Give us a brief description of yourself and RWE Npower.
RWE is a large, German company, which has about 23 million customers across northern Europe. It owns companies in the UK, the Netherlands, across Germany and then towards the east, in the Czech Republic, Poland and Hungary. Npower is the UK subsidiary of about 3.5 million customers, focused in the energy retail sector.
In terms of my role, RWE has identified the need to respond to the significant change happening within the energy market globally, with a focus on disruption and innovation and looking for us to be the leaders of the future energy system.
My team is very much at the heart of the innovation hub, and is the UK outpost for RWE. RWE has a number of outposts. It has one in Silicon Valley, it has Tel Aviv, it has a relationship incubator in the Berlin outpost, and in the UK we are a fundamental part of RWE’s innovation thrust.
What key technologies and new business models are you seeing as opportunities or threats to your business?
We see competition coming in from a number of areas. Effectively we think the change that is coming within the energy system is being driven by people, that people are having highly personalised experiences across a whole range of different retail sectors, and that their expectations of what they get from energy are changing significantly.
As well as new entrants and competition from incumbent energy providers, we see competition coming in from everything from entertainment providers such as Sky, digital healthcare and security. A lot of that technology is really about providing services and using connected technology in the energy market.
You are working with Nest, which is now part of Google and a key partner for RWE. Describe the relationship you have there and how it was launched?
We are the European energy partner for Nest. It was launched in July 2014 in the UK and Netherlands. As an energy partner, we agreed to offer Nest learning thermostats as part of an energy bundle into the UK and the Dutch markets, as well as trying new features, developing new features across other channels, such as boiler propositions and other related maintenance contracts, on a trial basis.
We are building on that partnership to negotiate much more of a strategic approach, moving to be much more embedded in the move towards full service provision.
Your venturing is very much a partnership approach rather than direct investment. Describe how your venture partnering works, with Nest or other organisations.
The partnership with Nest is very much a partnership to go to market together, and it may well change in the future. We did not set up our innovation activity with a view to going heavily into the venturing space, but we are, at the moment, setting up a corporate venturing activity within our innovation hub across RWE.
We have invested in a couple of companies so far. One is a company that optimises energy efficiency within the home, particularly the output of distributed generation and solar panels. And we have invested in a company which is a data and analytics company out of the US. Increasingly you may see us making some small investments in companies that are of strategic importance.
We are very much about recognising that, in the past, energy utilities took a view that they had to manufacture, own, distribute and install everything themselves, and we think that model is changing, and it needs to change.
Taking a partnership approach with companies that we are working with, such as Yale, Nest, D-Link and various others, is to recognise that to deliver the best and most innovative services to customers, you need to have a rich and best in class set of capabilities in your ecosystem. That does not come with just doing it all yourselves.
The second thing that we have done, which has been announced recently, is we have signed an agreement with Innovation Birmingham for an initial three years, to work with them as an incubator in the internet of things and intelligent energy to start bringing forward or instigating various start-ups to help us in our mission of being there within the future energy system.
Which partners do you find are the most effective? What lessons have you learned?
It is early days. Certainly Nest is a very positive route forward. We have companies such as Geo, where we are doing a demonstration and a pilot within the area of an intelligent home, in which we are partnering the likes of Yale. The signs are pretty good, and we are all learning a lot as we go forward.
I have worked with you and your people on that over the years and people are so central to making corporate venturing so successful. Introduce some of the team members – the numbers you have, their locations and the skill mix.
At the RWE level, dedicated to innovations, there are around 100 practitioners across Europe. In my team I have about 18 people. Some of them are Npower people, about half of them are contractors. There are some all-rounder people as good innovation managers and then we have some technical expertise.
I have somebody who is focusing on technology. I have somebody focusing on external partnerships. I have somebody focusing on the development of the innovation culture around the methods and the approaches to innovation – a good mix of people who fit into that innovation bracket.
I have been following your YouTube channel, where you have been showing what you are doing to get the team together, and redoing your office. Tell us about that.
It was stimulated by one of the people I brought into the team, who has had the experience of building what they called future centres, and spaces where you can create the environment to stimulate innovation. There is a very, very wide range of approaches that you can take. You can spend millions on putting in a lot of technology. We went over to the Netherlands and saw one such space, which was space age – it was amazing.
But that is not for us. We managed to get a floor in a bit of an unloved building in Solihull, which we are calling the First Floor. All the evidence suggests that if you create the right environment you can get people to think and act differently, so we have a room dedicated to clarifying problems. We have a room dedicated to coming up with ideas. We have an area where you go in and it is a kind of action room. Open spaces to be able to collaborate significantly.
We took quite an alternative approach, where we were told by the powers-that-be in our organisation that that kind of thing would take six months and about £500,000 ($710,000) to do using traditional routes, but with the backing of the chief executive, we said we would do it in 50 days for less than £50,000 and that we would very much use it as an innovation project in itself – involve the team in terms of designing and making it happen.
So we have been working weekends. We have been wallpapering, we have been building things, with a lot of our own steam, and learning a lot about each other as we do it. We achieved it in less than 50 days, and significantly below the £50 000 threshold. It has been very exciting.
You touched earlier on new business models and new technologies. Give us an insight into the key challenges you see in bringing these new technologies and new business models into current core businesses.
There is that balance between whether a core business can see sufficiently into the future to be able to consider doing things that actually potentially affect the existing business. The idea is that people will come and disrupt you, so you may as well disrupt yourself. There is a cultural challenge, without a doubt.
Some of the issues to get over are whether the people you collaborate with are likely to be your competitors into the future, and how you manage that.
The ownership of intellectual property across multiple players within a partnership is an interesting challenge to deal with commercially.
Trust, customer trust – that the new business model you put together with partners is actually trusted by customers from end to end.
Increasingly, the final one is really about the issue of data. We all know the future is very technologically and data enabled. Actually, if you are in a position where you need to ensure that you treat customer data with integrity, then you need to make sure that each part of that actual chain does the same, so there is no breach of confidentiality, or misuse of that data, as it goes from end to end. Data security is quite a significant thing to really get your head round when you are entering this new world of ours.
How do you measure your financial and strategic performance?
As a unit that is very close to an existing business, we constantly come up against people with a whole host of key performance indicators (KPIs) and spider diagrams, trying to measure everything that moves. In innovation you need to have a small number of KPIs that really help you with clock speed, as opposed to looking in the rear-view mirror all the time.
We also track spend – what you spend in order to get there – and success at each part of the stage in terms of revenue targets. So right at the beginning, when you are looking at an opportunity space, you are probably looking at large numbers with probabilities of success. As you then develop a concept, you are starting to prove what percentage of success you are really going to go after.
Obviously, as you launch, it is all around rapid growth – “speed, spend and success” is the mantra I am using at the moment.
Describe a couple of the current projects in those contexts?
We are doing an intelligent home proof-of-concept in the Midlands. We decided that we wanted to make it geographically bounded, because we would be able to see how people react to gamification in the community. We are bringing together a number of technologies to see how people adopt them in the home.
Initially the platform has been put in place with remote camera monitoring and internal security. The next stage will be to introduce the smart lock, and the final stage will be to introduce the Nest learning thermostat.
What we are trying to do is all about consumer behaviour and appetite. It is not about the particular brand of technology. It is to try to understand the business model, which we make through different partners.
The other key part of that is learning what it is like to go forward with three or four partners all stitched together in a group, and learn what it is like to work there, in that environment, and what kind of commercials are required when you are completely interdependent.
We have another rapid prototype going on, in the area of wireless power and charging stations in business premises.
When do you get time to relax?
I don’t relax, but I read a lot. I play the guitar, write songs. That is my main passion, being creative. I also occasionally go to the gym.
You can listen to this and other interviews on a podcast available at gaulesqt.podomatic.com
Andrew Gaule leads the GCV Academy, developing the capabilities and expertise of organisations leading open innovation, venturing and corporate venturing programmes to drive strategic benefit. He also supports innovation programmes and collaborations in innovative new value chains in global organisations.
To contact Andrew Gaule and for future interview ideas, email andrew.gaule@aimava.com or Toby Lewis tlewis@globalcorporateventuring.com