New products and technologies are changing how customers interact with their energy provider and have opened up opportunities to offer additional products and services designed to drive engagement, trust and revenue. The utility of the future will need to engage with customers through value-added products and services that go beyond simply providing reliable service, but how do utilities pivot from operating as a regulated monopoly to becoming innovative and inspired product marketers in a competitive landscape?
The good news for utilities is that they have abundant resources and capital to support new-product development. The challenge, however, is that they are accustomed to putting those resources to use within a very structured, regulated environment that is not well-suited to the free-thinking and “willingness to fail” ethos often required to successfully generate ideas and turn those ideas into new products and services. Simply put, innovation as well as product or service development requires a culture and skill set that many utilities lack.
Utilities should keep in mind three principles as they work to evolve into innovators and product marketers.
Principle #1: Listen to Your Customers
If you are wondering where to start, you have two options:
- Provide a product or service already available in the market (e.g., offering Nest thermostats or launching a marketplace)
- Develop a new product or service
While developing a new product or service from scratch is much more difficult and requires a different approach from how utilities typically operate, both options should start by identifying unmet consumer needs in the market through customer experience research. After you have established the needs of your customers, you can then develop a solution that addresses those needs. This is a critical first step that, if executed properly, will start you down the right path.
Principle #2: Build Success Using an All-in Approach
Unfortunately, the rigid structure that helps regulated utilities keep costs down and run efficiently can strangle innovation. Successful innovation needs an “all-in” approach that differs from what utilities are accustomed to.
Market Strategies suggests utilities set up a “sand box” for the innovation team to play in. Staff the sand box with individuals who have the right skill sets and are unencumbered by the corporate “way of doing things.” There are several design, consulting and research firms that can aid this process. This is not an easy process and success requires a dedicated, focused and full-time effort. Identify and empower the right individuals, clear the red tape, give them permission to fail and the resources to succeed, and get out of the way.
Principle #3: Avoid Chasing Revenue
Revenue can be a misleading metric, particularly when evaluating the “success” of a new offering. Why? You often need to lose money first to make money later, particularly in early rollout stages while you work to drive awareness and capture early adopters. Setting a revenue target as your initial goal out of the gate can quickly stifle the freedom and creativity needed to innovate, as well as limit the potential for success. We are not diminishing the importance of revenue—it is certainly a key metric to consider when forecasting market potential down the road, but it should not be the North Star during the innovation and development stages. If you are offering or developing a product that solves a customer need, the revenue will follow. Consider key performance metrics that focus on the number of viable ideas being generated and the effectiveness with which innovation teams are able to move new ideas from pen and paper to tangible offerings with market potential.
For more information on how you can develop, refine and innovate products that work for your customers, as well as give your utility a stronger competitive edge, download our product development guide.