domingo, abril 22, 2012

How Utilities that Become Tech Companies Might Develop Business Model Innovations

In the article From volume to value: Why utilities MUST change their business model (and one way to get started), Jesse Berst introduces an approach that goes from one end of a continuum, to the other, going through three roles that he calls infrastructure on one extreme, intermediary somewhere in the middle, and innovator in the opposite end.

He clarifies that “The volume-to-value continuum is a metaphor. In the real world, of course, the boundaries between these roles will blur; other new roles will appear. The three roles are not mutually exclusive. It is quite possible to imagine a utility that innovates one or two services, while also acting as an intermediary for several more, while also maintaining its traditional infrastructure role.”

Next is a hyperlinked version that merges the comments “Continuum Versus Discrete Smart Grid Evolution” and “The Second Generation Retailer is Just a Tech Company“ that I posted under Jesse’s article.

Hi Jesse,

Thank you for repeating this interesting continuum approach, which I respect a lot. Next, I will contrast it with the EWPC-AF discrete approach that emerged through me. A lot of the though behind the continuum also applies to the discrete approach.

I wonder if the business concept “stuck in the middle” would apply, leading to the traditional low cost and high value, either/or discrete polarization.

This is how the power industry whole gets split in two highly cohesive subsystems that are lightly coupled among them:

1) A low cost wires-only T&D (Smart) Grid regulated utility. This is critical, but it no longer owns the retail customer interface.

2) A high value innovative Enterprise (Smart) Market “Second Generation Retailer” tech company. This is where business model innovations are expected on the customer interface.

That's what has been emerging through me as the EWPC-AF, which I said a year ago may be renamed as the Value Added Electricity Architecture Framework (VAE-AF).

3) Utilities should not be forbidden of trying the intermediary role as a transition tactic, but I suspect it is a losing “stuck in the middle” strategy in the long run.

Next is a list of this year EWPC post entries, most recent first, after about half a year of inactivity.