We spoke on the phone with Philip Mezey, President and CEO of Itron, in the first of a series of interviews entitled The Leadership Insight Series.The interviews will include leaders of some of the world’s biggest companies: examining their leadership style, and giving them a chance to share their specific thoughts on the development of the utility sector globally.
What do you consider as the top attributes of a successful leader?
I would express leadership as the ability to paint a bigger picture and to enrol people to participate in that narrative. Leadership is about drawing people out of themselves and connecting them to something larger than themselves, whether that is a team, a company or an industry. It’s the ability of the leader to draw people toward a vision. In Itron’s case, that means inspiring people to want to make our customers more successful, because I think that really is the essence of business – enrolling people in the quest to achieve customer success and helping them understand their role in serving the industry. Leadership is about conveying that sometimes, even though our own best interest is not directly served, by serving others we ourselves are served.
That fits well within the concept of the ‘servant leader’ – that you are best served by serving others. Which values do you yourself demonstrate as a leader?
The ‘desire to serve’ is a very important attribute to have. To put one’s ego aside, to focus on a common goal or the goals of others is very important.
It’s tremendously important to be curious, to want to draw information out of other people and to understand that if you want to serve them, you must understand what their challenges are and how to overcome them.
For there to be curiosity, there must also be respect and trust. For curiosity to be genuine, there should be some element of mutual respect and that comes with an element of trust.
Do you believe you demonstrate these qualities?
I would like to think so – I certainly aspire to that.
What are your greatest weaknesses and strengths?
One of the things I’ve learned is that often the strength and the weaknesses are one and the same thing.
I see both sides of issues. I’m blessed with a certain amount of empathy and understanding for others but the act of seeing both sides can mean that you take too long to analyse a situation. By understanding both sides, you can project a level of uncertainty because people expect leaders to be decisive, crisp and quick. Being able to weigh both sides and be more deliberative can be extraordinarily useful in coming to a better answer. It’s a matter of balancing thinking fast and thinking slow.
How do you motivate a team after experiencing a defeat or at a time of low energy and enthusiasm?
I think the key is to reset their time horizon. We make the mistake of thinking that every battle is a war. People tend to get very focused on a single event without seeing the connection between the events or seeing a larger time horizon than a single incident. I think my role is to put the situation into context and then give people the opportunity to look at how we can learn from the situation and ask the question: Did we try our best and what are we going to do next time in order to improve the outcome?
You must draw people away, for a moment, from the narrow time frame that they can get trapped in, helping them understand the broader context and then focusing on the diagnostic. Then you must be able to inspire people by reminding them why we are doing what we are doing and not get hung up on what happened. My job is to figure out how it happened and to leave them with the “why are we doing this” part, which tends to reset the energy level.
Moving away from a personal focus and your leadership style, what do you see as the biggest challenge for the utility sector going forward?
This is something that is being actively discussed in the industry and revolves around several big picture items. In many areas of the world, utility revenues are flat or declining due to a strong emphasis on energy efficiency, distributed energy resources and conservation. These elements are challenging the overall revenue picture.
There are, of course, massive ageing infrastructure issues, so when a utility is challenged on the revenue side, their ability to invest in their infrastructure is challenged. Over the next 25 years, more than a trillion dollars need to be invested into water infrastructure. On the electricity side, there are massive gaps in investment.
At the same time, customers are becoming more demanding in their expectations. They’re experiencing a kind of commerce on their smartphones so fundamentally different from what they experience with their electricity, gas and water utilities that the disparity is creating demand for enhanced services. In addition, consumers are starting to become generators of energy themselves, and this is a real challenge to the revenue model as well.
What are your top three technology predictions for the sector for 2017? And what are the top three strategic predictions?
One of the things that we have been focussed on is industry standards and multi-purpose networks. The industry’s tradition of building islanded solutions, I believe, is over. It is going to become a normal operating practice to have nonproprietary approaches to solving problems and when a company or person builds something, it needs to be useful for multiple purposes. This is going to become, as they say, ‘a price of entry’. That we are thinking in somewhat different terms about extensibility, openness and multi-use is very important.
I think the industry is going to accelerate toward moving to the cloud, both in terms of how it utilises software and how it gets services. Some people believe that utilities are slower moving in this regard, but the proof points are going to be pretty overwhelming, I believe. The underlying technology solutions are becoming more complex and the benefits of putting that complexity up into the cloud are going to become tremendous.
Related to these points – the Internet of Things is going to map itself more clearly to the utility space. Of course, the utility space is one of the greatest implementations to date of the Internet of Things, with so many connected devices, many of them smart devices.
Going back to the openness and extensibility points raised earlier – we are going to see many other devices start connecting across these shared networks. With this use of standards, we are going to see more proof points of new types of devices, which will utilise these standards to connect to the open infrastructure that is being put in place.
On the water side, we are deploying acoustic leak sensors, and on the gas side, we are looking at methane sensing, corrosion detection and pressure monitoring. On the electric side, the big things people are talking about are streetlights, charging stations and distribution automation devices. The industry is moving beyond the traditional metering proposition to a number of other grid-connected devices.
Many of our customers are struggling with these questions: What is the utility business going to become? What opportunities are there for new revenue sources? How do we think differently about the business?
We are going to see an emergence of utilities trying to use these technology platforms to build other products and services that they can offer. In light of rising consumer demands, the emergence of the producer/consumer, or prosumer, onto the grid is going to require engaging in a different way. Utilities will face new challenges when moving from a centrally controlled, centrally distributed product to a much more distributed and competitive environment that is going to put some pretty significant demands on them.
That being said, the grid is an integral part of how electricity, gas and water are going to be delivered. I don’t think islanding is going to be a huge thing, so utilities are going to be in an absolutely critical transactional measuring and monitoring space that is going to evolve over the next couple of years. We are seeing this in places like New York where they are doing some pretty big experiments. As we see more deregulation, we will continue to see many interesting things going on here.
You recently spoke at Carnegie Mellon University’s Wilton E. Scott Institute for Energy Innovation. Your focus was on Energy & Water: Powering the Modern City. Can you talk us through the important points you wanted the audience to take away and any insights you gained from the discussions?
The underlying premise of the presentation was that 40% of all water is a part of the energy generation process whether through hydropower, cooling or steam generation. Additionally, massive amounts of water are needed in the natural gas sector. Electricity is the largest cost component in the pumping, purification and movement of water. The energy and water cycle are heavily interrelated.
It’s an often quoted statistic that greater than 30% of water is lost in the distribution network prior to reaching its destination. This is much more pronounced in many parts of the developing world. There is a massive opportunity for water optimisation and water savings. Water losses of between 30%-40% contrast with 3%-7% in electricity distribution losses and 1%-3% in gas losses. Water has this tremendous opportunity for improvement. The question becomes: How do we really isolate where the water is being lost and then attack that problem? Much of the water that is lost is lost after the electricity has been consumed to clean and pump it on its journey through the distribution network. Thus, the lost water also equates to a large amount of lost electricity as well.
Water utilities are often run by cities, and we see a great opportunity for water optimisation (and therefore electricity optimisation) as one of the early value propositions for smart cities. Because there’s such a huge opportunity there, people are looking for an ‘anchor tenant’ and asking: What’s the initial value proposition of a smart city? What’s the thing that can justify building the kind of communication infrastructure that will support connected parking or lighting solutions, or air quality and other applications that people are envisioning for smart cities?
These are smart and interesting ideas, but you still need to find an economic ‘anchor tenant’. Water optimisation could be a very powerful way to move a city toward a smart solution or smart infrastructure. That’s the premise behind the integration of energy and water and why water is such an important topic for cities (coupled with energy, of course).
I sat on a panel with the mayor of Pittsburgh and the Chief Executive of Allegheny County (the county in which Pittsburg is located) and the CEOs of the local electric and gas utilities. The desire to rejuvenate Pittsburgh and make it more livable and attractive is overwhelming. The panel discussed the possibilities for collaboration, new thinking and exploration of how technology can be used to solve some large-scale city-related economic challenges.
The desire to break down regulatory barriers and collaborate in new and open ways was tremendous. It was really an inspiring experience and it is so heartening to see various aspects of the city come together and work on projects.
We have worked on several projects which are cross-cutting, with people talking about public-private partnerships, breaking down regulatory barriers, overcoming impediments to open up all sorts of opportunities. It is a very optimistic experience and the stakes are high, but the opportunities are extremely great in terms of being able to find ways to use technology to bring value to these cities.
Having this opportunity to engage with the readers of Metering & Smart Energy International, what is the most important message you would like to convey to the industry and the utility sector specifically?
There are some important points I’d like to make. We have used this humble device, called a meter, simply as a tool for measuring consumption and creating bills for the past 100 years. Our company has focused on being the very best at managing that revenue cycle as efficiently as possible. Today, because of the new technology that is available, these devices are becoming sensors that are able to help the utility measure how efficiently they are distributing electricity, gas and water. They are also helping consumers determine how efficiently they are using utility services – thus better connecting the utility to the customer.
I see us at a time in which our utilities are facing big challenges in revenue and questioning how they tackle infrastructure, make themselves more efficient businesses and enable new kinds of transactional business. By putting more smarts into the meters, metering companies enable utility customers to be more successful and more innovative and to meet the really pressing challenges that the industry faces. At the same time, consumers are provided with a much better view of the value of the services that they are receiving from the utility, enabling those consumers to also sell energy back onto the grid and deal with issues like storage and charging that are bi-directional in nature.
I am so excited about the opportunity that our industry has to help our customers be more resourceful and to enable them to address some of these really large challenges. MI
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