Utc Fuel Cells: Innovation Inside a Large Firm

30 Pages Posted: 21 Oct 2008

See all articles by Andrea Larson

Andrea Larson

University of Virginia - Darden School of Business

Stephen Keach

University of Virginia - Darden School of Business

Abstract

To be used to enhance student understanding of emerging markets and innovation around fuel cell technology, and the strategy and management of an entrepreneurial unit inside United Technologies Corp. The case also examines environmental issues as operating concerns and market opportunities for innovative firms. Fuel cells are a leading clean technology to replace gasoline combustion engines for transportation, and fuel cell power plants offer an alternative electricity source to the electrical grid (which is heavily dependent on coal burning).

Excerpt

UVA-ENT-0018

UTC FUEL CELLS: INNOVATION INSIDE A LARGE FIRM

Bill Miller reflected on the strategic opportunities open to the UTC Fuel cells (UTCFC) unit of United Technologies Corporation (UTC). Fuel cell technology had the potential to dramatically change the power generation industry in North America and in emerging economies over the next two decades. UTCFC was in the enviable position of claiming a long and successful track record in fuel cell technology development. Yet there were significant uncertainties. The power industry in the United States was changing rapidly under deregulation. In 2000, widely publicized blackouts and brownouts in California and power shortages threatened for other regions had opened up new possibilities for distributed power in the United States. Vulnerability to terrorist attacks on centralized electrical grids and voices arguing for energy independence (reducing dependence on outside fuel supplies) added weight to the argument favoring distributed power (local production and distribution of electricity that avoided large power plants and centralized distribution networks). Fuel cells could meet that need for stationary power.

Furthermore, the transportation sector represented a huge opportunity for fuel cell technology. But how fast would auto companies move to fuel cell technology, which technology would be selected, and how would the fuel and distribution issues be addressed? It was clear environmental issues were an increasingly important driving force in the emerging energy and transportation markets. Given the market turbulence and UTCFC's internal changes, what were the top priorities for management if UTCFC's goal was to continue to make good on its claim of being “the world's leader in fuel cell production and development for stationary, transportation, residential, and space applications?”

United Technologies Corporation and UTC Fuel Cells' History

In 2002, United Technologies Corporation comprised six subsidiary companies with well-established products in mature markets: Pratt and Whitney (turbine engines and space propulsion), Carrier (heating, ventilating, and air conditioning), Hamilton Sundstrand (electrical and mechanical systems and controls), Otis (elevators and escalators), Sikorsky (helicopters), and UTC Fuel Cells (see Appendix 2 for brief descriptions of UTC units). Few companies could match the $ 2 billion UTC spent annually on research and development, a figure that helped explain the firm's long history of growth based on innovation and high-quality engineering. Revenues had reached $ 26.6 billion in 2000 with a net income of $ 1.81 billion.

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Keywords: entrepreneurship, environmental issues, innovation management, new technology, management of, technological change

Suggested Citation

Larson, Andrea and Keach, Stephen, Utc Fuel Cells: Innovation Inside a Large Firm. Darden Case No. UVA-ENT-0018. Available at SSRN: https://ssrn.com/abstract=908789

Andrea Larson (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/larson.htm

Stephen Keach

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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