Utilities: it’s time to hone your product management skills

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Tech companies live and die by their ability to bring products to market. The process is so critical that the specialty product managers who oversee it often earn more than the software engineers.

In order to become more customer-centric, utilities and other energy providers are investing in digital platforms that improve customer satisfaction and help utilities bring more products to market. As a result of these investments, the public service of the future could have as many digital infrastructures on its balance sheet as poles and wires. That’s why utilities are starting to look like tech companies.

The transition underway includes technology as well as people and processes. Yet, in one area, utilities still lag behind the tech industry: Product managers are not a routine part of utilities teams.

This must change, and quickly. As they diversify into distributed energy, blockchain, online marketplaces, and other innovative energy solutions, utilities will want to take inspiration from the tech industry by expanding their skills in managing energy. products.

Beyond energy

In their customer base, almost all utilities use their digital customer engagement platform to promote product offerings for energy efficiency programs, but almost none of them use the platform to promote d ‘others products.

This shouldn’t come as a surprise. For more than a century, utilities have sold two products to their customers: electricity and natural gas. Instead of prioritizing product innovation, they invested in core operations and complementary capabilities that support the “big three” goals: reliability, safety and affordability. Additionally, regulated utilities typically have 100% of their addressable market as customers, making the two functions of product management redundant – managing new product innovation and figuring out how to create products with market potential. maximum.

The implementation of energy efficiency programs was a game-changer as utilities had to manage deployment and accommodate market demand for individual products. But the highly scripted design and rigid segments of these programs left little room for innovation. Additionally, achieving a one to two percent market penetration typically meets program goals, with little upside (and all too often, downside) to outperformance.

The good news is that energy efficiency programs have given utilities a taste of what it’s like to sell non-energy products and services. The less good news is that scaling up other offerings will require a new culture of innovation.

Growing demand for new energy solutions

Energy consumers today have different expectations than in the past, creating new market opportunities. Within the business segment, the general interest in cleaner energy is raising the bar for all those fighting over customers. Seventy percent of energy-using businesses say their customers require them to account for the source and impacts of their electricity supply.

To meet these expectations, companies are looking for solar, battery storage, new tariff options, cost coverage tools, interconnections, renewable energy contracts and other products that offer cost savings, control and cleaner energy.

For many of these new products and services, customers have the option of choosing their supplier. But the easiest choice is often to call the utility. As a result, for the first time since the dawn of the electric age, customers are pressuring their utilities to innovate in products. A survey by the Smart Energy Consumer Collaborative showed that 61% of small and medium-sized business customers, even those who rarely engage with their energy supplier, want their utilities to provide more products and services.

In most industries, that would be a product manager’s dream. But if they don’t have product managers, utilities must find other homes for new product innovation. This ad hoc approach can work at first, but as any tech company will tell you, there is no substitute for efficient and coordinated product management.

Public services become agile

At CS Week 2018, many utility executives talked about staying “nimble” as they revamp their customer experience. This language, focused on product innovation, is familiar to technology companies but, until recently, was foreign to the utilities sector.

The tech industry has embraced “agile” because it replaces long development cycles with short time to market and short learning by doing. Agile strategies favor “minimum viable products” with short product cycles and depend on continuous user testing and feedback.

Energy efficiency programs, with their three-year planning cycles, are anything but agile.

The essential idea of ​​the agile philosophy is that it is not practical to get the perfect product on the first launch. Imagine telling that to a distribution engineer working on a 35kV line upgrade, and you’ll see why utilities are new to this approach.

CS Week leaders highlighted how agile approaches help them launch effective digital engagement tools. For example, PG&E’s director of clientele described how better collaboration between the IT group and the sales team improves online engagement. A market research manager for CenterPoint spoke about the benefits to customers of a “design-prototype-test-repeat” process.

It’s a welcome shift in perspective that should help utility product managers refine their digital engagement and develop new, successful customer solutions.

Platform products and commercial products

New entrants to the electricity industry find it strange how utilities determine their revenues based on their costs. This reverse accounting means that cost management is at the heart of utility operations. Income generation is secondary.

Utility products, therefore, can be classified into two groups: “platform products” and “commercial products”. The platform’s products are free or subsidized and deliver value to customers by helping to reduce service costs and / or save customers money. Products in this category include rate plans, electronic invoicing and energy efficiency programs.

Commercial products generate revenue for the utility because the customer pays for them. The products in this bundle can include anything from charging stations to power purchase contracts. This is where the growth opportunity lies. Commercial products are developing rapidly.

Platform and commercial products require product management to determine specifications, prices, target markets, and what constitutes “success” for a product line.

Product management: product marketing

As author and venture capitalist Ben Horowitz puts it, a good product manager acts as the CEO of the product she manages. Product managers manage new products through design, build and launch.

Each public service evaluates the products to be offered to customers. For many of them, product management is new and may conflict with traditional ways of thinking.

Utilities are well-staffed with line engineers, call center teams and regulatory experts. Their mission is to provide electricity service in a safe, reliable and affordable manner. Given the high stakes, these people are encouraged not to take risks and not to fail.

In tech, product managers aren’t supposed to fail, but know they could. Managing this possibility is part of their job. As Horowitz writes, “Good product managers know the market, product, product line and competition extremely well and operate on a solid foundation of knowledge and trust… A good product manager knows the context in which it turns out… and it takes responsibility for devising and executing a winning plan. “

A consistent product strategy and roadmap defines the value proposition for customers, target market, launch strategy, pricing, and other information. Product managers generally rely on documents relating to market and product requirements to ensure the best match between products and customer needs.

The energy data that utilities already collect from customers gives them a distinct process advantage. Advanced analytics can turn this data into customer insights that support segmentation, needs assessment, and market research. In addition, customer intelligence must inform market launch strategies, including critical periods when customers are made aware of new product offerings.

Product-driven utility teams will need incentives that encourage agile development and create a new cultural acceptance of risk taking. This may require the addition of new skills, including professional product managers from outside the industry.

Along with having the right people on the team, it’s important to include the right people in decisions – and knowing when to close the door. It means developing comfort with decisions made by small groups.

Product management: High stakes

Managing new product lines will be a high-stakes activity for public services for years to come. Customers will continue to want easy access to new products. Utilities will see more revenue from these products. Clean energy players will care about customers who adopt new energy products. Scale will not be achievable without well managed energy products.

Utilities should embrace the fun process of creating and bringing products to market. By leveraging unique strengths, including past program successes and customer data, product managers will have a better chance of success. Reliability, security and accessibility will remain top priorities, but they are now joined by innovation, agility and product strategy.

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