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Utilities need to do their Starbucks transformation

www.infosysblogs.com

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Historically, our economy focused on extracting raw materials (gold, wood, cow and so on). Willing to transform these raw materials for some end-use purposes (luxury, transport, feed and so on), firms started selling goods as more or less differentiated products (jewels, boats, steak and so on). Then, firms move to services (fit jewels and clothes, offer mobility, serve hamburger in your favourite fast-food restaurant and so on). The natural evolution is to provide experience to end consumers (feeling pretty, enjoying a nice trip in a train where you can dance like in a club, enjoying tasty food in a very practical environment).

Thus, for instance, Starbucks and Nespresso are both firms which managed to push further coffee industry by creating unique experiences they sell to their clients. Indeed, in the 90s, coffee industry seemed to lead to a dead-end development. After harvesting coffee, selling it with different packages and complementary equipments (coffee machines..) in shops, offering cups of coffee in your favourite restaurant or coffee shop, it looked like there was nothing else to do in this industry. However, some firms such as Starbucks and Nespresso extended the coffee market to a broader market based on experience. For Starbucks and Nespresso, coffee is not only a good to sell, but also a catalyser to provide something else. Something consumers are ready to pay a premium for: a unique experience in a coffee shop or at home.

We see through these examples that experience economy shapes the evolution of industries. The next question that comes to my mind is: what about energy industry? How Utilities can rethink their core-business to move from a product-based (commodity and services) market to an experience-based market?

Energy industry started with wood, oil, coal or natural gas extraction. Then, Utilities supplied useful energy like electricity, gas oil or natural gas. These very undifferentiated goods are called commodities. Some energy services used to complete this field, such as operations & maintenance, Energy Efficiency, and metering services amongst others.

What will be the next move? How energy industry firms will reconfigure their organisation to run this evolution? What kind of weak signals Utilities need to track? How firms and local authorities could help pioneers develop their innovations?

Get to know more about experience economy:
first related Harvard Business Review article
this excellent Joseph PINE (concept’s inventor) TED video

Sources: Jean-François NOUBELwww.infosysblogs.com

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