Innovating for Our Survival Part 3: The Collective – Can Innovation be Inclusive AND High Performing?

But that doesn’t mean it’s easy. Involving more people across the organization with different perspectives can be hard. Innovation is hard and complicated because it is a team sport. And this is when it is still inside your organization. When reaching outside the four walls of a utility and asking suppliers to participate in the process – all with different incentives – innovating can feel downright impossible.

But this is the new normal. Due to the increasingly complex technology landscape, involving outside suppliers is a “must have.” Often, these partners are the ones funding the development of new ideas “at risk” on behalf of a utility whose cost-constrained R&D budget (see part 1 of our series) forces cooperation. Increasingly, those taking on the most risk are often the venture-backed startups. Once seen as too risky, working with startups is now normal and walls are being broken down so “disruptive” startups and conservative, risk-adverse utilities can innovate together in more entrepreneurial ways. This is exciting news.

This article outlines how embracing a larger ecosystem can be an opportunity for your utility in today’s cost constrained R&D reality. As teams get larger, innovation can be more complex but much more rewarding.

The Complicated Nature of Technology Increases the Number of Seats at the Innovation Table

In today’s world, we can’t give a single utility engineer a new “widget”, send them off to a pristine R&D lab for testing, on their own timetable and come back with a unilateral decision. In today’s world, we have sophisticated technologies with software, hardware, data, and communications components that touch multiple lines of the business – and each will want to have their say in the decision-making process before a new idea is approved for production.

For example, solutions with:

• Software involves digital, data, IT and cyber reviews.
• Hardware involves standards, safety, unions, training, field crews and maintenance.
• Data involves privacy, customer, cloud and digital transformation teams.
• Communications involve fiber, IT/networks, clouds and wireless experts.

Often the providers of software, hardware and communications components in one solution are coming from different companies adding additional layers of complexity to the innovation mix.

Then, the business will also want to bring in support from:

• Project and change management.
• Business owners to fund and scale production.
• Procurement, legal, cyber and risk who will review commercial agreements.

As your ecosystem grows, the harder it is to keep everyone aligned. As an innovation leader, this is your new reality.

Inclusion Means Building Trust

Organizations that foster inclusive leaders create high performing teams that drive trust and are more likely to possess higher performance and productivity as research highlighted below from Deliotte shows.

Source: Deliotte Review, 2018

We look at what this means in an ecosystem that includes external (suppliers) and internal (employees) who must innovate together.

Building Trust with External Stakeholders – Updating the “Supplier” Relationship

“Suppliers” are an important part of the innovation ecosystem. But treating them like a “supplier” will not elicit trust in an innovation process.

If we think of innovation as anything that is new and useful, this often means working on ideas that might be a “first of its kind.” There may be no roadmap or blueprint for first movers. Products will likely not be commercially available and will still be in a prototype phase. Emphasis will be on learning and discovery to determine form, fit and function. Much of this development may be taken “at risk” by a supplier that sees an opportunity to solve a problem and they may invest a lot to develop on the utility’s behalf. Yet our procurement cycles and ways of working with solution providers may not take this into account.

You may have heard the old adage “everyone sales.”  Similarly, we like to say “everyone innovates” and when utilities think about reframing their innovation process, it often starts with procurement. The way you engage your partner in the buying process says a lot about the results you will get out of your innovation trials. If contracting and field-testing requirements are too stringent, solution providers may feel like they are being set up to fail from the beginning. We need new contract vehicles and ways of working that give space in the innovation process for both to learn by doing (see this HBR article: A New Approach to Contracting as an example)

This means the power dynamics are shifting in the procurement relationship. What is evolving is a symbiotic relationship between the utility and its solution provider beyond a transactional relationship that is based on best pricing and availability. In the innovation stage, it is about the best learning. Solution providers see value if utilities work with them to complete a full innovation cycle with shared learnings. By giving a solution provider a seat at the table with access to key decision-makers in the business, access to feedback and a reasonable timeline to provide new solutions and reach timely decisions, many are willing to waive the costs of the pilot. Instead of developing at risk on their own, utilities can take advantage of this offer to partner with the supplier so that they can build better solutions that might also benefit the rest of the industry.

Honesty and forthrightness in the why and how decisions are made can go a long way. The more trust that can be built, the more the solution provider can understand where they fit in the fabric of the ecosystem and decision-making process. Each partner can be treated fairly, even when ideas do not progress beyond the pilot stage – or multiple suppliers of a solution many need to be brought in to avoid supply chain risks to solve a problem collectively. Together, all parties can begin to understand the holistic problem that utility faces rather than just their small piece. This is where tremendous value can be created in the way the supply chain is managed and participates in the innovation process.

Building Trust with Internal Stakeholders – Creating Process, “Hole Punching” and Pitching Ideas

As a new idea enters the innovation arena and begins to take shape, it is fragile. There is a lot that may still be unknown. Yet, it is important to start by bringing all relevant departments along in the process so that voices can be heard often and early to encourage learning and get buy-in. Here inclusive innovation can mean the ability to create diversity of thought and opinion in a safe environment with those striving to better understand a new idea. Safety means being able to share early thoughts without being punished later if you disagreed with the status quo or turned out to back a solution that turned out not to be a good fit for the organization.

We see this as the most challenging step for a utility to advance their innovation program. Here are a couple of best practices to consider, especially in the ideation phase of innovation (before field trial):

• Have a clearly defined process for reaching decisions: This seems simple, but in our own surveys, we found more than 60% of respondents said they did not have a process for innovation. The process is key. It can help set expectations around where the idea is in its evolution and what type of feedback the organization is soliciting from stakeholders.
• Create safe spaces for “hole punching” ideas:  Give stakeholders ample opportunities to challenge each other as more information is uncovered about the idea before it moves to field trial. By having hole-punching sessions that create inclusive innovation at the beginning, it becomes easier to make the right decisions at the end of the process and adopt successful ideas into the production environment (source: HBR article: Drive Innovation With Better Decision Making).
• Help your innovators pitch their new ideas to the organization: Just because an innovator comes up with a great idea doesn’t mean they know how to “sell it” to the organization. If innovation leaders coach employees on how to pitch their new ideas to the organization, they may feel more confident and willing to participate in the process. We need to remember that as an idea evolves, everyone has limited understanding. By providing templates with commonly asked questions that must be answered at the various stages, it becomes easier to pitch ideas to peers who may be playing “the devil’s advocate” and bring them along long enough to uncover valuable learnings.
• Scoring and ranking ideas: Create frameworks that allow internal stakeholders to score ideas that are coming through the portfolio – from initial gut checks with an informal “thumbs up or down” rating to more formalized scoring methodologies – scoring data can prepare the organization for supporting a field trial. By putting a quantitative number on an idea and ranking it, the organization has a good sense of what they want to work on first. It can also help the solution provider understand where they sit in the long list of the utility’s priorities. When we have a portfolio of hundreds of ideas, it is not possible to work on everything at the same time. Ranking and prioritizing is necessary for successful innovation.

When Does it Pay to be More Exclusive – Amazon’s Two Pizza Box Theory

There is a time and a place for everything. Being inclusive in the beginning of the innovation process is key. Developing trust with stakeholders – internal and external – is critical. But when it comes time for a greenlit project to prepare for take-off, Amazon’s “Two Pizza Box” theory applies. The concept is that smaller internal core teams get more done and these should be no larger than what it would take to feed them with two pizzas. We use the “two pizza box” yardstick when it comes time for field trial. When the organization has made their decision to field trial an idea, the debating is done. The decision is made. Now, it is time to go fast and learn by doing.

The innovation leader must still continue to drive inclusiveness by keeping the full team aligned during the field trial and share all captured learnings transparently. When it comes time to making the final “go/no-go” decision for production, many of the original stakeholders may come back together around the table one final time. Here is where inclusivity will pay off – when it comes down to the final hole-punch and the organization is ready and willing to live with the decision.

But here, living with the decision is a heck of a lot better than punting and making no decision.

Source: InnovationForce.io

Conclusion

Innovation can be inclusive and high performing. The reality utilities find in today’s cost constrained R&D environment is that they can innovate more effectively ecosystem partners. While this can be hard, it can be rewarding and drive more value. The more utilities can be prepared to drive inclusive, innovation ecosystem innovations, the faster then lead the way to the clean energy transition.

Stay tuned, our final installment of this series will be driving to the urgent need for utilities to take action today and should be available in June. In the meantime, checkout the recording of our recent Energy Central PowerSession Innovation 2.0: The Human Side of Innovating Inside Today's Modern Utility.