Digital transformation
Energy: 6 C’s inhibiting change
We know that, in energy, the winds of change are approaching gale force. The Covid-19 crisis has only amplified and accelerated matters. Yet, the entrenched nature of existing systems and players raise impediments - both cultural and systemic - that have held change back. So, how to get ahead of the disruption wave? Where to even start, when the future’s so uncertain?
At Thoughtworks, preparing for the unpredictable is what we do best. Our experience helping companies both navigate and drive disruption - be it retail, media, airlines, or finance - teaches us there is no silver bullet. What’s more, it's that challenged companies face their own set of challenges in their own way. Change is difficult for all the reasons noted and more. To pretend otherwise is setting yourself up for failure.
However, there are some common patterns to industry disruption and becoming a modern digital business.
First, courageous executives need to paint the vision for change at an organisational and cultural level; especially the compelling reasons and commitment to change. Depending on how confident and specific a bet the company is making, the end-state doesn’t need to be spelt out in detail, but at a minimum there needs to be a clear direction and mode of travel. The central goal is to mobilise and motivate everyone in the organisation to join in transformation efforts; to help build the future business. While early days, Bernard Looney’s current campaign to reinvent BP (as part of ‘reimagining energy’ for BP’s Net Zero future) looks to be a compelling how-to example of this in action.
Innovation is a natural cornerstone to change. This means encouraging a culture of productive experimentation. 'Failing fast' is a core piece of the puzzle, but is not enough in isolation. A solid tip here is having your CFO on board early in order to help break down annual planning cycles in order to encourage iterative or conditional planning. Other critical elements are a data-driven approach to testing hypotheses and actually learning from failures. This mode of thinking can be difficult in an industry where, historically, operational failures could have catastrophic consequences: not only commercial losses, but critical risks to power supply, the environment and safety. Indeed, we’ve helped companies like StormGeo to harness tech and data to help manage and mitigate industry risks. However, the challenges to wider experimentation aren’t unique to the energy sector, and encouraging innovation should not imply lack of discipline or controls. Lessons can be drawn from secure technology innovation in other industries such as finance (with online security risks), healthcare (patient records), or retail (social networks, customer data and GDPR). Often the surest risk is not innovating at all.
A value-driven mindset is key to directing both innovation and change efforts, especially raising technology priorities upward from simple operational efficiencies toward value creation. Importantly, this means focusing on end customer needs and wants. People raise the objection that while customer-centricity is now axiomatic in most sectors, energy is the ultimate commodity supply: a kilowatt-hour is a kilowatt-hour, in which case it’s hard to differentiate product or service (and it’s all about scale and efficiency).
Today’s customers, though, expect more than just commodity supply. We have helped digital challengers such as Fresh Energy to satisfy the desire for greater transparency, individuality, sustainability and digital services. For one of our global energy major clients, innovation depended on secure usable access to data from legacy systems; for another, it’s about re-usable services to create fresh sources of customer data. Throughout the B2B supply chain, too, participants’ needs will diverge from each other according to location and business priorities. Keeping a clear focus on changing markets and value to your customers is central to prioritizing, once the innovation box is opened.
Above all, agile execution - facilitated rather than hampered by technology - is the vital lynchpin; and likely the biggest challenge of all. With the best will in the world, customer-focused lean innovation will go nowhere if your organisation and systems aren’t set up to deliver on the new ideas or learning. Too many fine intentions founder on the rocks of legacy systems, with roots too deep to displace and branches too spread to bypass. Equally, software development gets choked by those same systems, and locked into long-term project mindsets.
Fortunately, there are options to legacy modernisation which don’t call for upending the entire bathtub. Similarly, agile development being Thoughtworks’ superpower, we’re used to working with clients to identify and deliver the most valuable ‘thin slice’ of software. Customer-focus, rapid delivery, learning from experience. It sounds easy, but it takes commitment, practice and experience. Working collaboratively and iteratively, we help build both the internal muscle and neural pathways needed for faster value-driven software delivery.
In short, start small, start learning. Just so long as you do get started. As Buckminster Fuller famously observed of the ‘trim tab’ rudder mechanism, by focusing the right efforts and making use of natural momentum, applying a small force in the right way will turn even a supertanker.
At Thoughtworks, preparing for the unpredictable is what we do best. Our experience helping companies both navigate and drive disruption - be it retail, media, airlines, or finance - teaches us there is no silver bullet. What’s more, it's that challenged companies face their own set of challenges in their own way. Change is difficult for all the reasons noted and more. To pretend otherwise is setting yourself up for failure.
However, there are some common patterns to industry disruption and becoming a modern digital business.
First, courageous executives need to paint the vision for change at an organisational and cultural level; especially the compelling reasons and commitment to change. Depending on how confident and specific a bet the company is making, the end-state doesn’t need to be spelt out in detail, but at a minimum there needs to be a clear direction and mode of travel. The central goal is to mobilise and motivate everyone in the organisation to join in transformation efforts; to help build the future business. While early days, Bernard Looney’s current campaign to reinvent BP (as part of ‘reimagining energy’ for BP’s Net Zero future) looks to be a compelling how-to example of this in action.
Innovation is a natural cornerstone to change. This means encouraging a culture of productive experimentation. 'Failing fast' is a core piece of the puzzle, but is not enough in isolation. A solid tip here is having your CFO on board early in order to help break down annual planning cycles in order to encourage iterative or conditional planning. Other critical elements are a data-driven approach to testing hypotheses and actually learning from failures. This mode of thinking can be difficult in an industry where, historically, operational failures could have catastrophic consequences: not only commercial losses, but critical risks to power supply, the environment and safety. Indeed, we’ve helped companies like StormGeo to harness tech and data to help manage and mitigate industry risks. However, the challenges to wider experimentation aren’t unique to the energy sector, and encouraging innovation should not imply lack of discipline or controls. Lessons can be drawn from secure technology innovation in other industries such as finance (with online security risks), healthcare (patient records), or retail (social networks, customer data and GDPR). Often the surest risk is not innovating at all.
A value-driven mindset is key to directing both innovation and change efforts, especially raising technology priorities upward from simple operational efficiencies toward value creation. Importantly, this means focusing on end customer needs and wants. People raise the objection that while customer-centricity is now axiomatic in most sectors, energy is the ultimate commodity supply: a kilowatt-hour is a kilowatt-hour, in which case it’s hard to differentiate product or service (and it’s all about scale and efficiency).
Today’s customers, though, expect more than just commodity supply. We have helped digital challengers such as Fresh Energy to satisfy the desire for greater transparency, individuality, sustainability and digital services. For one of our global energy major clients, innovation depended on secure usable access to data from legacy systems; for another, it’s about re-usable services to create fresh sources of customer data. Throughout the B2B supply chain, too, participants’ needs will diverge from each other according to location and business priorities. Keeping a clear focus on changing markets and value to your customers is central to prioritizing, once the innovation box is opened.
Above all, agile execution - facilitated rather than hampered by technology - is the vital lynchpin; and likely the biggest challenge of all. With the best will in the world, customer-focused lean innovation will go nowhere if your organisation and systems aren’t set up to deliver on the new ideas or learning. Too many fine intentions founder on the rocks of legacy systems, with roots too deep to displace and branches too spread to bypass. Equally, software development gets choked by those same systems, and locked into long-term project mindsets.
Fortunately, there are options to legacy modernisation which don’t call for upending the entire bathtub. Similarly, agile development being Thoughtworks’ superpower, we’re used to working with clients to identify and deliver the most valuable ‘thin slice’ of software. Customer-focus, rapid delivery, learning from experience. It sounds easy, but it takes commitment, practice and experience. Working collaboratively and iteratively, we help build both the internal muscle and neural pathways needed for faster value-driven software delivery.
In short, start small, start learning. Just so long as you do get started. As Buckminster Fuller famously observed of the ‘trim tab’ rudder mechanism, by focusing the right efforts and making use of natural momentum, applying a small force in the right way will turn even a supertanker.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
