Enel, the digital revolution

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From state-owned company to multinational. From traditional utility to “one of the most innovative and forward-facing businesses in Europe.” This is the story of the Enel Group, presented as a case study in a long essay and article by the prestigious London Business School which was recently published in Think.

The study, written by Julian Birkinshaw, LBS professor and author of many studies on innovation, and Ken Mark, a freelance writer, describes the digital transformation of the Enel Group, from 2014 in particular as a consequence of the appointment of Francesco Starace as CEO.

The writers recall the corporate employee survey launched by the CEO in 2015 which focused on a simple question: “How digital are you and what do you plan to do about it?” The results revealed an “inverse correlation” between management position and digital ability. This sparked the Open Power strategy which aimed to change corporate culture, reorganising the Group by breaking the vertical divisions between departments and to open it outwards. It was a choice that paid dividends and which led the writers to conclude that “Enel has embraced the digital revolution.”

The London Business School not only highlights Enel’s foresight in opting for renewables (“It moved more quickly than its large competitors towards renewables, with slightly more than 50% of its energy coming from zero-emission sources in 2019”) but also the digital transformation that, for example, inspired the group to explore new lines of business with Enel X and to migrate to a digital infrastructure that has allowed it to become full cloud.

The essay by Birkinshaw and Mark traces the Group’s transformation in all its sectors. The authors recall the pioneering decision in 2001 to replace traditional meters with smart meters in Italy and the Company’s leadership in driving the first smart grid to regulate the flow of energy from renewable sources in 2011. “Enel has always been a leader in applying technology to its operations,” as was the case with the Digital Plant project, for example, which installed smart sensors in the power plants to monitor activity and communicate data in real time. Significant investment made in machine learning and predictive analysis makes it possible to reduce waste and improve efficiency. Augmented Reality and Virtual Reality are also increasingly being used to accelerate training programme results and improve operations in the field.

The piece also recalls other steps in the Group’s path to innovation: from the construction of the international network of Innovation Hubs, the establishment of the crowdsourcing platform Openinnovability.com, the ICT team’s push to transform to a platform company, the digitalisation and simplification of global procurement processes, the introduction of agile methodology and a data-centric approach, through to innovations in finance with the launch of the world’s first SDG-linked bonds.

“By 2020, Enel was the most valuable utility in Europe…. Under Starace’s steady hand, it led the way in its commitment to renewables, and its embrace of all things digital was helping it’s operational efficiency and its customer responsiveness” the authors conclude.

A story that continues, in a revolution that never ends.

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