MANAGING INNOVATION IS A TOP CHALLENGE FOR LEADING ENERGY TRANSITION
The pace of innovation in the energy industry is unprecedented. Renewable technologies have seen considerable government incentives and investment since the oil crises of the 1970s, and the cost-effectiveness of technologies such as solar and wind are now at levels driving mass adoption. Recent accelerating policy and regulatory support is enabling further investment, driving an increased pace of change.
The advent of AI as a driver of energy efficiency and streamlined processes is forcing executives to make different decisions than they might have done even one year ago. Societal factors are driving demand. Perhaps, then, it is unsurprising that 45% of energy suppliers and investors view managing the innovation curve as a top concern for long-term energy outlook and, when asked about leadership qualities most critical for a successful energy transition, the “ability to innovate and embrace new technologies” was the top response, chosen by 61% of respondents.
of energy suppliers and investors view managing the innovation curve as a top concern for long-term energy outlook
Which leadership qualities do you believe are most critical for guiding a successful transition from traditional to low-carbon energy? (energy suppliers and investors)
A significant majority of energy supplier and investor respondents view strategic alliances and joint ventures as the key means by which to expand technology portfolios
globally
A significant majority of energy supplier and investor respondents view strategic alliances and joint ventures as the key means by which to expand technology portfolios
globally
Many leaders have been managing innovation for years, whether through the advent of fracking technology (Schlumberger, Halliburton), the adaptation of biofuels (Shell, BP), or diversification into wind and solar (Ørsted, TotalEnergies). The velocity of innovation, coupled with the frequent need to invest in multiple technologies at once, presents a new level of challenge. A majority of energy supplier and investor respondents - 51% globally - view strategic alliances and joint ventures as the key means by which to expand technology portfolios. The preference for joint ventures and strategic alliances is especially pronounced in regions such as Asia-Pacific (49%), Latin America (56%), the Middle East (54%), and the U.K. (52%). However, in the United States and the EU there is a slightly stronger inclination towards increased R&D spending. For instance, in the U.S., 55% of respondents favored increased R&D compared to 50% who prioritized joint ventures and strategic alliances. Similarly, in Western Europe, the split was 46% for increased R&D versus 48% for joint ventures and strategic alliances. Licensing and M&A were chosen as portfolio diversification alternatives by 34% and 24% (respectively) of our global respondents.
How would you characterize your company's main approach to managing and expanding its energy technology portfolio? (energy suppliers and investors)
For executives and managers navigating the transition to cleaner technologies, managing innovation, and developing a skilled workforce are emerging as critical success factors. Our survey reveals that 45% of energy suppliers and investors view managing the innovation curve as a top concern for long-term energy outlook, while 42% highlight workforce challenges.
As the pace of innovation in the energy sector accelerates, driven by renewable technologies, AI, and policy support, managing innovation has become a critical concern for industry leaders.
The future of innovation management will involve a complex interplay of strategic alliances, joint ventures, increased R&D spending, and intellectual property licensing. Licensing will become more important as companies seek to rapidly expand their technology portfolios without the complexities of full acquisitions or joint ventures.
The ability to effectively navigate this landscape, balancing in-house development with external partnerships and licensing agreements, will be crucial for companies aiming to stay competitive in the rapidly evolving energy market.
This shift will require a sophisticated approach to intellectual property strategy, emphasizing not just protection, but also strategic sharing and monetization of innovations through licensing and other IP transactions.
Jeffrey Whittle, Global Sector Leader - Energy & Natural Resources
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