Diagnosing Innovation Capabilities - A Case Study at E.ON Sverige AB

Abstract: Theoretical studies assessing innovation capabilities often tend to be general. This literature might not be completely applicable in practice when it discussing utilities, which are heavily affected by their external environment. Exploring which factors that drive innovation in a utility would therefore cover a gap currently existing in innovation management literature. A theoretical contribution in this area could therefore help energy utilities develop their innovation processes in general. The Business Innovation department, at E.ON Regional Unit Sweden, is currently challenged to gain a full understanding of how to improve its practices and needs support in developing a measurement system for its own use. The thesis has the format of a single, qualitative case study. Gathered information has been continuously processed, and reanalyzed, adjusting scope and focus areas based on key findings. Collected data has mostly consisted of interviews and observations of E.ON Employees. It has during the study become evident that the utility industry differs from other industries in several aspects, such as being greatly affected by political decisions and legal regulations: shaping both company structure and internal collaboration. It has also been shown that utilities are experiencing major changes in social- and technology trends. This affects several innovation capability areas: increasing the importance of some of them. An example of this is innovation culture and customer involvement, becoming increasingly vital for utilities. With these changes, the environment of utilities is becoming increasingly similar to other industries. As a result, general innovation management literature has been determined to be highly relevant for energy utilities. The finding encourages energy utilities to use innovation management literature for evaluating and developing their innovation processes. As for the practical purposes, E.ON RU Sweden have shown to be well developed in many areas important for utilities. Some improvement of innovation capabilities can however be made in the areas that have recently grown in importance due to the changed conditions. This study has highlighted the most important factors to prioritize: including developing a more complete project portfolio system, creating stronger incentives for innovation and receiving more continuous customer input. In order for BI to continuously diagnose these areas, a set of seven strategic- and three operational measurements have been suggested. The practical purpose of the thesis is however limited to E.ON, and can only be viewed as an inspiration for other utilities.