CEO Interviews, Innovation Cases & Models, Leadership

Julia Hamm: Tackling Momentous Change in her Industry

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A New CEO's Challenge

Julia Hamm, CEO and President of SEPA (the Smart Electric Power Alliance) doesn’t hesitate when asked what success looks like to her: “creating  order out of chaos.”

This is a good thing since, according to her, significant change is afoot in the U.S. power sector. While utility business models have  remained unchanged for over a century now, markets, consumers and technology have been changing dramatically.  

Even as a new CEO, Hamm recognized the nature and significance of this gap and determined that her association should have a  leadership role in closing it.  

The organization she inherited in 2004, was focused on solar  power. While Hamm had no answers, she realized that she could not be effective by focusing only on a narrow segment of the industry, given the complex changes taking place and the interdependence of stakeholders and technologies.

Even though the association maintained its acronym, SEPA, it changed its meaning from Solar Electric Power Association to Smart Electric Power Alliance. 

In the course of 12  years, Hamm would transform her association from one with a niche focus on solar  power to a leader in the energy industry —building key coalitions among  multiple stakeholders and playing an important role in efforts to bring energy  delivery to the 21st century and provide efficient, affordable options to  consumers.  Modernizing the energy industry, she determined, would, in turn, benefit solar power.

 The Dynamics of  Change in the Energy Industry

Many complex forces have been at work transforming the  landscape of the market utility companies were originally designed to serve.For example: 

  • Consumers now have more options. For example, today  the U.S. has over one million solar installations (up from 30,000 in 2006) and  the per watt cost of solar power has dropped drastically.    
  • Consumers are no longer passive recipients. Take  the Nest thermostat, for example. Instead of simply registering temperature, it  learns about your habits and preferences and enables you to increase efficiency and cut down costs. Customization, customer choice and control are now standard  consumer expectations.
  • Technology has opened entirely new options.  Smart grids, for example, use sensors, meters, digital controls and analytic  tools to automate, monitor and control the two-way flow of energy across  operations. They are no longer one-way deliverers of energy but also provide  customers with information and tools for understanding and reducing their energy usage and  costs.
  • Moreover, the current utilities model is focused  on selling power and depends on continuous growth of demand. Today, however, the focus is on boosting energy efficiency which, by nature, will lead to decreased demand.   No wonder that, while  many utility companies are beginning to make changes, the industry is antagonistic  to energy efficiency and demand response programs.
  • Finally, even as utility companies are beginning to change in response to their customers’ needs, the pace of regulation is far  slower than the pace of technology and market changes. All this means that  there is an enormous discrepancy between the rigid utility business model and the flexibility, interactivity and speed of its environment.

 

Organic Building Blocks Toward Solutions   

Rather than provide each member group with separate portfolios of benefits, Hamm realized that the greatest value the association  could offer was to bring these groups together, help them make sense out of “chaos” and facilitate substantive collaborate thinking and innovation.  

She didn’t quite know how she would do this. Yet, her dynamic,  market-driven approach favored immediate action over planning and waiting for the  perfect plan to be completed before acting. She would make a start somewhere  and evolve by learning from the market and building on successful results. She  grows through “building blocks,” as she puts it.

 The first building block she put in place in 2004, was a  trade show—something the industry did not have up to this point. This brought  the first substantial stream of revenue. It also generated lessons learned. Members  had episodic and experiential understanding but no systematic analysis of the  state of the solar industry and data that elucidated its rapid growth.  SEPA, Hamm decided, would step in to fill this void, making research the second building block.

Research was, in turn, translated into fresh building blocks: publications, educational programs, forums, discussions and other platforms for stakeholder engagement and feedback.  These research and content-based conversations with customers/members/stakeholders gradually clarified the role the industry  needed SEPA to assume in the future:  to help all these diverse stakeholders figure  out how to work together and transition to entirely new ways for generating,  buying, selling and delivering energy.  

Hamm tackled the  challenge through a two-pronged approach:

 

  • Helping member companies address immediate, pressing needs, mainly to understand and apply current and emerging  technologies
  • Helping them envision a different way of doing business and a different future; create order out of chaos and craft transition  plans. This goal gave rise to a new, ambitious initiative called the 51st State.

 

 

  

From Concept to Execution: A Customer-Driven Approach

 

The “51st State” creates a hypothetical state, outside the  politics, habits and perceived limitations of “business as usual” of real states.  It provided a nexus around which multiple stakeholders could come together: solar industry  companies, electric utilities, related associations or think tanks,  universities, consultants, etc. SEPA invited all of them to offer their “best and brightest ideas for a  sustainable path for distributed energy resources and the infrastructure needs  of managing the electric grid.”

Two of the three projected phases have been completed—each lasting about a year.

  • Phase I– aimed at creating a new vision for the U.S. energy future. The challenge was the lack of clarity about what an ideal future, which does not yet exist and has never been experienced, might actually look like. Instead of relying on board committees or outside “experts,” SEPA went directly to its members, facilitating  the process of re-imagining the future through crowdsourcing.Fifteen fresh “visions” were submitted. SEPA spent the second half of the year engaging members and  other stakeholders at conferences, forums and many other platforms around the country, in discussions about these visions.

Hamm’s aim, however, was not to  simply elicit provocative visions of the future of energy in the US but to translate  this vision into reality.  This was the goal of Phase II.

  •  Phase II invited members and a broad base of stakeholders to submit practical roadmaps for turning vision into a  reality. Once again, fifteen submissions were received through the same process  and SEPA engaged members and stakeholders in discussions about the alternatives.
  •  Phase III, which has not yet started, is where the rubber meets the road. It “will facilitate direct assistance to  states looking to transition toward market structures and program offerings  that leverage distributed energy resources in a proactive manner.” In essence,  this phase will yield proofs of concept and early adopters that can catapultlarge-scale adoption.

 In conventional business strategy, plans are designed and  completed, usually by one group of people, and “implemented” by another. In  market-driven, entrepreneurial models, planning and implementation are  collapsed. You begin the journey with a broad and incomplete vision, which is  fleshed out as you learn from the market, and executed through a series of tests and prototype launches.

SEPA’s phase III is not a mechanical execution of a blueprint,  but a process of learning and developing through testing that allows for unexpected  discoveries, new opportunities and leaps of innovation that would not have been  possible otherwise. This collaborative approach is also unique in its ability to bring people together around shared purpose. 

SEPA’s Outside-In Approach

SEPA has created a collaborative approach to radical,
systems-based innovation in which all stakeholders become engaged in a process of problem-solving, deconstruction and reinvention.  

Instead of generating its own agenda or answers, it has created a framework for re-examining the status quo and executing change with members serving as co-creators rather than mere users of products and received wisdom. And, instead of lobbying for a profession or narrow segment of the industry Hamm determined that she could provide far greater value to members by providing value to the larger industry and beyond.

The association has grown fast and is continuing to grow. Its “formula” for success is simple: focus on increasing results rather than members. 


 

 

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