Utility Week

UTILITY WEEK | 18TH - 24TH MARCH 2016 | 9 Sponsored report Drivers Regardless of the utility market segment rep- resented, contributors to this report said the key drivers for innovation in their organisa- tion are: Efficiency: manifesting in reducing cost to serve, asset performance improvement, pro- cess improvement, etc. Customer experience: manifesting in ser- vice innovation, bringing non-traditional business models to market, improving the reliability of services, engaging with com- munity energy and self-consumption trends, etc. Climate change: manifesting in integration of low-carbon technologies, decarbonising energy sources, energy efficiency, infrastruc- ture resilience, etc. Competition: this is among the primary drivers of innovation in energy supply and in the advent of market opening for non- domestic water retail in 2017 it is becoming a significant influence on innovation in the water sector. Despite the lack of true competitive driv- ers among monopoly energy networks, sev- eral contributors said regulatory structures have been successful in creating a competi- tive environment for innovation in the sec- tor. (There was some debate over the extent to which this was a positive thing.) Problem areas Regardless of the utility market segment represented, contributors to this report said the aspects of culture and governance they find most difficult to optimise in order to support innovation are: Time: making time for employees, beyond innovation teams, to engage in innovation activities. Tracking transfer to business as usual: as companies become more confident about conducting innovation projects and more projects reach completion, the focus of innovation leaders has turned to ensuring that innovation outputs are embedded sus- tainably in business as usual. Collaboration: there is growing confidence and structure behind internal collabora- tion, which brings in a wide variety of busi- ness perspectives for innovation. However, external collaboration is still felt to be dif- ficult and laborious – especially "cross-vec- tor" collaboration. Understanding innovation best practice: as innovation leaders seek to improve the pace, focus and uptake of innovation, there is considerable interest in finding ways to "codify" innovation, measure innovation benefits more accurately and improve pro- cesses for managing innovation from con- cept creation to adoption by the business. One of the most popular ways of achieving these improvements is by learning how other organisations approach innovation. Some also advocate formal benchmarking. It is reassuring to note when looking at these problem areas for innovation in utili- ties that leadership support for innovation was not commonly identified as a chal- lenge. Most interviewees were extremely positive about the buy-in and engagement of their own senior management and board- level teams to supporting innovation, and some reported directly to chief executives – for priority programmes if not all innova- tion activities. This is positive because it is widely believed that establishing board-level behaviours that support innovation can be one of the most challenging areas in building strong innovation cultures. That said, some participants in this research did express the view that there is still room for improvement in terms of ensuring senior leaders are consistent and clear in their support for innovation. The fact that similarities exist across util- ities in terms of the drivers and challenges for innovation suggests that there could be significant value in greater benchmarking and best practice sharing about processes and approaches to managing innovation, both between utility companies and with companies beyond the sector. To read Innovation in UK Utilities: a State of the Nation Report in full go to the downloads section of utilityweek.co.uk YES 53.57% 15 Historical regulatory barriers to innovation in energy supply reflect a strained relationship between Decc, Ofgem and the market There is a need to move the culture of investment away from reliance on NIA, otherwise there could be an innovation car crash " " " " l 52 per cent of respondents said cross- departmental collaboration within their organi- sation is an area in which they need to improve in order to support innovation. This reflects opinions expressed in interview-based evi- dence that central innovation teams are seek- ing to improve the way they interact with those conducting innovation projects in the business, and the way in which learnings from innovation projects are shared across the business. l 43 per cent of respondents said they felt that collaboration between their organisation and other companies in the utility industry was insufficient, while 61 per cent said they felt that collaboration with companies outside the sector was insufficient. This reflects similar findings in interview- based evidence submitted for the State of the Nation report, where collaboration with other utilities was o en felt to be patchy. It also reflects opinions expressed by supply chain representatives who said that, despite some recent improvements in the expression of innovation priorities, utilities o en seem inac- cessible to external partners seeking to bring innovative solutions to market – especially small and medium-sized firms. Other notable findings from the most recent Utility Week Wipro Innovation Barom- eter include: l 48 per cent of respondents said they felt utilities could learn a lot about innovation from the digital technologist sector. l 67 per cent of respondents said they were somewhat concerned about the availability of skills to support innovation. Sufficient 8.70% 2 Good but leaves room... 21.74% 5 Non-existent 8.70% 2 Insufficient 60.87% 14 Do you feel that collaboration between your organisation and organisations outside of the utilities industry to inno- vate on common challenges, or to improve your approach to innovation, is: Do you believe your organisation invests enough in innovation? NO 46.43% 13

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