When a utility undergoes a major transformation – such as adopting new technologies like advanced metering – the costs and time involved require that the changes are accepted and adopted by each of the three major stakeholder groups: regulators, customers and the utility’s own employees. A technology demonstration center serves as an important tool for promoting acceptance and adoption of new technologies by displaying tangible examples and demonstrating the future customer experience. IBM has developed the technology center development framework as a methodology to efficiently define the strategy and tactics required to develop a technology center that will elicit the desired responses from those key stakeholders.
KEY STAKEHOLDER BUY-IN
To successfully implement major technology change, utilities need to consider the needs of the three major stakeholders: regulators, customers and employees.
Regulators. Utility regulators are naturally wary of any transformation that affects their constituents on a grand scale, and thus their concerns must be addressed to encourage regulatory approval. The technology center serves two purposes in this regard: educating the regulators and showing them that the utility is committed to educating its customers on how to receive the maximum benefits from these technologies.
Given the size of a transformation project, it’s critical that regulators support the increased spending required and any consequent increase in rates. Many regulators, even those who favor new technologies, believe that the utility will benefit the most and should thus cover the cost. If utilities expect cost recovery, the regulators need to understand the complexity of new technologies and the costs of the interrelated systems required to manage these technologies. An exhibit in the technology center can go “behind the curtain,” giving regulators a clearer view of these systems, their complexity and the overall cost of delivering them.
Finally, each stage in the deployment of new technologies requires a new approval process and provides opportunities for resistance from regulators. For the utility, staying engaged with regulators throughout the process is imperative, and the technology center provides an ideal way to continue the conversation.
Customers. Once regulators give their approval, the utility must still make its case to the public. The success of a new technology project rests on customers’ adoption of the technology. For example, if customers continue using appliances as they always did, at a regular pace throughout the day and not adjusting for off-peak pricing, the utility will fail to achieve the major planned cost advantage: a reduction in production facilities. Wide-scale customer adoption is therefore key. Indeed, general estimates indicate that customer adoption rates of roughly 20 percent are needed to break even in a critical peak-pricing model. 
Given the complexity of these technologies, it’s quite possible that customers will fail to see the value of the program – particularly in the context of the changes in energy use they will need to undertake. A well-designed campaign that demonstrates the benefits of tiered pricing will go a long way toward encouraging adoption. By showcasing the future customer experience, the technology center can provide a tangible example that serves to create buzz, get customers excited and educate them about benefits.
Employees. Obtaining employee buy-in on new programs is as important as winning over the other two stakeholder groups. For transformation to be successful, an understanding of the process must be moved out of the boardroom and communicated to the entire company. Employees whose responsibilities will change need to know how they will change, how their interactions with the customer will change and what benefits are in it for them. At the same time, utility employees are also customers. They talk to friends and spread the message. They can be the utility’s best advocates or its greatest detractors. Proper internal communication is essential for a smooth transition from the old ways to the new, and the technology center can and should be used to educate employees on the transformation.
OTHER GOALS FOR THE TECHNOLOGY DEMONSTRATION CENTER
The objectives discussed above represent one possible set of goals for a technology center. Utilities may well have other reasons for erecting the technology center, and these should be addressed as well. As an example, the utility may want to present a tangible display of its plans for the future to its investors, letting them know what’s in store for the company. Likewise, the utility may want to be a leader in its industry or region, and the technology center provides a way to demonstrate that to its peer companies. The utility may also want to be recognized as a trendsetter in environmental progress, and a technology center can help people understand the changes the company is making.
The technology center needs to be designed with the utility’s particular environment in mind. The technology center development framework is, in essence, a road map created to aid the utility in prioritizing the technology center’s key strategic priorities and components to maximize its impact on the intended audience.
DEVELOPING THE TECHNOLOGY CENTER
Unlike other aspects of a traditional utility, the technology center needs to appeal to customers visually, as well as explain the significance and impact of new technologies. The technology center development framework presented here was developed by leveraging trends and experiences in retail, including “experiential” retail environments such as the Apple Stores in malls across the United States. These new retail environments offer a much richer and more interactive experience than traditional retail outlets, which may employ some basic merchandising and simply offer products for sale.
Experiential environments have arisen partly as a response to competition from online retailers and the increased complexity of products. The Technology Center Development Framework uses the same state-of-the-art design strategies that we see adopted by high-end retailers, inspiring the executives and leadership of the utility to create a compelling experience that will enable the utility to elicit the desired response and buy-in from the stakeholders described above.
Phase 1: Technology Center Strategy
During this phase, a utility typically spends four to eight weeks developing an optimal strategy for the technology center. To accomplish this, planners identify and delineate in detail three major elements:
- The technology center’s goals;
- Its target audience; and
- Content required to achieve those goals.
As shown in Figure 1, these pieces are not mutually exclusive; in fact, they’re more likely to be iterative: The technology center’s goals set the stage for determining the audience and content, and those two elements influence each other. The outcome of this phase is a complete strategy road map that defines the direction the technology center will take.
To understand the Phase 1 objectives properly, it’s necessary to examine the logic behind them. The methodology focuses on the three elements mentioned previously – goals, audience and content – because these are easily overlooked and misaligned by organizations.
Utility companies inevitably face multiple and competing goals. Thus, it’s critical to identify the goals specifically associated with the technology center and to distinguish them from other corporate goals or goals associated with implementing a new technology. Taking this step forces the organization to define which goals can be met by the technology center with the greatest efficiency, and establishes a clear plan that can be used as a guide in resolving the inevitable future conflicts.
Similarly, the stakeholders served by the utility represent distinct audiences. Based on the goals of the center and the organization, as well as the internal expectations set by managers, the target audience needs to be well defined. Many important facets of the technology center, such as content and location, will be partly determined by the target audience. Finally, the right content is critical to success. A regulator may want to see different information than customers.
In addition, the audience’s specific needs dictate different content options. Do the utility’s customers care about the environment? Do they care more about advances in technology? Are they concerned about how their lives will change in the future? These questions need to be answered early in the process.
The key to successfully completing Phase 1 is constant engagement with the utility’s decision makers, since their expectations for the technology center will vary greatly depending on their responsibilities. Throughout this phase, the technology center’s planners need to meet with these decision makers on a regular basis, gather and respect their opinions, and come to the optimal mix for the utility on the whole. This can be done through interviews or a series of workshops, whichever is better suited for the utility. We have found that by employing this process, an organization can develop a framework of goals, audience and content mix that everyone will agree on – despite differing expectations.
Phase 2: Design Characteristics
The second phase of the development framework focuses on the high-level physical layout of the technology center. These “design characteristics” will affect the overall layout and presentation of the technology center.
We have identified six key characteristics that need to be determined. Each is developed as a trade-off between two extremes; this helps utilities understand the issues involved and debate the solutions. Again, there are no right answers to these issues – the optimal solution depends on the utility’s environment and expectations:
- Small versus large. The technology center can be small, like a cell phone store, or large, like a Best Buy.
- Guided versus self-guided. The center can be designed to allow visitors to guide themselves, or staff can be retained to guide visitors through the facility.
- Single versus multiple. There may be a single site, or multiple sites. As with the first issue (small versus large), one site may be a large flagship facility, while the others represent smaller satellite sites.
- Independent versus linked. Depending on the nature of the exhibits, technology center sites may operate independently of each other or include exhibits that are remotely linked in order to display certain advanced technologies.
- Fixed versus mobile. The technology center can be in a fixed physical location, but it can also be mounted on a truck bed to bring the center to audiences around the region.
- Static versus dynamic. The exhibits in the technology center may become outdated. How easy will it be to change or swap them out?
Figure 2 illustrates a sample set of design characteristics for one technology center, using a sample design characteristic map. This map shows each of the characteristics laid out around the hexagon, with the preference ranges represented at each vertex. By mapping out the utility’s options with regard to the design characteristics, it’s possible to visualize the trade-offs inherent in these decisions, and thus identify the optimal design for a given environment. In addition, this type of map facilitates reporting on the project to higher-level executives, who may benefit from a visual executive summary of the technology center’s plan.
The tasks in Phase 2 require the utility’s staff to be just as engaged as in the strategy phase. A workshop or interviews with staff members who understand the various needs of the utility’s region and customer base should be conducted to work out an optimal plan.
Phase 3: Execution Variables
Phases 1 and 2 provide a strategy and design for the technology center, and allow the utility’s leadership to formulate a clear vision of the project and come to agreement on the ultimate purpose of the technology center. Phase 3 involves engaging the technology developers to identify which aspects of the new technology – for example, smart appliances, demand-side management, outage management and advanced metering – will be displayed at the technology center.
During this phase, utilities should create a complete catalog of the technologies that will be demonstrated, and match them up against the strategic content mix developed in Phase 1. A ranking is then assigned to each potential new technology based on several considerations, such as how well it matches the strategy, how feasible it is to demonstrate the given technology at the center, and what costs and resources would be required. Only the most efficient and well-matched technologies and exhibits will be displayed.
During Phase 3, outside vendors are also engaged, including architects, designers, mobile operators (if necessary) and real estate agents, among others. With the first two phases providing a guide, the utility can now open discussions with these vendors and present a clear picture of what it wants. The technical requirements for each exhibit will be cataloged and recorded to ensure that any design will take all requirements into account. Finally, the budget and work plan are written and finalized.
With the planning framework completed, the team can now build the center. The framework serves as the blueprint for the center, and all relevant benchmarks must be transparent and open for everyone to see. Disagreements during the buildout phase can be referred back to the framework, and issues that don’t fit the framework are discarded. In this way, the utility can ensure that the technology center will meet its goals and serve as a valuable tool in the process of transformation.
Thank you to Ian Simpson, IBM Global Business Services, for his contributions to this paper.
- Critical peak pricing refers to the model whereby utilities use peak pricing only on days when demand for electricity is at its peak, such as extremely hot days in the summer.