The Smart Grid concept has been around for a few years now. There have been a bunch of pilot projects, but the typical consumer has largely been unaffected by work in this area. There have been grumblings all along and even a few high profile naysayers as well: Vinod Khosla publicly ridiculed many of the technologies as ‘toys’ in a recent key note speech. This debate brings to mind Geoffrey Moore’s ‘Crossing the Chasm’ model and raises the question of whether the Smart Grid will ever cross the chasm?

Geoffrey Moore explained the Technology Adoption Life Cycle (TALC) in his classic ‘Crossing the Chasm’. Since the publication of the book, the terms have entered into every day vocabulary for people in the tech industry. The TALC describes how any new technology is adopted by people. Not everyone jumps up immediately to try out new technologies. The people who are at the forefront of the tech world developing new products are the ‘Innovators’. The ones who are eager to try out new technologies are the ‘Early Adopters’. The ‘Early Majority’ are the pragmatists who buy products only after their value is well established. The ‘Late Majority’ and the ‘Laggards’ are the ones who are never keen to try anything new. As Moore explained, new technologies are easy to penetrate the small group of Innovators and Early Adopters. For a technology to become really successful, it has to reach the Early Majority. However, the transition from the Early Adopters to Early Majority is not smooth and a there is gap, the Chasm, that should be crossed. The Smart Grid industry is currently in a stage where it has reached only a few early adopters. All the debates about whether the Smart Grid will become a reality centers around the question of whether it becomes adopted by the pragmatic users.

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Geoffrey Moore gave a talk at Connectivity Week back in May where he examined this question about what it would take for the Smart Grid to cross the chasm. The basic challenge is that the Smart Grid is trying to simultaneously alter industries that have fundamentally different business models. On the one side, we have utilities that operate highly complex systems in maintenance mode for very long durations. And on the other side, we have the consumer market that is driven by volume sales and rapid changes in technologies. In order to get the Smart Grid industry unstuck, Moore raises four questions: Are we ready with the technology? Do we have a target problem? Do we know who the key players are? And do we have the right policies? The key to success will be to find answers to these questions.

In terms of available technologies, there have been a number of successful pilot projects. With regard to the communication technologies, I think the industry is battling over standards. There are hardly any unsolved problems and the fight is on to see which technology becomes the dominant standard. The key players and the battle for polices are problems and I will address these in future posts. I think that the biggest problem is Moore’s second question: What is the broken mission critical process that is crying out for a solution? Let’s analyze this question with regard to the Smart Grid’s vision of a fully automated home, with dynamic pricing to reduce energy consumption. From the consumer’s perspective, at this stage there is really no broken process that needs to be fixed. Of course there will be many benefits from interconnected devices, but no one is crying out for a solution that will hook up their water heater to their iPads. At the moment the only drive for this solution comes from a generally agreed upon need for energy conservation and efficiency. For people in the USA, the cost savings from dynamic pricing don’t seem very compelling right now. It is hard to sell a new technology solution unless it is possible to demonstrate significant benefits. Unless the economic equation changes it is hard to see how this vision will be realized. Having said that, it is also crucial to remember that things in the consumer industry tend to move at very different speeds and tipping points are hard to predict. Perhaps the ‘target problem’ will change from ‘why should I hook up my heater to my tablet?’ to ‘What other cool stuff can I do with my tablet?’. And that is where initiatives such as Google’s Android @Home have the power to make a difference.

Moore has plenty of other insights and you can watch the entire talk here on YouTube.