This article first appeared in Utility Dive.
Utilities have always strived to adhere to the basic concepts of the traditional regulatory compact of providing safe, reliable and affordable service to customers. However, utilities now have the opportunity to innovate using a host of new technologies and ultimately offer a new level of customer service that remains in lockstep with today’s evolving digital world.
Companies are generally seeing the need to transform and strategically evolve. To this point, PA Consulting Group’s "Innovation Matters" survey revealed that 66% of respondents believed their organizations would not survive without innovation.
Southern Company is a leading energy company that has always valued the importance of innovation and, as such, serves as an example to other utilities seeking to innovate. Walter Rojowsky, an energy and utilities expert at PA Consulting Group, recently had the opportunity to talk with Michael Britt, vice president of Southern Company’s Energy Innovation Center. The Energy Innovation Center, which is situated on the edge of the Georgia Tech campus in Atlanta, acts as a catalyst for Southern Company’s most inventive ideas and programs, all of which drive toward bringing new energy products and solutions to market.
Britt takes pride in starting as many innovation fires as possible around the business to inspire change and offer better services to customers. Britt said his job is to “stir the drink” of a business model that is really built around risk aversion (safety, reliability, etc.) and to recognize that it will change, even though no one knows exactly what it will change into, or when.
He has achieved great success in leading the effort to help improve the lives of employees and customers by growing the energy company’s culture of innovation, influencing the business model, and delivering new products and services.
How Southern Company defines innovation
Since innovation can oftentimes be a somewhat nebulous term, Britt divides it into three distinct areas, all of which need to be focused on in parallel with each other:
What is the role of the Energy Innovation Center?
The Energy Innovation Center is novel in that it addresses an area that Research and Development (R&D) departments at utilities have not traditionally fulfilled. Southern Company, for example, has a long history of innovation and R&D. From the early days of hydroelectricity, Southern Company was responsible for many advancements in generator designs and it was the first utility to start using computers in the 1950s to help with the economic dispatch of generation.
“Utilities are increasingly looking to move beyond traditional R&D which has often focused on internal technological needs related to the operation of the power grid. Today, these companies are seeking to remain relevant to the customer by bringing tangible innovations directly to them,” Rojowsky said.
The Energy Innovation Center differs from the company’s traditional R&D efforts that include, for example, work with national labs and the Department of Energy on advanced testing. The Energy Innovation Center helps the company identify unmet customer needs and works with Southern Company’s operating companies to deliver innovative solutions for customers.
Additionally, the flow of technology is moving more rapidly than ever before and it is critical to keep pace. The Energy Innovation Center serves as a tool and a resource to enable the flow of technology into more of Southern Company’s business areas and provide more solutions to the customer.
“At the Energy Innovation Center, we really see our role as an accelerator of the flow and integration of technology. All of this would happen over time as a matter of course (or at least, that is my belief), but I also believe that we make it happen quicker, and that speed is what will be even more important in the future,” said Britt.
Most importantly perhaps, the Energy Innovation Center seeks to inspire an engaged culture of innovation across all areas of Southern Company’s business.
SO Prize stimulated fresh ideas at Southern Company
In May 2014, the utility embarked on its SO Prize internal competition for employees to harness the power of innovation and collaboration.
Britt said an ideation firm told Southern Company to be reasonable with its expectations for the SO Prize because many employees work in a power plant or in the field and, therefore, would be unlikely to engage. They said to aim for approximately a 10% engagement rate of the employee base, generating about a hundred or so ideas. However, an overwhelming 42% of the company engaged in this enterprise-wide effort, garnering a whopping thousand ideas, with 147 ideas deemed good enough to implement and ultimately improve the business, he said.
“The SO Prize was very important because it really pointed to the latent, pent-up demand to share ideas and make improvements inside the business,” said Britt.
One notable project success from the SO Prize is rEVolution, which has evolved over time to become an online electric vehicle (EV) selection tool that helps a customer evaluate the various choices in the market and identify the EVs that may be best suited for the individual’s driving style, family size, etc. It is now integrated with Autotrader, an online marketplace for car shoppers and sellers, offering an important opportunity to grow the platform.
“We really think it is important to help educate customers on the various EV options that are in the marketplace. This is a tremendous resource for the customer,” Britt said.
Another example of a project that provides value to customers is Southern Company’s e-commerce platform – in partnership with Simple Energy – which provides customers with a marketplace to buy energy efficient products and services with an immediate discount using rebates.
Keys to innovation success
Britt indicated that ultimately the customer is always at the center of innovation. “If you focus on solving customers’ problems, you will create value for both the customer and the corporation. On the other hand, if you innovate to make money, it will fall flat, which is why we built the innovation center to be customer-centric.”
To other companies looking to go down the innovation path, Britt said it is important to keep an eye on technology as changes are occurring at a rapid pace. Equally important is addressing the tactical, near-term needs of the business and not just focusing on the big transformational endeavors.
“You have to find products and services that align with the company’s strategy and will help the business grow,” Britt said. “At the same time, we frequently look at a solution in terms of what it means to us inside the utility. Flip that around: focus on the customer first and you will do well.”
Amanda Levin and Walter Rojowsky are energy and utilities experts at PA Consulting Group