Power & Potential

AUTHOR: Cameron Cooper   DATE: 14.12.06   ISSUE 2, 2006

A day in the life of Anthony Kongats involves phenomena that are beyond the imagination of most CEOs – nanotechnology, superconductors, power architecture and the like. His approach to building a business, however, is easy to comprehend.

Anthony Kongrats, head of CAP-XX, says his approach to building a business requires passion, strategic focus and flexibility to adapt to product and market needs.

You must be passionate. You must have a strategic focus. And you must have the flexibility to adapt to product and market needs.

Kongats heads CAP-XX, a dynamic Australian company that is making its mark internationally in the competitive world of superconductor technology. Named one of the World Economic Forum’s 2005 Technology pioneers, the honour goes to technology leaders that are seen to be developing and applying the most innovative and transformational technologies which have the potential to make a significant impact on business and society.

For the uninitiated, supercapacitor technology is an ideal power solution for increasingly smaller, longer running electronic products such as mobile phones, digital cameras, PDAs, medical equipment and notebook computers. Capable of providing high bursts of power for activities such as snapping a digital photograph or sending wireless transmissions, supercapacitors help bridge the gap between traditional capacitors and batteries.

Traditional capacitors have been around for years, but they typically serve low-energy applications, whereas CAP-XX components deliver power via a thin, flat, prismatic package. They are playing a valuable role in wireless technologies and renewable energy sources such as fuel cells and solar power.

In such a highly technical and sometimes speculative sector, Mr Kongats says a balance must be struck between pursuing a long-term business vision and having enough flexibility to adapt to market needs. “In our sort of business you have to have a high tolerance for ambiguity and uncertainty,” he says.

A global focus

Based in Sydney and with additional production facilities in Malaysia and sales offices in South Carolina, Texas and Taipei, CAP-XX is one of a growing number of Australian companies that, according to BRW magazine, have been born global.

Such companies work to international benchmarks. They are flexible, fast-moving and, most of all, smart.

In the past few years, CAP-XX has shipped more than a million supercapacitors around the world.

Companies should remain faithful to a business plan and not get distracted.

Despite this success, Mr Kongats admits it was fraught with danger to start a business with “not much more than an idea” and without any certainty about the final product or benefits it would bring to a consumer.

“It’s really starting with a clean sheet of paper and saying ‘where are we going to take this concept’,” he says.

In the early 1990s, Kongats bought a manufacturing business in a competitive sector with low margins.

Things were tough before the CSIRO, eager to use its carbon technology expertise in an arena other than coal mining, approached Mr Kongats to help it adopt supercapacitor technology.

A proposal was presented to the NSW State Government for funding and, with nothing much to lose, Mr Kongats bought an option into the technology to “have a seat at the table”.

Now as CEO of a thriving business and responsible to stakeholders and technology experts, Mr Kongats says juggling balance sheet and R&D expectations can be tough.

He argues that many companies fall into a trap whereby technology becomes the chief driver for the business “and it becomes a case that you are trying to shoehorn this technology into making it fit a business opportunity”.

At the same time, he is wary of traditional business models that start with consumers’ needs and work backwards to a product or service solution. “The reality is that a lot of great gee-whiz stuff happens…because there’s some geek or scientist or engineer who discovers some really quirky feature that no one has thought about before.”

Forge relationships and overcome cultural barriers in foreign markets.

Consider your options
Mr Kongats who graduated from AGSM’s MBA program in 1987 is well schooled in the disciplines of business leadership. He says organisations must consider two key questions: what business are we really in, and how are we going to compete? He then advises executive teams to start thinking about options to “enrich that strategy”.

“Look to acquire options that fit with your business vision. In fact, one day these options may themselves turn into a business.” CAP-XX proves the point. After recognising the potential of supercapacitor technology, the company set about targeting a series of niche markets in international locations. Along the way he has adopted what he calls the “bowling alley” approach to management.

CAP-XX picks a beachhead customer in an industry segment (knocking over the front tenpin, if you like) and then focuses on superior service to that client. To exploit that “win”, it targets other design or product groups in the same company or even market competitors (the knock-on effect scatters the other tenpins).

Mr Kongats explains: “So we’ve built up a strategy of penetrating a market segment or niche by using a credible initial customer as our beachhead and reference site.” A second guiding principle has been to use partners as much as possible to forge relationships and overcome cultural barriers in foreign markets. CAP-XX concentrates on its core strengths while relying on local experts to manage cultural sensitivities.

A third lesson from Mr Kongats is his recommendation that companies remain faithful to a business plan and not get distracted.

More to achieve
Despite bedding down a recent IPO and basking in the World Economic Forum recognition, Mr Kongats and his team are not resting on their laurels. In March, CAP-XX unveiled a significant breakthrough in its BriteFlash power architecture to provide LED flash camera phones with enough light to produce highresolution images.

Such innovation has been at the heart of the company’s success, although Mr Kongats concedes he is not sure what being truly innovative means.

CAP-XX is one of a growing number of Australian companies that have been born global.

If, he says, it is an ability to marry unmet market need with a new solution “then clearly what we are doing is innovative in a whole lot of areas”. For now, the CAP-XX focus is on hand-held devices, mobile phones and digital cameras.

The next horizon includes medical devices and fuel cells. One area that CAP-XX is still getting its head around is the value of industrial branding and marketing.

Mr Kongats says: “While it’s clear that consumer brands are valuable, we were not sure about the value of branding an industrial component.” CAP-XX relies on sales to large technology companies that assemble its components into products. They take much of the glory through their brand, while CAP-XX has the advantage of targeting a number of major consumer suppliers.

A decision has been made not to advertise, relying instead on a market-by-market strategy targeting individual companies. This means dealing with a relatively small number of end customers which, Mr Kongats says, for a small Australian-based company with global aspirations makes more sense than dealing with tens of millions of potential customers around the world.