The notion that utilities don’t do a good job of consumer engagement is only half true. The fact is, many customers don’t want to be engaged. They just want cheap, reliable electricity, no...
The Power of Innovation, Part II
Utility Execs' Roundtable: We sat down with five utility execs who lead their companies on innovation
The January 2017 Innovation Roundtable collaboration between Strategy& and Public Utilities Fortnightly focused on how executives at five leading companies began the stand-up and execution of their innovation programs.
High expectations for innovation exist across all the companies, even though the path to ultimate program success is still to be fully designed. In only a short time, what originally defined success is continually evolving to match the requirements for market positioning.
The executives now recognize that several challenges to innovation success exist related to the role played by the utility and the time-to-market. Also important is the relationship companies want to have with risk. And, these leaders know they have to drive innovation beyond being just a concept to becoming part of their companies' DNA. And developing new business models that they have never considered.
Industrial companies focus on getting to market fast and think in one- or two- year windows. But the utilities industry never had to think about time-to-market and currently tends to consider a three-year plus window comfortable.
Markets move at speeds very different than companies, particularly regulated utilities. If pent-up demand is not met by utilities, someone else will step in to do exactly that. If future customer needs are not defined to enable fulfilling those needs, it will be too late to address the market at a future time.
The key is to connect ideation directly to commercialization. It is far more valuable to turn good ideas into value than to generate a multitude of ideas that do not hold commercial promise or cannot be successfully executed.
These utilities have pursued partnering in many forms: for investment; for expertise; for collaboration, and for big ideas. Partnering has not historically been a characteristic of the utilities industry. Too often partnerships have failed to benefit either party or create any market distinction due to misconstrued purpose and inconsistent motivations.
Successful partnering depends on enterprise and individual chemistry, as well as a shared commitment to what really matters: making customers better off. It is hard for partnerships to stand the test of time. It's still harder for these relationships to weather market adversity or unrealized expectations.
This is particularly true with respect to de-risking utilities' market bets through relationships with savvy financial investors such as venture capitalists. Through those relationships, these utilities are leveraging broad market awareness, risk syndication and capital sourcing strategies that increase the likelihood of successfully taking a new technology into the market.
Even as companies are only beginning to progress through their innovation life cycle, they are already looking ahead. They want to embed a culture of innovation, where the DNA of the business reflects the challenge of advancing the business.
The executives fully expect that pursuing a market future built on a foundation of innovation and a focus on commercialization will have wide-ranging impacts. Conventional wisdom suggests that the business model will fundamentally change, and it will. But that is not the end of the