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Innovation and digital transformation in the energy sphere

Professor Luca Giustiniano explains key factors in ACEA's experience

Luca Giustiniano LUISS

One of the longest running multi-utility companies in the Italian energy sector, ACEA has recently began an innovation program focused on new technologies and process organization.

La digital transformation di una multi-utility collects data, documents and interviews in a new study dedicated to technological and organizational changes, referred to as ACEA 2.0, by LUISS Professors Luca Giustiniano and Andrea Prencipe for Harvard Business Review – Italia.

“When we speak about best practices, we tend to consider a company’s experience as an importable or exportable process, while every best practice must be adapted to fit the context a business operates in” explains Professor Giustiniano, an associate professor of Organizational Design with the Department of Business and Management. “Our work focused on pinpointing distinctive traits of ACEA’s innovation process and analyze them with instruments from social science. The result is a critical analysis conducted with scientific methods to understand the transition in operations from a traditional model to a digital model with strong emphasis on the sectorial context and interactions between people who are involved.”

The company invested heavily in information systems. User request forms were the first to be centralized and digitalized. “Today all activities from around the country are traced and synchronized by a control room that communicates with operators via tablet and dispatches them based on their location and predefined skills, opening the way for multichannel relations and transparency in interaction between citizens and the company. The entire system becomes more productive at the theoretic level, even if we must be careful not to overlook the human side.”

Digital Transformation Giustiniano Prencipe

In the case of the Rome-based company, digitalization was a bottom-up process, first putting operators in a position to be able to use new technologies before slowly integrating new criteria to measure performance. “ACEA’s digital transformation is based on two pillars: the transparency in service for the customer and a radical redesign in operations and workforce management. The transformation subsequently stimulated the adoption of new evaluation models as well as performance and results management. This bottom-up process enabled the entire organization to be more confident in subjective and qualitative performance evaluations in addition to more objective and formalized assessments.

A mistake that managers commit frequently is to underestimate social aspects during changes. Professors Giustiniano and Prencipe thus balanced the study of technological development with attention to personal and social dynamics. “ACEA took on the challenging path towards innovative and organizational transformation thanks to an external partner, John Kotter, Professor Emeritus at Harvard Business School and a global guru on change management. The Kotter method includes creating parallel working teams that coexist with the formal and traditional organization to introduce an initial push and sense of urgency in working practices. The metaphor that Kotter uses is a group of penguins on an iceberg that is slowly melting. Even if we do not realize it, the world around is changing and we must take into consideration these evolutions and new client needs.”

The urgency teams were proven necessary to establish the pressure to innovate in a regulatory context of municipally-owned enterprises. Through the dual organization and new performance-measuring systems, ACEA was able to create a virtuous network of relations and information exchange both inside and outside the company. “Through our analysis we discovered a modus operandi that was able to spread to other companies involved in providing the service.” On this point, Giustiniano underlines: “Solutions cannot be generalized in an an unquestioning manner, but the combination of organizational and technological innovation can create positively contagious effects and an alignment of organizational systems.”

The theme of a company opening itself to outside influence seems to be a central theme. “One of the biggest challenges for management is listening: modern managers must be able to listen to everyone while also applying a filter for non-constructive input. It is a delicate balance: a company must be able to take different interests and stakeholders into consideration, but excessive reception can lead to vulnerability.”

In addition to revolutionizing technology and company culture, digital transformation must also bring concrete results in line with established objectives. In the case of ACEA, results seem to be more than positive. “In April 2017, the presentation of financial statements revealed the company’s best results to date,” concludes Professor Giustiniano. “All of this stimulus towards innovation and digital transformation has become concrete evidence that we have not yet understood in full. Change takes time and ACEA’s potential has not yet been fully expressed.”