After spending the past few days attending DistribuTECH, I’m left with a couple of random thoughts.
- Technology is a double-edged sword—providing amazing benefits while also hindering growth. I found the latter part especially true with legacy equipment.
- The convention center was undoubtedly designed so that attendees would be forced to walk off their New Orleans food overindulgence. (In retrospect, this was much appreciated – thanks Clarion!)
Predictably Irrational Behavior
In my booth conversations, a theme consistently emerged. Utilities felt trapped by legacy technology and, by proxy, the vendors that supplied it. It reminded me of the sunk cost fallacy—the tendency for people to continue to head down a particular path if they have invested money or resources. Predictably irrational behavior.
Sunk costs become a fallacy if it’s pushing you to make decisions that leave you worse off. Even the most rational among us are susceptible because humans typically focus on what will be lost versus the potential gain. Have you ever gone to a movie and shortly after realized that it’s painfully bad; however you sat through it anyway? The predictably irrational response was that you didn’t want to waste your money. That is the sunk cost fallacy in action.
Sunk costs become a fallacy if it’s pushing you to make decisions that leave you worse off.
This year at the show, we demonstrated how legacy equipment shouldn’t dictate your roadmap. There is a method where utilities aren’t subject to the sunk cost fallacy. To demonstrate, we used augmented reality to illustrate seven scenarios common to all utilities. Each story had one thematic backdrop in common—simply put, with the FlexNet communication network utilities are given the freedom to escape from sunk costs.
Technology Choices Abound
We continued the theme, using DTECH as a launch pad to unveil the new Stratus IQ smart electricity meter. This meter was obsessively engineered for durability and capacity to grow. Additionally, by using software-defined metrology, the Stratus IQ gives utilities complete control of the data received while getting a granular snapshot of their power quality. Utilities aren’t locked into a specific data set—giving them the liberty to adapt as needed. (On a side note, the larger than life meter model was the real star of the show.)
Lastly, I came across a lot of utilities that were early AMR adopters but now felt trapped. Moving away from ERTs seemed to be an impossible challenge. We talked to them about EasyLink. Our engineering team developed a portable, reliable and user-friendly system that lets utilities migrate to an AMI system at whatever pace they choose. It’s been successfully deployed and is proven to prevent utilities from throwing good money after bad.
20/20 Hindsight
Years down the road we are going to look back, through the beneficial lens of 20/20 hindsight, and realize we were all cogs in the transformative machine that is the changing utility. Advancing technology and a changing world are forcing utilities to reinvent themselves from supplier to partner. And with that transition, it’s time to stop investing money into sunk costs and start looking for solutions that provide the flexibility needed to thrive in the future.
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Matt, you are right on. The other area where a utility struggles is with the 20 year system cost with a 10/10 warranty. I’ve seen where a great product at a great price is destroyed when having to do a 20 year life cycle cost because not all of the manufacturers are on the same page. I’ve seen where a marked down life cycle cost won an award even those the numbers were misleading.