Being one of the largest, most successful and savviest consumer marketing companies, P&G is often considered by utility companies as a model for how to develop and market new products or services.
As more and more so-called “smart-grid” technologies go to market, enabling more active customer intelligence and management of energy consumption, the skill of rolling out innovative — and potentially lucrative — new offerings to households will be important both from a financial and an environmental standpoint.
For the utility industry, learning this skill is very challenging. The utility sector grew through the 20th Century under a regulated monopoly structure, where customers didn’t have choices about providers, and often didn’t have choices about service levels either. This codified innumerable business practices across all aspects of the utility business and shaped generations of utility employees to not know anything about individual customers — and frankly, to not much care about customers, other than the overarching mandate to provide reliable service levels. To this day, many utilities still refer to customers as “meters” or “accounts” — hardly customer-centric terminology.
But it’s not just the fault of utilities. As McDonald’s opinion piece “From Soap to Energy” notes accurately, “consumers are fairly passive about their energy needs — the only times they get involved are when costs go up or service goes out.” With such customer indifference, it’s hard to break through the clutter and compel changes in behavior.
And, this change in behavior is at the root of so many energy efficiency opportunities that — as a widely-cited McKinsey study points out – represent much of the “low-hanging fruit” in untapped emissions reductions. Thus, unless utilities get stronger at marketing, much of the promise of energy efficiency will remain uncaptured.
McDonald’s brief essay is pithy — and not only highly relevant for utilities, but any cleantech innovator seeking to offer a new product/service.
“We all occasionally fall into the trap of knowing more about the technologies we invent than about the people who use them. This is usually a prescription for marketplace failure. Successful innovation requires a deep understanding of consumers’ lives, dreams, frustrations and aspirations. This level of understanding breeds insights that, in turn inspire innovation that improves lives. It’s hard, time-consuming, hands-on work.”
Continuing: “My advice to the electric utility industry is to get off the grid and into people’s homes. Understand the role that energy plays in day-to-day lives.”
For McDonald, this entails a degree of immersion into household behavior and sentiment that probably no utility has today. For that matter, it’s a degree of immersion that few entrepreneurs developing energy-saving products/services have.
Ultimately, the future of cleantech is not just, or even mainly, about the technology, or even its economics. If smart-grid technologies, and cleantech in general, are going to transcend the entrenched customer indifference about energy, the future winners will have to somehow figure out a way to tap deeply buried dissatisfactions or unleash undiscovered sources of happiness regarding energy usage.
As the old adage says, “Nothing happens in business until someone sells something.” And, as virtually anyone involved in cleantech ventures will tell you, there’s no more important validator of a technology or enabler of financial success than revenues. This all starts with the essence of McDonald’s simple advice: Know Thy Customer.
Indeed, given the daunting challenges that utilities face in restructuring their century-old operations and grooming a new cohort of human capital to be more customer-centered, a whole segment of cleantech entrepreneurship may emerge to help bridge this utility-customer gap.