Future History

Transformation of the electric industry isn’t isolated from the larger societal, customer and technological changes that have impacted other industries. The future history of the electric industry will be based on its ability to make institutional changes to anticipate and adapt to rapidly changing customer needs, accelerating technological advancements and dynamic business innovation. Customers today are empowered to make real choices about how they consume, or produce, electricity like never before.  This fundamentally changes the stakes for the electric industry and represents a total paradigm shift.

We’re not alone in having to deal with this type of paradigm shift and other industries also struggle to deal with these transformations that are driven by the very same customer, technological and business innovation drivers.  For example, 20 years ago it would have been hard to imagine that nearly every movie or tv show ever made would be available to watch over the internet for less than $15 a month.  Netflix put video rental stores like Blockbuster out of business almost overnight and every major television broadcaster/movie studio got caught with their pants down.  The disruption didn’t stop there.

Over the past 10 years, Netflix has continued to outfox the entertainment industry with the transition to online streaming content. The two mistakes that these networks and studios committed were:

  • Continued to operate in a “business as usual” fashion. That decision blinded them from seeing that technological advancements would allow customers to make choices that had never been available to them before.
  • Misunderstanding the potential value of their content libraries. This allowed Netflix to stock their platform with digital content from many of the major networks and studios for far less than current market value.

To understand the significance of these mistakes, Netflix in ten years has gone from being a streaming platform that had no original content to now functioning as the most powerful streaming platform while also being one of the most influential content producers in the industry (Ex: Stranger Things and The Irishman).  These two events represented a total paradigm shift as a result of changing customer expectations.  For the networks and studios, the future has repeatedly landed on their doorstep and they’ve had no idea what to do – and still don’t 20 years later.

Today, networks and studios are trying to reposition themselves once again, but they face even more competition. In addition to Netflix, companies like Apple, Amazon, and Disney, to name a few, have created their own streaming platform services. Now no longer dictating the marketplace in content or platforms, networks and studios have to decide choose to be the role of:

  1. Content creator,
  2. Content platform (e.g., Disney+), or
  3. Do both (e.g., Survivor seasons 1-34 on Hulu/1-40 on CBS app).

Each of these choices has its own financial risk and requires vastly different business models in order to succeed.  The reality is that networks and studios should have started asking themselves what role (creator/platform/both) made the most sense for their customers and for themselves at least 10 years ago.  Had they been more proactive, they likely would have been able to shape the streaming market rather than being dictated by it.

The electric industry is currently facing its own future history and has to contend with:

  1. Customer expectations based on personalized, on-demand services and subscription pricing in other sectors
  2. Accelerating technological advancements in distributed resources that are already upending the centralized model and institutional constructs.
  3. Dynamic business innovation driven by new entrants and business models adapted from other sectors.

These developments are fundamentally changing the electric industry and new market entrants are dictating the scope, scale and pace of industry change – including regulatory.  Today, we are at the mid-point of a customer-centric distributed electric industry revolution. By 2035, this future history will be largely written. The question is whether the electric industry will learn the lessons of other sectors and adapt accordingly or continue to think we are institutionally protected from the forces of change.

As Einstein observed, “We cannot solve our problems with the same level of thinking that created them.”

Share This
Scroll to Top