Wednesday, October 12, 2011

Lessons from Microsoft & Apple Applied to Energy

I’ve been struggling to find a way to connect the lessons learned from Microsoft and Apple to the energy company I chose for our project (PG&E, a utility in California). In class, Professor Venkatraman mentioned that vertical integration is giving way to horizontal layers with specialized capabilities and that winning requires dominating a layer and connecting across layers. As far as I can tell, PG&E is fighting this and is doing the opposite. The company is involved in almost every aspect of the energy industry from power generation to metering to energy efficiency consulting. I don’t believe they are leading the sector in any of these efforts, which leads me to believe that they haven’t “won” in the way discussed in class.


A large part of this is due to the fact that PG&E, like other utilities, essentially has a regulated monopoly over their region so perhaps some of the same rules don’t apply. They don’t necessarily need to dominate their layer because they don’t seem to face a great deal of competition. However, with the increasing number of Independent Service Operators participating in the market and local initiatives (like this one) aiming to give residents more options when it comes to power generation, it would be wise of PG&E to look at the lessons that can be learned from Microsoft and Apple. There may come a time when PG&E doesn’t have the government regulated “edge” over their competitors and unless they narrow their focus and excel at certain capabilities, they could potentially fall behind.

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