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UTILITY WEEK | 1ST - 7TH APRIL 2016 | 21 Operations & Assets Views from the floor : "Those who succeed in building strong, smart innovation cultures which make the most of available resources – both in terms of people and technology – will form a pivot point for the industry, swinging it in a new direction." Arun Krishnamurthi, vice president and global head of utilities, Wipro "Collaboration is often identified both as one of the most important elements of a successful innovation culture, and one of the hardest things to achieve consist- ently in relation to innovation projects." KR Sanjiv, chief technology officer, Wipro produced in partnership with: However, with talk of targets came talk of failure – more specifically fear of failure and the way in which this has affected innova- tion culture in utilities. Council members said the potential con- sequences of failures in their critical national infrastructure mean they are more likely to prefer incremental to disruptive innovation. One council member said the utilities would "love to be seen to be doing things but are very nervous. Critical services cannot be jeopardised". Despite this conservatism, from a cultural perspective it was acknowledged that the prospect of failure should not be allowed to discourage the generation and development of new ideas among employees. Whether or not an idea is successful, the process of chal- lenging status quo approaches to business and operations must be supported. Ideas from outside the sector should also be assessed for their relevance to utility inno- vation challenges, said attendees. Indeed, there was hot debate over the perceived division of sectors into unhelpful silos, which stop innovation in cross-cutting busi- ness activities – such as retail – from being shared and transferred freely. The benefits of drawing down innovation from academia were also discussed, with one delegate say- ing that universities oen "have solutions but no problems" to solve – and therefore that industry has a role to play in applying innovation generated elsewhere. Crucially, it was stated that the applica- tion of innovation should be driven by the needs and demands of customers. However, it was also acknowledged that investors and shareholders may not always see customer- led innovation as an enabler for the returns they require. Careful communication of inno- vation goals, and associated risks to inves- tors and shareholders, is therefore needed and is likely, again, to lead to a preference for incremental innovation, said dinner guests. One way of clearly identifying and miti- gating innovation risk is to support more demonstration and testing at scale. SGN's project for testing new gas compositions in Oban was mentioned as a good example of this. Overall, innovation is clearly seen by the council as a fundamental activity, with the survival of some businesses depending on it. How innovation comes about is likely to vary from company to company and sec- tor to sector, and "there is no silver bullet". However, improving understanding of a range of approaches to innovation, among both industry and regulators, is considered essential. 1. Culture and innovation • There is a conservatism when it comes to innovation, where the risk of failure could affect critical services. If something goes wrong, there could be a huge impact on the consumer, so utilities o en tend to be cautious. • Incremental change is as impor- tant, and significant, as bigger and more wholesale innovative ideas. • Utilities need to foster innovation by giving people the confidence that their ideas will be considered and that there is permission to fail. 2. Investment and innovation • The perception of risk is impor- tant. There is the question of whether innovation will down- grade the attractiveness of a utility to investors, or if it leads to greater financial rewards. • Change and innovation is crucial for survival. All businesses, includ- ing utilities, need to continually innovate and evolve to ensure they are fit for purpose and can con- tinue to operate at the standards required. • Innovation could expose share- holders to increased risk. Utilities need to carefully consider how their innovations affect their returns to shareholders. 3. Regulation and innovation • The regulators are supporting innovation in different ways. Ofwat is giving water companies freedom to innovate with its outcomes-based approach, while Ofgem has provided a regulated space for innovation. • Regulation is not the driver of innovation, the companies themselves are. • The regulators are seen as rela- tively innovative and were praised for highlighting innovation. Ofgem came out highly compared to the Financial Conduct Authority. 4. Lessons from other sectors • Collaboration is key. Teaming up with businesses from outside the sector will help lead to better innovation outcomes. • Innovation transcends sectors. It is necessary to think about key verticals, such as retail service, rather than thinking in silos. • Change is being driven by custom- ers wants and needs. The expecta- tions from one sector transfer into another, so innovation needs to keep pace with these demands. DISCUSSION TOPICS