Design Thinking's Role in Utilities Service Transformation 

Because utilities are responsible for delivering essential services like electricity, gas, water, and wastewater management, they have often (for good reason) prized reliability, security, and affordability over customer experience. 

Today, utilities are feeling pressure to transform these legacy service-centered approaches into customer-centered approaches. Numerous factors are driving utilities in this direction, including new digital competitors, evolving customer preferences, falling customer service scores, advancing technologies, directives from regulators, cost escalations, and sustainability concerns. For many utilities, this customer-centric transformation is a radical mindset shift. But innovation is possible: The advent of web 3.0 will enable seamless customer journeys with digital technology, even as it makes current business models increasingly obsolete. 

For all the advances that utilities have made on their journey towards customer-centricity, many of these advances have been tactical interventions designed to improve individual aspects of the customer experience. To take this transformation maturity to the next level, utilities will need to adopt a holistic design-led approach to innovation. This transformation extends beyond technology adoption and touches both process and people; it involves a comprehensive overhaul of the customer experience based on real-world customer insights. By leveraging “design thinking” to understand customer pain points, preferences, and behaviours, utilities will be able to de-risk innovation, revamp customer journeys, and transform their business models. 

What Is Design Thinking?

Design thinking takes a human-centered, holistic, collaborative approach to innovation that aligns people, process, and technology to elevate and deliver an enhanced customer experience. Rather than starting with technology, design thinking starts with the user’s needs, and (re)designs products, services, and experiences around that user through an iterative process that emphasizes testable prototypes. 

Airbnb famously leaned heavily on design thinking as it matured its business model. Numerous companies, from the smallest startups to the largest Fortune 500 corporations, utilize design thinking to foster user-centric innovation and enhance their products, services, and strategies through the human-centered, iterative approach. And for good reason: Studies have demonstrated a 32% rise in revenue growth and a 56% increase in total shareholder return for design-driven organizations. 

Compared to many enterprises, utilities already have one crucial advantage in the design process: They provide services that people not only want, but absolutely need. However, there is plenty of flexibility in terms of how they present those core offerings to customers, and utilities services will only become more diverse as the global economy decarbonizes. Amid this larger transition, utilities can leverage design-driven service transformations to achieve a fully realized omnichannel customer experience that improves customer acquisition, customer retention, and customer satisfaction.

From Personas to Prototypes

The first step in any design-led transformation is to start from the perspective of a consumer of a utility service. Rather than proposing incremental improvements, the design thinking starts with discovery (see double diamond framework below). This discovery phase asks: Who are my customers, and what truly drives them? Utilities will need to consider multiple consumer types — including but not limited to residential, industrial, commercial, agricultural, and medium/high voltage customers — and identify the most important loyalty drivers for each of them.

After the discovery phase, it is crucial to synthesize research findings and begin defining clear problem statements that need to be addressed. This stage will employ tools such as service blueprints, customer journeys, and empathy maps to refine the utility’s understanding of its customers. 

During the ideation process, the focus turns from understanding problems to developing solutions. This stage emphasizes collaborative and divergent thinking, encouraging the exploration of various unconstrained ideas before collectively selecting a handful of promising concepts. 

After ideation, it is time for implementation. But even the best ideas rarely survive the first contact with customers themselves, so one of the most crucial aspects of the implementation process is prototyping and testing. These practices serve as the bridge between abstract ideas and tangible customer experiences. Instead of opting for a "big bang" implementation and immediate full-scale rollout, a more methodical approach is employed. This involves iterative testing and prototyping of specific service components and isolated touchpoints that, when aggregated, form the complete service experience. By employing prototyping and testing, the goal is to align the final service with user expectations, while mitigating risks and reducing costs. 

Design-Led Transformation for Utilities: Observations from the Field

Design thinking would not be of much value to utilities if it simply surfaced wonderful ideas that are impossible to implement. In the end, the utility needs to be able to deliver on the reimagined customer journey in a cost-effective manner. Working with utility clients, we have found that the most powerful design-led transformations manage to greatly improve customer journeys while also reducing cost-to-serve. Cost reduction should never be the sole focus of design-led transformation, lest the customer experience be short-changed, but it can be a profound fringe benefit. 

Recently, implementing a new water management system for a water utility, we applied a design-led approach to both the customer experience and back-office process re-engineering. On the customer side, the new customer journeys feel comparative seamless thanks to a wealth of new self-service options. On the backend, that means employees spend much less time checking and correcting details. With an improved experience, it turns out, customers reward utilities by entering cleaner data. And cleaner data means that utilities can, in turn, make decisions and deliver services to customers more quickly — a virtuous cycle that we have seen repeated across multiple client design-led service transformations. Cost-to-serve goes down, while CSAT scores and digital engagement metrics significantly improve.  

From Customer Experience to Business Model Transformations

Many startups turn to design thinking because they are pioneering untested new products and need to understand how customers will perceive those products. Historically, utilities have not had that problem: They already knew that customers wanted their core products. Today, they are turning to design thinking to reimagine their customer experience and maintain their edge with customers. But there is another huge reason for utilities to become comfortable with the design thinking process: Soon, they may need to orchestrate new energy marketplaces, launch novel value-added services, and explore entirely new business models. To do those things quickly and effectively, they will need to start by understanding a fast-shifting customer, ideating new offerings, and testing prototypes to ensure product-market fit. In other words, utilities will need a lot of design thinking.

About the Authors

Makarand Kale
Consulting Partner, Utilities Consulting

Makarand has worked in the utilities industry for more than 25 years. He has led large business transformation programs and has expertise in the areas of strategy, road mapping, bid management, delivery, project management, key account management, and organization change management. He has worked with power and water utilities across the globe.

Adrian Olsson Nilsen
Business Designer OSL, Designit

Adrian is a strategic practitioner whose passion and expertise lies in combining business thinking with design doing to create innovative strategies and business models that deliver tangible human and business value. Drawing on experiences ranging from Norwegian startups to international corporations, he now advances major digitalization and decarbonization transformation projects in the energy and utilities sector.