Flourish or Flounder: How Will Utilities Respond to Disruptive Innovation?

By Jesse Hitchcock


Today’s customers are highly connected, well-informed and demanding.  Retailers and banks have adapted to the challenges of serving modern customers by providing cross-platform, digital experiences, which have in turn allowed them to grow their services and foster stronger relationships with their customers. Other industries, such as hospitality and personal transportation, are being forced to quickly adapt or be left behind by disruptive organizations such as AirBnB and Uber.  


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Software is the fastest growing spend for the Retail Industry. Source: Gartner


The utility industry has generally lagged behind the customer-focused innovation curve - relying instead on proven communication methods and a lack of competition to keep their customers satisfied.  As of now, customers trust their energy providers, but utilities are missing out on opportunities to deepen their relationship with customers and expand their service offerings. This article discusses how utilities can use technology strategically to better serve modern customers before disruptive innovation fundamentally changes the role utilities play in customers’ lives.    


Advanced technologies are driving significant change and creating disruptive innovation in almost every sector.

Screen Shot 2020-01-20 at 8.01.52 PM    Source: Accenture Research Disruptability Index 2.0


In order to navigate this disruption -- and be positioned to benefit from it -- businesses can cultivate preparedness in four main ways:

1) Awareness and understanding of the changing technologies that have the potential to disrupt their space

2) Encouraging a resilient, innovative organizational culture

3) Exploring organizational agility by embracing new ways of working and making decisions

4) Acquiring and deploying the best people, technology and financial resources to remain competitive[1].

Deloitte completed a cross-sectoral analysis and found that 35% of companies are wholly unprepared for this disruption, and are struggling in all four areas of preparedness1. Not only is preparing for disruptive technology essential for companies to future-proof themselves, but investing in these organizational changes can also improve how a company operates today1

Facing disruption is not a new phenomena. Several large companies have already faced disruptive technology and either flourished or floundered as a result. Companies such as Kodak, Nokia, Maritime Tel & Tel, for example, all succumbed to innovative disruption despite being dominant leaders in their respective markets.


Lessons learned from the financial sector


The banking industry has largely been successful at navigating a digital transformation and embracing new technologies. In doing so, they have been able to leverage technology to create market opportunities and satisfy customer demands. When faced with the potential for disruption, the industry quickly realized the inherent opportunities that it was presented with. They forecasted that this disruptive technology would provide invaluable insights into their customer base, allowing banks to provide their customers with services that were best-suited for them2. They saw the disruption as a way to increase consumer confidence and engagement, while reducing operational costs and continuing to satisfy complex regulations2.

Today, digital banking has become a critical part of a bank’s strategic plan in a highly competitive environment2. Because the banking industry was able to foresee the opportunities associated with disruptive technology, they are now on the leading edge of navigating the global digital transformation by providing services such as electronic deposits, payments and data-driven consumer targeting. 

Ultimately, the business-case is clear. Sector analyses show that future profits will be redirected to financial institutions who deploy digital technologies for process automation and analytics, create new services and value for their clients through accessibility and convenience, and who have an agile and innovation-oriented organizational culture3.

The energy sector is not immune to disruptive innovation, and utilities are now faced with choices that will dictate whether they flourish or flounder. 





The cross-platform, digital experience that is now commonplace with retailers and banks has produced a marked shift in consumer behaviour. Today’s customers are highly connected, well-informed and demanding. They’ve grown accustomed to easily accessing information and resources at their convenience, and this expectation is now being placed on their relationship with energy providers4

In addition to satisfying evolving consumer demands, Government regulations and policy are requiring utilities to move toward greener, more efficient and flexible energy markets. Consumers are also becoming interested in taking advantage of innovative solutions such as Distributed Energy Resources, and they want guidance from their energy provider to navigate these transitions5.

The sense of urgency associated with satisfying these consumer demands is diminished because of the current lack of competition in the utility space4.

This sense of security will not last forever. Utilities must invest in innovation to bring new products and services to market. These services must be fully integrated into the utility offering, fostering a meaningful and seamless customer journey. Consumers aren’t demanding new technology in isolation— they want utilities to use technology to provide them with simple solutions that suit their lifestyles4.

At the same time, utilities are tasked with navigating a constant tension between the reliability and security of supply, the need for clean and sustainable energy, and affordability4. Utility executives tend to see security of supply as the top priority in the short term, while also recognizing that delivering clean, sustainable energy will take precedence in the long term4. It is imperative that utilities begin to explore solutions that can achieve all of these goals in tandem. Energy efficiency, for example, is a customer-facing sector that can utilize in-depth data insights and technology to improve the consumer experience, design and target programs, while also protecting the reliability of supply and achieving sustainability goals. 

Energy efficiency, for example, is a customer-facing sector that can utilize in-depth data insights and technology to improve the consumer experience, design and target programs, while also protecting the reliability of supply and achieving sustainability goals. 


Innovative technology can allow utilities to meet existing business and customer needs today, while opening up new potential markets in the future. Consumers trust their energy providers and are open to an expansion of service offerings for this reason4, but they won’t wait forever. While the banking industry was successful at navigating disruption overall, they similarly lost revenues to third-party providers for services such as wire-transfers, financial management and investing. This was largely because they did not fully understand their customer-base, which prevented them building these programs into their service offerings in the way that customers demanded. The FinTech company Wealthsimple, for example, has drawn 175,000 clients from traditional banks and has $5 billion in assets under management, largely due to understanding the demographics of their customer-base and targeting millennials. If utilities fail to capitalize on these changing realities, they stand to lose significant revenues associated with bringing new services to market. 

82% of consumers would buy additional products and services from their utilities if those services were personalized to their needs and preferences

An opportunity for utilities and energy providers

Consumers believe that energy companies are the most trustworthy source of information about their energy use4. They rank their trust in utilities on this topic above governments and governmental organizations, environmental associations and academia4. This trust can be an immensely valuable asset, but building these relationships is challenging for utilities. Customer engagement may be a conceptual priority, but the execution has been lackluster. On average, consumers interact with their energy providers only four times a year, and almost a third of consumers only engage one or twice each year4

Using data to better understand customers will create new opportunities for utilities to reach out and connect with them. By building these relationships and focusing on more than just outages and bill inquiries, utilities will set the stage to convey strategic messages and communicate new service offerings to their customer base4. These new offerings will be essential as the industry experiences rising energy costs often paired with reduced consumption4

Starting with a base of trust and integrity is helpful, but utilities now have to ensure that they are providing services that resonate with the consumer. 82% of consumers would buy additional products and services from their utilities if those services were personalized to their needs and preferences7. This is why innovative technology is critical. Demographics, location, energy consumption, preferred communication channels can all be used to uncover customer segments, and allow energy companies to refine their programs accordingly7

Data-driven technology enables utilities to start building these profiles and establishing relationships instantaneously, instead of relying on customers to engage on an opt-in basis. Not only do utilities provide something that consumers need -- safe and reliable energy -- technology is now giving them the opportunity to deliver something that consumers want. By fostering a deep understanding of the customer-base and their motivations, utilities can raise the bar and deliver exactly what is timely and relevant. The status-quo is no longer sufficient -- utilities who do not capitalize on these opportunities stand to lose both customer support and future profits. In contrast, utilities who prepare for and embrace disruptive innovation will undoubtedly reap the benefits of this new energy transition.


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1Deloitte Future of Canada Series. 2015. Age of Disruption: Are Canadian Firms Prepared? https://www.corpgov.deloitte.ca/en-ca/Documents/StrategyAndRisk/AgeOfDisruption_042015.pdf 

2World FInance. 2019. Digital disruption could make or break the banking sector.


3Digital Disruption of the Banking Industry - Threat or Opportunity? 2016. https://www.researchgate.net/publication/305629159_Digital_disruption_of_the_banking_industry_Threat_or_opportunity 

4PwC. 2016. Opportunity Amidst Disruption: How energy transformation is shaping Canada’s utilities sector


5Smart Energy Consumer Collaborative. 2019. Distributed Energy Resources: Meeting Consumer Needs https://smartenergycc.org/research-release-seccs-distributed-energy-resources-report/ 

6Bloomberg 2019. https://www.bloomberg.com/news/articles/2019-08-15/wealthsimple-targets-canada-s-richest-with-grayhawk-partnership7Accenture Consulting. 2017. New Energy Consumer: New Paths to Operating Agility https://www.accenture.com/_acnmedia/Accenture/next-gen-5/insight-new-energy-consumer-2017/Accenture-NEC2017-Main-Insights-POV.pdfla=en#zoom=50