For the past few years, we have been posting information on other platforms regarding our consumer side utility infrastructure technology. You will likely be curious enough to investigate more about what my company CoolWaters Energy Technology does. I do want to talk about some troubling observations I have seen regarding corporate leadership and how it is embracing bureaucratic philosophies with regards to innovation.
The electric utility industry is not like the high-tech industry, but it should be. With high-tech, there is real innovation and only through innovation can these businesses survive, thrive and grow. Earlier this year, Warren Buffett, someone who understands the economics of energy, gave the utility industry “two thumbs down.”Â
The thing is, society needs successful and thriving electric utilities, now more than ever. Even though I ran a multi-billion-dollar net profit company, I knew then and it is confirmed more now, if I had done things the way things had been done for decades, my company would have failed without the profits my team and I were able to generate. I would have had employees killed as well. Instead, I pressed my team to break norms and do things differently and as a result we significantly increased net profits and productivity while also improving safety. This clearly underscores, "the way we have always done it" is not a recipe for success. Â
Bureaucracy is the Enemy of Innovation
This is where I am concerned, electric utilities are maintaining the status quo and being buried in regulatory and bureaucratic inertia. Executives of these companies are not able to build their business to be better, more profitable, more reliable, safer and resistant to real innovations from outside of their own four walls. Sadly, when I have talked with these executives, they seem scared to do more than keep their jobs. I desperately want you to succeed.
Hierarchies are also enemies of innovation. By recognizing that receptivity to external innovation solutions, most companies still focus upon what they know and shy away from anything new. That is a huge problem because if your teams look to each other for answers, they fail to understand there are people and businesses on the outside who already have a solution. If one of those companies goes to a middle level manager and the solution filters up to be approved, that middle level manager won’t be credited with the win but will certainly be tagged with the failure. As is often the case, self-preservation in the upper levels will turn the idea down for the same reasons. Where is the incentive for your people to find ways to help the utility improve?
The issue of hierarchy also involves CEOs and senior executives who punt new product evaluations to engineering. We are engineers and we know that engineers operate based upon what they know and placing concepts outside of their prior understanding, these teams are ill equipped to evaluate much of anything. This does not confront their intellect or education; it is just the nature of the profession.
For example, we pitched to a CEO of a utility and he directed his team to evaluate our technology. “It’s a smart panel and not at all what we need” was the response. One team member understood what we were doing and how it could bring in funds from the state and federal government and help their users. The team understood smart panels and our technology is distinctly not a smart panel. Some of this is on us to make the case, we agree. When presenting a technological solution which significantly transforms business strategy and produces high returns beyond what can be currently accomplished, an engineering evaluation is not likely the best means to determine viability and value.
The Tail Wagging the Dog
Big Tech companies are eye-balling electrical utility companies as well. If you and your team are not able to get your company above the soul crushing inertia, you can be assured the biggest of the Big Tech businesses will do it for you. All of this is to say, by continuing on the same path for decades, you are living a recipe of a dying enterprise. You must get ahead of this but acting like a bureaucracy rather than as a business is going to spell the end of the industry as you know it. Remember this from Colin Powell, “If it ain't broke, don't fix it' is the slogan of the complacent, the arrogant, or the scared. It's an excuse for inaction, a call to non-arms.”
Governments know this and they know the industry does not push back even with teams of lobbyists, we have met them. So, the government forces its ideas on the utilities, at the expense of what’s good for customers and profitability.
Innovation is not diversification of generation, it is not buying a new billing software with voice recognition, and it is not nor was it ever smart meters. These technologies will make others profitable at your expense, not for your electrical utility’s benefit. Real innovation demonstrably alters how you do your business. That is terrifying, we get it. It takes a unique kind of leader to steer a ship through transformative/disruptive innovation. Bureaucratic leaders trained to operate institutions with a business model formed in the 1960s, well, they are going to have a hard time on their own.
Strategic Partnership
Any truly innovative vendor, with a product or service which changes the game and turns around an archaic industry is going to be a partner. There is only one technology which can dynamically transform the business of powering homes and businesses, and I have it. When we engage in a deal, I not only work to put equipment in boxes to be shipped, but our entire team is involved as strategic partners to help utility leaders succeed. It is incumbent upon us to do so because this is also what we are selling. If you do not own your destiny, expect someone else to own it for you.
The Nature of the Industry
There is so much noise and arguing around the electrical utility industry. Debates about generation, responsiveness following disasters, capacity, load shedding, and ideology. At its simplest form an electric utility generates electricity and distributes it to a customer to consume, then that customer pays for the amount of electricity consumed. In other words, a light bulb is lit, and a bill is paid. Yes, we know about complexities, and nothing is as simple as I described. Yet, that has been the business since George Westinghouse and Thomas Edison engaged in the War of the Currents. Has anything really changed?
Here is what we know, and we suspect you know it too: an aircraft carrier is not going to operate with canvas sails. Electrical infrastructure is by in large, a relic of design conjured by your great grandparents. Demand is greater and improvements have been made to make consumption safer.
Yet to propel a modern civilization which demands more and more electricity, the industry is at a critical point. Old ideas of “we don’t go beyond the meter” is not going to work. The only reason utilities haven’t done so before is they never really had the means to do so. Sure, there are opt-in thermostat controls or water heater controls, but they never were very successful unless large populations participated. There is a perception about customer push-back. Broadband providers use utility right of ways and their service is not just inside the home (behind the wall), the service is six inches from their customers noses.
The landscape is different today than what existed fifty years ago or even 20 years ago. The truth is circuit level load control, submetering, and monitoring is an available technology and without it, the aforementioned nose will only grow louder as aspirations go unrealized. That is just a surface issue. With the granular level of control I am discussing, blackouts are mitigated, energy theft is all but eliminated, data on how your electricity is used is not an educated guess, and customers benefit from more reliable service and a better understanding of the health of their appliances and systems.
I am usually reluctant to say “win-win” because it seems one side wins more than the other. Just with the reduction and prevention of energy theft, the savings to utilities is sizeable of $5 - $34 per customer/billing period. Utilities could lower rates, fund infrastructure upgrades, or draw down debt. I do not know a better definition of “win-win”.
Doing things the way we have always done them is going to produce declining returns. Larry Page, co-founder of Google, once said, “Lots of companies don’t succeed over time. What do they fundamentally do wrong? They usually miss the future.” The industry is changing as demand grows and if or when domestic manufacturing returns, that demand will grow exponentially. If the utility industry is not able to turn the ship, companies such as Google or Amazon will step into the breach and take control. If you think for an instant the industry is not broken, I fear you are to face a very rude awakening.
Over the coming weeks and months, I will talk more about what I am seeing, and I am going to be critical, and above all fair, about how electric utilities have been pushed into a corner where they are set to fail. I promise you, there is time and a means to turn this around.
A Service-Disabled Veteran Owned Business  Â
Stephen Williams, CEOÂ Â Â Â
CoolWaters Technology, LLC    Â
Houston | TX | 77578Â Â Â
Office  832.637.7003 Â
Mobile 832.715.0064  Â
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