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Bits & Watts Initiative is a cross-campus effort of the Precourt Institute for Energy.

Open Innovation in the Electricity Industry: A Multi-year Examination of the Free Electron Program

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PI: Steve Comello; Co-PIs: Ann-Kristin Zobel (University of St. Gallen), Lukas Falcke (University of St. Gallen)

The electricity industry is undergoing structural changes due to a confluence of forces that can conveniently be summarized as the “Four Ds”: decarbonization, digitalization, decentralization and deregulation. While this energy transition holds the promise of new technologies,

business models, and competitive landscapes, the journey for any firm toward these endpoints is highly uncertain. This is true for both incumbents and new entrants. Incumbents may have assets, experience, and capital; however, the “business as usual” deployment of these capabilities may not enable these firms to thrive in the future. New entrants may have agility, ideas, and cutting-edge knowledge, but not necessarily the experience and resources to build, test, and deploy their solutions economically or at scale. In response, incumbents and new entrants may overcome their strategic constraints and complement each other in an open innovation (OI) environment in order to co-develop mutually beneficial solutions.

The Free Electrons (FE) program — a novel utility-backed innovation ecosystem — is a manifestation of such an OI environment. Now in its 4th year, it has brought together 10 utilities and 57 startups from across the world within a structured setting, where each is encouraged to form beneficial collaborations to test solutions, gain knowledge, and build critical relationships through a mediated cohort-based approach. Researchers from the Stanford Graduate School of Business and the University of St. Gallen have been examining the Free Electrons program since inception, exploring such dimensions as: (i) OI collaboration formation, (ii) OI goal negotiation among heterarchical firms, (iii) effective OI program design, (iv) digital technology piloting strategies, and (v) OI program effects on startup success trajectories.

Research on FE continues to be a fruitful, rewarding relationship, where academia and industry support each other in developing findings that advance both practice and theory for the electricity industry and beyond. As an example, results from a study focusing on OI design were used to enhance FE program delivery and the subsequent academic manuscript was recently awarded “Best Paper” at the 80th Annual Meeting of Academy of Management.