How Andrew Littlefair has grown Clean Energy Fuels by tackling the biggest challenges Featured

8:01pm EDT April 30, 2012
Andrew Littlefair Andrew Littlefair

Forget the rabbits. Hunt the big game.

The one-time advice of a colleague has become a guiding philosophy for Andrew Littlefair in his role as president and CEO of Clean Energy Fuels Corp., a company that is trying to turn natural gas into the commercial vehicle fuel of the future. But to make a real impact in an emerging industry, Littlefair has needed to thing big — he’s needed big thinkers, big goals and big customers to raise the profile of his business.

In short, he’s needed to hunt for elephants.

“One of the best pieces of advice I ever got was “You guys need to be hunting for elephants,” Littlefair says. “Don’t chase rabbits. That is why we needed to develop a good understanding of what our value proposition is to our customers. We needed to focus on fleets, and fleets that use a lot of fuel, so we really tried to carefully design around those markets. Then, we have stayed laser focused on going after those. We focus on airports and vehicles that operate out of airports, refuse trucks, transit buses, and now heavy duty trucks.”

To continually hunt for elephants, Littlefair needs to reinforce what Clean Energy is as a company, who the company serves and where the company needs to go in the future. Then he needs to enable his people to achieve those goals. With Littlefair’s philosophy as a main driving force, Clean Energy has risen from $91 million in 2006 revenue to $211 million in 2010 revenue.

“Ultimately, we’re faced not only with running a business, but also creating an industry,” Littlefair says. “That is kind of a significant, ongoing and important challenge that we face. Moving people to a new fuel has all sorts of new stuff associated with it. It’s easier today than it has been in the past, but it has been a challenge and it will continue to be a challenge that keeps us on our toes.”

Find your customers

Most leafy plants grow toward a light source. Your business, in that sense, really isn’t that much different from the potted plants on your windowsills at home. Your light source is the revenue provided by your customers. Where the most revenue can be generated is almost certainly where you’ll grow your business.

About a decade ago, Clean Energy scored one of its biggest and longest-standing contracts with Waste Management. At the time, there was a governmental push to reduce emissions from city service vehicles throughout Southern California. Littlefair and his staff saw an opportunity to convert diesel garbage haulers to natural gas. Waste Management was among the first sanitation companies in the region to hop aboard the natural gas bandwagon.

It was an ambitious project for company that was just entering the space, but it was a critical win for Littlefair and his team, and taught the leaders at Clean Energy a great deal about retaining a major client.

“We really didn’t have the right product at the time, so we worked with a company that was doing vehicle conversions, and we went out and got the grant money to pay for the conversion of their diesel trucks to natural gas,” Littlefair says. “Then we went out and built a station on Waste Management’s property to dispense fuel, and worked out a long term fueling contract. That started out 10 years ago with seven trucks, business has changed a little bit over time, and today we now have a national operation and management agreement with Waste Management. We work very closely with them on building their stations, even providing the equipment and doing the maintenance.”

But getting from converting the first garbage trucks to natural gas to maintaining a longstanding and strong relationship with Waste Management was a process that took years. It took a great deal of listening, adjusting and Littlefair doing whatever it took to continue to build the relationship.

“Early on in the business, utilities were involved, and they built stations,” he says. “But it was sort of a ‘build it and they will come’ theory. There were no natural gas vehicles out there to speak of, so it was sort of like building a station and looking for a needle in a haystack. So what we did was really start to analyze the markets, figured out what we really wanted, and started to identify customers that had what we wanted. We wanted companies with a lot of vehicles, and vehicles that used a lot of fuel, and preferably vehicles that operated as return-to-base vehicles, where they always came back to a central area for refueling and maintenance.”

Over time, Littlefair and his team began to identify the customers that met those criteria, including Waste Management, and began to reach out to them. Reaching out, in this case, means doing research and gaining a deep understanding of what the customer needs.

In Clean Energy’s case, Littlefair even hired a former Waste Management senior manager as a member of his executive team.

“I ended up hiring a senior guy from Waste Management as a vice president because he knew the refuse business and he spoke the lingo,” Littlefair says. “You always have to be talking to the customer, listening to the customer, and doing whatever you can to understand how you can best serve the customer. That is how you develop the strategy for how you are going to serve the market. In our case, and in the case of many businesses, you put a lot of that connection in the hands of your sales team. You listen to them, you empower them and you motivate them. You still lead them, but they’re your ears and eyes in the field, so you delegate that customer interaction to them and hold them responsible, because you as the leader can’t do it all.”

Develop discipline

Listening to your customers is a great start. Defining the goals of your business, and rallying your people around those goals, is essential to long-term growth. But none of those initial steps will mean anything if the seeds you planted don’t take root.

Your vision grows roots through discipline. You need to execute each day on the systems and processes you have put into place, which are aimed at allowing your company to achieve the goals that you and your leadership team have set.

It’s a maintenance task that every business head has to perform. If you aren’t setting the tone from your position, you can’t expect others to maintain the course you have set for the company.

“I’d say ‘discipline’ is the right term,” Littlefair says. “You just have to stay disciplined. I’m a pretty good motivator and leader, and a pretty good communicator, so we’re always trying to make sure that we’re doing things to ensure that we all stay on the same page. Businesses change, we add and we adapt, but you still want to make sure everybody is with you and all on the same mission. That is all really key.”

A big part of communicating and reinforcing goals is measurement. Littlefair says the long-held business belief that an ability to measure something equals an ability to manage it is still correct. The nature of how you measure and what you measure might change over time, but the need to quantify results is always present.

“How do you develop the discipline? Part of it is you need to measure you success, take stock of where are and whether you are doing well enough or not,” Littlefair says. “You had better know what you are aiming for and you had better set some goals to get there. Sometimes, I get criticism from within the company that I set goals too high. But I feel like you need to set goals that are a reach to obtain. Anybody can hit a low goal. I want to keep the organization striving for something outside their reach.”

Ambitious goals do prevent a treadmill mindset from taking hold, in which your employees become complacent and content to do the same job at the same level of competency every day. That is a recipe for stalled growth, backsliding and getting left in the dust by your competition.

But you still need to find the sweet spot between ambitious and unattainable. If you set goals that are too far beyond the capabilities of your people, you’ll overburden them, stress levels throughout the company will rise sharply, and the overall effect will be damaging to your collective morale.

It’s a tightrope that Littlefair has repeatedly walked as he continually tries to serve the needs of bigger and more demanding customers, while still staying within the capabilities of his team.

“It’s harder for me, because I am a sales-oriented individual,” he says. “I do have to check myself on that. If you set goals that are too far out of reach, the goal no longer becomes significant because you can’t attain it. What I’ve found over the years is that the organization counterbalances. If there is somebody in the organization who is too optimistic, there is somebody else who is more realistic. Any good leader is going to have to end up balancing that. You listen and take into consideration the various points of view. Not that you’re going to run your business by committee, but you can take the information from your management team, and that ends up being pretty important as you finalize your goals.”

Finding that balance as a leader is not an exact science. A great deal of balancing aggressive optimism with pragmatic realism comes from knowing the people in your organization, the customers you serve and the conditions of the market.

“There isn’t a recipe, but that is what you need to do,” Littlefair says. “You need to have an optimistic viewpoint. Sometimes being too realistic is too pessimistic. So I think a good leader takes all these inputs and puts them into place, and work that out. And you don’t do it in a vacuum, you get a lot of that from your company and from the people who work with you.”

Ultimately, growing your business and broaching new markets takes vision and a willingness to take calculated risks. But making those changes stick is a far less glamorous and far more mundane task. You need to connect with customers, serve their needs and ensure that everyone in the company is maintaining the discipline to do the same. Much like Thomas Edison’s often-referenced description of the invention process, it’s 1 percent inspiration and 99 percent perspiration.

“My job as the leader is to coalesce the vision, getting it approved by our board and developing that with our senior management,” Littlefair says. “I’m kind of the chief communication officer and the chief motivator. There are certain things I have to do that no one else has to do and vice versa. But I think what a good leader does is set the vision and the implementation, hold people accountable and make the adjustments necessary for that to happen.”

How to reach: Clean Energy Fuels Corp., (562) 493-2804 or www.cleanenergyfuels.com

The Littlefair file

History: I was born in Detroit, and we moved to California in 1963. I grew up in Torrance, Calif.

Education: B.A. in political science, University of Southern California

Littlefair on constructing a clear message: Like most companies, we have an annual strategic planning process. And we’re still small and entrepreneurial, so don’t confuse our process with what might happen at some place like IBM. But our managers gather information from well down in the organization, we have a series of one or two-day meetings, we started out with a larger group and break it down to a smaller group, cover a lot of areas, and we begin to sort new business opportunities, existing opportunities, reflect on past goals. It’s kind of a living process that goes on for a couple of months.

And through those several meetings, you ask people to embellish on their thoughts and different ideas, and what they think we need to pursue. As you develop a plan, and a lot of these things will end up being in the plan, that is part of communication, just the participation in the plan begins to bring everybody along. Of course, it doesn’t necessarily mean that everybody is together. When you finish the plan, they’re kind of 75 percent or 80 percent along the way, you need to make sure you have a plan to disseminate the goals, and you can’t do it too late in the year. You have to do it early and often, and you have to empower your team and managers to disseminate the plan, and if your company is small enough, you’ll try to do as much of that as you can personally.

Littlefair on developing a value proposition for customers: I think it is trying to stick to your knitting, understanding what it is you do well and what the proposition is that you have, and why you are better than others. Then stay damn focused on it, but realize that it sometimes takes longer that you think. One of the things I think as an entrepreneur or a business leader is that sometimes these things take longer than you think. Occasionally, you just have to kind of stick with it and through the thick and thin sometimes. That's the key, and that's what anybody really has to do in business.