ENERGY

Demand-oriented innovation strategy in the European energy production sector

Demand-oriented innovation strategy in the European energy production sector

Background to the research

In politics and innovation management alike, taking stock of the national innovative potential is an important strategic task. In the evaluation of innovativeness of firms, there has, for many years, been a tendency to concentrate on “supply-side” assessments of firm's innovative potential. Patent applications, R&D expenditure and spending on education are naturally important input factors for the process by which innovations come about and are disseminated. However, it is always assumed that the supply of innovations created by a “technology push” will be matched by demand on the market.

What?

There is surely no need to go as far as some economists, who claim that the graveyard of innovations that have not caught on is full to bursting (Real, 1990). Nevertheless, there is no argument about the fact that promising sectors are, on the whole, supported rather than driven by technology. New technologies are not unimportant, but often tend to “play second fiddle” as new markets develop (Wengenroth, 2002).

Why?

The literature offers up numerous examples of cases in which products that - from a technological point of view - were superior, failed to become the standard on the world market (Beise, 2001). Company innovation strategies that define additional benefit exclusively in terms of the technological efficiency of products ultimately run the risk of producing goods that are inappropriate for the demand of different markets.

Purpose

This paper is dedicated to a description of the worldwide market appeal of European energy production companies' innovations. The term innovation as used in this paper focuses on innovations that are directly relevant to the clients of energy companies, i.e. mainly product innovations. Such innovations may include new energy products such as “green electricity” (which can also involve new process technology to produce “green energy”), special products for industrial users, new product and service packages (e.g. a special energy tariff including energy safety advice) or new services (e.g. 24?h failure response).

A statement of the desired outcomes

The focus will be placed on demand pull, an aspect that has largely been left on the sidelines of innovation management research. It is particularly important for the energy production sector for two major reasons: First of all, worldwide demand for energy has risen considerably in recent years. This development has been mainly spurred by countries like China or India where growing economic prosperity has led to dramatic increases in energy demand. Second, customers all over the world have increasingly tended to demand “clean energy”, i.e. energy that has been produced in a sustainable way reducing the carbon dioxide emissions that are associated with the production of energy from fossil sources.

The intended discovery

Although energy technically remains the same, companies in the energy production sector have started to launch new products, e.g. energy produced exclusively from water or solar power. The research is carried out within the framework of a Lead Market Analysis - a methodology that has been developed to assess the ...