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Video

Jason Glickman: Digital Strategy for Utilities

Three lessons from successful digital transformations can guide utilities executives.

  • June 20, 2018

Video

Jason Glickman: Digital Strategy for Utilities

Fewer than 20% of utilities executives feel confident that they know how to proceed with their digital strategy. Jason Glickman, who leads Bain's Utilities & Renewables practice in the Americas, shares three lessons utilities can take from successful digital transformations.

Read the Bain Brief: Digital Strategy for Utilities

Read the transcript below.

JASON GLICKMAN: We're finding today that digital is one of the top two or three agenda items for most global utility CEOs in their teams. We recently surveyed a number of global utilities and found that less than 20% of them were confident that they knew how to proceed with digital and what it meant for them.

Part of what we've done at Bain is look across other industries, look at dozens of companies and industries that have gone through digital transformation and are farther along, and studied what's made them successful or not, and what can we apply to the utilities sector. And we've really found there are three main lessons.

The first is to take a stand in terms of what direction the industry's heading and how you're going to participate in that. So for example, in utilities, that could be improving asset utilization. You've got a sector where traditionally a big portion of the asset base is used less than 50% of the time for the hottest day of the summer, coldest day of the winter, power plants, wires, etc. Or it could be improving field productivity. We have a shrinking labor force. We have a rise in demand on the grid, in particular for investment. And we have to find a way to apply digital to close that gap.

Once you've established that that's the direction for the sector, you need to make some choices about how you're going to participate. We often find that utilities will have dozens of use cases generated bottom up from the organization, and they'll fragment their efforts and not use their scale. So we advise folks to pick one or two of those themes for transformation in the sector and really focus on it and drive it through.

Thirdly, utilities need to address their operating model. That's an issue in every company undergoing digital transformation, but we find utilities have some unique aspects relative to other companies. In particular, their horizon for planning has traditionally been 30 or 50 years long, and digital technologies may be obsolete within less than 5 years in some cases. Most utilities also operate at a regional or localized level compared to national or international digital natives, and they need to find a way to access some of that scale and not try and recreate everything on their own. So they've got to create a network and a set of partnerships across their business.

Lastly, there's a big cultural element for utilities. That long-term planning and the criticality of the infrastructure leads to a culture that is focused on risk reduction as compared to digital natives that actually reward risk and failure. And so it's finding a way, within your operating model, to create some contained experiments where you can take some risks, learn from it and apply it to the rest of the business.

Read the Bain Brief

Digital Strategy for Utilities

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