Liberal media sites often highlight the positive trend of solar and wind power. In contrast, Mr. Jenkins, a Wall Street Journal opinion columnist, concentrates his energy-related columns on the well-known flaw of solar and wind energy not being as reliable as fossil fuels. He suggests wind and solar will be niche energy sources.
Jenkins is wrong.
He has fallen into a trap called mistaken (and sometimes hidden) assumptions. Jenkins assumes the intermittency flaw is a constant. But battery technology is continually improving, and its use in power storage to solve the intermittency problem is spreading in many countries. Battery technology is advancing so quickly and effectively for automobiles that one can now reliably predict when petroleum-powered cars will become more costly to produce and run. No wonder Tesla is worth more than Toyota.
There are always naysayers to change. The Kodak Board was a naysayer about digital photography. What Kodak and the Wall Street Journal columnist have in common is the inability to see that real progress is messy and uneven, whether technological, social, or cultural. All pieces don’t always fall together all at once.
Progress in steps is the norm in human history. Why not look where the puck will ultimately go versus paying attention to the barriers to change and assuming the status quo will stay with us? It is far better to help clear the way than assume things will stay where they stand today or will move slowly, at best.
The pandemic is creating some very abrupt changes across markets, and the wisest companies are waking up to reexamine the assumptions in their strategy. For example, with plummeting oil prices during the pandemic, BP wisely acknowledged that the future of oil is not consistent with its past. BP has written down $17.5 billion in value of its oil reserves, about 12% of its book value. It is assuming oil prices will be lower over time ($55/barrel versus $70), and that it will not develop its Gulf of Mexico and Canadian reserves in the foreseeable future.
“Everywhere I have been – inside BP, as well as outside – I have come away with one inescapable conclusion. We have got to change,” according to a New York Times report on BP CEO Bernard Looney’s February speech. Duh!
BP executives are asking themselves the most strategic question a leadership team faces, “What business are we in?” BP’s actions in the past always suggested, “Oil and its refined products,” no matter what the marketing-spin said. Now, BP is at an urgent pace to answer “Energy” in its actions, not just its tag lines.
BP has done some things right. It is investing in biofuels and the biofuel value chain. It has pledged to cut its carbon emissions to zero by 2050. It will exit petrochemicals used in plastics. But imagine if the company might have earlier on understood the pre-pandemic march towards less use of oil. It might have dominated windmill or solar energy.
The pandemic is challenging many other traditional business definitions. Telehealth and remote monitoring are creating healthcare outside the walls of the healthcare system. Innovation leader Intermountain Health already has an “at-home hospital” in deployment. Commercial real estate may face the challenges of shopping malls – what to do with unwanted space?
Many other sectors need to be reimagined, including everything from policing to brick-and-mortar retail stores. Events must think digital for the time being and perhaps well after the pandemic is over. Conferences must think of new ways to convene. Training must focus on how to change behavior and develop skills without in-person, classroom settings.
Stay stuck in history, and the future may pass by you. Imagine an expanded purpose, and you’ll spotlight opportunities on the road to a better future.
How should your strategy change?