A research project led by academics at the Manchester Institute of Innovation Research will provide insight into how firms in the European energy sector can transform their business by embracing disruptive innovations.
In recent years large electric utilities have been forced to rethink their business models in order to cope with the societal challenges of climate change, and also because of the backlash from the Fukushima nuclear disaster of 2011. For instance in the wake of the disaster Germany announced it would close all its nuclear plants by 2022.
Professor Jonatan Pinkse from the Institute says because of the disruption caused by sustainable energy innovations in the area of renewables and smart grids utilities have been forced to embrace innovations they have so far resisted.
“Utilities face the dilemma that they know they have to change their business model, but do not know how. The ‘old’ model where utilities focus on electricity production and sell as much electricity as possible is now considered unsustainable. Instead there is an increasing need for utilities to design a ‘new’ model that goes beyond electricity production and moves towards service provision.”
He said there was a major challenge for electric utilities to redesign their business from the inside and that they were increasingly looking across their organisational boundaries for help. “This project creates insight into how European utilities change their collaborative behaviour to be able to tap into new sources of value creation built on sustainable energy innovations.”
The project, which is funded by the Lord Alliance Foundation, takes a business ecosystem perspective by studying the change in dynamics of utilities’ strategic alliances with new partners active in the field of sustainable energy.
Adds Jonatan: “Focusing on the emergence of new business ecosystems the project aims to examine the questions of ‘who is doing what?’ and ‘who is profiting most?’ This ecosystem approach will not only reveal the actors involved, the inter-firm division of activities and resources, and the allocation of costs and revenues, but also why some actors capture a greater share of the value than others. The analysis will show under which conditions certain actors seem able to shape the business ecosystem to their advantage, while others fail to do this.”
The project, Sustainable Energy Innovation and Shifts in Value Creation and Capture in the Business Ecosystem, is being headed by Jonatan and Dr Eva Niesten.