2035+; scenarios for Tomorrow’s Energy Sector
Today, energy is one of the core issues in the world and the energy market is highly complex. Regulatory requirements, changing customer expectations, economic and ecological aspects, as well as technological challenges force market participants to constantly adapt.
The energy sector is characterised by the complex interaction of numerous factors. The scenarios method has proven to be particularly well suited in analysing and managing such an unclear environment. This instrument for strategic forecasting enables potential future developments to be analysed and causal connections to be illustrated. Thereby, hypothetical consequences of events are depicted in the form of various scenarios to draw attention to important processes and key decision moments. Although this method was originally used by the military, it was recognised decades ago that it can be applied in many fields with complex environments, such as the energy sector. Therefore, the plethora of scenario studies in this sector is hardly surprising. Why do we think an additional scenario study is necessary?
The future is not easy
Quite the opposite: as this study shows, the future will be determined by a multidimensional field of factors; everything plays a role. This vague “everything” can best be handled by applying a variety of methods, with a range of perspectives and futurology processes. This study deals with the complexity by including conceivable, probable and desirable scenarios, surprising developments (so-called “wildcards”) and current uncertainties, as well as innovations and tips to avoid cognitive distortions.
The main results of the study can be summarised as follows:
Simplicity: is the new paradigm for the energy sector – it is not the best companies that win, but rather the simplest. Successful companies are those with the simplest – that is, the catchiest, most believable and most effective – messages, products, services and communication structures.
Diversity: is the key to transformation of the sector: if, for instance, Google operates wind parks and applies for a licence to trade electricity, the industry’s boundaries come crashing down. The strategic response to this is not defence, but rather diversification.
Innovation: leverages progress: this will no longer come from companies’ secret research laboratories, but will be developed in open innovation and foresight platforms.
Employer Branding: attracts employees to sectors and companies: image campaigns from both established companies as well as industry associations will have to reinforce employer branding in the long term.
Targeted Marketing: will become a core competence: plain old “information events” no longer hinder grass-roots protests. The industry communication of the future will work with “stories”and change attitudes with appealing narratives.
The biggest stumbling block: for the future of the energy sector is cognitive distortions – so-called biases: the biases of individual managers in perception and thinking first need to be identified and eliminated. Otherwise, the traditional management mind-set will be ineffective in achieving the comprehensive transformation needed by companies and the sector as a whole.
Wildcards: are surprising events with major consequences and are among the greatest threats to the industry. People who only perceive them as threats, however, might miss out on opportunities. The long-awaited “energy miracle” may well emerge from such a surprising development.
The report, published by KPMG Global Energy Institute Europe, Middle East & Africa (EMA) can be downloaded here: 2035+; scenarios for Tomorrow’s Energy Sector
About David Okwara
Africa, Africa brief, Africa challenges, Africa opportunities, African countries, Angola, challenges, development, East Africa, economic growth, financial services, Foreign Direct Investment, foreign investment, GDP, Ghana, infrastructure, KPMG, KPMG Africa, Nigeria, oil, Oil and gas, South Africa, sub-Saharan Africa