AGL: An Electric Utility Dealing with Disruptive Innovation
(5 pages of text)
Case (Pub Mat)
AGL Energy, a long-time traditional energy supply company in Australia, was facing competition as alternative sources of energy, such as solar power and batteries, were taking root in both the marketplace and with energy-conscious homeowners. The trend of homeowners who opted to supply their own energy needs and go off the grid was described as a “death spiral” for utility companies. In response, AGL Energy appointed a new chief executive officer in 2015 to address concerns related to falling demand, customer retention, and unpredictable energy prices. With climate change issues pushing so-called green energy sources into the forefront, what were the strategic options that would ensure AGL Energy's continued presence as a leader in the energy industry?
This case is suitable for use in MBA and other graduate-level programs in advanced marketing or strategy-related courses that include management, energy, and innovation. After completion of the case, students will be able to
- explore the trade-offs that emerge when shifting from goods-dominant logic to service-dominant logic and its requisite value mindset;
- understand the utility industry, especially the enormous challenges that renewables and storage pose for established players;
- examine the management of a core business when faced with disruptive and systemic changes enabled by the development of new technologies or through the evolution of customer attitudes and behaviours; and
- identify the benefits and challenges for market participants and industry regulators of disruptive business models.
Australia, Large, 2016
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