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Pink on Green: How to ignite the second electrical revolution

Elisa WoodBy Elisa Wood
April 4, 2012

The electric industry is good at building things. That’s how it solves problems. Is there a threat of blackouts? Develop  a new natural gas-fired plant. Worried about climate change? Build wind and solar power. Does electricity cost too much? Install a transmission line to import cheaper power.

But build-to-solve represents only half of the equation in the new world of smart grid. The other half, the part that stumps the industry, is solve-without-building.

Rather than adding more energy, smart grid tries to wring maximum efficiency out of the system by changing the way we consume electricity.  But it turns out,  trying to direct human energy behavior makes cat herding look easy. To get people to pay attention to their energy use, utilities and private companies are experimenting with alluring gadgets and social motivators.  So far, success has been minimal.  Thomas Edison’s light bulb has been such a smashing success for the last 100 years, none of us want to turn it off.

So what will it take?

The Edison Foundation recently looked outside the industry for some answers, inviting Dan Pink, best-selling author of “DRIVE: The Surprising Truth About What Motivates Us” to speak at last month’s Power the People 2.0 conference  in Washington D.C.

Consumer motivation has become a common conference topic. But Pink’s talk was different. He stepped back and took a broader view and asked: How do we motivate the people who are trying motivate the consumer? Pink calls this “the science of how people do extraordinary things.”

The power industry’s creative thinkers need to bust out of their intellectual silos to ignite the “second electrical revolution,” according to Pink. But smart grid represents a particularly difficult problem for them because the industry is trying to invent gadgets consumers are not demanding.  The electric grid needs the gadgets and needs consumers to use them.  But consumers would rather think about their next iTunes download or where to buy the tastiest strawberry. How do you get consumers to want a smart plug or home energy display just as much?  Some in the industry say smart grid is doomed because it not born of household demand but of the power industry’s need.

Pink has another view. He asked members of the audience to raise their hands if they own an iPad. Half did. Then he asked how many of them knew they needed one two years ago. Only one hand went up.

Therein lines Apple’s genius; its ability to give the world something it didn’t know it was missing. Can the power industry do the same with smart grid? It must first recognize that this is a skill more likely to be found in artists than engineers. “I think the cognitive skills of artists today are the most important  cognitive skills in the economy,” Pink said. “We need scientist that think like artists and artists that think like scientists.”

The electric industry also needs to reconsider the way it motivates creative employees. “It turns out a lot our intuitions about motivation are not quite right,” according to Pink. In fact, it’s downright “Newtonian” to assume that “when you reward behavior you get more of it, and when you punish behavior you get less of it.”

So forget the big bonus for the genius idea.  While people need to be paid reasonably to perform well, big bonuses only motivate them to achieve short-term goals, like making a sales quota. “Igniting the second electrical revolution is not simple, is not short-term, but is complex and long term,” he said.

So what gets creative thinkers moving? Free time, as Pink tells it. He cited studies and examples of  artists doing their best work without a commission and inventors achieving Nobel Prize-winning work off the clock.  The business community is beginning to catch on to this idea, and some are offering a regular day when their inventors and problem solvers are encouraged to stop their required tasks and just work on anything that intrigues them. Many of these free hours have produced astonishing findings, some that the companies have been unable to achieve any other way.

“Complex industries, likes yours, complex ecosystems demand this kind of complex, silo-busting thinking. You’re going to get it, not through an elaborate system of incentives, but by hiring talented people and getting out of their way,” he said.

Perhaps, if Pink is right, and the electric industry listens, he’ll be able ask audiences in a few years how many own some amazing energy-saving device that no one has yet conceived, and many hands will fly into the air. Perhaps then the light bulb, as we know it, will finally be replaced.


Elisa Wood About Elisa Wood

Elisa Wood is an editor at EnergyEfficiencyMarkets.com. She has been writing about energy for more than two decades for top industry publications. Her work has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. Geoff Hartman says:

    Great comments! I agree with the emphasis on the need for innovation and creative thinking in the energy markets. I know some retail electric providers (REPs) and even regulated utilities are trying to tap into new markets, and maintain customers with offers of free ‘devices’ or services. I think these ideas are only partial solutions that need closure and a more proactive, rather than reactive, approach to be significantly successful. On the other hand, they are a step others are still ignoring.

    I recently heard several consumers talking about “smart meters” very differently than industry insiders. They do not see opportunities for managing loads, lowering bills, and saving energy or reducing peak loads. Their perception is a more ‘big brother’ interpretation. The discussion started something like this. “These new meters are a huge scam! They [utility] can see exactly how you use your energy, and stick you with high rates, or fees & penalties, during your highest use hours.”

    I think this perception is partially due to the fact that some people have seen significant jumps in their bills that correspond (in their mind) with the new meter install. I have personally seen significant reductions! However, I do not really know when the meter was installed. I merely noticed it at some point when my usage seemed to become more reasonable. Maybe we finally started turning off the lights and appliances?

    More importantly is the lack of useful and informative outreach about the potential for smart meters and grids. Lack of understanding breeds mistrust. Finally, lack of real products, services, or innovative rates that can be associated with the new technologies further breeds mistrust, and confusion. “How is this helping me save energy and money?” “All I see is an additional charge on my monthly statement.”

    One consumer in the group was ecstatic and very proud that she had contracted for a 1-year fixed rate of nearly 11 cents per kWh. While most of the group quietly murmured that we are only paying [6-8 cents], we politely smiled and congratulated her.

    Another bragged about how, after a lot of arguing, she successfully negotiated with her REP for a lower rate. They had originally refused to offer them a lower rate, because it was only available for NEW customers. This is the cell phone and cable industry model, where we are forced to change providers in order to get the best deals. We know the cost to acquire a new customer is about 8-10 times that of keeping an existing customer, yet we focus most efforts on attracting new business, while large numbers of customers we already have “leak” out the back door to our competition.

    Yes, even regulated electric utilities have lots of competition. We used to install a lot of natural gas and propane services to replace existing electric heating, cooking and water heating, and to add generators, pool heaters, patio heaters, and outdoor kitchens. Name someone who wants an electric kitchen outside in the rain!

    Conclusion? – Ignorance is bliss, and perception is reality. All politics are local, and all marketing is one-on-one. So the question is, or should be, “Who are you?”, “What do you want?” and “How can I give you what you want?”

    Creative solutions, whether products, services, or business development will probably not be found in traditional strategies and thinking. Encouraging employees to focus on customers may require more than high sales quotas and bonuses for gaining New accounts.

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