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20 | 6TH - 12TH MAY 2016 | UTILITY WEEK Sponsored report S omething unexpected is happening in UK utilities. With levels of customer satisfaction at a low, and a growing band of challenger companies hoovering up market share, a sector not known for its entrepreneurial zeal is signalling that it is ready for a change. Enterprising start-ups are making inroads, and centres of innovation are taking shape within the larger, more tra- ditional corporations. Whether the buzz is around product innovation or customer service improvements, a new wave of entrepreneurialism in the air. "New entrants will do new things, potentially better than you. You have to be open, to look at it and to consider how customers react. Can we match it or go a step further?" says Will Morris, SSE managing director, retail. "It's a really, really great thing for this sector to be seeing so much new entry, to dispel the myth that the market's closed, and to make it more dynamic." Among traditional utilities striving to break new ground, one of the big success stories is Hive, the spin-off brand from Brit- ish Gas. Offering remote control thermostats through Hive Active Heating, connected light bulbs through Hive Active Lighting, and Hive Sensors, motion and contact censors that automate home functions, it has won 350,000 customers and is growing rapidly with sales of 5,000 units a week. However, Hive had a bumpy start in life (see box, p22), and it took a newcomer to utilities, British Gas chief information officer Dave Cooper, who had previously worked at TalkTalk, to point out that the business lacked the product people to make it work. According to Adrian Heesom, Hive chief operating officer: "[Cooper] quite rightly said: 'This is not a tariff-type innovation, this is not service innovation, this is product innovation – it's hardware, electronics, so- ware.' It's a different mentality. It was really early in the Internet of Things in 2011, but he had the foresight to say: 'We don't have these people in our organisation, this is not a core competency of British Gas.' So they went and found somebody that did." Cooper's insight was crucial in clearing the way for a new, more entrepreneurial cul- ture to flourish, and for a characteristically entrepreneurial focus on product to develop. "An entrepreneur finds something, a product or service, that customers want, creates a mission to provide it, and col- lects a group of people to sell it and to make it meaningful to customers," explains Charles Spinosa, director at Vision Consult- ing, a specialist in business transformation. "Entrepreneurialism frequently comes with innovation, because innovators tend to want to share their ideas with people, but there's a big difference between entrepreneurialism and innovation. An entrepreneur is a culture changer; an innovator comes up with and develops new ideas." Northumbrian Water Group (NWG) is flex- ing its entrepreneurial muscle in support of its three strategic aims around energy: reducing usage or improving efficiency; gen- erating renewables or maximising the ben- efit of renewables; and minimising the cost of energy procurement (see box, right). In pursuit of these goals, it wrested control of its water network from the hands of opera- tors and gave it to a computer system, sav- ing £1 million a year in energy costs; became one of the first water companies to turn 100 per cent of its sludge into methane, saving £3 million a year; and has improved water quality by reducing discolouration. "Over that period our net promoter score, which started off in the high 20s, improved to 49 per cent, which in the utility sector I am pretty proud of," says Maxine Mayhew, NWG commercial director. "We do have an entrepreneurial streak, and it's prob- ably a little bit unusual in a steady, regulated business that is quite rules bound. "We work with a lot of partners, universities and SMEs in the region, effectively using them as part of our team. We don't have all of the ideas, we're a water company, so tapping into different sectors and ideas is really important." NWG held a hackathon in March, allowing external people access to its data in a controlled way, with a view to develop- ing new perspectives on how it can use the data. "That to me was a very entrepreneurial thing to do, and something that we would never have done in the past. It's what more entrepreneurial businesses do all the time when they don't have resources. By doing it, we're building a culture where innovation is the norm. It's the way we do things around here," says Mayhew. The upshot is that employees are more engaged, creative and service-focused. NWG technical support adviser Ray Armstrong came forward with a prototype for a new product, the "porcupine", a rag-catching device that cleans sewers by collecting rags and other debris. It is now rolled out across NWG's network. Hive's culture is also one that under- stands and consciously nurtures entrepre- neurial behaviour. "We have a team of really entrepreneurial product thinkers, people Utilities and entrepreneurialism Utilities are famous for dependability rather than dynamism, but technical innovation and competition from new entrants has persuaded many that they have to be more entrepreneurial. Brought to you in association with "The upstarts are like Leicester City Football Club. Money and tradition will not beat them. An incumbent has to master the zeal of such an upstart." Billy Glennon, chief executive, Vision Consulting