Innovating in the energy sector; from imaginary walls to a well-oiled innovation machine. Jeroen van Loon, working at Vattenfall Feenstra and responsible for Innovation and Product Development NL, and Anthony Meyer zu Schlochtern, founder and CEO of Innovation Booster, meet after a number of successful collaborations at Vattenfall’s headquarters. They catch up on the status of innovation within the energy sector. And how Jeroen has set up innovation within Vattenfall.

How long have you two known each other?

Anthony: “ That is a good question, we go back about 4 years. I remember very well that we had our first good conversation with the MT in this room, and that we had found a good connection!”


Jeroen: “Yes, that was actually the first step to establish a new innovative concept that was separate from commodity, electricity and gas. We then experimented with Innovation Booster and a small team, and soon came to the energy transition, now even more of a topic than at the time. And if you isolate houses, then you have the advantage of saving energy, but there will be less ventilation. And then we thought that instead of solving the ventilation problem, let’s make people more aware of the problem by means of house-climate-monitoring. We then took that concept and examined it over a period of 12 weeks, resulting in a sketch and the first hardware suppliers.”


Anthony: “That once originated from the idea to see whether we should no longer let consumers pay for their energy, but that we could solve that with other data and types of revenue. Then we investigated if there was a willingness to do so, but that was still really a bridge too far.”


Jeroen: “Building on this, we still got to work, because it has to be tackled structurally; the energy model with energy transition. This transition is under pressure and the need grew to give substance to it.” 


What does innovation mean to you? What is your innovation ambition? 

Jeroen: “For me personally it is always something awesome, something cool that also makes employees very enthusiastic. From a business perspective, we want to substantiate our purpose ‘fossil free in one generation’ with concrete evidence and thereby also help the client to really take those steps. What you see now is that customers still find it difficult to make the right decision or to take the first step. Innovation must be an important driver to make that possible.”


Anthony: “And from your perspective is that a new product or a new service, or do you also look at the business model?”


Jeroen: “We do two things, so the best thing is if you can link existing products to the current business model and make something better out of it. This is for example an existing process that we are currently doing with a heat pump, through which we bring the knowledge from Feenstra and the strategic know-how from Vattenfall closer together. That is really the linking different, existing technologies to better solutions and systems. Another great example of this: as a company we never had solutions for customers without a roof, then we developed a participation solution. So instead of solar panels on individual roofs, we just have a field that we now make available to the customer, as Vattenfall, to participate. Simple, and very efficient to let customers come into contact with sustainability.”


That sounds like a whole bunch of different products, services & business models that you offer, how many concepts are in the innovation funnel?

Jeroen: “This year we have covered around 60 concepts, and at the moment there are 26 in the funnel. We have highlighted the 7 main concepts; we really want to make progress on that. These have the best strategic fit and the most potential in terms of business value. These 7 are always given priority.”


Can you give an example?

Jeroen: “We are working on a concept around traceable energy; knowing where your energy comes from. That can go very well with participation. We have a nice concept ‘Samen in Zon’ (together in the sun) where we install solar parks at locations. After an investment via a bond loan, customers get a return on this and the longer the customer stays with Vattenfall, the higher that return will be. At the same time, our customers help us produce new sustainable energy and we could also offer this directly to the customer. We will soon make this concept available via Vattenfall and then you get that nice combination. Because you can invest in your solar panels, but you can also take your energy out of it. 


There are also some major challenges for our customers. They get a lot of information, so they don’t really know what the best choice is. Next to this, the issue is always; “how do I finance this?” Even with the most famous product, solar panels with a clear payback period, it remains a decision for the customer to spend that money on this product instead of for example on a vacation! That is their right, but with the renting of solar panels everyone can have solar panels. In which case you generally get more in return than you pay. These are  of course great models to think about. How can you make it accessible to participate without it directly affecting your wallet.” 


In terms of innovation, Vattenfall has experience major changes from what it was a few years ago. Can you outline how the situation was then and what challenges there were? 

Jeroen: “Yes, then we have to go back to four years ago. We had to bring at least four departments together to form a team from Vattenfall. We brought all innovation power and all product management together under one department for Feenstra and Vattenfall together. It is not the most important thing that we have one department, but  that there is one roadmap and one goal. This greatly helps in terms of management. If you see that the strategy is being refined, then this is easier to implement in the funnel and in addition we have done a project with IB to tighten up the governance, so that we know exactly what has to be delivered per phase and what the importance is of testing first without making a lot of investments. There is control, understanding, it is very transparent, and therefore you can make conscious choices. It just goes a lot faster.”  


Do you know how much faster you learn now? What have been the successes? 

Jeroen: “The big successes took a little longer, but these included complete legal issues. What you do see now is that it goes a lot faster with other concepts because we went through the same pain once. These are important learnings that you immediately include in your funnel. You see simple propositions, especially with partnerships, with which we now could launch in four months, provided that the partner switches gears quickly. This used to take at least a year by definition. We have also created a dedicated team from product management and marketing to market innovations or new propositions. There is a lot of profit in that.”


Anthony: “That is also a piece of organization politics that you have taken out.”


Jeroen: “Yes, we have simplified it for the teams. Our CEO determines the strategy and gives strength and focus on innovation, which in turn is directly translated to our roadmap. In terms of governance, all stakeholders are on the solution board (innovation committee), so they judge if an idea is ripe enough or not. This gives you a lot of speed and profit.” 


Anthony: “And that helps for motivation, I think?”


Jeroen: “Yes. It is now clear to the teams and they know what to work on. The solution board has not had to kill an initiative itself, since 80% is based on the advice from the team.”


Anthony: “With that you essentially give the ‘power to the people’. How often does the strategy get changed and what does that do with your funnel? Is that bothersome or does it go smoothly?” 


Jeroen: “We have a clear purpose ‘living fossil free in one generation’ and a basic strategy, customer intimacy, that is rock solid. We also know that we must always strive for operational excellence in certain areas. This strategic direction is refined every year and a half.


On the innovation front we had three areas that we were working on; can our core-product reinforce each other, especially to promote loyalty? Can we develop initiatives within the smart-home domain or smart-living domain and offer extra products and services with regard to sustainability?


Sustainability is now our cornerstone! We have therefore decided to put the other two on the back burner. For me that was a nice adjustment because it creates focus. The current purpose motivates people in such a way that they also find it amazing to contribute to it. I must say that more focus always works well.”


Anthony: “You just mentioned that in 80% of cases people notice themselves that a concept shouldn’t continue and that they proclaim this themselves. How do people respond to that?”


Jeroen: “I like that! It actually stems from the governance and the new KPI’s that we expressly propose for the next phase. Everyone is focused on that. For example, when they have to reach a conversion of fifty percent, this creates an atmosphere of innovation that you normally see more in the operational departments. There, they monitor almost daily to see if they have a successful concept. I think it is cool if people dare  to make the decision themselves. For example, we had a difficult discussion about stopping a product, which was profitable but did not reach Vattenfall’s internal benchmark. If that is not  a match, then we have to stop, which is painful. Those are the least pleasant conversations.”


Anthony: “We managed to put a certain amount of operational pressure on the innovation process, which removes that lack of commitment.”


Jeroen: “Yes, and without losing creativity. As you progress in the innovation phases, you see that the operational process becomes much more important. You have to hit the ground running, be on top of it to monitor it properly and determine the KPI’s. If you enter without KPI’s then it is a subjective judgement whether you continue or not. It is nice that this is eliminated, because this also motivates people. If they are not close to the KPI, they will tweak and design a variation to see if they can make it. So, there is a lot of creativity.”


What do you expect will be changes in the energy world? 

Jeroen: “Actually, I had the best and the worst role. For me, everything is about change. We have always had a centrally organized energy landscape; coal-fired power stations, windmills, or solar panels produced energy for all customers. Now you can see that customers produce and purchase this themselves. On the other hand, groups of customers find it a hassle to do it all themselves and will ask for help. So, the role by the energy supplier will always remain. 


On the one hand, we are in a free  market and on the other hand there is still quite a bit of government involvement to help start the transition. The goal is very clear and vary ambition, but the road towards it, the management and who will pay for it is less clear. This creates unrest but also opportunities and innovation power to find the right solution. There is no correct solution yet and there is no one size fits all. If you then innovate or are in the lead to develop new propositions, then it is a fantastic field. However, it is frightening that you don't know how you are going to do it. There will probably be many different solutions and it will become much more dynamic than it is now. As a company, we have to adapt to that. As an innovation, you anticipate this to occupy an important position as frontrunner and to take the customers along in the transition. ”


Anthony: “You say this from the field of energy supplier. Of course, you are also an innovator. What have you seen happening in the field of innovation in recent years? ”


Jeroen: “I always saw innovation as something very cool and I have therefore spoken a lot with startups. Now, more often, you hear the realistic story. Innovation is just hard work and it really is a numbers game! You have to innovate with discipline. There is a lot of talk about how the shop looks and feels. I don't think that's important as long as you have a good group of people. The way of working is especially important. Do it with dedicated people because daily work is always leading in our context and has priority. Make it transparent what the team is doing so that innovation is not something that pops up every now and then, but really blossoms. ”


Anthony: “So basically that is the same as the delta works here in the Netherlands. In the Netherlands, the dikes have been separated from the government, because it just has to be done. Is it comparable to how you are doing? ”


Jeroen: “Yes, and I am very pleased that at Vattenfall Netherlands we have chosen a model within the existing units with a clear link to the marketing teams. That works here, but it can work differently at other companies. I don't really believe in the model in which you are completely at a distance. Ultimately, innovation must contribute to what your company does, because it is at the core. If you are really at a distance, you can only get spin outs or spin-offs. I don't think you then contribute to the company and in our case to the purpose. It is nice that this is so clearly linked here and that the extra focus in the strategy certainly helps. Ultimately, it is also our task to achieve that purpose in the future. That integration helps me. I often see that reflected in other cases that I look at.”


How do you define success? When do you pop the champagne?

Jeroen: “Haha. I am a very blue person, so that has to be when the KPIs are achieved. Actually no, success is when people are proud. There is nothing more fun than the little moments of happiness. We now have a path where we go from challenge to challenge and every time people become happy when those challenges are overcome. You see pride and there is energy for the next challenge. The traction on how things are handled and at what speed is what I feel most about. Of course, I am most proud when the product is live and does everything it should do. ”


Anthony: "So results and excitement!"


Jeroen: “Indeed results and excitement. And therefore, I am especially proud of employees. If you see that they went for it and realize it. With small activities you can already see that it can bloom! But on the other hand, I can laugh and celebrate a lot, but I really have to be really grumpy 3 times a year because otherwise I will no longer work at the cutting edge. And you must have ambitious goals, actually so ambitious that you cannot achieve them. If you do achieve them then you have at least come full circle. ”


We all know the war on talent; what do you need talent for?

Jeroen: “Talents and young people are always good to have. I think they have a different view on sustainability, on the energy world, on how the world works digitally. It shakes things up nicely again. I think they are much more passionate about sustainability than perhaps the current generation at Vattenfall. ”


Anthony: "How do you ensure that those young people enter this building, Hoekenrode, so that those young people can keep that freshness?"


Jeroen: “Innovation involves people other than a customer service department, for example. We spend a lot of time outside with customers, cafes, web sessions, a lot of research, a lot with partners and the young talents have to go along with that. And everyone who enters must maintain their own opinion as much as possible before you are completely adopted in the culture. That is sometimes difficult, I see that with all newcomers, the longer you can hold on to it, the better it is. ”


So what does such talent have to offer? What are you looking for outside digital, fresh points of view?

Jeroen: “Internally we have a stable basis, but especially in validation, problem validation, solution validation, we sometimes seek help. I would expect young talents precisely in that field. Also in the growth of digital solutions that we want to create. To make the link between proposition, product and marketing with the new growth hacking techniques, someone fresh from the outside or another sector can help enormously.”


What does Vattenfall bring to the younger generation?

Jeroen: “Vattenfall wants to make the Netherlands a bit more sustainable. If that is also your ambition, you will get a huge opportunity for that at Vattenfall! And I think that Vattenfall is above all still a very social and good employer where there are many opportunities and growth opportunities. And a lot of change so you don't have to get bored during the first few years. You can create something beautiful and a sustainable future for Vattenfall, and therefore also the Netherlands. ”


What message do you want to give the readers?

Anthony: “An observation that I am now doing, and what I really like, that we as Innovation Booster get to work on, is that besides that the governance and the team are neatly set up, it is very cool how you can innovate in a structured and disciplined way. There is really a common thread and rhythm throughout the year, which I find very special. 4 years ago, this was not there and how it is now, I just think it's really cool! That's a real compliment. ”


Jeroen: “That is also a compliment to you for the processes for validation and designing and implementing governance, which were very fruitful collaborations for me. There will probably be a lot more to come in the future and it has also made my life a lot easier 😊. ”

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