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22 | 6TH - 12TH MAY 2016 | UTILITY WEEK Sponsored report Case study Third time lucky: how Hive came to life who are very skilled at talking to customers about their problems and what they do in their house every day, trying to extract that little essence of an idea that we might then be able to serve in some way," says Heesom. However, changing the culture of a large corporation to allow entrepreneurial spirits to thrive is a challenge, and corporate enti- ties are frequently bad at harnessing the entrepreneurial energies of their staff. "That poor old project [the original Hive] was squashed to death by what I call 'cor- porate antibodies," says Heesom. "The way a large organisation like British Gas has to work means that management behave a cer- tain way. It's risk averse and controlling in nature, and if you set up a new thing in a corner somewhere and ask it to behave in an entrepreneurial fashion, or in a fast and agile fashion, eventually the corporate antibodies seep out, they don't like it, and they kill it." To give Hive the best chance to grow, it was set up as a separate operating business from British Gas, with a shiny new brand, and a safe pair of hands behind the scenes in the form of finance director Colin Gard, who transferred over from another British Gas business unit. That allowed the start-up the best of both worlds: enough distance from the corporate to avoid its potentially deaden- ing hand; and an arm's-length association with a familiar consumer brand. Striking a balance between the passion that naturally radiates through a start-up, and the steadier energy of a more established business is also a challenge for those once new market entrants that are now reaching a significant size. "It's certainly a challenge. We can't all crowd around a few desks any more, so we have to cascade messages to staff in differ- ent ways," says Justin Haines, customer ser- vices director at Ovo, a challenger energy company that has grown rapidly to around 410,000 customers in six years, and which proudly tops Which? 2016 customer satisfac- tion survey with a score of 82 per cent. Hive is a success now, but it failed twice. In 2009, AlertMe, a small technology firm from Cam- bridge, came to British Gas with a set of remote plugs, motion sensors, and contact sensors for security purposes. The powers that be created a project, threw cash at it, and hoped that it would be a success. They spent £7 million, end to end, and bought 20,000 units of stock. They sold 740 units at £149 each. My post implementation review said the product's fine, the technology's really good, and the idea's a sound one, but fundamen- tally the project was squashed by being put in the IT headquarters. I said if you're going to do this kind of thing you need to do it separate from the main business. That wasn't want they wanted to hear. So in 2011 when AlertMe knocked again with a thermostat, they repeated the same mistake, and spend £5 million this time. But they had a bit of luck towards the end. The standard way that British Gas promotes new products is through the call centre network. At the time, the call centres were inundated because of price fluctuations. So in a last ditch effort they gave the stock to the field engineers. They hadn't seen new thermostat since 1985, and got rather excited, and shipped 20,000 units. It didn't break even, but when they came to reviewing what happened the then managing director Phil Bentley, asked the question: 'What do customers think about it?' We had net promoter surveys from Brit- ish Gas and there was an overlap of about 8,000 customers. There was a plus 50 point difference in the customers that had bought this £200 thermostat. The response was: 'You're telling me that customers who bought a £200 ther- "We work hard to ensure that each person knows how important their contribution is. Leadership is important. Senior managers frequently hold focus groups, and we still have a monthly town hall meeting where the whole company comes together. By adapting how we work… we can maintain that start-up feeling for a while longer," says Haines. Ovo generated a huge amount of good- will among customers through its focus on fair pricing and customer service, picking up thousands of new accounts each time founder and chief executive Stephen Fitzpat- rick spoke out about energy pricing. Such pinpoint accurate understanding of cus- tomer sentiment is a common characteristic of highly successful entrepreneurs. "Entrepreneurs tend to know the details of their business top to bottom and they can shi their businesses around as they see cus- tomers and markets shiing. They have that enormous attentiveness to the market," says Spinosa. At SSE, on the other hand, Morris says he is "quite conservative and cautious about entrepreneurialism. If by entrepreneur you mean innovative and open to change, dynamic and effective, then yes, we want to be that. But our approach and the way we handle customers is not at all entrepre- neurial. Entrepreneurial companies tend not to be customer centric, they tend to be start- ups, and very commercial". Whatever the subtleties of how entrepre- neurialism may manifest itself in different organisations, the effect of the new entrants has been to sharpen the focus of utilities on understanding and communicating with their customers. "The upstarts are like Leicester City Football Club," says Billy Glen- non, chief executive of Vision Consulting. "Money and tradition will not beat them. An incumbent has to master the zeal of such an upstart." Morris has been out on the frontline watching and listening as SSE plans its approach to the upcoming rollout of smart meters into customers' homes. "I went out with one of my boiler engi- neers last year into a customer's home. He was very polite and did all the work and then, at the end of it, the customer popped Brought to you in association with "Entrepreneurs tend to know the details of their business top to bottom." Charles Spinosa, director, Vision Consulting "