Ten Startup Tips for Utility CEOs

Published: Mon 24 Jun 2013
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

When you’re privileged to be an Executive in Residence at a Silicon Valley incubator like I am, you enjoy exposure to many interesting ideas and thought-provoking perspectives.  Just the other day I listened to a serial entrepreneur deliver a talk that summarized key learnings over 25 years of starting and building companies.  The presenter had stunning successes as well as a few expensive failures.  As I listened to the talk, it was clear that this excellent advice directed to twenty-something wannabe bazillionaires was equally relevant to electric utility CEOs and regulators with utility oversight. 

How is a startup like an established electric utility?  On the surface, there’s no comparison.  Startups are small, with little or no revenue - often with just a great idea and a highly motivated team of true believers who have embraced a disruptive technology or service concept.  Utilities are big, with well-established revenue streams and experienced employees who operate by the mantra of safe, reliable, and cost-effective electricity.  But the business models for electric utilities are changing.  Utilities are confronting disruptions in the forms of new Smart Grid technologies, a range of transformative regulations, and residential and commercial market adoption of innovative financial instruments.  Utilities must reinvent themselves to successfully survive and thrive in the transformation of the traditional electricity supply chain comprised of generation, transmission, and distribution.  Utilities need to think like startups to realize reinvention.  Every utility CEO and the agencies and politicians that regulate them should take the following ten tips to heart. 

1.     Zero in on megatrends. Smart Grid megatrends include privately-owned renewable sources of electricity proliferating in the distribution grid; transactive energy models that drive market participation in the distribution grid; hardening the grid for resiliency in addition to reliability; and investments in IT/OT convergence.  The distribution grid is changing, and utilities are challenged to address the impacts to their operations. 

2.     Don’t be arrogant.  It sounds so simple, but is not always easy to achieve.  The CEO is the most visible sales person in an electric utility, but you’re not selling electricity.  You are selling visions to stakeholders – both internal and external.  No one likes an arrogant salesperson.

3.     Manage your time on the most important tasks to build the business. With the introduction of Smart Grid technologies and empowered consumers with choices, what builds the business now is different than what your predecessors would have prioritized. The old business model built on a presumption of ever increasing electricity consumption is over.  You can slash spending, and many Smart Grid technologies can help with that, but this tactic does not create new sources of revenue.

4.     Focus business on what really counts. You’ve got a big organization to reinvent to thrive in a new electricity value chain. Get your message out there that it’s not business-as-usual with your employees, and embrace effective change management practices.  Your captive, subscription-based model is morphing.  The good news is that utilities are set up for subscription-based services – so focus on new services you can offer that leverage this strength.

5.     Don't try to do everything. The most successful executives freely admit that they hire a team that’s smarter than they are.  Find the best talent from inside or outside the company to bring in fresh perspectives, experiences, and knowledge.  Challenge them to envision a reinvented utility based on the Smart Grid megatrends. 

Failure is not an option, some in the industry might say.  Nonsense.  Of course it’s an option.  Successfully navigating the Smart Grid megatrends to the satisfaction of all utility stakeholders takes hard and smart work.  I’ll share the remaining five startup tips for utility CEOs in a future article.