Partner or die? Strategies for the Convergence.

Should I look to form a strategic alliance? And if so, with whom? This question is on the minds of many energy executives looking for ways to survive—and thrive—in the energy Convergence. As just one recent example, Google and Walmart have announced a partnership that brings together Walmart’s huge retail operations with Google’s online mastery; now anything consumers would buy at Walmart stores can be purchased through Google Home via Google’s web platform, mobile app, or voice assistant. The benefit of this partnership must have been unmistakably compelling for both entities when you consider the following:

  • Never in Walmart’s history have they sold products through websites other than their own.
  • Walmart’s 2-day shipping competes directly with Google Express, offering free shipping over a set price threshold.
  • Just one year ago Walmart paid $3.3 billion for Jet.com so they could compete with sophisticated digital players like Amazon and Google directly.

As the Convergence accelerates, more and more companies will form strategic alliances like this with companies outside their industry—unexpected pairings that make a great deal of sense when viewed from a radically different frame of reference. The newly announced partnership between Comcast and Sunrun is another recent example. Sunrun will be the exclusive rooftop solar provider for Comcast’s vast base of customers, while Comcast builds a whole new revenue stream.

But these alliances aren’t just about boosting sales. Sunrun gains a way to improve customer relationships through Comcast’s existing customer service model. Comcast gets to portray itself as the go-to resource for all things related to the home. Walmart instantly becomes more digital on a grand scale. Google makes a Google-sized statement about its ability to compete and win against the world’s largest online retailer.

To succeed in an unlikely partnership, today’s energy players have to critically examine their own strengths and weaknesses in the context of new relationships. Successful partners will identify the business practices and assets that are truly unique to them, accept shared ownership of new territory, and determine their tolerance for risk in this very dynamic energy landscape.

What are your thoughts? Please share below, or contact us directly for a conversation.

Best,
Carole Barbeau
President of Energy Advisory – Americas
DNV GL

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