Written by Sasha Bermann, PR & Marketing manager
Within our industry, the energy industry, there is often talk of how technology is changing our industry and putting pressure on the traditional business models of the utility companies forcing them to re-invent themselves. To this, I would say just you wait and see till generation z, the digital native generation born with the internet, the smart phones and virtual life becomes your standard energy consumer – then the industry will really change.
The difference between generation z and previous generations is, in brief, that they grew up with technology, embrace technology instantly and deploy it in their everyday life to a much greater extent than previous generations. To illustrate this point and offer an idea of the changes to come, I will share a personal anecdote of how I go on holiday Vs how my parents go on holiday and what that means to business.
Family holiday anecdote
When my parents go on holiday, they check out the travel offers in catalogs, they book their trip via travel agencies, they pay via bank transfers, they live in hotels and make use of services like taxis to and from the airport. That’s the traditional way of going about your holiday.
In comparison, here is how I do it and how many young people of my generation do it – the modern way if you will. I go on skyscanner or Momondo (price comparison websites) and check out the best deals. I book it and if possible I pay with bitcoins or other virtual currencies. I book a home with AirBnB. I transport myself around not by taxi, but by Uber. This consumption pattern breaks the monopoly of the traditional business of travel agencies, banks, hotels and taxis, the same way the car made obsolete and later replaced the horse wagon. Today the horse wagon is largely an item on display in museums and medieval festivals around Europe. As time moves on and younger generations become the standard consumer in regions like Europe imagine what effect this will have on these businesses. They will either embrace the change that technological progress brings or they will find themselves next to that horse wagon in the museum – symbolically speaking. The old ways wont last.
It is about lowering the transaction costs, keep it simple
The traditional business, from all sorts of different sectors, are under pressure thanks to technology and the speed of which we embrace it. We embrace it because we grew up with it; we are tech-literate and savvy. Not only do we like it, we prefer it because it lowers our transaction costs and make events like taking a holiday easier and cheaper. Take bitcoin as an example: Traditional banks charge you a fee for cross-border transactions, they take days to transfer the money, not to mention all sorts of other hassles they put you through. Bitcoin rids you of all this. You pay and you are not charged for it. You transfer money, it takes a moment. Easy, fast and cheap. So what reason is there really for sticking with the old ways?
The younger generation’s approach to technology will, undoubtedly, have an impact on the energy industry and then there will be real pressure on the traditional way of business. Could this mean the end of utilities as we know it and a world of micro producers and micro grids kept together by telcos and bypassing traditional energy businesses? Only time will tell, but utilities would be well advised to think of alternative business models.