Dec 06, 2013

Here Comes the Sun

solar_system

In his 1995 book Managing in a Time of Great ChangePeter Drucker predicted that, after the year 2000, the “environmental market” would flourish, with solar power cells becoming affordable and “no longer ‘sci-fi.’

Today, as a glut of solar panels have caused many producers to close up shop, Time magazine’s Bryan Walsh has seen the future, and it is SolarCity.

Co-founded by entrepreneur Lyndon Rive (a cousin of Tesla Motors CEO Elon Musk, but that’s a separate post—too much to ponder), SolarCity’s business isn’t solar manufacturing but solar installation. Rive has 80,000 customers now, and he hopes to have 1 million by 2018. (To sweeten the pot, SolarCity intends to bundle its power with Tesla batteries, to allow for better energy storage.)

In fact, Rive believes that his company is on the verge of shaking up the entire utility industry. “We’re going to change the business model,” he says.

Meanwhile, David Owens, executive vice president of the trade group Edison Electric Institute, tells Time he isn’t worried. “You might not need a [telephone] landline, but you’re always going to want to be connected to the grid,” Owens says.

Oh, dear. We were probably a little more skeptical of Rive’s grand vision before we heard Owens’s response. Suddenly, we’re measuring our roof for solar panels.

What everybody in the business ‘knows’ can never happen should be examined carefully,” Drucker advised in Managing for Results. “Quite often managements will insist that a development is impossible because they are afraid of it while convinced that it is inevitable.”

Drucker’s cautionary tale was of makers of “heavy electrical switchgear for power houses and transformer stations,” who “published papers proving the theoretical impossibility of electronic power-switching.” Did that get them anywhere? Well, yes, but nowhere good. As Drucker explained, “The only result of this head-in-the-sand attitude was that the leading manufacturers did not work on electronic development and were in danger of losing the market when electronic switchgear was finally developed—by other companies.”

“If a business continues to stick to the existing, traditional, established—or denies that anything else is possible—a change may destroy it in the end,” Drucker warned.

Perhaps it’s time for the strategists at Edison Electric Institute to power up some new thinking.

What do you think? Do you believe that you’ll be a solar power customer in your lifetime?

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