InnoLead recently sat down with Scott Burns, the director of innovation at Reliant Energy, a Houston-based division of the $8.4 billion electricity giant NRG Energy Inc. To win customers in an increasingly competitive electricity market, Reliant created an innovation function that aims to provide unique products and services to differentiate it from the competition. According to Burns, goal-setting around innovation has been critical to the success of the initiative, but so has tracking performance.
Burns took us inside the goal-setting and reporting process at Reliant, where weekly updates track status as red, yellow or green, and help “increase our team’s overall sense of urgency.”
Q. Let’s start with you, Scott. What’s your official title, and who do your report to?
A. I’m Reliant’s Director of Innovation, and I report to Bill Harmon, Vice President, Mass Markets.
Q. How big is your innovation group?
A. We have 12 on my product team, but innovation is becoming embedded in the culture at Reliant so we are seeing innovation driven by resources across all departments including customer service, sales, and operations.
Q. What are you primarily focused on right now?
A. We are working on new and different ways to provide differentiated and valuable products for our customers. We are in a competitive electricity market, which means that customers can choose their electricity provider. In the Houston area alone, customers have between 50 and 60 providers competing for their business. What that means to us is that we have to work hard to differentiate ourselves from the crowd.
We’ve been successful in doing that so far by providing unique energy-management products that help customers better control how and when they use electricity. These include products like intelligent thermostats that can be controlled from your smart phone, electricity plans that provide you free energy on the weekends or discounted electricity at night, and personalized reports delivered via email, the Web, or your smart phone, that provide insights into how your home is using electricity. We’re now even going beyond the home to develop products that help customers stay powered even when they’re on the go.
Q. How do you prioritize initiatives?
A. I hold regular portfolio reviews with the key stakeholders to inform the organization what’s coming and where we’ve been. It’s a great forum to get feedback from different parts of the organization (operations, marketing communications, PR, legal, regulatory, and others) as to what they’re hearing from customers and others in the market.
I also review the roadmap with our segment directors (who own the P&L) to ensure we’re aligned so that the products we’re developing will help them meet their goals. That alignment makes us more effective, as I’ve experienced the frustration of developing something I’ve been really excited about, only to later learn that key stakeholders have had other priorities that didn’t align with our team’s approach.
Finally, I have a monthly portfolio review with the president of Reliant to keep her informed and ensure alignment with the broader corporate strategy.
Q. A lot of our readers have talked about how executives have “pet projects” they want at the top of the list. It’s a pretty common issue … how does Reliant manage it?
A. We’ve implemented a gate-like development process that has really helped us manage the “pet project” phenomenon that happens at every company. Before a project gets into our second stage where we fully develop the concept, a new product idea must go through an online research panel to get an assessment of how the concept appeals to our customers and prospects. That way, if someone has a favorite idea that they’re championing, we validate it and compare it to control concepts so we know if it really resonates with potential customers. It’s an important filter that prevents us from spending a lot of time and money on a new product that the market may not want.
Q. And do you set innovation goals?
A. Reliant’s parent company, NRG has taken a stand that electricity companies must innovate or become irrelevant. Dramatic changes are in store in the electricity industry. Increasingly, customers have more options like solar and new devices that generate electricity at home. We must adapt to be the trusted advisor helping consumers navigate these choices and develop solutions that fit their lifestyles.
So, we have a lot of support to try new things, but we also realize that we must hold ourselves accountable. On a more tactical level, we establish annual goals to provide direction for the year and then follow-up them up with specific quarterly goals that are closely tracked and carefully managed to.
Q. Who’s involved?
A. During the monthly portfolio reviews, we get inputs from stakeholders across the organization. The goals themselves are established by the innovation team with agreement from the Segment Directors, and our VP of Mass Markets has final sign off.
Q. What does the process look like?
A. Our annual goal-setting happens in conjunction with our performance appraisal process, and specific quarterly goal are refined prior to each quarter start. The individual product managers provide inputs for their portion of the annual innovation goals based on the product roadmap. We get together and reach agreement. Then, I consolidate the product goals and submit them to my boss (the VP of Mass Markets) who reviews them with his whole team, including the Segment Directors. We review them as a group and get final agreement. It’s also worth noting that we are not always focused on specific product launches. In many cases, we’re tracking capabilities or tests that build the foundation for future product launches so that we don’t lose track of those goals that are more strategic or longer-term.
Q. How do you track progress?
A. Everyone is very aware of their goals and drives toward achieving those goals. We submit a weekly report that talks about our progress toward the quarterly goals (including a “Red-Yellow-Green” status). It’s required that we acknowledge every one of the quarterly goals in each of these weekly reports so that we can ensure we’re aligned and progress is being made.
There are times that goals are missed because of unforeseen circumstances or conscious changes in priorities. These happen in the natural course of business, but we acknowledge them as they happen so that there aren’t any surprises and the broader organization is aware of the changes. If a status changes from “Green” to “Yellow” or “Red,” we also work to make sure that all resources are brought to bear in order to get the project back to “Green”.
Q. Any lessons you’ve learned on goal-setting that you could impart to other innovation executives?
A. For me, goal-setting and tracking helps to increase our team’s overall sense of urgency. Innovation teams often get a reputation for being “free thinkers” that are in a lab trying to invent things in a vacuum and will bring these products to market eventually. By ensuring the broader organization is very informed on the roadmap, establishing clear delivery goals, and tracking/reporting these goals, we are held accountable and we’re able to maximize our productivity and efficiency.