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2017 Energy Roundtable

In June 2017, The Barton Partnership hosted a roundtable dinner for senior strategy stakeholders within the Energy space. Those in attendance included Heads of Strategy from companies such as General Electric, Lightsource, Origami, Centrica and SSE.

Below is a summary of what was discussed over the course of the evening;

The regulator 

The summary around the table was generally positive around OFGEM and how the fact that it provides market intelligence and information, standardisation of information and makes it available is extremely important to market incumbents. Tom Hay’s example on this topic was regarding the purchasing of a power station in the UK versus other countries. OFGEM provides readily available information and regulations when it comes to dealings in the UK whereas information is scant when these transactions are attempted overseas.

On the flip side, there was also a strong view of OFGEM being overregulated and remaining behind the times. The phrase used was ‘political no-man’s land’, with a clear opinion that there has been a lack of adaptation to facilitate the fast growing new technologies and sustainable sources. Kareen at Lightsource talked about their large output at one solar farm which caused issues as it ventured into new territory, highlighting the issue somewhat.

No one at the dinner had personally read the recent OFGEM report. This may be a possible reflection of the industry sentiment towards it? The overall opinion was that whilst OFGEM provides some useful information when you need it, it is otherwise slow, burdensome and a source of frustration.


Customers

It was discussed that there may still be a mind-set issue within the leadership of leading Energy players. The businesses want to become much more customer-centric but is there a lack of individuals at the top having changed their own way of thinking which may act as a hindrance.

It was also mentioned how it is getting easier for customers to switch providers. As it is difficult for one player to always be cheapest, retention is a key topic with a focus on customer service, smart tech e.g. connected home etc. possibly providing solutions to the retention issue.


Innovation/Next Moves/Changing Landscapes

The question was then asked where the attendees would invest £1 in the market.

As mentioned above, consumer technology is happening for the public whether businesses are on-board or not and it seemed mainly agreed that tech is one of the best options on the table for improving customer focus and retention.

Most seem to be placing bets one way or another. This is either setting up innovation hubs/garages to test ideas and attempt to keep the consumer front of mind or, the use of funds in the space as mentioned by National Grid.

Alex Howard at Origami mentioned how it is not uncommon for larger players through one means or another to invest in smaller start-ups more for the exposure and gathering of knowledge, rather than actual financial or commercial gain directly from the venture. The summarising views were that there are too many options out there for them to all be right, however it is worth buying “a seat at the table”.

Storage was widely mentioned, in part thanks to the present company. There seemed to be a fair level of agreement around its growing role in the future of the market or where ‘bets’ should be placed.


Strategy teams/hiring/diversity

This topic looked at the wider business as opposed to just strategy functions, but obviously most of the attendees were in or had previously been in strategy roles. The summary seemed to be that the challenge is being able to fulfil the day job whilst trying to have any sort of handle on the future and which way the market is heading. There were also discussions around trying to enable a team (and in future the whole business) to be more agile in order to successfully navigate the future.

Hiring is proving tricky for the established players - the energy industry and larger companies in general are not as popular as they once were. Different firms have different factors affecting their appeal in the market such as location or being seen to be ‘too large’, which is often construed as lacking excitement or challenge.

Smaller or newer firms in the industry such as Lightsource and Origami however seem to be on the other end of the spectrum and are benefitting from this. These firms often boast multi-cultural (Lightsource boasting 29 different nationalities) and gender diverse workforces and have little issue attractive young employees.

One positive for the larger players is that the graduate schemes are being successful in bringing more diversity to the workforce. Unfortunately, outside of the success of the graduate schemes, the opinion was that they still need to find more ways to improve diversity.
An interesting point made was that the Energy market is one of the most important in the world for global impact on the population, the earth and its future. This should theoretically appeal to the young strategy consultants looking to move into the industry, but there seems to be a lack of popularity around the bigger firms or classic energy sources.

Whilst the younger businesses and areas such as the renewables market don’t necessarily have a problem in finding talent, there can always be a problem retaining it. The new workforce is often happy to move jobs much more frequently than generations before them, often seeking new challenges and locations – something some smaller businesses aren’t always able to offer.


Consulting firms

Each company had used consultancy firms in the recent past and the key takeaway was around how there didn’t seem to be an obvious choice for the best work/advice in the sector.

McKinsey took a spotlight given their work with Lightsource, where Kareen described them as “good but brutal” and mentioned how, while their findings weren’t obviously apparent or useful immediately, they did become clear over time. Tim Jarratt of National Grid opened a discussion around McKinsey (and other strategy houses) and the talent they could actually provide; how their London office is still very Oil & Gas heavy, with hardly any consultants with relevant Utilities experience or knowledge of modern challenges facing the providers. A few experts from different offices would be rolled out for the pitch and possible oversight, but a clear lack of expertise in this space doesn’t help the industry.


Conclusion

Overall, although several different topics were discussed by the attendees, the main takeaway was that there is still a lot of uncertainty in the market and its direction. Secondly, when the attendees discussed the future it was the Innovation hubs/ ‘garages’ that seemed of most interest. Whether they and their businesses were currently involved or not, everyone was very interested to see what ideas will emerge and what that could bring to the market.


Thoughts from attendees


"Thanks Nick, I really enjoyed the evening and thought your facilitation was excellent. This is probably the first dinner I have attended where I left feeling like I knew everyone in the room a bit better."

Heidi Hellmann, Head of Group Strategy, Centrica


"It was a great group of high-calibre and interesting individuals and I thought that you ran the discussion really well. Secondly, for me the biggest takeaway was how uncertain everyone was in terms of reacting to the major change wave that is hitting the industry."

Tim Jarratt, Head of Strategy, National Grid


"One take away - given the uncertainty on how our sector will evolve, a common challenge is to encourage the organisation to make a diverse set of bets – we’re not yet at the stage where the answer is clear. Interestingly, working for a new entrant, my challenge is almost the opposite – it’s to ensure that we channel our resource into a relatively small number of bets where we can make a big difference.

Alex Howard, Head of Strategy, Origami


Thank you for the dinner – it was a good discussion and great opportunity to network with peers from the energy industry. In terms of main takeaways, for the me the key points are the following:

- Huge market uncertainty – different opinions on market outlook for energy demand/supply going forward – important
to keep optionality and flexibility – also critical to have a resilient portfolio
- There is a demand/need for diversity of experience / diversity of thought – not only diversity of geography or gender
- Big bets – storage / software / renewables

It would be great to see what other points were captured as main takeaways.

Julio Dal Poz, Strategy and Portfolio Development Manager, Statoil