Less than two years ago an Australian energy retailer ran an ad campaign with the tag “Energy, made fresh daily”. Just like eggs, bread and milk, they claimed, energy is a perishable too. Not for much longer.
Disruption in the energy and transportation sectors
Author and entrepreneur Tony Seba blew my mind recently. His talk, “Clean Disruption: Why conventional energy and transportation will be obsolete by 2030” covered the rise of energy storage, electric vehicles, self-driving cars, and solar power.
Seba outlined four ways our lives will be changed in the next few years:
- Energy Storage: the shift to relatively inexpensive lithium batteries to store and draw energy means consumers and businesses can buy ‘off peak’ and use whenever they like, effectively destroying the energy sector’s revenue model. Energy will no longer be ‘perishable’.
- Electric Vehicles: As performance improves and costs of ownership plummet, Tesla and other electric vehicles will displace conventional vehicles by 2020, disrupting petroleum suppliers and transport manufacturers. With only 18 moving parts in an electric vehicle compared with over 2,000 in a conventional car, the economics of both ownership and spare parts manufacture will be dramatically altered.
- Self-driving and ridesharing transport: We use our cars only 4% of the time, so as the convenience and reliability of ridesharing and a network self-driving options emerges, the financial advantages will discourage ownership.
- Solar: By 2020 solar is going to be cheaper than the cost of transmission (i.e. generating your own rooftop power will be cheaper than you can buy from an energy retailer), again disrupting the business models of energy suppliers.
It’s difficult to watch Seba’s talk without a mix of excitement, cynicism and anxiety:
- Excitement for the environmental and economic benefits;
- Cynicism about the speed at which he believes the changes will occur. Four years time? Wow!; and
- Anxiety for those legacy businesses who don’t seem to be adapting – those that will be left behind.
Are you spinning plates?
It’s big stuff that Seba is putting out there, isn’t it? Of course it’s not just energy and transport that are being disrupted: retail, education, publishing, healthcare, food, manufacture, finance … every industry is undergoing radical change.
Yet many businesses I’ve observed seem to be grappling with a short-term pricing promotions to boost sales for the quarter rather than use their skills to disrupt their own business model before it gets disrupted for them.
They are good at being busy – good at spinning plates – but as we know, the band played on as Titanic sank.
That’s the perplexing nature of incumbency. It’s both a blessing and a curse to have established systems and a revenue base. Unfortunately we allow short-term bias, sunk cost and loss aversion to keep us focused on avoiding losses in the near term rather than risking a step back to move forward.
So if you are in this situation and sick of spinning plates I thought you might like a couple of articles from my archives. They might help you enlist appetite for change by understanding the behaviour underneath:
- Self-Disruption: Risking going back to go forward: How Netflix disrupted itself
- How to get traction in your business: How to enlist the support of others for new ideas
Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.