How Can Obsolete Business Models in the Energy Sector Be Reformed in the Face of Digitalization?

INTRODUCTION:

As we embark into the 2020’s, we see more economic activity shift to the digital sphere. This is further pushed onward by new generations, such as Gen Y for example. Many younger people spend a great part of their life on the internet, using smart phones and other technology. Not surprisingly, B2C sales has shifted to the digital sphere where you see stronger revenue growth. 

 


THE GREAT DIVERGENCE ON THE STOCK MARKET: Taking a look at the stock market, we see the great divergence coming: On the one hand, we have stock-holding companies that perform very well post-corona, they are mostly fully digitalized and generate revenue via online sales and so on.


BUSINESS MODELS DIVERGE: But we also have a great majority of businesses that still maintain their old business models. They have their existing business networks that they have build for many years. The oil majors have so far been able to maintain their networks, and besides that, they are able to expand on their existing networks through social media. They have embraced digital media to a much greater extend than many of their competitors.  We see that timing is of essence. Many businesses in the English-speaking countries have learned to work with social media, to grow their business relations with the help of the internet. That was not always the case in other countries. This is particularly true for countries outside the Anglosphere, so to speak.


THERE ARE A GREAT MANY REGIONAL DIVERGENCES; EVEN THOUGH IT HAS BEEN ARGUED THAT THE INTERNET IS GLOBAL: In German-speaking Europe, public utilities had been slower to adapt to the internet, generally-speaking. This is not always the case, but generally holds true in many instances. The fact that different languages are spoken across Europe is an advantage when it comes to the internet, to online sales in particular. There is some sort of delineation with regards to linguistic boundaries in Europe. So in this regard, energy businesses in these areas have a bit more time on their hands to adjust to the internet and online sales. The fact that public utilities work on longer time horizon allows them to make long-term decision, in many cases this benefits the organization as a whole.


DIGITAL TALENT COMPETES GLOBALLY: One could argue that talent is now global, part of a global market. In fact, this process of concentration of talent in specific sectors, companies, industries and places will probably speed up post-corona. Even public utilities compete for brain power with large multinationals, including oil majors. This is a situation that was hitherto unknown in the energy world, except for specific areas such as petroleum engineers and chemical engineers, to give just two examples. This situation has existed in the financial industry, but has started to creep up into other industries. As the focus of energy businesses much more service-sector oriented, we see an acceleration of this trend.


NOW, WHY SHOULD WE FOCUS ON SALES AND LESS ON FINANCIAL MANAGEMENT? The main reason is that sales is now key when it comes to information management, especially with regards to collating new information. A major obstacle of most organizations, any organization that reaches sufficient size, is the efficient flow of information. But sales sits at the entrance of most “valuable” information coming into the organization. So good sales management, information management means good data and timely data that is needed to make accurate assessments of the market, the product, what customers want.


NEW IDEAS OFTEN COME FROM YOUR SALES TEAM: Sales is critical to find out about new ideas, build business models that work and sales streams that will generate revenue for energy businesses for years to come. Sales will see a mighty shift, if will become much more involved with other business areas. Now, one area where sales can contribute massively to the organization as a whole is to collect information which serves as the bedrock or the basis on which to make decisions for the organization.


IN OTHER WORDS, THE VALUE OF YOUR COMPANY DEPENDS ON YOUR ABILITY TO PROCESS INFORMATION AND GENERATE VALUE FROM IT. THE KEY TO TRANSFORMING AN ENERGY BUSINESS IS TO DEPLUG THE INFORMATION BOTTLENECKS IN THE ENERGY BUSINESS.


To do that, good leadership requires real interaction, and real intrinsic motivation of your team, preferably long-term engagement with a goal everyone shares, it has to be felt by everyone. If people see themselves a cog in a machine, it will hard for an organization to process all that complex information as there is no shared identity with the energy behemoth.


Many thanks for the shared interest in the energy world!



Disclaimer:


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations.

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You are welcome to take a look at

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