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Innovation framework to leverage utility innovation initiatives for smart communities
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EUC industry at a juncture – fascina4ng 4me. It is a 4me for innova4on to help transform society toward a more sustainable future. I have been working with clients for many years helping to manage technological innova4on, assessing poten4al of innova4on, or implemen4ng it.
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Innova4on: = crea4ve idea + recogni4on of value + implementa4on = the process that transforms ideas into economic value
Innova4on is then a process that starts with ideas, that must be managed: • At a strategic level by board that includes all stakeholders. • By selec4ng and following-‐up a porIolio of different projects of all types. • With each project managed step-‐by-‐step, as a stage-‐gate process, based on
results.
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• The electric industry was founded on innova4on. • In the 1880s, Nikola Tesla invented the 3-‐phase alterna4ng 60 Hz (50 Hz)
technology s4ll used in the North American (European) electrical grid. Tesla’s inven4on were then commercialized by George Wes4nghouse, who was compe4ng with Thomas Edison.
• One hundred and twenty five years later, the Smart Grid aims to solve this 19th century problem using 21st century systems. And the 21st century itself brought a new set of challenges to be met: energy efficiency, integra4on of distributed and renewable energy, charging of electrical vehicles, pressure on costs, environmental concerns, and consumer expecta4ons.
• The Smart Grid is a radical overhaul of Tesla’s grid. We are, again, talking grid innova4on.
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• We are now in the process of re-‐inven4ng the grid, but innova4on is not just implemen4ng new devices in electrical grid.
• The Smart Grid supposes the re-‐thinking of internal process and organiza4on lines of the electric u4li4es.
• Customers are par4cipants in the Smart Grid, not just passive ratepayers. • Impact on the civil society is greater than ever, as economic development
depends on reliable electrical power. • Environmental impacts affect everyone.
• Smart Grid innova4ons are not limited to implementa4on of new technologies. • Because some of the technologies are immature, the innova4on process must
include managing uncertainty at a much higher level than u4li4es are accustomed to.
• For organiza4ons focused on delivering an essen4al public service, radical innova4on is a difficult art to master.
• The level of disrup4on may be underes4mated, resul4ng in difficult implementa4ons.
• Or, the radical nature of the innova4on may be watered down to make it easier to swallow, reducing or elimina4ng many benefits.
• Because some of the technologies are immature, the innova4on process must include managing uncertainty at a much higher level than u4li4es are accustomed to.
• Because of uncertainty, organiza4ons may over-‐analyze a breakthrough innova4on, building up cost up-‐front to address hypothe4cal issues rather than learning what is worthwhile as the innova4on is developed toward implementa4on.
• U4li4es may also close down to innova4on, thinking that their mission is just to deliver reliable power and that customers should be glad to just have it.
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• The disrup4ve nature of Smart Grid innova4ons calls for a different management framework. U4li4es cannot en4rely rely on the approach used to manage informa4on technology projects (i.e. sequen4al design process in a waterfall model), nor on the approach tradi4onally used in power systems (ECP -‐ engineering, procurement, construc4on, tes4ng and training).
• Smart Grid innova4on must be open to other stakeholders: • Consumers. • Universi4es (McGill University in the picture). • Independent producers(wind farm picture is from South Africa). • Manufacturers.
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• The innova4on board oversees the innova4on process, ensuring strategic alignment with the u4lity and the community objec4ves, focusing on value crea4on.
• It is composed of senior (execu4ve) representa4ves from stakeholders, typically from u4li4es, government and universi4es.
• Its roles are to receive innova4on ideas, analyze them, select projects in the porIolio, and oversee their development.
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Managing the porIolio of various innova4on project aims at balancing risks and maximizing value crea4on. It is the process and the tools to analyze and collec4vely manage (from launch to end) current or proposed innova4on projects based on numerous key characteris4cs against set priori4es: • Level of risk – You aim to balance “big bet” projects with low-‐risk incremental
innova4on. • Technology – You aim to balance across project a number of technology to limit
risks due to technology obsolescence. • Innova4on topic – You would not want all project to address a single topic, such
as solar genera4on, but cover many topics (e.g., solar, wind, hydro…) to limit exposure to policy changes or scien4fic breakthrough.
• Geography – Ojen to align with government policies.
• Environmental impact – To align with environmental regula4ons and trea4es. • Collabora4on (open innova4on).
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The innova4on board manages individual projects through a series of pre-‐defined gates – typically 5 or 6 gates, from launch to large-‐scale deployment or commercial availability.
• Gates are decision points with defined pass/fail criteria (“Go/No-‐Go” or “Go/Kill”). Poten4al to create economic value is typically a main, if not sole, criteria to pass a gate.
• When passing a gate (including Gate 0, or launch gate), a project enters a new stage and is given the resources to complete the objec4ves of the next gate.
• If a project fails to pass a gate, it is either thrown back with new resources or objec4ves, based on the learning thus far, or abandoned/terminated.
The stage-‐gate process ins4tu4onalize ra4onal learning and allows for deliberate decision making, limi4ng poli4cal interference and decisions based on impressions and intui4on.
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