A key focus for the board must be the functionality and integration of new digital technologies — answering the question, “Is our business fit for a digital world?” While cloud computing, social media and customer mobility have been around a while, the big game changer is now the ability to bring these together with technologies like the Internet of Things (IoT), big data, machine learning and virtual reality. This explosion in technology is enabling new competitors to pursue opportunities in the power and utilities sector, and I see more and more utilities entering new partnerships to retain their market position.
A number of big utilities have passed the point of ideation and structuring their innovation processes. But I see many that are struggling to take those innovations into the mainstream. There is no shortage of ideas, but the hard part is knowing how to take an idea and turn it into business as usual.
A digital journey
Invention is just the first step in a long commercialization process. Utilities appear to be in a number of different phases:
- There are those in what I call the developing phase, a period of self-examination to assess existing strategies for relevance in a future competitive landscape and to start thinking about how to find the right balance between internal and external capabilities needed to deliver growth.
- Some are in a building phase where creating a culture of collaborative innovation within and beyond company boundaries is vital.
- The release phase is perhaps the most important area for utilities to get digital right and arguably the hardest. This is when management adopts an idea and aims to scale it into the business. In this phase, it is important to understand the organizational transformation needed to make this a success.
- Then there are those in the establish phase, the period when the new service or product is rolled out and promoted, and its success is measured and evaluated.
Is your business strategy fit for a digital world?
As utilities move through the phases of their digital journey, there a number of key questions to think about:
- How are you reorienting and differentiating your business?
- What can you learn from competitors and early adopters?
- How can you innovate and create a unique experience within the existing regulatory framework?
- What culture and capabilities do you need to enable this unique experience?
- How can you manage the trade-offs between customer experience, cost to service and business risk?
- What drives shareholder value in this brave new world?
There are no right or wrong answers. The key is to recognize the structural shift in the sector and the pace of disruption. Embracing change means being aware of new risks but also of the opportunities arising from new technology. Those companies that can get ahead will have a real first-mover advantage, having created the right environment, leadership and culture to innovate and succeed.