Corporate Entrepreneur Interview series — Innovating in the highly regulated US energy market
As part of our Corporate Entrepreneur interview series we spoke to Josh Gould, a Department Manager in the Utility of the Future division for Con Edison, one of Americas largest utility providers. His role is to identify, design and pilot new business models and technologies that could result in future revenue streams for Con Edison.
DC: Could you give us an example of one of the concepts your department has launched?
JG: One of the main projects that launched this last year was the Clean Virtual Power Plant. Customers invest in solar and storage for resiliency; they’re able to keep going if the power goes down. Our innovation was to help these customers monetize their unused energy supply by selling it back to the wholesale market, bringing an underutilized supply back into the network and providing a new revenue opportunity for the customer. We worked in tandem with 3rd parties to design the technology that aggregated this supply with other customers and optimized when to sell and at what price point.
DC: How long does it usually take to get an idea to market?
JG: It sounds like it should be easy, but it takes a while. From the point of conception we go through a number of stages including approval, sourcing of partners, design and concept testing to finally getting something to market. I’d say it’s almost 15 months from conception to ‘assets in the ground’. I think we do have a great culture of experimentation though — we really want to try stuff out, see if it works and then learn from our successes and failures.
DC: How do you pilot your concepts?
JG: One of our challenges is that we operate in a highly regulated industry and we need to seek approval at each stage to test our ideas. So the way we get past this is to ring fence part of the network and use this as a ‘sandbox’ to test different initiatives. We use this to try out different alternatives without actually threatening the regular supply for our customers.
DC: What are some of the challenges you come across?
JG: In many cases there is a tendency for internal stakeholders to measure the idea against the existing core business model, which can be a challenge. It’s all too common for new, uncertain ideas to appear risky or more nebulous compared to the core, and therefore undesirable to some stakeholders including our regulator. However, if we always had to be convinced that the alternative is better than our existing business model, we might not do anything!
DC: So how do you move people past this thinking?
JG: We tend to flip the argument about the regulator on its head by trying to get ahead of the game. In almost every case, our company is in a much stronger position when we can go the regulator with ideas and lead the conversation instead of being forced to act. So we can usually reach a better outcome for both our company and our regulator this way — by targeting ideas that are on the regulator’s agenda, and piloting concepts that shape rather than follow this agenda.
DC: Where do you see innovation coming from in your industry?
JG: We’re in a world now where so much innovation is being led by 3rd parties. You just need to compare the size of our R&D budget against the investment going into startups in the energy industry — we don’t compete! So we’re really keen to take a best of both worlds approach, maintaining our approach to experimentation whilst leveraging and embedding the great things we’re seeing from externals.
DC: What advice might you give someone in your shoes?
JG: One of the most critical things needed to succeed in my role is stakeholder management. There are so many different groups we need to manage, not just business leads, customers or regulators, but others 3rd parties like environmental groups. We also recognize that the customer we’re designing for may be very different from the ones we have today. We handle this by building a really broad cross functional design team covering a multitude of functions from R&D to customer operations, distribution, efficiency, etc, and bringing in different external groups into the process as and when we need. This cross functional and external approach means we get really valuable feedback along the way and keep people bought into the process.
DC: Are there any other skills you think are important?
JG: I think a team with genuine diversity of experience is really important. You need humility that you don’t have the right answer and you need to be able to leverage the skills of other people — both internal and external. Finally, I believe you need people around you that have a hunger to learn and stay up-to-date on what’s happening in the industry and to be able to bring the latest insights to the table.
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