There are big shifts going on in the energy and utilities sectors, with changes in the social licence to operate and the rapidly shifting economic model. There’s an awareness of climate change and an increased emphasis of the need to ‘do something’; there is a shift to low carbon solutions, with governments enacting laws to force action. At the same time, consumers are demanding change; even lobbying from investors concerned about ESG (Environmental, Social & Governance) is forcing change.
When they try to innovate and change, many organisations are locked into what I call an ‘engineering-dominant’ approach which hampers their innovation. An ‘engineering-dominant’ approach is where teams have to write business cases and provide evidence to ‘prove’ something is going to be successful, before they are able to deploy resources.
This is not how innovation occurs.
We often observe innovation in organisations being hampered by the same engineering-dominant thinking that actually makes the industry so successful. The solutions for one approach create problems in another.
Recently the team at AGLX has been taking a deep dive into energy and utilities sector innovation and has seen many successful outcomes. We have also seen a number of times that innovation has been unsuccessful. We have identified three broad categories where innovation has failed:
1. Atomistic Innovation
We try and train individuals to be innovative (like sending people on a design thinking course) but we don’t change the system in which they operate.
Innovative people will usually crash into organisational inertia and ultimately lose the will to stop pushing. This is a waste of resources and frustrating for the people involved.
Some people can’t or won’t participate. In fact, some people are in roles where they should not be expected to innovate, such as those who manage critical systems and infrastructure.
Those who are innovative usually just want to get on with it but become disillusioned with the rigidity of the organisation.
Innovation does still happen in some places, but it is usually ad hoc and deliberately hidden from senior management.
2. Innovating in Silos
‘Skunkworks’ was pioneered by Lockheed Martin’s Advanced Development Programs and is used to describe a group that is set up adjacent to the core of an organisation, given a high degree of autonomy and unhampered by bureaucracy, with the task of working on advanced or secret projects.
This may work for organisations that build discreet products and services.
It almost never works in organisations with a high degree of interoperability and complexity.
The result is that a few edgy things get designed and built but it is really hard to integrate these back into the larger organisation. The ‘skunkworks’ team are viewed with resentment and suspicion by the rest of the organisation. You might get innovation, but you will almost certainly have a culture problem.
3. Innovation Theatre
Innovation usually starts small and messy, it is on the edges not the middle.
Many business leaders want innovation to be big, visible and clear, mostly to satisfy frustrated senior managers and board members.
Innovation theatre usually involves a lot of PR and management attention and that creates a real fear of failure. Innovative ideas get pushed through with much fanfare but are quietly killed off later, because they don’t meet the needs of the organisation or fit their context. Innovation theatre starts to look like a cargo cult. We go through the rituals and make a lot of noise, but innovation never seems to land.
Safe to Fail
We’ve been helping a number of organisations build ‘safe to fail’ experimentation through our ICE Innovation® framework.
This includes enabling multiple parallel experiments, or ways of working.
There is often not just one single solution to a challenge and this approach means you don’t have to pick the one single approach you think is going to win. We use a framework to allow success to emerge as a consequence of coherent action across different approaches and allows for ideas that seem ‘logical’ but are not yet proven.
The testing of the ideas and principles is deliberately fast. This is not about competing for one to win, but about coming together to reflect on what has been learned and ‘failing fast’ so that resources are not unnecessarily expended trying to make something work.
Distributed Decision Making
We have also been working with teams to build confidence and skills in distributed decision making. This is not about a complete ‘free-for-all’ but is about unlocking some of the constraints within organisations that hold them back, but doing it in a safe way.
We have held the engineering dominant thinking at bay until we have done some experiments, tested some ideas, explored and learned. We are trying to avoid chaos, while enabling serendipity and success!
If you are a leader in the energy or utilities sectors, what is happening to enable innovation in your organisation?
Is your organisation adaptive and stepping confidently into the future, or struggling with what to do and how to do it?
Do You Want to Change the Status Quo?
As you can tell, this is something I am passionate about.
We’d love to talk with you if you are a leader who is excited about what you read and you recognise this might be a great approach for your organisation.
AGLX is an adaptive strategy consultancy that allows organisations to be confident in complexity & turn uncertainty into a competitive advantage.
We work with the leaders of organisations who are looking for fresh thinking and want to challenge the status quo.
Get in touch with us for a confidential discussion about how we can help you.