How does a utility pursue innovation at a moment when reliability and sustainability are at the top of customers’ minds?
That question is at the center of Michael Cross’ job as Vice President of Entergy’s KeyString Labs. Entergy is a New Orleans-based energy provider with over $10 billion in revenue. The company is pursuing an ambitious set of sustainability goals — it aims to achieve net-zero emissions by 2050 — and driving toward them by adding more electric vehicles to its fleet and retiring older, coal-fired power plants.
Entergy started KeyString in 2019 to create new offerings focused on customer needs.
Cross makes the case that innovation execs need to begin with a focus on delivering concrete, near-term results. “When you think about innovation, there’s a spectrum,” he says. “There’s core innovation, incremental, and then disruptive. I think it’s responsible for corporate innovation [leaders] to always start with that core. Because you can go out and disrupt and think about things for 2030-2035, but how does that connect back into the business [that] you’re trying to achieve today?”
We spoke with Cross in January 2021 about how KeyString Labs is set up; how a background in insurance and healthcare helped him prepare for the role; and how his team stays close to customer needs and sustainability goals.
How has your background in insurance and healthcare applied to what you’ve done at Entergy?
One parallel I’ll mention is [that my previous roles at AAA and Kaiser Permanente] had multiple components to their business operations. For example, AAA had 23 clubs, Kaiser had eight medical regions, and at Entergy we have five energy operating companies.
You can take any industry and apply these innovation methodologies and really come out with some incredible outcomes and opportunities, because it’s really about getting intimate with your customer. When you’re looking at tackling a problem…if it was already known, we would just duplicate that blueprint. But if it’s not known, it’s really about talking to customers, doing market research, and looking at trends, to ultimately build new solutions. These are practices that we’ve started to apply to Entergy, not just within the innovation team at KeyString Labs, but something we’re trying to proliferate throughout the whole company.
When you’re looking at tackling a problem…if it was already known, we would just duplicate that blueprint.
How does the innovation lab at Entergy work?
We’re not a separate group by any means, but we’re a separate department and we have a physical footprint in the warehouse district in New Orleans. We’re about 35 people. But we built it up just like when you’re building a new product. You might start with a couple of people in a garage and you start working on things, and then you invest more money.
This whole thing started with a few product ideas and about eight people [when] I came in, in June of 2019. Then, as there was more demand for more products and more use cases, we gradually built the team up.
When you think about innovation, there’s a spectrum. There’s core innovation, incremental, and then disruptive. I think it’s responsible for corporate innovation [leaders] to always start with that core. Because you can go out and disrupt and think about things for 2030-2035, but how does that connect back into the business [that] you’re trying to achieve today? We’re really focused on our core business. What are the sustainability goals, what are Entergy’s strategic goals?
There’s a lot of companies setting sustainability goals for 2035 or 2050, but companies also have to think in the short term. What are some things you’re doing for that?
I’ll use a sports analogy. There’s a goal of net zero by 2050. That’s sort of like winning the game. It’s not about doing things today to just immediately win the game; it’s about the building blocks to get there. Our customers, they have sustainability goals. You have very reputable companies — Walmart and Amazon and these other companies — have all set sustainability goals. But publicly, even Amazon’s commercial says, “We don’t know how we’re going to get there.” That’s kind of a trend, whether you’re a small mom-and-pop shop, a boutique company, or a mega industrial. That’s where the partnership comes in, where we need to sit down with our customers and talk about their goals, their timing, what are some of the things they want to do to get there.
It’s not about doing things today to just immediately win the game; it’s about the building blocks to get there.
This is really coming [about] through an organizational shift that we made in 2021. David Ellis became our Chief Customer Officer in the second quarter of 2021, and that’s who I work for at KeyString Labs. It’s a broader customer organization that’s committed to talking to our customers, getting intimate with their needs and their goals, and then working on almost like co-creating a roadmap together. Now, some of that will come through innovation, some of these things will come more through just going and building things that we already have as part of our portfolio.
By customers, I assume you don’t just mean individual homeowners, but larger entities looking to provide power to their buildings.
Yeah. Just a quick background, we have three million customers across southeast Texas, Arkansas, Mississippi, and Louisiana, with a specific operating company in New Orleans. Those customers span from people like myself who sit here in my house, residential to small commercial and then larger commercial, industrial, it’s all the above. You have two different needs. You have to focus on what are the needs of this larger customer base versus the more residential customers too.
I’ll highlight something that our research shows. You talk to some of the larger commercial industrial customers, they’re focused on sustainability in a meaningful way, meaning they will have hired people who focus on sustainability, they’re educated around sustainability, they have knowledge, they have skin in the game, and they have things to contribute… Whereas a residential customer, they have interest in some of the things like going green, being cleaner, but in their daily lives, they are not as attached to how to do that or how to get there.
Going back to the lab, you mentioned you have about 35 people there. What is the whole process of coming up with new ideas and getting those out to the testing, then putting it out to market?
It’s definitely a test-and-learn approach. When we go after an opportunity, we do some strategic planning. We have product themes, as you can imagine, everything from affordability to sustainability, which is broken down by e-mobility, which I think you’ll see across the nation with other utilities. That’s the term that’s used for how we might solve problems for customers who are going electric when it comes to their vehicles. Those product themes are where we start.
At Kaiser, I learned this methodology where you periodically check in and say, ‘Why will this fail?’ If you have supporting evidence about why this might fail, then you might talk about a pivot to the product, or potentially a discontinue.
Then, we go after use cases that our customers have — we call it customer friction. We work with our operating companies to get access to these customers to talk to them and do the research and then ultimately, that starts evolving into some prototyping. I’ll be proactive and speak to a couple of things that we’ve kind of built over time. There’s a product called Power Through, which is backup generation. You might think, a backup generator, why is that innovative? Well, there’s this opportunity to provide power for these commercial customers at a time of need, but the generators sitting there are not in use a lot of times. That [generator] can send power back to the grid when it’s not in use [by a customer]. But then when the customer has a need, they obviously have priority and [can] leverage the power that comes from that generator.
We also do shore power, which is port electrification. We have seven of the top 20 ports in the nation, including Port Fourchon [in Louisiana], and there’s this technology to extend the grid, the electrification, to vessels at the port. [It’s a] cleaner ways of doing energy for vessels.
The shore power example came directly from our process of learning about our customers’ needs and frictions in order to find a path to working together to solve their challenges…
We worked in bite-sized chunks. Back at Kaiser, I learned this methodology where you periodically check in and say, “Why will this fail?” If you have supporting evidence about why this might fail, then you might talk about a pivot to the product, or potentially a discontinue. The old term is propagate, pivot, persevere, deal. You have to have that [ability to] stop working on something that’s not going to necessarily come to fruition and solve a customer’s problem.
You mentioned backup generators. Certainly one issue for your company, which is based in Louisiana, is how to mitigate climate-based events like hurricanes.
The backbone of our company is through our power generation, transmission, and distribution. There’s always going to be a focus on reliability, but as you talk to customers, there’s an understanding that we live in an area that’s very susceptible to storms. We’re being very proactive in how we think about resiliency. When you think about these big storms, the Home Depot’s and the Lowe’s generators are flying off the shelves, you even have trucks driving in, contractors are coming in to sell generators.
As a utility, in our customer-centric approach, we want to be part of that solution for the customer. We don’t want to say [that] our job is to make sure your power is reliable, but it’s going to go out possibly during a storm. You solve that resiliency problem. What about other backup solutions [besides generators]? What about [energy] storage? What about solar? It’s not a separate conversation with a customer. It’s really a continuum. That’s why standing up a customer organization has been critical for us.
You’re making this transition towards more electric and solar. Are those relatively new things for Entergy? Or have you been working on these newer sustainable energy sources for a while?
We’ve definitely been working on this for a while. Preceding me, there were sustainability goals that have been going on for years, and we’ve exceeded expectations. Then of course, we have the new goal for 2030, which is to reduce carbon emissions by 50 percent compared to our 2000 production…
That’s why one of the reasons KeyString Labs is in place — to try to stay out in front of those trends and look at new technologies.
When you think about how rapid technology evolves, how far solar came — I remember when I was in California, and I studied solar, there were years and years of solar production in California. If you look at when the sales took off, it never took off until you could get a net neutral or potentially a credit, and then it just took off. But we were talking about 15-20 years of working the solar thing in California and then it just exploded.
If you look at the electric vehicle numbers, that’s a great example. You can look at the data and say, “Electric vehicles may not happen for a while.” But all of a sudden, it just takes off, and I think we have to address that and get out in front of that. We have a sense of urgency, when we think about electrification and renewables. That’s why one of the reasons KeyString Labs is in place — to try to stay out in front of those trends and look at new technologies.
It’s not just new technologies in the form of hydrogen and solar and things like that. There’s all the technologies to satisfy the user experience. This could be in the form of software in how [energy] resources are allocated, and the customer experience that sits on top of that. Those are all things that we’re focusing on in software. It’s not just about the actual energy sources. We have used our digital platform to enhance communications with customers, including a variety of options to help pay bills, understand how to navigate circumstances that arise when there is impact from a storm, and leveraging our mobile app to ensure customers can access their accounts when they are on the go. We will be delivering future digital capabilities that will support our customers who are on this sustainability journey.