Innovation is the key driver to turning our world from a fossil-led one into one based on renewables and technology is the enabler.
For this to happen, our focus today should be fully on low-carbon technologies and their technical realization.
We should be looking at applying the three horizon methodology here to determine a pathway from today through to 2050 to achieve our goals of having a world free of man-made carbon emissions.
Innovation applied has three value points here 1. Sustaining innovation, 2. Disruptive innovation coming from the 2nd Horizon and 3. Transformative innovation from technologies has yet to fully emerge.
Let’s take a look through the three horizon lens and outline the basic differences and approaches using the three horizons
If we apply these to the prevalence of each horizon and group the type of application and the different maturity levels of energy technologies we are grouping these into three types:
1. Extending Mature and Established Technologies,
2. Technologies in development and emerging on the market, that have to go through validation and commercialization and the critical need for scaling up
3. Those technologies in fundamental research or yet to be proven beyond the lab or small pilot scale.
Examples of these different technologies that can build out the renewable pathway are shown below, along with the important need to apply relevant new thinking to developing or altering the business model.
Each technology has a significant scale, financial impact and business model approach. I am not discussing the Business Model changes needed here.
Each of the energy technologies here is known and discovered. There are many questions we need to answer
For instance, a real need to change the materials used to reduce rare earth materials for example, or find more effective and safer ways to build out small modular reactors. Can we make sure all future designs are net-zero or circular economically designed for recovery and maximum re-use?
How do we handle rapid changes in infrastructure needs, incentivising market changes or managing a number of potentially stranded assets, switching from fossil fuel to renewables, or the ability to ensure developing countries can have access to financing these changes, even with proven technologies we have today.
The business case of change, in any technology, market or energy carrier is a significant endeavour in itself
We need to ask basic questions such as a) how can we achieve stronger electrification of the end-use more rapidly, b) how can we decarbonize power supply, c) shift any gas to being 100% green, d) build out the infrastructures to handle variable energy sources and equally e) build a sustainable mobility need for cars, trucks, trains and aeroplane travel.
Also how can we constantly drive energy efficiencies, optimize plastic issues, resolve hard-to-abate sectors like steel and cement and capture existing and future emission?
The three-horizon approach is a triggering device to begin to explore and answer all of the questions raised here but it gives it better structure,
The structure enables and opens up all the different voices needed in each board room as they consider energy change, as all must do, to decarbonize and evaluate the impact and costs and consider the shifts this means in the business model.
For me, we need to heed the different voices and recognize the dominating systems that need challenging in any change of such magnitude as the global energy system.
We need to clarify how to identify the existing prevailing or dominant system and the challenges to its sustainability in the future, i.e. the case for change (horizon 1). Innovation can lose the ‘fit’ aspects over time as the external environment changes.
We also need to think through the desirable future state, the ideal system you desire and the emerging options. Those that can displace what you already have. Often you can find elements in the present that give you encouragement (horizon 3); keeping yourself open to all options that could lead to transformational change.
Often the struggle is to draw out the nature of the tensions and dilemmas between vision and reality, and the distinction between innovations that serve to prolong the status quo and those that serve to bring the third horizon vision closer to reality (horizon 2); This is the space of transition, often unstable, called the intermediate space where views can collide and diverge.
The three voices that need to be in the same room
The different voices involved can be highly engaged, all wanting to add their perspective:
- You have the voice of today, the incumbent, the manager(s) responsible for delivering today’s result, very much operational and result orientated, that are more concerned with managing the existing, maximizing returns and keeping the organization going efficiently and effectively.
- Then you have the second voice, the voice of the entrepreneur or pioneer, the one eager to experiment, try out new things, wants to push further, explore and extend, accept some aspects will not work but keen to investigate, experiment and learn from these discoveries.
- Last we have the third voice, the voice of the aspirant, the champion for energy change, who is looking to build a different vision, believing in different, more pioneering, perhaps radical solutions that seek to visualize things in their ‘mind’s eye’, far more aspirational. These concepts often can seemingly look on first ‘take’ to be totally incompatible with the reality of today but are picking up on ‘weak signals’ that are out there that signify a changing future that might impact your own.
It is the combination of these different three voices that need to come together and frame the innovation journey by using the three horizons framework.
In summary, the three horizons provide a further structure to the need of exploring and exploiting both mature and emerging energy technologies
The three horizons approach offers the methodology for constructing plausible and coherent innovation activities projected out into the future. It looks for emerging winners. It allows for dialogues to commence and be constantly evaluated.
This is not a planning tool; it is providing a valuable evolutionary perspective that dialogues can be formed around so decisions on where to focus and what resources to apply can be made on a more plausible and coherent set of activities, projected into the future, searching for emerging winners that can change and challenge your existing business.
You really should give it a far greater consideration within your innovation and energy transition toolbox, it ‘aids’ the framing of your present to future needs and gives ‘voice’ to all the different thinking and opinions on building the innovation pipeline, balancing the portfolio and helping to identify all the gaps and opportunities that need resolution.
If you need any stimulation or help, then come find me!