European Utilities have been through the good times in recent years, driving growth on the back of relatively stable business. However, political headwinds in the form of regulation, the blurring of industry boundaries, the consumer drive of energy technologies, and the volatility of commodity prices are all challenges on the industry’s horizon. Given this changing context, it’s vital that the sector re-assesses its approach to innovation, and starts to think beyond the usual channels to turn these challenges into opportunities and find fresh growth over the next decade.

With the impact of the Fourth Industrial Revolution fundamentally altering the Utilities and Energy sectors, businesses must embrace the new emerging technologies that are disrupting the market and develop fresh ways of working to stay relevant in the long run. Digital consumers are demanding fast-paced change and transformation in an increasingly decentralized market, meaning that Utilities must actively look for ways to bring the outside in – becoming more agile, acquiring new capabilities and fueling new revenue streams.

The good news is that we are already starting to see this change, and many Utilities have already become more collaborative entities in the energy value ecosystem. Utilities must work together with their customers and co-create value with their partners.

In France, Engie has built two cross-organisational ecosystems that foster, spread and industrialise innovation, both internally and with select partners across Europe. Our research finds that larger Utility companies taking different approaches to both partnership and organisation structure.  

Structuring and integrating innovation

This new way of working won’t reach its full potential unless Utilities set themselves up internally in the right way, and adopt a truly agile mindset. The innovation entities that Utilities are building must be well-integrated into the main organisation in order to have maximum impact.

According to the TCS-commissioned new TCS-IDC Energy Insights report, more than half of European Utilities have set up innovation labs. This is a fantastic achievement and must be celebrated, but this isn’t an end point in itself. Looking further into the issue, the report found that less than half of European Utilities run new businesses within the perimeter of their core company, while only a quarter of Utilities have created a dedicated strategic business units. 

The advantage of running these innovation labs within the perimeter of the firm is that they can make use of contextual knowledge of business and of customers. However, Utilities must mitigate against the danger of slowdown caused by the inertia of a larger corporations.

Utilities need to consciously invest in the structures that enable new ideas to flourish. This includes the space for innovation to take place, evangelists to promote it internally, and processes that ensure the output of this innovation is fed back into the spine of the organization.

Building Digital capabilities is critical to success of Innovative projects. For this Utilities have to harness the talent that they have within as well as partner effectively. For example the TCS-IDC report found that two third  of European Utilities realise that they are short of analytics specialists –  Utilities need to find a way to mitigate through partnership and upskilling.

The research finds different approaches taken by Utilities. In some cases it is more bottom up by engaging employees in a whole new way and enabling them to become a digital while in other cases we see there is a strong focus on top down drive with Chief Digital officers heading the CIO organizations and steering the organization. In either case, the cultural change is underpinning the organizations approach to business.

Collaboration for the customer

It’s vital, though, that all this is focused on meeting the needs of the empowered customer. Perhaps the biggest impact to businesses has been on the customer’s demand for exponential value which has been identified as an important dimension in the Business 4.0 framework of TCS. Customers want the best products and world-class services that’s delivered instantaneously and has that all-important ‘wow’ factor.

Innovation needs to be carefully managed and filtered so that it addresses the underlying challenges posed by the Fourth Industrial revolution. The TCS Business 4.0 Framework is in response to addressing these challenges and helping customers see them as opportunities for growth and transformation.

Whether it’s a hackathon, a transformative engagement or a strategic partnership, the output has to be channeled into tangible benefits to the end customer.

Last but not the least, choosing the right collaboration model is vital for success. Leveraging the ecosystem is essential from a time-to-market perspective. Partnerships are the key to success in the 4.0 world.

If you’d like to learn more about how collaboration will be the key to success, please have a look at our report