This post is part of the Innovation Management Practitioners Blog series.

The "green" message is clear: use less energy and leverage renewable energy sources. From the use less perspective, the concept seems simple, however population growth and income increase due to globalization are causing a swell in energy consumption, mainly in the form of coal, gas, and oil. The U.S. Energy Information Administration (EIA) published their Annual Energy Outlook 2011 looking at the state of energy by 2035 and projected a growing reliance on liquid fuels of 44% by 2030 – a trend that is not sustainable. The way we consume energy needs to change as the world is facing a major crossroad in consumption and supply. But the biggest opportunity for innovation may not just be in new sources and delivery optimization but in the way companies seek to source and collaborate on building those breakthrough innovations. This in fact, maybe the biggest opportunity that will shift the way we consume and source energy in the future.

The Context

With respect to renewable resources, alternative energy sources, such as wind, biomass and solar power continue to increase in funding and capacity, but in 2011 only made up 16% of the global energy consumption. The energy industry is indeed different from other industries in that constant innovation is highly necessary to keep up with overall growth and build a sustainable future. But how exactly are big energy companies innovating? Looking further, a few unique challenges are faced by big energy, and unique ways in which companies are refactoring their approach to innovation to meet growing demands.

Cost drives the energy market, as corporations and governments are constantly on the search for the cheapest form of energy, which may not necessarily be the most sustainable. Although there may be an ample supply of coal in the United States, the environmental cost of burning such fuels is quite high as toxins and greenhouse gases are emitted, while extraction is becoming increasingly expensive and difficult. Oil carries many of the same problems as coal with the added risk of environmental disasters, such as the infamous oil spill in the Gulf of Mexico.

With regards to the US, the country's high demand for energy has brought about numerous challenges, such as dependence on foreign fuel in nations. When looking energy challenges in America, CAN, a non-profit research organization, stated, "without stable and predictable energy prices, business leaders, farmers, and especially large industries cannot effectively plan, hire, and remain competitive in a global market." Dependence on energy affects all parts of the country, from government policy to small businesses.

The recent high-profile bankruptcy of Solyndra, a solar panel manufacturer that received a $535 million loan guarantee from the US Department of Energy, highlights some of the challenges with energy innovation. Innovating in the energy market is risky and may require millions of dollars towards a project or company that could easily fail.

New Approaches To Innovation

China Light and Power (CLP), a leading power company in the Asia-Pacific region, focuses their innovation initiatives on the foundation of the company, employees and corporate culture. Engages employees spread across continents, an innovation program called innov8, powered by Brightidea seeks to tap the intelligence of employees to find efficiencies and sustainability in day to day operations, but on a large strategic scale as well. Targeted campaigns encourage employee involvement with support from top management and creative branding and marketing for each campaign. "innov8 gives us the platform to connect, collaborate and innovate across geographic boundaries," Joe Locandro, CIO of CLP has stated. One campaign, Earth Heroes, looked to its employees for ideas on eliminating waste that could be contributed to Hong Kong's Energy Efficiency & Conservation program. It utilized Brightidea's iPhone app and spurred interest through a variety of marketing mediums including posters featuring the company's top management as action heroes. CLP donated HK$5 to green initiatives in the Asia-Pacific region for every idea submitted. Another campaign, Sustainability Jukebox, expands the range of people involved by bringing employees from Hong Kong, Australia, and India to collaborate within a dual-language interface on various sustainability strategies for the organization. CLP has been recognized as a leader for its various efforts, and to learn more about their innovation program, a full case study is available here.

 Protecting, sourcing, and executing on innovation is essential to every business. Despite numerous technological advancements that have fundamentally changed the way patents are granted and companies secure capital, past legislation regarding these two key areas have failed to address new realities. Recently, two new bills have passed that aim to alter that perception and address a broader challenge, job creation and innovation in the US. The first-to-file law and a recently passed bill that changes regulations on funding may  have significant impacts on innovation.

FIRST TO FILE LAW

 In an effort to minimize the complexities and costs associated with protecting intellectual property, on September 16, 2011 President Obama signed into law the Leahy-Smith America Invents Act, overhauling the patent system that had not been changed for the past 60 years. According to the Committee on the Judiciary, "Our outdated patent system has been a barrier to innovation, unnecessarily delaying American inventors from marketing new products and creating jobs for American workers." President Obama saw this as an opportunity a speed up the patent process to new inventions can develop into businesses, provide employment, and therefore stimulate the economy.