In the electricity distribution world, demand response (DR) represents a dynamic demand mechanism for managing
customer consumption of electricity during traditional heavy load or other
critical times via incentives based on price. Solution, software and hardware
providers have been attacking this space for over a decade in North
America. That includes incumbent
providers (meter companies), electric utilities themselves, and a newer
generation of startups building on increasingly sophisticated connectivity
platforms (cloud, Wi-Fi). One of those
startups is a company in Palo Alto that has been generating some significant “buzz”.
Nest Labs designs and
manufactures a sensor-driven, Wi-Fi-enabled, learning, programmable thermostat
that is now in its second generation. Nest
is led by Tony Fadell, a former Apple executive with a stellar pedigree, having
helped bring the iPod and iPhone into the world. He and co-founder Matt Rogers
recruited an A-list team from Apple, Google, Microsoft, and Logitech, to drop
but a few names.
With some solid market success selling the thermostat under their belt, Nest
announced this week an expansion of their solution to incorporate DR as part of
the overall value proposition, using the Nest thermostat as a platform for
managing energy during peak times.
Whether the DR solution from Nest (called Rush Hour Rewards, BTW) is
materially different than some of the other offerings already in existence is
not yet clear. However, the announcement
included the creation of new residential
demand-response programs with Austin Energy, Green Mountain Energy and Southern
California Edison, along with an existing one with Reliant Energy. Combine that with the founders Apple heritage
and the current Nest buzz could begin to make DR more top-of-mind with
looked at the strategic intent, market activities, and business models of
hundreds of companies over the past two decades, I am sure of only one
thing: most companies don’t really
understand strategy. A recent article in
Strategy + Business
by Ken Favaro tackled this issue head on.
discussing strategy, executives often invoke some version of a vision, a
mission, a purpose, a plan, or a set of goals. I call these “the corporate
five” Each is important in driving execution, no doubt, but none should be
mistaken for a strategy.”
I discuss strategy within organizations, I try to get to the heart of intent by
asking four simple questions:
Who are you?
Why are you here?
What do you do?
Why should I care?
those questions don’t cover all the bases, but if an organization can’t answer
those, they don’t understand where they are trying to go or what they are
trying to be. Favaro has a different set
of questions that crosses the same territory.
He calls them” the strategic five”.
“Before they get to the corporate
five, companies need to address five much more fundamental, and difficult,
questions. Let's call them the “the strategic five”:
1. What business or businesses
should you be in?
2. How do you add value to your businesses?
3. Who are the target customers for your businesses?
4. What are your value propositions to those target customers?
5. What capabilities are essential to adding value to your businesses and
differentiating their value propositions?”
also think it is important to recognize that “the corporate five” have
historically become hard-coded as an “aspirational” raison d’être, often
resulting in sclerotic environments that are neither agile nor adaptable enough
to maintain success in today’s rapidly evolving markets.
Favaro’s “strategic five” prepares an organization to much more easily roll
with the punches that their marketplace will almost certainly attempt to throw