Embracing disruption to stimulate innovation in sustainable energy

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.

Disruption

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.”

Ecosystem

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.

Source: http://www.mbs.ac.uk/news/school-news/embracing-innovation/

Organizational Inaction on Climate Change – A Guest Lecture at the University of Hamburg

As part of the CGG Lecture Series of the University of Hamburg I gave a lecture on the lack of action on climate change by business. The lecture can be watched via this link: lecture.

The lecture is based on a paper that is forthcoming in Business & Society:

Slawinski, N., Pinkse, J., Busch, T., & Banerjee, S. B. (2016). The role of short-termism and uncertainty in organizational inaction on climate change: A multilevel framework. Business & Societydoi:10.1177/0007650315576136;ResearchGate

 

 

 

Dieselgate: a strategy perspective on the Volkswagen scandal

by René Bohnsack

It has almost been 6 months since Volkswagen has admitted using so-called cheat devices in a majority of their cars in order to fulfil increasingly stricter emission regulations. Volkswagen, in striving to become nothing less than the largest car manufacturer in the world, has thereby jeopardised its existence, damaged the German reputation and deceived millions of now distrustful customers.

One of our recently published studies allows a look behind the strategic scene of the scandal. Basically, the car industry is one of the, if not the most complex global industry. The international activities of car manufacturers are part of that. All of these different international markets have their own government policies with diverse agendas, often favouring local players. We found that globally there is an intricate interplay between local, national and international government policies and car manufacturers’ strategies (see the figure).

Analysing the case of Volkswagen with our “International Multi-Level Framework” (see figure) we find that VW got hammered on diesel engines in the US, a place where the government does not favour this technology. In fact there is a good chance that the scandal would never have developed the same way in Europe, as there is more political backing for diesel in Germany and France, for example.

In other words, VW’s presence in the US has made it vulnerable to the different attitude towards diesel, which now spreads across the globe. It also spreads to the home market where it was protected so far by more lenient policy of being able to do the testing in self-defined conditions.

From a strategic perspective, VW’s objective to become the No.1 car manufacturer requires operations in the U.S. as a major market. Toyota, its closest competitor for the first rank, had a strong position for years in the U.S., partially based on a competitive advantage they have gained due to strict emission regulation in their home market Japan. VW in the US on the other hand was then exposed to fulfil technological requirements that did not fit their capabilities and decided to engage in illegal actions. What we now see is that the U.S. reaction (e.g. more rigorous testing) has been spreading and haunting VW in other markets including their home market ever since.

Companies can learn from this. In a world in which many companies create large shares of their revenues in foreign markets and in which government regulation is increasing, companies are well advised to screen their international environment. Particularly they should test their strategy for fit with foreign policies before entering a market – because not every attractive market is a suitable market – and companies should follow the activities of competitors abroad closely since they might be subject to more demanding policies which could give them later on a competitive advantage in international markets. Not doing that, could lead to costly implications. In the case of VW – which at the moment seems to be pushed by the U.S. Environmental Protection Agency to make up for their mistake by producing electric cars in the U.S. — the coming month will be interesting to witness and see how the overall effect of their negligence will unfold.

TSFC

Figure: The International Multi-Level Framework

For further reading see: Bohnsack, R., Kolk, A., & Pinkse, J. (2015). Catching recurring waves: low-emission vehicles, international policy developments and firm innovation strategies. Technological Forecasting and Social Change, 98, 71-87. ResearchGate.

Published in Portuguese: https://www.dinheirovivo.pt/opiniao/510679/

 

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