A Simple Heuristic for Managing Technological Change in The Utility Industry.

The electric utility industry is glacial in its adoption of technology. There is evidence of this in never-ending pilot projects with startups that lead nowhere and in product design crowdsourcing campaigns that take a year and end up with products that remind one of the failed healthcare.gov project.

But change the industry must. The new consumer demands it (push) and it is what technology wants (pull). Caught in the middle of this push and pull is a cadre of management that is struggling with understanding who the new consumer is and is hampered by the bureaucracy and hierarchical decision making process in an environment where speed is crucial. Built on a premise that the utility's role was to provide stable power reliably and safely the system, and consequently the industry, has failed to adapt to a time where the consumers definition of safe and reliable power is one that is reasonably priced and sourced from renewables in a digitized economy.

What is required is a decision making approach that facilitates speed without compromising on the need to continue to provide stable power safely and reliably (as newly defined by the consumer). The new approach should factor in the 4P’s and weigh the impact of any new technology based on these four factors below by asking some critical questions. There are a few more questions than the ones listed below and I cover these in my ebook ‘Managing Technological Change in the Utility Industry’. 

  • People: How will the new technology impact consumers and employees?
  • Product: How does the new technology change the product we are providing?
  • Performance: Do our processes change as a result of this new technology?
  • Policy: what are the policy implications of adopting this new technology?

A comprehensive risk and response prioritization assessment of the answers to the questions above. This enables the development of a simple radar chart that enables the manager make the case for the right projects to be implemented at the right speed. An example radar chart for Augmented Reality (AR) is shown below. As easily seen, employees and processes are most affected by AR. This is due to the possibility to train a new employee to address the skills shortage that is quickly becoming a big problem in utilities across the country.

Simple heuristics like the 4Ps also provide a mindset modification to favor speed over ‘paralysis by analysis’. A much needed mindset change in the industry. As the industry moves to a distributed structure, as consumers request a deeper and more customized experience from their utility providers and as technology advances at all layers (from the infrastructure to the interaction layer) the ‘glacial-response-while-we-collect-rent income-business-as-usual-approach' of the utility will no longer work.

It’s what technology wants. And you and I know that technology eventually gets it’s way.

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