EnerNOC is an energy company with an innovative business model: it serves as an intermediary between electric utilities and electricity users. It contracts with electricity users willing to reduce demand during periods of peak energy demand, and sells this as excess capacity to electric utilities. The company is facing an upheaval in the energy markets due to the dramatic growth in natural gas fracking and the resulting increase in natural gas supply. The case enables students to evaluate the EnerNOC's business model--including its environmental implications--and the potential impact of fracking on its business. The case is accessible to non-specialists, as it provides background on the electric utility industry and the debate about fracking for natural gas. Given the substantial environmental impact of the energy and electricity industries, the case is particularly relevant for courses that focus on energy, the natural environment, and environmental sustainability.
Authors :: Michael W. Toffel, Kira Fabrizio, Stephanie van Sice
Swot Analysis of "EnerNOC: DemandSMART" written by Michael W. Toffel, Kira Fabrizio, Stephanie van Sice includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fracking Enernoc facing as an external strategic factors. Some of the topics covered in EnerNOC: DemandSMART case study are - Strategic Management Strategies, Boards, Business models, Collaboration, Demographics, Entrepreneurship, Financial management, Intellectual property, Managing uncertainty, Manufacturing, Product development, Productivity, Regulation, Risk management, Strategic planning, Supply chain, Sustainability and Technology & Operations.
Some of the macro environment factors that can be used to understand the EnerNOC: DemandSMART casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, supply chains are disrupted by pandemic , increasing energy prices, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%,
geopolitical disruptions, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of EnerNOC: DemandSMART
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in EnerNOC: DemandSMART case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fracking Enernoc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fracking Enernoc operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of EnerNOC: DemandSMART can be done for the following purposes –
1. Strategic planning using facts provided in EnerNOC: DemandSMART case study
2. Improving business portfolio management of Fracking Enernoc
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fracking Enernoc
Strengths EnerNOC: DemandSMART | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fracking Enernoc in EnerNOC: DemandSMART Harvard Business Review case study are -
Effective Research and Development (R&D)
– Fracking Enernoc has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study EnerNOC: DemandSMART - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Fracking Enernoc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fracking Enernoc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Fracking Enernoc is one of the leading recruiters in the industry. Managers in the EnerNOC: DemandSMART are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Technology & Operations industry
– EnerNOC: DemandSMART firm has clearly differentiated products in the market place. This has enabled Fracking Enernoc to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Fracking Enernoc to invest into research and development (R&D) and innovation.
Ability to lead change in Technology & Operations field
– Fracking Enernoc is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Fracking Enernoc in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Fracking Enernoc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in EnerNOC: DemandSMART Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Fracking Enernoc is one of the most innovative firm in sector. Manager in EnerNOC: DemandSMART Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Fracking Enernoc is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Fracking Enernoc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in EnerNOC: DemandSMART Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Fracking Enernoc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fracking Enernoc has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Fracking Enernoc is present in almost all the verticals within the industry. This has provided firm in EnerNOC: DemandSMART case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Fracking Enernoc is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael W. Toffel, Kira Fabrizio, Stephanie van Sice can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Fracking Enernoc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fracking Enernoc has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses EnerNOC: DemandSMART | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of EnerNOC: DemandSMART are -
Skills based hiring
– The stress on hiring functional specialists at Fracking Enernoc has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study EnerNOC: DemandSMART that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case EnerNOC: DemandSMART can leverage the sales team experience to cultivate customer relationships as Fracking Enernoc is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Fracking Enernoc supply chain. Even after few cautionary changes mentioned in the HBR case study - EnerNOC: DemandSMART, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fracking Enernoc vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Fracking Enernoc has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study EnerNOC: DemandSMART, is just above the industry average. Fracking Enernoc needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Fracking Enernoc has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Fracking Enernoc even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High operating costs
– Compare to the competitors, firm in the HBR case study EnerNOC: DemandSMART has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Fracking Enernoc 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fracking Enernoc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study EnerNOC: DemandSMART can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Fracking Enernoc has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - EnerNOC: DemandSMART should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study EnerNOC: DemandSMART, it seems that the employees of Fracking Enernoc don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Fracking Enernoc is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Fracking Enernoc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fracking Enernoc to focus more on services rather than just following the product oriented approach.
Opportunities EnerNOC: DemandSMART | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study EnerNOC: DemandSMART are -
Manufacturing automation
– Fracking Enernoc can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fracking Enernoc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fracking Enernoc can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, EnerNOC: DemandSMART, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Fracking Enernoc has opened avenues for new revenue streams for the organization in the industry. This can help Fracking Enernoc to build a more holistic ecosystem as suggested in the EnerNOC: DemandSMART case study. Fracking Enernoc can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Fracking Enernoc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. EnerNOC: DemandSMART suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fracking Enernoc is facing challenges because of the dominance of functional experts in the organization. EnerNOC: DemandSMART case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fracking Enernoc can use these opportunities to build new business models that can help the communities that Fracking Enernoc operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Leveraging digital technologies
– Fracking Enernoc can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Fracking Enernoc can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Fracking Enernoc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fracking Enernoc to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fracking Enernoc to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Fracking Enernoc to increase its market reach. Fracking Enernoc will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fracking Enernoc can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats EnerNOC: DemandSMART External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study EnerNOC: DemandSMART are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study EnerNOC: DemandSMART, Fracking Enernoc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fracking Enernoc in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Fracking Enernoc needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fracking Enernoc business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Fracking Enernoc
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Fracking Enernoc.
Stagnating economy with rate increase
– Fracking Enernoc can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Fracking Enernoc in the Technology & Operations sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fracking Enernoc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fracking Enernoc.
Technology acceleration in Forth Industrial Revolution
– Fracking Enernoc has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Fracking Enernoc needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Fracking Enernoc high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Fracking Enernoc is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of EnerNOC: DemandSMART Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study EnerNOC: DemandSMART needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study EnerNOC: DemandSMART is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study EnerNOC: DemandSMART is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of EnerNOC: DemandSMART is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fracking Enernoc needs to make to build a sustainable competitive advantage.