AEP, Ameren, Entergy, Exelon, Southern
Warner Baxter is the CEO of Ameren.
At the June 2019 Edison Electric Institute Annual Convention in Philadelphia, Nick Akins from AEP, Warner Baxter from Ameren, Chris Crane from Exelon, Leo Denault from Entergy, and Tom Fanning from Southern Company, joined Strategy& and Public Utilities Fortnightly for our third virtual innovation roundtable.
Strategy&: Bring us up to date on the last couple of years, your innovation efforts?
Warner Baxter: Big picture, a lot has been going on. And over the last couple of years, we've been productive from an innovation perspective. We've been innovating for one hundred years, so innovation isn't new to Ameren. But we've had a more intense focus on innovation over the last three, four years, and we're seeing progress in several respects.
Number one, culturally. We have made a step change in culture. Our co-workers are engaged and recognize that everyone is an innovator, not just a select few. They also recognize that our innovation efforts put our customers at the center. They are all about creating value for our customers and the communities we serve.
Then there's innovation from an operational perspective. This innovative mindset is helping us deliver safe, reliable, affordable and cleaner energy for our customers today and positioning us to do so for decades in the future. Our focus on innovation is also driving new products and services for our customers. On top of our already successful energy efficiency programs in Missouri and Illinois, we are getting set to roll out new renewable energy and electric vehicle charging programs in Missouri.
Warner Baxter, CEO, Ameren Corporation, meets with student interns participating in Ameren Accelerator, an innovative partnership with the University of Missouri System, UMSL Accelerate and Capital Innovators, that assesses, mentors, and invests in energy technology startup companies.
Also, we have gotten better at working with third parties. We recognize that we're not the font of all knowledge when it comes to innovation. We've been intentional in terms of how we're working with energy thought leaders, and we also have our own accelerator.
We've also done better on executing innovation. We are better in terms of identifying, prioritizing, and then implementing innovative products and services.
Of course, we are not done. While I am pleased, I can't be satisfied because our industry continues to transform. Our customers' expectations continue to get higher. Recognizing we are part of this country's critical infrastructure, we just can't sit on our hands. We have to be relentless in our innovation efforts because that's how we're going to enable and implement a brighter energy future, not just for our company, but for our customers and our communities. That's what innovation is all about. That's the "why" behind it.
Strategy&: Could you elaborate on some aspects of partnering.
Warner Baxter: From a partnering perspective, we have been working with the Electric Power Research Institute for decades, including on projects associated with the integrated energy grid and efficient electrification. Together, this work helps us ensure that we have good foundational research behind some of our key innovation initiatives.
The other thing we have done is start up our own energy accelerator. When we spoke two or three years ago, we were just embarking on this program. Now we're in our third year.
The accelerator is a unique public-private partnership among Ameren, the University of Missouri system, UMSL Accelerate, which is University of Missouri, Saint Louis' own Accelerator program, and Capital Innovators, which is one of the leading accelerator companies in the country.
This program is about identifying innovative products and services developed by entrepreneurs that we can implement for our customers. It also gives us the ability to bring students into the energy space and give them the opportunity to work with entrepreneurs and companies like us.
It's also given our co-workers an incredible opportunity to work with innovators. Our co-workers become mentors to these accelerator companies, and it is great in helping drive our innovative culture.
PUF: Could you paint a picture, is it a building, what does it look like?
Warner Baxter: Our accelerator is housed in St. Louis in one of the most innovative business districts in the country, called Cortex. While Cortex is a large innovation district, our accelerator operates out of a relatively small space that promotes innovation and agility.
The results from our accelerator program have been a very pleasant surprise. Year one, we had two hundred companies apply. Year two, three hundred. And we just finished our most recent one, with four hundred companies from over thirty countries around the world applying for this program.
We make an equity investment of about one hundred thousand dollars per applicant, and we usually do six or seven per year, so now we've invested in thirteen of them and we'll have another six or seven coming up at this next cohort.
I'm pleased to say that we've had successes. Some of these companies are working with us on energy efficiency programs, on grid resiliency, and on cybersecurity. These are all early stage companies.
Our accelerator has been received very well in the company and in the community. What is even more exciting is that some of the start-ups are now opening their businesses in St. Louis.
To summarize, the objectives of the program are to keep our finger on the pulse of energy innovation. Also, to identify these technologies, to create this culture of innovation within our company, to ultimately implement some innovative technologies for our customers, and finally, to give students a unique learning opportunity.
We are also investing in later stage start-up companies through Energy Impact Partners. It is a fund that was established by industry leaders several years ago, and it invests in these innovative energy companies. Investors in the fund include utilities from all over the world.
What's great about this partnership is we don't just invest and sit back and look for returns. Instead, we are working with Energy Impact Partners in identifying and evaluating these companies. It gives us another opportunity to keep our finger on the pulse and discuss innovative ideas with the other utility investors in the fund. Our ability to share common insights is valuable to help us continue to drive innovation.
Other third parties we work with are our local universities. We work closely with the University of Missouri with our Ameren Accelerator. We also work closely with the University of Illinois, collaborating with them. We have a technology center in Champaign, and we have an innovation center at the university where we have students and interns work on data analytics.
I call them "the kids." They're very effective at driving innovation. They're not afraid to come in and say why not, what if? This is a mindset we want to instill in our organization that has been around for one hundred years.
Strategy&: What would you point to that's helped you get the employees to embrace the notion that innovation is about continuous innovation, not just episodic?
Warner Baxter: It begins by having strong alignment among your leaders on why innovation is important and what your objectives are. In our case, delivering value to our customers is at the center of our innovation efforts, which we believe will also deliver superior value to our shareholders. As leaders, we have to be effective at explaining "the why" behind innovation.
Second, once you have that alignment you have to be clear in your messaging that it's safe to innovate. We've been in an industry where you don't get rewarded, necessarily, for innovating and failing.
What we have said is, when you're innovating not everything is going to work. In those cases, we need to learn to move on quickly. Fail fast. When groups come in with innovative ideas and they fail fast, we recognize that. Because that's all part of the innovation journey.
We have also been clear in reminding our co-workers that innovation is not always a break-through discovery or incredible step change. It could be, but it need not be. A mindset of continuous, incremental innovation is transformational for organizations as well.
The bottom line is that innovation doesn't have to be a scary word. It's incremental change, and it's also step change. When you bring co-workers together, you give them that mindset and you have them start working together more effectively, then you start getting some real progress and continuous innovation.
Achieving a culture of continuous innovation is more than just messaging. We have to enable our co-workers to innovate by giving them tools. For example, we've created an online Idea Hub where co-workers can post their ideas. It's an internal social media kind of thing where they can start feeding off each other's ideas.
We also have an item called an IdeaHack. Annually, we invite co-workers from across the organization to form teams, and for about two days, these teams create innovative energy solutions for customers, improve our operations or address other problems. It is a diverse group, many of whom have never worked together in the past. The ideas they come up with in such a short period of time are really incredible.
In the last three years, as we have become more intentional on innovation, we have seen our co-worker engagement scores shoot up. In part, it is also driven by more intentional messaging around our vision as a company, as well as our mission and purpose. Our mission is to power the quality of life. Our innovation efforts are directly tied to achieving our vision and mission.
When co-workers know that it's safe to innovate, that we want them to be forward thinking, and they are empowered to do so, then you get engagement. When you get strong engagement from your co-workers, then you're going to make real progress in terms of how we're serving our customers.
Strategy&: You mentioned new products and services. Can you expand on that?
Warner Baxter: Sure. A key area of focus in our innovation efforts relates to delivering new value-added products and services for our customers. In terms of new services, our digital investments are not only going to help us from an operational standpoint, but they are also going to allow us to enhance our customer experience with improved services.
From a digital perspective, one of the services we are focused on is improving our communications with our customers during an outage. As you might expect, this is one of the most critical points in time that we have to engage effectively with our customers.
We are also focused on billing and payment, as well as move-in and move-out services. I know these services sound basic, and they are not new, but each of these areas are important interactions with customers. To the extent we can enable customers to perform these services at their fingertips, it will immediately enhance their experience with us.
In terms of new products, one product that we just rolled out within the last year is a Renewable Choice program. We did this in Missouri where we now have approval from the Missouri Public Service Commission to move forward with a four-hundred-megawatt program where we can engage with commercial and industrial customers to assist them in procuring renewable energy.
It will be a great opportunity to partner with them through a community renewable energy program that enables them to meet their sustainability goals. We can use our expertise in putting a good product together for them.
PUF: And the PSC was supportive?
Warner Baxter: Absolutely. They were also supportive of our Community Solar program. This program is much smaller in scale and it is for our residential customers. It is a one-megawatt program that was oversubscribed in two weeks, and our residential customers want more of it. We are installing the solar panels at Lambert International Airport in St. Louis.
Those are a couple examples of new products, new services. As we continue to move down the digital field, we're going to be able to offer greater products and services that will enhance our customers' experience in many different areas.
Looking ahead, I believe efficient electrification will be another area of focus for new products and services.
The bottom line is that our customers are starting to size up the quality of our products and services against what banks and airlines are doing, certainly from a digital perspective. While we don't have to be where these industries are at today in terms of the customer's digital experience, we need to be taking steps today to provide that seamless and distinctive customer experience in the future.
PUF: The efficient electrification is not just residential; it could be commercial and industrial as well.
Warner Baxter: Absolutely. I do believe that electrification is one that you're going to see a lot more attention paid to. Efficient electrification is beneficial for our customers, the environment, and the community. It's a win-win.
It will be critical to get the right policies in place to support efficient electrification for all of our customers. It will be time well spent.
Strategy&: Do you foresee that innovation will become a critical part in strategic growth in commercialization?
Warner Baxter: As we've seen innovation today, it's been more operational. In part because operationally you can implement these ideas more swiftly. When it comes to new products and services, they can take longer to implement due to regulatory review and approval processes. And that is fine. We understand it goes with the territory. The bottom line is that innovation will ultimately deliver significant benefits for our customers.
Down the road you'll see more commercial products that will come out as a result of innovation. I gave you just a few examples earlier, like the Renewable Choice and the Community Solar programs. These are products that our customers want, and we took steps to meet their needs. That's what matters.
Innovative new products and services will help us get even closer to our customers. So far, we have given our customers greater ability to manage their bills and energy usage, we are communicating more effectively with them and we are giving them products to meet their changing energy needs and expectations. If we remain focused in meeting their energy needs and exceeding their expectations, especially if we can make their interactions with us simpler through innovation, we will all win.
Strategy&: What pleasant surprises have you had moving from three or four years ago to today?
Warner Baxter: When we decided to become more focused and intentional on our innovation efforts several years ago, I expected our co-workers would embrace these efforts over time. The pleasant surprise is how quickly our co-workers stepped up and became even more strongly engaged in our innovation initiatives. They have embraced this mantra of innovation for our customers. They also recognize that if we're serving our customers well, it benefits our communities and our company. They are all in.
There could have been a lot of resistance, but it didn't go that way. Let's be clear, we're not perfect. We have made mistakes along the way and we are still learning. One thing we have learned is the importance of change management around innovation. It has to be intentional and thoughtful. We recognized that you need to spend time explaining the "why" behind our innovation efforts.
I also congratulated our co-workers for the innovation that they had been doing for decades. This is not a new idea. We've been innovating for one hundred years and so I had to encourage them to continue to do what they've been doing. But I also had to remind them that our customers' expectations continue to get higher, and so too must our innovative efforts to exceed their expectations.
As I said, we are not perfect. In the past, we would not want to move forward until we were ninety-five percent certain that things were going to be perfect. But in our industry today, we have to start living in what I call a 70/30 world. Our industry is transforming and change comes more quickly. We have to be more agile; we have to check and adjust more than ever before. We have to be looking beyond the horizon, as opposed to looking backward. I'm fortunate to work with great leaders, great co-workers across the company who are willing to do that.
Strategy&: You've moved from engagements, through ideation, operationalization. What's the next focus for you?
Warner Baxter: We have several areas that we are focused on. One area of focus is moving more swiftly and effectively from ideation to implementation of these innovative ideas. We've established a strong foundation. As things continue to change, we have to be more agile and more thoughtful.
While we have a lot of great ideas, we need to do an even better job of prioritizing what ideas we will pursue. At our company, it is often hard for some to walk away from what seemed like a cool idea and focus instead on another idea that we believe will bring more value to our customers in a more timely fashion.
We as a company, and as an industry, have to continue to be more effective in our outreach to key stakeholders. Not just to regulators, not just to legislators, but to customers and key leaders in the community to let them know how our innovative efforts are tied to delivering what I call a brighter energy future.
But also, we need to be more effective in communicating what our vision is. We as an industry, and Ameren as a company in this industry, are part of the critical infrastructure of this country. We have to be one of the leaders in this transformation to enable what is going to be a brighter energy future.
I strongly believe that we're going to have a more robust, resilient, and effective energy grid. One that's going to have a cleaner generation portfolio serving our customers. One that's going to give our customers greater levels of control over their energy usage and new, innovative products and services to serve them better. This is the vision of the future that I see over the horizon, and it is a brighter energy future for our customers and communities.
But it won't happen just because I say so. It will require us to continue delivering value through the billions of dollars of investments we make, and it will require us to continue to work effectively with our customers and key policymakers to ensure we have the right policies in place to support these investments and deliver this brighter energy future.
We have to be a leader, this critical enabler, and implementer. We talk a lot about leading today so that we can transform tomorrow, and I'm a big believer in that. We have to lead not just with messaging, but also by leading by making important investments in infrastructure, and by implementing products and services that are delivering real value to our customers and communities.
And at the end of the day, we must always remain focused on our mission, to power the quality of life, by delivering safe, reliable, affordable, and cleaner energy, and be willing to look beyond the horizon and say this vision of a brighter energy future is real. Come on the journey with us.
Innovation conversations:
