Isabelle Kocher: “In our world, digital technology is as vital to us as the air we breathe”
How is digital technology transforming the world of energy? It is this central question that ENGIE CEO Isabelle Kocher answers in her interview with Les Echos on June 28 at VivaTechnology.
Isabelle Kocher interview for Les Echos
The energy sector, where barriers to entry are high, would seem to be safe from the risk of ‘Uberisation’. Is it?
Not at all. We are living through an industrial revolution whose two lungs are energy and digital technology, and each is inseparable from the other. This revolution is linked to two fundamental phenomena. First: climate change. This is the first truly global challenge we face, which brings us, for the first time in our history, towards true solidarity – that of a shared destiny. This new awareness will provoke debate on everything: from what we eat, through to the correct use of the surfaces of the earth. Moreover, we face a lack of confidence in established institutions, not just political ones but industrial institutions too. The citizen of today wants not only to be a consumer; he or she wants to be an actor. The individual is no longer content just to depend on the decisions of a few big players.
How does this translate into the energy business?
Well, there is the bubbling rise of technology, a revolution which went under the radar for a long time but which has intensified over the last decade. Look at solar power. It will not be the only component of the future energy ‘mix’ for electricity but it is now at a tipping point. Its base is immense, and its costs have fallen considerably, to the point of making it economically accessible. It is well distributed around the world, and we have not really taken stock of the geopolitical consequences of its rise yet.
Solar power can be organized on a large or small scale: we have seen a call for tenders in the Middle East for a solar power plant of 800 megawatts – this is similar in size to a nuclear unit, but there are also production units on a very small scale. Right alongside this evolution comes recent progress in storage - this smoothes production and consumption, allowing prices to go down in those areas too. Hydrogen, in particular, seems to us to be a technology of the future.
In what way does digitalisation have an impact?
In a world where infrastructure is getting smaller, digitalisation accelerates this change and becomes central to it. It transforms the way we think and act even more than it transforms our business transactions. It has become inseparable from energy technologies. Not to master this new form of intelligence would be something close to idiotic. To manage energy in a building, for example, you need to collect data and use software that ensures a balance between production and consumption at each second, and also to manage the interface with the power grid. In this increasingly complex world, there is more aggregation, there are more peer-to-peer relationships, where digital technology is there at every level, linking production to consumption and managing the battery and the equipment. It is clear that the Internet of Things is developing fast. For us, this opens a lot of doors. It repatriates information, and creates algorithms and software that allow systems to function and create platforms to connect these systems together, and more. It is a total transformation of our profession: we are switching from large factories to small decentralized ways of production. And this makes for a radical change in the nature of the infrastructure we manage. In this world, digital technology is as vital to us as the air we breathe.
Is this world of decentralised energy not some kind of futurist vision?
We have to think far ahead. Solar energy already exists, technically, and it is becoming affordable. It is a technically accessible reality. To go further with it, we are starting pilot projects. We started one recently in Australia, looking at hydrogen. Solar energy does not yet represent a large share of today’s consumption, but certain governments believe in investing massively in its development. Chile aims at 70% of its electricity coming from solar technology by 2050 and, in some possible scenarios, the International Energy Agency is counting on 50% by the same date.
What impact does this have on ENGIE?
It is a considerable re-orientation for our profession. We need new skills. We have to change our internal culture. What counts now is the ability to innovate and entrepreneurialism, everywhere in the field. So the Group has to lower its centre of gravity. This revolution requires agility and permanent adaptation. Our future will be built by every single one of our colleagues. We were a whale, but now we need to become like a school of fish. Our clients themselves now expect us to help them reinvent their models.
But a change of internal business culture cannot be decreed...
We have to commit the whole organisation to a collective vision, a direction, a project. With the inner circle of the Group's leaders, the ‘ENGIE 50’, we first spent a lot of time diagnosing, working out what was happening. Then we defined a project that makes sense. We want to be the world leader in the energy of tomorrow, and on the cutting edge with regards to new systems. This project brings hope, since it makes it possible to provide energy to all without making everything fall apart in the process. There is always some resistance, that is normal, but it falls away when the project makes sense. I hope to change management methods and encourage a kind of movement where we learn as we go, without wanting to jump from point A to point B instantly. Even if we only move 1% per day, we will have truly changed course by a year later. To achieve this I laid down a few rules, almost rituals: always start from the outside, for example, begin meetings with what important things have been going on in the sector; do not neglect ‘irritants’, which frustrate us in our daily lives; and as soon as possible, take immediate decisions. So, in this way, leaders get the opportunity to run something up the flagpole. When resistance is expressed, it allows me to see angles that I would not otherwise have got.
You have created an internal social network, is this genuinely useful?
We created Yammer six months ago, and 100 000 out of 155 000 employees have already signed up! I am really impressed; I did not think it would go this fast. Communities have started to spring up, like the hydrogen specialists, for example. This allows people to share practices and knock down geographical barriers. I am convinced that employees want to live at work the way they live in their private lives. This is just the start; it is one of the pillars of the overall project to shake up our internal business culture.
Do young people not feel like a minority within ENGIE?
For me, the question cannot be posed in these terms. The real challenge today is to attract young people, ‘digital natives’, and to make them want to join the Group. Like Google or Microsoft did, we want to make ENGIE ‘the place to be’. We attach great importance to getting generations closer together and encouraging them to share experiences, expertise and good practice.
For a few years now, we have, for example, put ‘mentoring’ programmes in place. So far, more than 1000 duos have been formed. We have experimented with ‘digital reverse mentoring’, in which younger people have a mission - to train the less young in using social networks and the internet in general. We have also just renewed our executive committee. It incorporates extremely varied profiles of people, reflecting the diversity of the society in which the Group is evolving.
Is it important to possess technologies or is it good enough to buy them?
What is certain is that we are going to need to invest massively in these new technologies. We have convinced our shareholders to reduce their dividend to do this. The question of our link with technology has been the topic of a big internal debate. In our traditional trades and professions, those of the big factories, there were few actors and we had excellent experts: we had no need to master technologies in advance. In a decentralised world, entry tickets are more available, there are lots of newcomers. Our relationship with technology is moving on. Our line of attack is to detect the technological building blocks that are not ‘open source’ on the market, and in these cases, we invest in partnership most often. In batteries, for example, we would rather buy a business than develop the most advanced software to manage battery systems. We have also various ways for developing innovations internally: a network of business incubators, which has already allowed dozens of teams in the Group to develop their ideas in a protected manner, as well as acting as an accelerator.
What is the purpose of ENGIE Tech, which you have just launched?
It is a node that will tie together all our initiatives in the field of innovation. It is our factory for developing new businesses. Our ambition is to turn it into a unicorn factory. The challenge for us is to work out which of these projects could be launched on a large scale. We have several firms that we consider ‘powerful unicorns’, like Homni, who enable the energy management for private individuals by predetermining their bills, or PowerCorner, who develop mini-networks which are useful in emerging countries.
This ENGIE Tech node will include ENGIE Digital too, which we presented last week, where we have gathered together our experts in digital technology, as much as outside specialists. The idea is to create a platform that allows all our entities to create software using the same codes, so as to make them compatible. We have then, with this in mind, signed partnerships with the leaders in their sectors, like C3 IoT, specialist in Big Data, or Kony, leader in mobile applications. We also signed, in May, a partnership with Fjord, the design and innovation studio of Accenture, to help us create the digital commercial services of tomorrow. We would like to get up to speed with what is happening in these fields.
What are your relations with the world of start-ups?
If we think that we cannot develop a technology quickly enough internally, we buy it. That is what we did with Solairedirect, but we can also do it on a smaller scale. We have created an investment fund, ENGIE New Ventures, which invests in start-ups, always in connection with our activity. Like this, we have taken minority stakes in Sigfox, Tendril and more. But we bought out other companies that we would like to use immediately as launch platforms, like Ecova or Retroficiency.