Introducing the Bionic Network of the Future

As the world contemplates the return from covid-19, energy network executives are recognising that there is an opportunity to do more than return to normal, but rather to accelerate the incorporation of digital technology as they seek to build smarter, more customer-responsive, resilient networks.

At BCG’s Energy Network Transformation services business, we are often asked for our perspective on how the Digital Network of the Future will look. We like to describe it as Bionic rather than Digital, meaning that it seeks to augment our people rather than replace them.

Energy network businesses are under growing pressure from many directions: regulators squeezing returns; climate change increasing the frequency of wild-fires; distributed energy resources imposing new technical requirements.

A wide range of digital technologies hold much promise to relieve these pressures: drones, satellite or LiDAR imagery to map the network and identify defects; artificial intelligence to process the imagery and predict failure; Advanced Distribution Management Systems to orchestrate network flows; Robotic Process Automation in the back-office.

We see many clients pursuing digital initiatives with these and other technologies. Yet, despite their efforts – and considerable associated budgets --- few network businesses feel they are realising the full potential of digital transformation at scale. Most struggle to move beyond pilot programs to real business impact.

In our view, less than satisfying outcomes have common sources:

• Implementing new technology without a clear view on how it will translate to benefits;
• Forgetting the human: failing to help the team change itself and its processes to get the most out of technology; and
• Seeking to implement digital change on a technology platform that isn’t flexible enough for today’s rate of change.

What is a Bionic Network?

The Bionic Network overcomes these challenges by melding technology with human expertise to create business outcomes worth more than the sum of these parts. In a bionic organisation, a circle of four components work together: Purpose and Strategy; Business Outcomes; Human Enablers; and Technology Enablers.

• Purpose and Strategy set the direction. They inspire and align the company’s rapidly moving autonomous teams, establishing ‘an unbroken chain of why’ linking the work teams do with the business outcomes required.
• Business outcomes fall into three categories for the bionic organisation: bionic operations, personalised customer experiences, and new offers or services. For network operators, bionic operations are arguably the most relevant area, although the sector has recently appreciated the growing importance of customer experience. 
• Human enablers include the right talent mix, organisational structure, cross-functional teaming and new ways of working that will transform the business. The bionic network achieves this new mix of talent by retraining the existing team and hiring new in disciplines – for example, designers to encapsulate the employee or customer experience; data scientists to organise data, and develop and train algorithms; alongside a focussed suite of today’s functions.
• Technology enablers encapsulates (i) the modern stack of modular, flexible – often cloud-based – systems that underpin the new digital processes running the network; and (ii) the suite of technologies – such as LiDAR/satellite imagery; drones; artificial intelligence, network sensors that provide the data that is the life-blood of a bionic organisation.

How does a Network Business become Bionic?

The journey to a Bionic Network starts with the business outcomes – rather than the use-case or the application of a specific technology. The challenge is to reframe the starting point from ‘which new tool do we add?’, to ‘what is the business need or problem we are trying to solve – and how can all our capabilities, human and tech, combine to deliver the solution? By starting with a clear outcome in mind, the approach becomes targeted and relevant, leveraging the full mix of tech capability and human expertise.

The chart below shows six main business outcomes for networks to pursue, and the range of benefits we at BCG see for those who can successfully harness new technology. 

To make the first steps toward becoming a Bionic Network, we suggest first ‘closing circles’ of the human and technology enablers to achieve individual business outcomes, rather than trying to build the whole suite of technology, or implementing new ways of working across the business. The company can progressively expand the circles of transformation to further business outcomes, building momentum that eventually leads to a whole-of-business change.

A small example: the Bionic Vegetation Manager

As a microcosm of the Bionic Network, take vegetation management. We see companies look to implement LiDAR technology in their vegetation process –in hindsight finding it to be an added cost without much improvement in compliance.

We turn this around to ask ‘how might we achieve a 30% reduction in vegetation management costs without increasing network risk?’. Posing this question leads in turn to a series of questions:

• How do we quantify the risks of vegetation induced failure - human/wildfires/property/ outages?
• How do we determine when to treat vegetation to manage risk and minimise the number of visits – by predicting growth and intrusions on the network?
• What information can we combine to predict growth from a range of data sources, including LiDAR but looking beyond to satellite/ground imagery, weather information or species data?
• What’s the information architecture required to draw informed conclusions based on all data sources together and artificial intelligence algorithms?
• How do we change the processes and contracting models with our contractors so they can treat vegetation in the right way at the right time?
• What cross-functional team do we need to deliver the new process – more data scientists, designers and developers to augment arborists?

The answer to these questions reveals the combination of the technology and human enablers required to achieve the desired business outcome of lower vegetation costs and managed network risk.

The benefits of becoming a Bionic Network

The cost reduction benefits of successfully transitioning to a bionic network are substantial. As examples, we have seen 10%-15% reductions in repex, 20%-30% reductions in vegetation management costs, 50% plus increases in workforce utilisation, 40% reductions in contact centre call volumes.

Beyond that, we see substantial improvements in customer outcome: time to make connection offers falling from weeks to seconds and significant improvement in reliability measures for targeted parts of the network.

Perhaps most importantly, working in bionic organisations leads to more engaged and productive employees with a real sense of purpose.

More on the Bionic Network

Over the next few months, my colleagues in BCG’s Network Transformation Services (NeTS) Business Line will post on various aspects of the Bionic Network – including translating the bionic concept to the future of network planning, asset management; workforce management and vegetation management.

In the meantime you can read more about BCG’s cross-sectoral view on the bionic company here.

About the authors

Oxana Dankova, managing director and partner, is a core member of BCG’s Energy and Operations areas.

Javier Argüeso, senior knowledge expert and knowledge team director in BCG’s Power and Gas Utilities practice.

Pavla Mandatova, lead knowledge analyst in BCG’s Power and Utilities practice, with focus on power and gas networks

Phil Hirschhorn, managing director and senior partner at Boston Consulting Group, leads the firm’s Energy practice in Australia and New Zealand. Phil leads BCG's Network Transformation Services.