Innovation in a World of Convergence

Two Steps Forward

Innovation in a World of Convergence

Our VERGE conference centers around the convergence of energy, information, buildings, and energy as one of the next great waves of innovation.

Indeed, the possibilities seem endless in a world of converging technologies, from infrastructure (the smart grid and all of the intelligence being built into cities, highways, pipelines and other structures -- things like smart meters, sensor networks, and fiber optic and wireless networks); to business functions (things like telematics, smart building analytics, renewable energy facilities, microgrids, electric vehicle charging stations, and sensors for demand response); to consumer products and services (smart homes, smart appliances, smart vehicles, and for a vast assortment of things just now being conceived).

And 1,001 things no one has yet thought of.

But how does the process of innovation change in a world of converging technologies? I posed that question to my longtime friend Robert Shelton, a partner at the consultancy PRTM, co-author of Making Innovation Work, and one of the world's leading experts on how innovation happens inside companies.

"Innovation definitely changes in several ways when you have converging technologies," he began. "First, it changes what is possible. It provides new ingredients for solutions that before had been limited to solutions within a given topical area. In this case, people from energy maybe didn't think much about buildings or vehicles or information. So, as they converge, there are new ingredients, which allows new rules of the game to be created through mixing technologies and business models. It allows new ways to play the game -- and in some cases it can create whole new games, where people literally define entirely new industries, new ways to create value for consumers or for businesses."

Shelton was just getting warmed up.

Higher, Faster, Better

The second change, he said, is that VERGE potentially accelerates the rate at which innovation happens. "By adding all these new ingredients there is a lot more at hand. But the other part is that it seems to fuel a lot of activity from a host of players, some of them that are already in these industries, but also some new entrants that see new opportunities. And as they pile in, the rate of change increases and this creates additional opportunities. It also creates new threats, so companies feel pushed or pulled towards getting involved, upping the investment, and going faster in innovation."

The third way VERGE changes innovation, says Shelton, is that it creates new ecosystems. "That's not just because you've got new players that all of a sudden have entered the fray, but because you're going to need new capabilities and new types of partnerships. So VERGE creates an entirely new level of collaboration -- in fact, collaboration becomes a core competency of successful companies when you have this converging taking place."

Skill Sets and Toolkits

The implications for companies -- both those creating new products and services as well as those using them -- are multifold, says Shelton. First, they'll need to add talent. "You're not going to be able to solve the problems with the same old mono-disciplined folks. You're going to need people that are capable of working in the gray spaces between the converged areas as well as working cross-disciplinary, where they are able to combine elements that have never before been combined."

It sounds like companies are going to have to learn new skill sets, I proffered. "You've got to integrate the disciplines that you have in new ways," Shelton responded. For example: "You've got to provide information-sharing and capabilities that allow people to collaborate in ways they've never done before. Companies will be running their projects differently and they'll have new portfolios that have new combinations of projects, new types of projects, perhaps a different risk profile. While companies may have been very comfortable sitting in a strong, defensive position in the pre-verged world, companies may suddenly find themselves challenged to take on different risks -- not necessarily bigger risks but different ones than they're used to doing."

Do Companies Have What It Takes?

So, do most companies have what it takes to innovate around VERGE? Do they have the tools and the skill set to execute, from an innovation perspective?

Shelton answered with "a qualified yes followed by a qualified no." Uh, right. "They have many of the tools and can get involved," he quickly explained. "However, to keep up with the pace of change they're going to need to add to their innovation capabilities. They probably don't have all that's required to be able to stay with it. They might feel comfortable that they are in the game in the early innings, but it won't take long before they get left behind by those that have better tools and capabilities, that are able to do those things I mentioned -- add the talent, find the partners, integrate the disciplines in a way that allows ideas, solutions to both be identified and be created faster, to new portfolios that are able to manage the different risks. The companies that have those capabilities will do better than those that have just a smattering of them or that lack them."

The bottom line, warned Shelton: "If you're good at one of these areas right now -- vehicles, buildings, information, or energy -- and you hope to use what you have in this verged ecosystem, you'll be in the game for a little while but it won't take too long before you get left behind."