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Marketing and Competing

Fortnightly Magazine - July 1 1997

will continue to make either the product or service or seek outside help to do so. In this resource-stingy environment, utilities will find it very tempting to move outside their organizations to acquire the necessary skills or competencies. At times, they will do so at the expense (em or sacrifice (em of resources they already have.

Utilities are not alone in making these decisions. Other competitive industries, such as telecommunications, high-tech and pharmaceuticals continuously ask themselves these questions. The winners are the ones who know when to grow a competency and when to go outside to find the resource.

For example, literally overnight, AT&T built a credit card business. It had all the core competencies in-house: the information and transaction processing systems, and the capital from its allied long-distance service. IBM, on the other hand, went outside to buy Lotus because it needed to become a major player in computer networking and did not find this expertise inside. Hoffman-LaRoche allied itself with a genetics engineering firm because it understood that the next big leap in diabetes treatment and obesity would come from biotechnology and not its traditional pharmaceutical expertise.

Technology: Improvement or Distraction?

For some utilities, recognizing competition has meant beefing up their identified core competency. According to Craig Harrison, manager of business strategy with Pacificorp, his organization has earmarked customer service as a core competency worth investing in. "We are definitely investing in customer service as a core competency. ... Most innovations would fall under the category of distribution automation, but we have also moved to 24-hour phone contact with our customers instead of the traditional walk-up centers."

"One of the primary challenges that today's electric utilities face is developing and maintaining a culture of continuous improvement and innovation," comments Stephen R. Connors, director of MIT's electric utility program.

"While enhanced customer interfaces are essential for identifying and vending new energy services, they can become one grand distraction. The competitive electricity/energy market will remain a technology-driven industry. Utilities need to retain their expertise in energy technology integration and management, such as distributed generation and enhanced monitoring and control. They must keep this technological talent in-house if they are to keep ahead of competitors.

"Lose this technological competency," Connors concludes, "and state-of-the-art call centers will wind up handling complaints and confusion, effectively transforming opportunity into overhead."

What Are the Strengths?

All these examples beg the question: What are a typical utility's core strengths? Do they lie with technology? What company already has some competencies that utilities will need 20 years from now? Just examine the AT&T case. Everyone considers this company one of the premier telecommunications firms. What reason does it have to enter the credit card market? That was the question some six years ago. Today, however, the answer is clear. AT&T has exhibited all the necessary core competencies for the credit card business. All the banks (em the traditional card issuers at the time (em were surprised. Not AT&T. It saw the credit card as a means to extend its telephone business. It also had all the knowledge, the competencies,