Tom Flaherty is a partner with Strategy&, part of the PwC network, with over forty years of consulting experience. Most recently, he has led assignments related to standing up innovation programs and capabilities within utilities.
Articles, conferences, executive meetings and board of director discussions all celebrate innovation as the new big thing for utilities. But the quest for embedding innovation throughout these companies causes utility management teams to ask themselves how they can do this effectively and quickly.
The promise of building new businesses and deploying emerging technologies is certainly compelling and alluring. But it is also accompanied by the real challenge of execution from what is largely a standing start for most companies.
Companies have long focused on system expansion and infrastructure modernization investment. They have been less disposed toward spending on traditional research and development.
U.S. industrial, consumer and pharma companies outpace their world counterparts in research and development spending at five percent of annual revenues. But the energy sector lags at only one percent, and utility spending is almost negligible.
Some utilities have been conducting research and development going back to the World War II era. However, this effort was typically narrower and focused more on the generation business than on the network or behind the meter.
How does a utility overcome this lack of historical focus on innovation in an evolving future market and technology environment? Likely not at its own pace and not just organically.