Leader: For utilities, sharing is the key to innovation

Innovation is one of those buzzwords that seem to appear overnight, coming from nowhere to suddenly be on everyone’s lips – at every conference, at every speech, in every policy.

Sometimes such buzzwords are a bit empty; a bit meaningless. For utilities, “innovation” is anything but. As traditional, asset-based engineering businesses attempt to transform into modern, customer-focused service businesses, while continuing to invest in infrastructure and keep prices down, innovation is more than a buzz­word. It’s an essential mindset.

But what does it really mean? Arguably, there are two types of innovation. The first concerns doing the same things a little bit better – finding a slicker, safer or more efficient means of conducting business as usual by refusing to do something one way just because that’s how it’s always been done.

The second is visionary, game-changing innovation that turns business-as-usual on its head.

The energy networks sector has had a regulatory shot in the arm for innovation after decades of dwindling investment in R&D as the regulator sought to cut costs. The Low Carbon Networks Fund has by any standards been a success, and we explore some of its lessons on pages 18-20. Key to its success has been not only the dedicated funding, but the obligation to share the findings between networks and internationally. With luck, its successor, the Network Innovation Allowance, will continue the good work – though there are worrying signs that the stream of early wins is drying up, with applications for funding said to be falling fast.

All the more reason, then, for companies to look outside their own businesses when seeking innovation. I was lucky to attend the Energy Innovation Centre’s summit on innovation in customer service this week, and saw first-hand how bringing gas and electricity networks together to solve real-life problems, drawing on examples from other industries, can have revolutionary results.

Energy networks have been setting the pace on innovation, and other utilities sectors could learn from their successes. The results of our first Innovation Barometer, a survey of CIOs, CTOs and directors of innovation carried out in association with Wipro, suggest there is still much work to do. More than 45 per cent of respondents say their organisations do not invest enough in innovation; nearly 70 per cent say that while embedding innovation in the business is a strategic priority, they are not there yet. Turn to p28 for the full story.