True innovation will require utilities to take greater
strides toward diversity,

writes Benoit Laclau

Until recently, ‘utilities’ and ‘innovation’ were not words that were typically synonymous with each other.

But times are changing fast.

It was clear at our recent Innovation Realized retreat in Amsterdam that some of the world’s most innovative technologies are now at play within the energy ecosystem, as the utilities sector transforms in response to digital disruption.

But while businesses are firmly focused on ramping up their innovation capabilities, most still lack the focus on diversity and inclusiveness that I believe is critical to embedding transformation.

The utilities sector is now characterized by radical transformation, and as I’ve explored previously, utilities are now on a countdown to change.

Earlier this year, EY released industry-first research that pinpointed exactly where and when utility companies across the globe would reach three critical tipping points on their journey to a new energy world.

These milestones are driving utilities to act, and I’m working with energy companies around the world that are feeling the pressure to evolve and need to deploy digital technologies to prepare for change.

But technology is only part of utilities’ innovation story.

Transformation as a result of changing consumer trends is perhaps just as profound as the impact that technology is having on the energy sector.

And understanding consumers, and what drives them, is one of the key areas in which utilities are still lagging.

This is because energy consumers are diverse – and energy leaders, in most cases, are not.

Essentially, this is an issue of firm culture; as the business landscape evolves, utilities must pivot to become more agile and inclusive from the ground up.

The findings of EY research into gender diversity at the world’s biggest utilities over a three-year period have not been encouraging. In 2016, women made up just 5 per cent of executive board positions of the top utilities by revenue.

Sluggish gender diversity progress

Since 2014, the number of women on boards has increased by a disappointing 1 per cent year-on-year.

This means it would take the sector until 2058 for women to make up just 30 per cent of boards … that’s 40 years away!

While the data shows very slow progress, we believe there is an upside to disruption, as my colleague, Cyntressa Dickey, commented recently: “The change ahead should be embraced by utilities as a catalyst for more diverse teaming and leadership – particularly as they increasingly seek innovative partnerships with companies in other industries to succeed amid energy transformation.”

Diversity goes far beyond gender alone, and we know that diversity of ethnicity, sexual orientation, socioeconomic background and age all make for the highest performing teams.

Yet anecdotal evidence suggests that utilities are still primarily led by men from similar ethnic, social and educational backgrounds, and who’ve spent most of their careers in the sector.

Leadership lacking in diversity does not reflect the broad base of consumers that utilities serve. How can businesses understand a customer base that they cannot always relate to? In the future energy world, companies will grow value – not from the kWh – but from selling new products and services enabled by a digital grid platform.

Getting under the skin of consumers is critical if utilities are to offer the kind of products and services that meet their needs. If utilities are unable to quickly determine what consumers want, they will lose out to those that can from other sectors, such as retail and telecoms.

Adoption of AI

Outside of the boardroom, technological innovation itself also calls for diversity. A lot of the innovation we are seeing across the sector is borne out of the data produced by businesses, which is used to automate decisions via artificial intelligence (AI).

However, there is a risk that a lot of this data could generate unconscious biases toward certain demographics, thereby potentially skewing the decisions themselves.

The only way to overcome this is to build a diverse team that is trained to mitigate the potential for such bias. Indeed, it is important that utilities equip their people with the skills and confidence required to lead and team inclusively to maximize everyone’s
contributions.

The workforce engenders a wide range of perspectives and solutions to the issues
utilities are facing in today’s competitive landscape.

By embracing the notion of making each employee feel valued for who they are and by what they contribute — regardless of their race, culture, lifestyle, gender or age — teamwork and innovation will result.

Lack of diversity and inclusiveness ultimately hinders utilities’ ability to effectively address the complex changes they face.

Indeed, numerous studies prove that diversity boosts profitability, innovation and problem-solving.

So just as disruption demands that utilities act fast and be bold in aspiring to develop innovative solutions, it is critical that their boards are sufficiently diverse to successfully drive that forward.

True innovation will therefore require utilities to take greater strides toward diversity – to attract more women, as well as people from a range of ethnicities and backgrounds with different and fresh perspectives.

We’ve seen the energy world make great progress in its adoption of technology: now it’s time to focus on the human element of innovation and build a better – more diverse – working world.

Benoit Laclau is EY Global Power & Utilities Leader. The views reflected in this article are his views and do not necessarily reflect the views of the global EY organization or its member firms