Disruptive Innovations Struggle with Broken Systems

Published: Mon 01 Dec 2014
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

A colleague working for a startup with an innovative solution for the US public safety sector recently gave me a status update on the sector, and dwelled on the difficulties for his company to find an entry point in this sector. He talked about how the procurement processes in small to large city governments were ill-suited to accommodating innovative solutions. “They are all broken,” said my colleague, summarizing the state of city procurement processes, although his terminology was more colorful but inappropriate to my editorial standards. The resources that created the requests for quotes and proposals were procurement process experts, but often unable to bend these rigid processes to accommodate innovative technologies or services that could be a perfect fit for the first responder agencies they represent. In other words, its tough to fit square pegs into round holes.

The issue of broken systems is hardly limited to procurement processes within the public sector for Smart Infrastructure innovations. It’s endemic in the Smart Grid sector, with many cash-poor startups failing to successfully endure the marathons that many utilities have made of their technology evaluation and procurement decisions.

The situation has to change. Utility grids are aging. The American Society of Civil Engineers noted in a report titled The Failure to Act, The Economic Impact of Current Investment Trends in Electricity Infrastructure” that by 2020, the US electrical grid will need an average $75 Billion per year investment to upgrade its generation, transmission, and distribution systems. The situation is equally dire for city infrastructures – transportation systems, water and wastewater systems, and more.

We typically think of improvements only in the context of how things are accomplished now. To paraphrase Henry Ford, if he had asked people what they wanted, they would have answered “a faster horse” as automobiles were a luxury item unavailable to the vast majority of consumers. Henry Ford did not invent the car. He invented a way to make formerly expensive cars affordable for the mass market through a highly standardized and automated manufacturing process.

Disruptive innovations in Smart Grid and Smart Infrastructure technologies and services are square pegs. They don’t always conform to standard procurement processes. How can we improve existing city and utility procurement processes to accelerate Smart Infrastructure and Smart Grid investments? It’s a question that utility and city executives should ask themselves so their processes don’t become barriers to innovations that would improve their operations.

It’s time to break the existing processes with an aim to simplify and streamline them.   One eye-opening exercise would be for senior managers to try to navigate their procurement processes as outside companies. Perhaps they would see ways to reduce costs, reduce friction, and reinvent procurement to accommodate a wider range of solutions than those offered by vendors that have perfected management of procurement processes.

Christine Hertzog