As the leader of a business specialising in the innovation of a sector as traditional as energy, the CEO of Enel X, Francesco Venturini, knows first-hand the challenges of digitalisation, but, also, the enormous potential of new technologies to save costs and offer new products and services.
By José Manuel Blanco
It makes a lot of sense that, as CEO of Enel X, Francesco Venturini drives an electric car. His commitment to new mobility is a reflection of his company's vision, specialised in generating new forms of energy. With an MBA from MIT Sloan Business School (USA) and having held various positions within the energy sector, including CEO and director general of Enel Green Power, his current work centres around the philosophyopen innovability (innovación abierta + sostenibilidad) to find new business solutions.
How was Enel X born?
With the intention of uniting different pilot projects, alternative businesses, attempts to adopt new business models… Anything that was not strictly related to the main business, which is generating and distributing energy. We believe that, if you don’t separate them, normally the core business tends to extinguish any attempt to develop innovation within the group.
Enel X has limitations. It needs to discover a way to develop as a business that isn’t a replica of the rest of the group. The business model has to change completely and be as digital as possible; this is the big step forward that the group needs to take: to initiate the business without depending on the 75 million clients that we have in our portfolio.
In this adventure we could not start by saying, "OK, let's do something good, let's apply artificial intelligence [AI] to what we do, because that’s how the future looks." It was a very long and difficult process that was based on one thing: we needed to start by implementing a new technology in which we digitize our relationship with customers.
How was this process of digitalisation?
We started by analysing what we had in order to understand what was central: B2G [Business to Government]. In B2G we discovered that our company is the largest in the world of public lighting, a fundamental business: we control and manage around three million public lighting points in the world. The business is very simple, 90% of the time it consists of making sure that there is light at night, and if possible, making the local government change their lights in order to save money.
Secondly, we discovered that, if you are big, you are more competitive in the market. Having three million lighting points on the streets could help us to develop different services.
How is technology able to benefit energy customers?
By applying machine learning to basic services, such as public lighting. By using cameras, you can tell what the level of natural light on a specific street is and what the level of traffic of both cars and people are, and, with this function, assess the level of light at any specific time. It seems simple, but it’s very complex, because you need to ensure there is sufficient light: if an accident happens, it is your responsibility. You can save your clients between 20% and 40% of normal spending, this is an enormous amount of money. At the same time, we also recognise that lights are a form of pollution: artificial lights have an impact on our lives and on big cities, so it is very important to reduce the level of light.
We also needed a very detailed inventory of our resources. We had two options, send people to count those active one by one around the world, all three million (we only had the information of a third at the moment), or find another way to do it. We spoke with a company that helped us with the inventory by using images of night lights so that we could start counting our lights and geolocating them in the correct way.
Using artificial intelligence, we were able to extract different information in such a way that we thought that what was just counting our lights and geolocating them became a great exercise in understanding whether the light was positioned in the correct part of the street. It was a way to reutilise the light points and change them to make the system more efficient.
Applying machine learning to this system was amazing for the level of resources we obtained. At the same time, the cost was around a fifth of what we had estimated by doing it manually and we would probably only have obtained a fifth of the information that we obtained with the images.
Are you using the Internet of Things? (IoT)
Lots. We have our own platform. We started using another, but we understood that we needed our own for two reasons: because we needed to control a huge piece of land and because, at Enel X, we have developed a series of platforms that the rest of the group uses as well, for this we needed something very, very competitive, and we ended up building our own. Now we are selling the service to our clients.
It is also necessary to have a platform to manage the data.
The first thing that is said when you talk about data in your company is always the same: "Let's sell our data." Who is going to buy it? What to do with it? What is the business model behind it? This is the biggest mistake that most make: believing that there is very valuable data that someone out there would be willing to buy without building something around it that gives it value.
In my opinion, you initially need to understand your company, so the first thing to do is to speak the same language. There are many companies that make the mistake of not building a platform within their company so that everyone works in the same language. The way to calculate the customer's value in Italy must be the same in Spain, in Chile, in Brazil. You have to convince people that everything is done in the same way. If not, you are not speaking the same language and the data has no value.
It's what we focus our efforts on most: adopting the same systems, using the same processes, speaking the same languages, looking at the same KPIs [indicators]. It’s the first step.
The second step is, once we have the data and have organised it, to start looking for the information. We have not yet initiated the third step, which is to predict what the future will look like according to analytics.
What would you say to a CEO who doesn’t pay attention or doesn’t believe in the value of data?
I would tell them that in a few years their company may not exist. It's very important for CEOs in any industry to keep a close eye on what's going on out there.
It is not a question of understanding the value of data; it is more essential to consider how you build your own organization around it. Enel has trillions of terabytes of data, but it’s useless if you don't have an organization and structure to use it correctly. You have to be careful when talking about data and understanding its importance; especially, understanding what kind of change you need to make culturally in your organization to compete in today's world.
Let’s talk about mobility, one of Enel X’s fields of action. How do you think mobile phones, data, the IoT… are changing the way we move in and out of cities?
It's very easy: people are not buying cars. However, I think that everything we do, not only in mobility, is changing: how we buy, how we use banking ... If you cannot evolve quickly by adopting these organizational, cultural and digital capacities, it will be very difficult for your business to survive.
Therefore, mobility is changing like everything else around us. We need to adapt, making sure that we understand what we need to do in order to change.
What have you learnt and what has Enel discovered during the pandemic?
That there are some areas of some industries that seem irrelevant to daily life but that become more relevant in a situation of crisis, such as the digital world. Thanks to our level of digitalisation, all Enel employees were able to start working from home in less than a week. I think it would have been almost impossible two years ago.
Enel has spent billions on digitalising the company's operations system. This has allowed us to move very quickly from a normal situation to a crisis situation. The company manages crises very well; other members of the industry have recognized it and I think many people outside of it have also recognized it.
At the same time, we discovered that there are people who do not have access to digitalisation. The gap between those who can and those who can’t is very evident. I think that Enel is among the few companies that can, but that the gap is even bigger than people thought. I think it was the first big message that we learnt.
I think that the second big message that we learnt, and I think everyone learnt it, was that there is a lot of interdependence between different economies. We are multinational, so we experience it even more strongly than other companies. We understood that the value chain of any industry is very fragmented and globalized, so it is very difficult to maintain the workload if there is no strict control over it. Many companies aren’t able to have strict control over their value chain.
What opportunity does technology developed in the European Union now have?
The industries in China and the United States are based on economic models that are not present in Europe, so we have to work hard to find the best talent and develop it. At Enel X, we work hard to improve technology, we handle a lot of software; we are always looking for talent to hire. It’s true that it is not easy to find, so we are focused on preventing the infrastructure (financial, academic and I would say social) from declining, in order to build this type of model and make it sustainable.
[Furthermore,] it will be challenging for Europe to build desire in the next generation, as it’s not present on the continent today, and to understand socially that making mistakes is okay, you have to be wrong sometimes but that the second or third attempt will lead to success. We bet on resilience.
It is not about replicating California [US] in Europe, but they definitely have something cultural that we can learn a lot from. We have to renew ourselves. We have to adapt; if not, we won’t survive. It is not a question of a single business; it is a question of the entire economy. We have an opportunity and I think that we are working hard. Focusing on social and sustainability aspects will be essential, and we need a vision. We will not go very far as one country. I am a big supporter of Europe as a union. It is the only way strongly compete with countries like the United States, China, Russia, India...
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