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Letters from the Directors

Nurturing innovation during a strategic inflection point for global energy

Co-Directors, Precourt Institute for Energy
March 14, 2017
Bioengineering and Chemical Engineering Building. SEQ2Science and Engineering Quad 2
Linda A.Cicero/Stanford News Service
The global energy system is at a strategic inflection point arising from three disruptive D's – Decarbonization, Decentralization and Digitization.  We have discussed these three D's in our previous briefing papersHere, we address the question: What can and should we do to navigate it?

The legendary Intel CEO, Andy Grove, describes in his famous book, Only the Paranoid Survive, the notion of a strategic inflection point when the fundamentals of a business, an industry, a nation or the world change.  Historical data and past strategies become poor recipes for future success.  Such times invariably offer enormous opportunities, but it warrants new ways to think and act.  And “depending on the actions you take in responding to this challenge, you will either go on to new heights or head downward..." 

Why should this matter?  Energy is the bedrock of our modern economy.  In the long history of humankind, the last 250 years have been uniquely breathtaking:  Our global economy grew 600 fold, our prosperity grew about 100 fold and our population grew 10 fold.  Underpinning this enormous success were three trends: Rising use of fossil fuels, the spread of centralized power grids and analog infrastructure. The three D's are disrupting these trends and creating the strategic inflection point.  So if we are to maintain and improve our quality of life as we have done over the past two centuries, we should pay close attention to this.

How can businesses, industries, universities and governments navigate successfully through this strategic inflection point?  We must be willing to question century-old paradigms and envision new and innovative ones.  Given the enormity of the global energy system, it will not occur overnight, but will likely take a few decades.  Some organizations will invariably delay and watch: Therein lies the opportunity to move quickly, be bold enough to experiment with new approaches, knowing that some will fail, and continuously learn from them. This is the foundation for innovation.  

Visionary businesses, industries, universities and governments have figured this out and are aggressively investing in this process.  While investments are important, the key ingredient is to create and cultivate the right culture.  

How we nurture innovation is as important as what we nurture.  It is critical that we create an environment and a culture where individuals and teams feel encouraged to propose new and bold ideas and experiment with them.  Not all of them will succeed, of course, but without the inventors, the dreamers and visionaries, where would we be today?  Bold new ideas involve risks because at early stages, these ideas are rarely perfect or fully baked.  But without a risk-friendly environment, innovation will die.  That does not mean that all ideas should flourish, regardless of merit.  Rather, we must encourage the community to scrutinize these ideas either to improve and build upon them, or to identify roadblocks early so that we fail or pivot quickly and move on.   Luckily, in academia, we have the time-tested machinery of offering new ideas combined with community scrutiny that has helped foster such a culture.  But this is not limited to academia: If there are any lessons learnt from Silicon Valley, it is that this culture is critical for its success.

The bottom line: If we are to navigate the strategic inflection point for global energy, creating the culture of innovation is key. An openness to new and bold ideas balanced by constructive scrutiny and debate within a community is the bedrock for such a culture.  We all must work very hard to maintain this culture and catch ourselves if we lose this balance.