How to nurture innovation in the energy sector

innovation

By Jonathan Armstrong Director, Frazer-Nash Australia

The word ‘innovation’ is being democratised. Too long synonymous with Silicon Valley, venture capital and the internet, ‘innovation’ is now embraced by all.

Our greatest challenges need innovative solutions. Providing secure, sustainable and affordable energy for all is one such challenge. It is the right time to be an innovator in the energy sector.

The need for strategic innovation

Innovating for societal need, such as sustainable energy, is a distinct form of innovation. It needs its own name. This is innovation that meets what we need rather than just what we want. It often takes longer and costs more than venture capital driven innovation. It requires a more collaborative approach to manage risk, often with government as a partner. Let’s call it strategic innovation.

Strategic innovation isn’t ‘better’, it’s just different, and to do it well we need to recognise this. It offers huge opportunity for the scientist and engineer, not just the coder. It is inclusive of the established business and government, not just the start-up. It is often the domain of the intrapreneur, not just the entrepreneur.

So how do you ensure strategic innovation flourishes in the energy sector?

I suggest there are eight key steps for strategic innovation to succeed including one that is frequently overlooked: the art and science of telling the story of your innovation.

1. Be clear what your innovation is.

Innovation is very broad and organisations need to link innovation to their business strategy. This strategy needs to provide direction, whilst remaining broad enough to give room to innovate.

For example, Frazer-Nash supports the Defence Innovation Hub, which is investing $640m in industry to innovate against defence capability requirements. The Hub provides direction by identifying capability streams that are important to the Australian Defence Force, such as intelligence, surveillance and reconnaissance.

2. Nurture the key competency of telling the story of innovation

This is what transforms an innovation culture (ideas) into an entrepreneurial culture (successful commercial exploitation of ideas). Too often great ideas fail to translate into reality because the storytelling was poor.

I’ll expand on this idea below, calling up the spirit of Roman Senator and famous orator Cicero, who advocated that all communication should seek to prove, delight and persuade. Engineers tend to be very good at prove, but less comfortable with delight and persuade.

3. Encourage curiosity

Albert Einstein famously said: “I have no special talent. I am only passionately curious.” Encouraging a sense of continuous learning across the organisation provides a great platform for innovation. This needs to move beyond seeking efficiency to proper exploration and new perspectives.

There are many approaches to this. Lunchtime seminars, short weekly provocations from your leadership team, and/or adapting the environment you work in to incorporate a creative space to try things can all help.

Related article: The verdict is in: Renewables reduce energy prices

4. Have a rubric

Once you send a signal that the business is open for innovation, you need to understand how you will respond to the ideas that come forward. Having an assessment rubric allows for constructive criticism that nurtures rather than demotivates. The European Union’s Horizon 2020 strategic innovation fund, for example, invests tens of billions of Euros but has only three assessment criteria. These are: excellence (alignment with strategic priorities and novelty); impact (scale); and exploitation (ability to translate the idea into reality). This rubric allows clear feedback to applicants.

5. Send a leadership signal that it’s important

The importance of innovation needs to compete for attention against the tyranny of the urgent. Businesses are used to competing in the market for customers and the market for recruiting talent. Operational processes and performance metrics reinforce these. Today, the market for ideas is equally important.

A leadership signal is needed to shine the light of executive attention on innovation. For example, here at Frazer-Nash we run an Innovation Competition, judged by our executives, to encourage our staff to innovate and create new services.

6. Overcome fear of failure

It is right and proper that engineers have a healthy fear of failure. The tragic Morandi Bridge collapse in northern Italy reminds us of that. But innovation requires us to move beyond certainty and this can be uncomfortable for engineers. Ideas can fail, products should not.

One way of emphasising this is to operate an innovation pipeline, in which ideas move through a staged process, with some being eliminated at each stage. This has the familiarity of a customer pipeline: not all contacts become customers; not all ideas become products or services.

7. Create unusual teams

To transform ideas into impact, you need to ensure that you have both the technology push capability (developing the technical solution) and the market pull capability (understanding what the customer needs). Organisations often separate teams with customer-facing responsibility from their technical teams. To support innovation these organisational boundaries need to be overcome.

For example, here at Frazer-Nash we create innovation teams by pairing staff with deep technical understanding with staff with deep market understanding.

Related article: Making Australia a renewable energy super power

8. Don’t forget about the business model

For many, innovation is seen as being solely the domain of new products or services. However, many of today’s truly disruptive forces are innovations of a business model. Uber doesn’t make better cars and AirBnB don’t make better hotels. They innovated the business model for monetising the demand for taxis and accommodation.

Similarly, the creative possibilities for a transmission company are much greater if they see themselves in the energy mobility business, rather than being an operator/maintainer of poles and wires.

Telling the story of an innovation is a key competency. Good storytelling is important for anyone in the energy sector who wants to influence others to their way of thinking. Roman Senator and outstanding orator, Cicero, knew this when he said all communication should seek to delight, persuade and prove. It should appeal to the heart as well as the head. Our decisions are significantly affected by our emotional reaction. So telling your story of innovation needs to be on three levels – to delight, persuade and prove.

Energy Innovator Sundrop Farms

Strategic innovator Sundrop Farms knew this when they had an idea to achieve the seemingly impossible. A leader in sustainable horticulture, Sundrop worked out how to grow vast quantities of high-quality crops in arid areas utilizing renewable resources: seawater and sunlight. They had to first convince all their stakeholders this idea could work. They did it and now grow 10 per cent of Australia’s tomatoes in semi-arid land.

Delight the heart. Tell your story in a minute. This is the classic elevator pitch and it needs to grab your audience. It should focus on the problem you’re trying to solve and build delight that your thinking is in a space that is relevant, exciting and impactful. At this stage, you’re looking for emotional buy-in, rather than delivering a logical argument. Your objective is to establish a connection with your audience such that they want to know more. You’re looking for a meeting, not investment or a sale.

Sundrop Farm’s one-minute elevator pitch was: “We’ve had an idea how to decouple growing fresh produce from the seasons. This means supermarkets won’t need to import food and the price can stay constant all year round. Even better, we can do this on low value land not currently used for agriculture.”

Persuade the head. Tell your story in 20 minutes. If your elevator trip (or introduction at a networking event, chat at the coffee machine, or response to the question “what do you do?” at the weekend BBQ) has gone well, then your audience will want to know more. It’s time to persuade the head. Put together a short presentation on your idea. Guy Kawasaki’s ‘10/20/30’ rule is a really valuable guide here: 10 slides; 20 minutes; 30-point font. Remember to describe the exploitation (market, business model, competition) as well as the technical merits of your innovation. It is easy to persuade your audience that your innovation has merit if you can point to a customer who wants to buy it.

Sundrop’s persuasive pitch might be: “Technically, we’re going to use sunlight to desalinate saltwater and grow tomatoes in hydroponics in the desert. The market is there for our product – we have signed an agreement with supermarket group, Coles, which will buy our produce.”

Prove your claims by putting your shoulder into it. Tell your story in 60 minutes. If your 10/20/30 presentation went well, now it’s time to provide what an engineer may be most comfortable with – a written business case. Let logic have its full place, providing the detailed evidence that supports the claims made in your presentation.

Sundrop Farms had to tell its story of strategic innovation to many people, at many levels of detail. This included their investors, customers, suppliers, the local community and the South Australian government. They had a great story to tell and told it well. Frazer-Nash helped Sundrop prove its story by providing technical due diligence to the project funders – helping put together the detailed evidence that formed the bridge between the art of the story, and the science and engineering of the hard business case.

The demand for strategic innovation is all around us. Decarbonising energy supply, responding to urbanisation, and keeping us all safe, secure and fed in a changing world. Engineers have many of the answers. Let’s all focus on telling the story of our innovations well, so that valuable ideas translate into meaningful change in the world around us.