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 - – cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
technology disruption, central banks are concerned over increasing inflation, 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 -
Strong track record of project management
– Fracking Enernoc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
High switching costs
– The high switching costs that Fracking Enernoc has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its 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.
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.
Organizational Resilience of Fracking Enernoc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fracking Enernoc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Fracking Enernoc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Weaknesses EnerNOC: DemandSMART | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of EnerNOC: DemandSMART are -
High cash cycle compare to competitors
Fracking Enernoc has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael W. Toffel, Kira Fabrizio, Stephanie van Sice suggests that, Fracking Enernoc is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Capital Spending Reduction
– Even during the low interest decade, Fracking Enernoc has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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.
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.
Low market penetration in new markets
– Outside its home market of Fracking Enernoc, firm in the HBR case study EnerNOC: DemandSMART needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the EnerNOC: DemandSMART HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Fracking Enernoc has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Fracking Enernoc needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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 -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Fracking Enernoc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
Developing new processes and practices
– Fracking Enernoc can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fracking Enernoc to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fracking Enernoc in the consumer business. Now Fracking Enernoc can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Using analytics as competitive advantage
– Fracking Enernoc has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study EnerNOC: DemandSMART - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fracking Enernoc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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 -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fracking Enernoc can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study EnerNOC: DemandSMART .
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.
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.
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.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fracking Enernoc will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fracking Enernoc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Fracking Enernoc demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Fracking Enernoc needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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.
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.
