Copyright of the Daily Oil Bulletin 2017
Sponsored Content: Leading Innovation - ATCO
For decades, electric utilities have enjoyed a long run of success with a business model of centralized power generation and regulated, rate-based distribution to consumers.
While this approach has ensured a robust, safe and reliable power grid across North America, the emergence of newer, decentralized energy technologies, along with broad deregulation and global competition, have created new challenges for established industry players.
In this environment, regional power companies are seeking new approaches to growth, and are looking to innovation for solutions. Their dilemma: how to retain customers and remain competitive while exploring diverse markets, investing in unproven technologies, and inventing new business models to grow the utility of the future.
Kinetica Ventures was established to help energy companies apply the power of innovation in a rapidly changing market and technology landscape. A program of Innovate Calgary, Kinetica’s mission is to help energy technology developers bring transformative solutions to the world’s most pressing challenges in oil and gas, power and carbon.
Recently, they partnered with ATCO to help nurture their internal innovation capacity through skills development in entrepreneurship and lean start-up thinking, applied in a corporate context.
According to Wally Thorson, Kinetica Ventures’ director of technology and market intelligence, working with larger energy corporations was a natural extension of the work Kinetica is doing with start-ups. “The more deep-dive collaborations we experienced with industry, the more we saw a need for established companies to embrace more agile, lean principles that have a huge transformative impact in the start-up world,” he says. “ATCO is a great example of how start-up thinking can assist corporations to look beyond present business practices, and pursue emerging growth opportunities through iterative, evidence-based approaches.”
ATCO first sought Kinetica Ventures’ services to assist in identifying and sourcing new technologies that could become future growth drivers for their business. As scoping conversations developed, it became clear that ATCO was also looking for new ways to leverage existing organizational capabilities and to equip their teams to explore disruptive innovation opportunities that might fall outside of ATCO’s current business model.
“This is a common pattern we see across much of the energy industry,” says Kevin Frankowski, Kinetica Ventures’ executive director. “For years, companies have prospered by executing a proven business model in oil, gas or electricity by focusing their growth efforts on sales while pursuing incremental operating improvements and efficiency gains. For these companies, innovation is primarily viewed as ‘cool new technology’ that can be applied to solve current or known business challenges. In a rapidly changing marketplace, an incremental improvement approach like that can only take you so far.”
Breaking out of this mindset requires organizations to recognize that new growth is achieved from new and unique tactics — pursuing real invention versus relying on incremental approaches — in conjunction with the boldness to re-imagine new business models and inventions that open up different market and revenue generation opportunities. The reality is that true innovation is hard to achieve through continuous improvement models; new technologies aren’t enough to bring about disruption. New business models are required to create, deliver and capture value.
For ATCO, the desire to explore new business horizons already existed, but there was also a realization that doing so would require new innovation tools and processes, along with a mindset shift that embraces experimentation, exploration and rapid iteration to discover novel market opportunities.
“We already had all these amazing resources in our business, but we needed help changing our perspective to look beyond our current way of doing things,” says Loraleigh Kovacik, Director of Sales for ATCO’s Electricity Global Business Unit. “We learned how to apply business model thinking and lean start-up methodology within our innovation teams. We’ve come to see that speed and agility matter more than getting it right the first time and minimizing risks at all cost. Kinetica showed us how to create, test and learn what customers need in an iterative way that is faster and more agile than traditional planning approaches.”
In January, ATCO participated in a two-day workshop, led by Kinetica, bringing in a broad cross-section of staff in engineering, sales, operations and finance. “Rather than diving immediately into technologies and new product ideas, we looked at new opportunity development as a process of creating, delivering and capturing value in the context of an overall business model,” says Kovacik. “Working alongside potential customers to discover and co-develop the value they are seeking is really what innovation is all about.”
Following the workshop, Kinetica guided four ATCO teams through an eight-week innovation sprint to validate their ideas with customers, culminating in a “Dragon’s Den” style pitch event with group executives. “This new approach really reinforced the importance of adopting entrepreneurial thinking and evidence-based customer insights,” concludes Kovacik. “Our power industry is changing fast. At ATCO, we are looking for ways to invigorate innovation and entrepreneurial thinking that help our teams chart new pathways to growth. With Kinetica’s help, our teams are more connected with customers, more energized, and better aligned on how we will grow our business through innovation.”
ATCO and Kinetica Ventures are continuing their collaborations, with a second set of innovation sprint teams anticipated to launch this fall.