deal terms or advising portfolio company management has to be done by experienced partners. The challenge is for companies to give new MBAs work that doesn’t ultimately reduce to translating emails from junior folks to senior folks. According to Adam Bernstein, for MBA graduates this typically means taking a core specialty skill, for example a certain technical expertise or a specific financial structuring expertise (i.e. tax equity structuring of ITC/PTC) from before business school, and building an in-house knowledge center around that.
Often a simple “I don’t know” is a great answer to a question
Equally, employees must learn healthy skepticism, pressing and challenging their information sources when the dots aren’t connecting, and never resorting to guessing or hypothesizing answers to questions. Often a simple “I don’t know” is a great answer to a question, insists Adam Bernstein: it accurately and concisely conveys New Energy Capital’s understanding of a situation and yields a clear follow-up step. Build a culture of efficient precision when it comes to information, he recommends.
A rewarding sector to work in
Rewarding employees for intellectual rigor and adhering to process is very important in energy, maintains Adam Bernstein. Generally characterized as a large scale, project-oriented industry with a high level of workload and analysis, energy sector businesses that deploy capital ultimately produce a relatively small volume of transactions. Bernstein concludes from experience that employees may spend a lot of time on projects that aren’t executed, but they’ll be evaluated on their process quality.
Adam Bernstein, Managing Partner, New Energy Capital
For further information visit the New Energy Capital website
Edited by Tom Gamble, Communication coordinator at the Council on Business & Society, from Adam Bernstein’s notes and speech at the Council on Business & Society’s 2015 Boston Forum Energy, Business, and Society.
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