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"We must replace linear growth models with innovative ideas that cut cost, improve customer care, put consumers in control and provide them with a wider choice." Arun Krishnamurthi, vice president and global head of utilities, p10 "I can only promise you turbulence and resource inflation over the coming years." Steve Lee, CEO, CIWM, p11 "I would ask whether the focus on aligning for optimal efficiency has been to the detri- ment of broad-based innovation. The key to innovation in the supply chain is collaboration." Iain Gray MBE, former CEO, Innovate UK, p15 A culture revolution Utilities are famously risk-averse, but there is a pressing need for them to innovate in their thinking and processes. UtilityWeek S P E C I A L R E P O RT / M AY 2 0 1 5 9 | 15TH - 21ST MAY 2015 | UTILITY WEEK Talking points I t's oen said that necessity is the mother of invention. Yet today, in an environment where there is so much need for innovation – climate change, ageing infrastructure, the smart tech race, and decentralised consumer empowerment – it seems utilities are struggling to conceive truly innovative cul- tures where "outside the box" thinking is nurtured and swily embedded. Despite some successful innovation pro- jects, recent gatherings of innovation lead- ers in utilities and technology experts from the supply chain have resoundingly reported that they feel hemmed in – "unable to look to le or right" – when seeking to embrace the disruptive innovations they know are required in the energy and water sectors. There is also a strong feeling that where innovation is taking place, it is isolated, and there have been calls for broader collabora- tion, for the "greater good" of the industry as a whole, on the "pre-competitive" foun- dations of new, smarter energy and water systems. Furthermore, a disconnect has been observed between technology innovation and the business model innovation that needs to occur in parallel if util- ities are to realise the full poten- tial of smart, distributed and dynamic energy and water use. While it may be possible, even necessary, for the bulk of disruptive technology innova- tion to take place further down the supply chain in agile, IP- hungry manufacturing and engineering firms, only utili- ties themselves can execute the required business model inno- vation. Only utilities can reorientate their organisations to thrive off the new value streams and revenue models that emerging technology will enable. There are many – oen interdependent – reasons why barriers to innovation exist, not least of which are risk aversion and regulation. These barriers are not insurmountable, however. It is essential, for the future resil- ience of the UK's energy and water systems, not to mention the survival of the organisa- tions, that utilities embrace disruptive inno- vation with enthusiasm and purpose. This report seeks to understand the bar- riers (both real and perceived) to innovation for utilities and identify ways in which they can be dismantled or overcome. Produced in association with: Innovation \Culture\Process\Technology ONLY UTILITIES CAN EXECUTE THE NECESSARY RESTRUCTURING JANE GRAY, INSIGHTS EDITOR To facilitate the growth of strong innovation cultures, ideas generation and technology uptake in the utilities sectors, Utility Week has launched a Technology and Innovation Council, in association with Wipro. The council is formed of information and technology leaders in companies, as well as key innovation strategists from the broader sector, including regulators. The council's objective is to understand the concerns and challenges facing the senior individuals run- ning innovation and technology processes in the UK's utilities, and to feed this back to Utility Week and the sector more widely. THE INNOVATION AND TECHNOLOGY COUNCIL

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