Electricity and gas distribution lie at the heart of the energy industry. CXOTalk host Michael Krigsman talks with an energy industry leader about digital transformation in this important sector of the economy.

Ms. Adriana Karaboutis is Chief Information and Digital Officer of National Grid PLC, a natural-gas and electricity distribution service in the U.K. and the U.S. Northeast. Previously, Andi was Executive Vice President of Technology, Business Solutions and Corporate Affairs at Biogen. Prior to Biogen she served as Global Chief Information Officer for Dell. She has been a guest on CXOTalk several times in the past.

Transcript

Michael Krigsman: I'll bet that you didn't know that the energy industry is one of the sexiest industries in the world.  We're going to prove it today on Episode #272 of CxOTalk.

Before we start, I want you to please, please tell a friend, like us on Facebook, share this. Would you do that right now?

I want to say thank you to Livestream, which supplies our video streaming infrastructure. Those guys have supported us, and they're great. Please go to Livestream.com/CxOTalk, and they'll even give you a discount.

Without further ado, I want to introduce our guest today. Andi Karaboutis is the chief information officer and chief digital officer at National Grid. This is her third time being a guest on CxOTalk. Andi, how are you? Thanks so much for being here.

Andi Karaboutis: I am well, Michael, and it's a pleasure to be here with you again. Thank you for having me.

Michael Krigsman: Andi, tell us about National Grid.

Andi Karaboutis: I'd love to. I joined National Grid approximately five months ago. It is one of the world's largest utility company, investor-owned, and it's focused on transmission and distribution of electricity and gas, multi-nationally, so we're a U.K. and a U.S. company based in the U.K.

For those that don't know, utility companies like ours do transmission and distribution, which is different than being the source. Just very simply, if you think about source of energy, whether it's a powerplant or whether it is gas--which, for example, in the U.S. we have 33 states that produce gas--those are the sources. A company like National Grid, what we do is we transmit this energy and we distribute in some cases. By transmission, that is the high voltage, the lines that you see above fields and things like that that are high voltage that transmit along long distances and then do a step-down transformation or transform in order to do what I call the last mile or distribute to businesses and homes, which is a step down in power. Similarly, along the lines of gas, it's high powered gas lines. Then, when it gets to its destination, it's lower powered. We actually do that transmission and distribution in the U.K. and the U.S.

In the U.K., we do the transmission for England and Wales. We operate the lines for Scotland, though we don't own them for those networks. We have about 4,400 miles of overhead lines, 932 miles of underground lines, and 342 substations, just to give you a sense for the order of magnitude.

In the U.S., we do transmission and distribution. In the U.K. it's only transmission. In the U.S., it's transmission and distribution in New York, Massachusetts, and Rhode Island. It's a pretty exciting business when you think about what our motto is, which is to bring energy to life. How many homes and how many businesses we actually bring energy to. Again, here in the U.S., about 3.3 million electricity companies and upwards of 3.5 million, 3.6 million gas customers as well, so an exciting company.

Michael Krigsman: Yeah, so you're a very, very large company. When we talk about energy, can you maybe take a step back and share with us what are the energy challenges? We know the price of oil is rising but, from your standpoint, what are the energy challenges that are facing these countries, facing the world, and how do these affect you at National Grid and your thinking about the activities that you perform?

Andi Karaboutis: Michael, if you think about the fact that where energy is going, we're going towards a world of decarbonization, decentralization, [and] alternative energy sources: wind, solar, hydroelectric, geothermal, et cetera. Those new energy sources will require new infrastructure for transmission and distribution. That infrastructure will say we're taking energy from multiple sources.  We have challenges around how to manage that supply/demand. As the world looks forward, places that were or entities that were actually consumers of energy can now be producers and consumers

Michael Krigsman: I'll bet that you didn't know that the energy industry is one of the sexiest industries in the world.  We're going to prove it today on Episode #272 of CxOTalk.

Before we start, I want you to please, please tell a friend, like us on Facebook, share this. Would you do that right now?

I want to say thank you to Livestream, which supplies our video streaming infrastructure. Those guys have supported us, and they're great. Please go to Livestream.com/CxOTalk, and they'll even give you a discount.

Without further ado, I want to introduce our guest today. Andi Karaboutis is the chief information officer and chief digital officer at National Grid. This is her third time being a guest on CxOTalk. Andi, how are you? Thanks so much for being here.

Andi Karaboutis: I am well, Michael, and it's a pleasure to be here with you again. Thank you for having me.

Michael Krigsman: Andi, tell us about National Grid.

Andi Karaboutis: I'd love to. I joined National Grid approximately five months ago. It is one of the world's largest utility company, investor-owned, and it's focused on transmission and distribution of electricity and gas, multi-nationally, so we're a U.K. and a U.S. company based in the U.K.

For those that don't know, utility companies like ours do transmission and distribution, which is different than being the source. Just very simply, if you think about source of energy, whether it's a powerplant or whether it is gas--which, for example, in the U.S. we have 33 states that produce gas--those are the sources. A company like National Grid, what we do is we transmit this energy and we distribute in some cases. By transmission, that is the high voltage, the lines that you see above fields and things like that that are high voltage that transmit along long distances and then do a step-down transformation or transform in order to do what I call the last mile or distribute to businesses and homes, which is a step down in power. Similarly, along the lines of gas, it's high powered gas lines. Then, when it gets to its destination, it's lower powered. We actually do that transmission and distribution in the U.K. and the U.S.

In the U.K., we do the transmission for England and Wales. We operate the lines for Scotland, though we don't own them for those networks. We have about 4,400 miles of overhead lines, 932 miles of underground lines, and 342 substations, just to give you a sense for the order of magnitude.

In the U.S., we do transmission and distribution. In the U.K. it's only transmission. In the U.S., it's transmission and distribution in New York, Massachusetts, and Rhode Island. It's a pretty exciting business when you think about what our motto is, which is to bring energy to life. How many homes and how many businesses we actually bring energy to. Again, here in the U.S., about 3.3 million electricity companies and upwards of 3.5 million, 3.6 million gas customers as well, so an exciting company.

Michael Krigsman: Yeah, so you're a very, very large company. When we talk about energy, can you maybe take a step back and share with us what are the energy challenges? We know the price of oil is rising but, from your standpoint, what are the energy challenges that are facing these countries, facing the world, and how do these affect you at National Grid and your thinking about the activities that you perform?

Andi Karaboutis: Michael, if you think about the fact that where energy is going, we're going towards a world of decarbonization, decentralization, [and] alternative energy sources: wind, solar, hydroelectric, geothermal, et cetera. Those new energy sources will require new infrastructure for transmission and distribution. That infrastructure will say we're taking energy from multiple sources.  We have challenges around how to manage that supply/demand. As the world looks forward, places that were or entities that were actually consumers of energy can now be producers and consumers of energy.

If I do a futuristic, "imagine a world where", exercise, and you think of you have an office that may have solar panels that, because of Internet of Things and data, we can now assess. I need to consume less than what those solar panels are actually producing, and so maybe we can also then distribute that energy to another building next door. The traditional, only consumer, model becomes now a distribution and a consumer model.

If you think about that even in terms of turbines and all the rest of the wind, solar, et cetera, and all of the rest of the options that we have, it's a different world. It's a grid now of distributed energy. All of that requires new capability, new thoughts around infrastructure, and new engagement models, too, with regard to customers.

Michael Krigsman: When you talk about new engagement models, in other industries there is this notion of changing customer expectations. But, when it comes to utilities, where does that come into play?

Andi Karaboutis: That comes into play from our multiple constituents. If you think about we're now a world that thinks more of green and sustainability, that comes to the decarbonization; if you think about the fact that we have these alternative sources and people want to leverage them and take advantage of them; if we think about increased, constantly increasing, interest and concern in safety, which a company like National Grid puts at the forefront; reliability; efficiency; all of those things of the discerning consumer: we've seen it in other markets. It's prevalent in this market as well. All of those driving factors for, again, reliability, safety, efficiency, decarbonization, … (indiscernible, 0:06:49) green and all of that is really driving our industry to think about how do we go forward into a world that answers those calls and cries.

Michael Krigsman: Other industries like, say, retail, consumers have choice, right? They click one store on a site to another store. But with power, utilities, they don't have much choice, and so what then is the motivation for you to spend all this time and energy [and] resources thinking about how to be more responsive to your constituencies?

Andi Karaboutis: That's a great question, Michael. I think you're alluding to the fact that we're actually a natural monopoly in sort of the energy utility industry. But, if you think about the distributed energy sources and the more choices that are being had, I think we're going to see that slowly changing. Our traditional business, if you will, is clearly something that we continue to look to optimize and make reliable. Like I said before, solar panels that can now produce energy for a consumer that now can also become a generator, that sort of begins to disrupt what we call the natural monopoly. This isn't something that happens overnight, but we are already engaged in something like that.

Let me give you an example. Block Island, right off of Rhode Island, there is deep sea wind program that National Grid actually laid the infrastructure for. For the wind generation that was happening on Block Island, we built 20 miles of cable underwater that helped to do the distribution of that. Block Island has become a producer of energy. But, when there's not enough wind that's covered for that specific area or we can actually move over to Rhode Island, they become a consumer.

Think about that at the macro, the example I just gave, and the micro scale. It starts to get disintermediated, and the natural monopoly starts behaving a little bit differently and has to answer to different calls.

Michael Krigsman: This shift, how much does this inform your thinking, your strategic thinking, and where? Where does it come into play?

Andi Karaboutis: It informs our thinking quite a bit. National Grid, I talked about our regulated business, both in the U.K. and U.S. What I didn't mention is the fact that we have just put together a ventures business. It's just over a year old, I think. In the ventures business, we're thinking about this distributed energy, decentralization. We're thinking about increased safety. We're thinking about choice.

We're thinking about the digital environment that says, for example, a Nest or equipment, heat controls in the house. If a utility company, there's some way that we can dial down the heat to save energy and share it across, how can we start distributing and balancing better our supply/demands of electricity or potentially even gas, that sort of thing? We are thinking about that. Again, it's along the lines of improved safety, reliability, efficiency, et cetera. All of those things are coming into play.

Michael Krigsman: From the outside looking in, if you're not an expert in energy, you would not be aware of A) these kinds of pressures, and B) the kinds of technologies that you're bringing to bear as you look into the future and the change. Then, I have to assume that, from what you've been saying, there's a deep layer of technology that's part of this as well, but then culture and mindset, and all of that has to be on your radar at the same time.

Andi Karaboutis: Exactly right. The technologies that we are leveraging and really bringing to bear to understand, first of all on our services themselves--battery technology, getting the energy from solar and wind--and then how do we store some of that energy for future consumption, et cetera. We're looking at Internet of Things. Already, we have a U.K. metering business, and we're starting to look at the Internet of Things for how do we sense things behind the meter in order to, for instance, if allowed by customers at some point in the future, to balance that heat usage or the electricity usage, et cetera, being used by customers across other entities.

All of that comes with data, and we worry about leveraging data and analytics to understand, from a safety perspective and a reliability perspective, how do we do more in the realm of preventative maintenance. Now, I know, Michael, a lot of these things don't sound new relative to preventative maintenance, Internet of Things, reading meters, et cetera. But, to the degree that we anticipate we will need to do that, this is going to be a pretty marked improvement, I think, for utility industries. We're going to need to answer that digital call in order to be able to address new technology in our services, again storage, battery, things like that, alternative energy sources.

New technology and customer and consumer engagement, customers even today, and we're doing this sort of thing, want to know, "How much energy have I used? What are my peak periods? How do I compare to my neighbors?" et cetera, things like that.  Those are things that we already have into play.

New digital technology around the efficient and effective enterprise as well for frictionless employees, our field force being out in the field: think about augmented reality or virtual reality from a safety perspective and a repeatability, helping our field force be able to do repeatable repairs or the correct repairs, right sequencing, et cetera, or preventative measures using that sort of augmented reality guidance. There is a tremendous amount that we can, and we are, looking to do.

Michael Krigsman: I want to remind everybody that we're speaking with Andi Karaboutis, who is the chief information officer and chief digital officer at National Grid, which is one of the largest energy transmission organizations in the world. There is a tweet chat going on right now using the hashtag #CxOTalk. Please, tweet your questions in and share your comments.

You are the CIO, the Chief Information Officer and the Chief Digital Officer. How do those roles come into play with the transformations that you were just describing?

Andi Karaboutis: Right. My title is actually Chief Information and Digital Officer, so CIDL. Those roles come into play [in] a couple of things. When I joined National Grid, I think the recognition was that IT, enterprise technology, operational technology, and critical national infrastructure are a continuum. The reality is that while the enterprise technology continues to be extremely important and we continue to drive it, that continuum says that, as we look to going towards more and more digital capability, both for our customers as well as for the different technologies that we're using in battery, solar energy, and the things that we're investing in there, primarily led by our ventures arm, that continuum really makes sense to come together into one overarching strategy for the company.

I would say what's different about my role here than traditional or some of the CIO roles I've had in the past is I'm pushing further into the operational technology and partnering a lot more with the business units here at National Grid. Again, I'm only five months in. We're at the stage where we're developing. We have a lot of great digital initiatives going on. We're at the stage of developing what I think is going to be a great overarching strategy. Together, with our ventures, with our electricity transmission, our gas transmission, and our distribution businesses, we're going to be putting that together and looking at the entire value chain of the company to determine, where do we continue to drive some of the digital investments we have; what things do we decide to stop; and where do we double down?

The interesting thing is, traditional CIOs would have said, I would say, many years ago, as a matter fact, that IT belongs only in IT, or Information Services, as we call it here. But, the reality is technology is now, continues to be, and has been for several years, so ubiquitous. The digital disruption using Internet of Things, using mobile, using cloud, using distributed technologies, battery technologies, and all of those things coming together into an overarching strategy to really drive forward improvements in safety, reliability, efficiency, customer enablement for the customers that are National Grid is what we're trying to do.

I'm really proud of the fact that this digital strategy, though the core of it is what we're trying to do in my organization, is an end-to-end enterprise endeavor. Our board is very keen on it, our executive team is very keen on it, and we're really driving it as a group.

Michael Krigsman: On this theme of the digital aspect, we have an outstanding question from Twitter. Arsalan Khan asks, "Are there any use cases?" This is a multipart question. "Any use cases for AI and blockchain, and what happens to the jobs that are lost?" It's really three different points: AI, blockchain, and the impact on jobs in the energy industry.

Andi Karaboutis: Look. There are. Let me start with AI. First of all, AI allows us to gather as much data as we can, learn on it, et cetera. Again, just like any other industry, be able to apply it for predictive and look ahead at safety, sustainability, improvements in our efficiency, et cetera. AI, as it applies to all other industries, is something that would help us as well in our specific use cases.

Blockchain is very interesting. For authentication of transactions, it clearly could be an opportunity for us. It could also be a really strong opportunity for, for instance, people may want to just pay for the energy they use ahead of time like a parking meter. There are new models now that blockchain could be leveraged to use. If someone is at a summer cottage, for instance, and they want two days' worth of electricity, and then they can leverage what that is, they can prepay using a blockchain transaction. There are multiple use cases. Those are two of them. Probably not the strongest, but two right there that we could say blockchain could be a big enabler for us.

As far as workforce, I don't know how you worded it, Michael; jobs lost or jobs gained. 

Michael Krigsman: Well, that's how he worded it as jobs lost. I guess the question is, what happens to these jobs as a result? Is there an impact on jobs as a result of automation, like with AI for example?

Andi Karaboutis: Look. As with every industry, automation generates new positions, new opportunities, new jobs. Other positions or opportunities may be lost. I'll use that word only as you've said it. Every industry, and as time goes on, has transformed, but more jobs have been created, potentially in different areas. There is absolutely nothing I can say here relative to "these jobs would be lost and these jobs would be gained."

I would just look around at the evolution of all the industries and what's happened. The automotive industry, when cars didn't exist, I guess there were more horse and cart on the road, et cetera. That created a whole plethora of jobs in and of itself as it became a new industry. I think I would just say change is inevitable, change happens, but out of change are born new opportunities and new positions. I don't know that there's lost jobs net/net.

Michael Krigsman: It sounds like at least a fair amount of your time is being invested right now in looking at these kinds of forward-leaning technologies.

Andi Karaboutis: Right. The driver for them is decarbonization, decentralization, and distributed energy resources. Those are very real drivers for us and the trends that are going forward that we need to address and answer. If you look at my former colleagues in the tech industry, Google, Tesla, et cetera, they're all right there really thinking through, and we want to be part of that. We believe we are and we continue to be at the forefront of really helping drive some of the innovation in this space.

Michael Krigsman: Is that why they brought you on with this role?

Andi Karaboutis: I think the reason it's a somewhat newly created role of chief information or a combined role in digital officer is really in recognition of the disruptive technologies, information systems, data, and all of that as a continuum. I think it's that sort of recognition of that. I think we've seen it around multiple organizations. Some companies have CTOs. Some companies have done what National Grid has done. It's that recognition that has pulled both aspects together.

Michael Krigsman: We have another question from Twitter, John Nosta, who is a former guest on CxOTalk and a bigtime thinker in healthcare innovation. John asks, "Can you make sense of what an electromagnetic pulse is and how we can protect our electrical infrastructure against this?" He's thinking of North Korea, for example, and all of the talk about that. Electromagnetic pulses, what is it and how can we protect ourselves against it? [Laughter]

Andi Karaboutis: I wouldn't dare to begin to do that on CxOTalk. I do have an idea of what an electromagnetic pulse is, detection, and all the rest of that, but I think that would be a little bit deep and might be a little bit beyond what I want to bring into this program, to be honest with you.

Michael Krigsman: Well, one of these days we're going to have to get an electrical engineer to talk about it.

Andi Karaboutis: [Laughter]

Michael Krigsman: I won't understand it at the time, but it will be interesting.

Andi Karaboutis: Yes. Suffice it to say, and I'll address this to John Nosta, we are very, very high and very, very focused on cybersecurity. And, as a critical national infrastructure, we're greatly concerned about that. I think it's a little bit of a tangent to John's question, but maybe where he was looking to go.

Michael Krigsman: Actually, a very, very interesting and important question. Would you share with us some thoughts, insight on this topic of security and these cybersecurity attacks that we have been hearing about?

Andi Karaboutis: Sure. I'd be happy to. Michael, obviously cybersecurity is something that is at the forefront of every chief information, chief digital, chief technology officer's mindset. By the way, it's at the forefront of every board member's concern, as well as executive committee's because keeping an enterprise secure, both physically and digitally, is critically important. Companies like us, water companies, electrical, gas, et cetera, the utility companies, communications, those are all critical national infrastructure, and we take it very, very seriously.

Michael Krigsman: How big a threat is it at this stage?

Andi Karaboutis: Michael, I hope you don't think this a non-answer, but we take it so seriously [that] we always consider it a threat, as do most companies. I'm sure if you've talked to Equifax, Anthem, Target, or any of those companies, answering the question of how big a threat is it, you just need to assume that it is a paramount threat. We all take mitigating actions and controls and have strategies around that. I would answer the same as I would answer for other companies, except obviously being part of a company with critical national infrastructure, we make sure that we take the necessary steps around such criticality.

Michael Krigsman: Yeah, and I guess you, like everybody else, is not going to detail the exact steps that you're taking. [Laughter]

Andi Karaboutis: Only if I want to maintain my position and be a little wise, correct. [Laughter]

Michael Krigsman: [Laughter] All right, well, from a digital transformation perspective, the industry is moving so dramatically, and so what are some of the considerations that you think of internally and externally? Also, there are the regulatory aspects as well, I'm sure.

Andi Karaboutis: There is. As a matter of fact, we're a highly regulated industry. We have our nonregulated business as well, obviously, through ventures, but we're a highly regulated industry, and different regulators in the U.K. versus U.S. Even in the U.S., it's different by what we call a jurisdiction or state. We're highly regulated. We are mindful of that, et cetera.

How are we approaching it? I mentioned it a little bit earlier, but I'll add a little more color to it. The way we're approaching our digital strategy is looking at the end-to-end value chain of the company, everything from the customer, the meters, et cetera, to the internal operations of the company down to the employee and how to make their workday less fractioned through more digital capability, et cetera. We even have an organization that's doing robotics around transactions on how to process and things like that.

What we're doing is being very mindful and very thoughtful around the technologies and the areas of the value chain that we should go after, not necessarily in serial, somewhere in parallel, but go after for a big benefit for the company. Again, benefits being around safety, reliability, efficiency, and new customer engagements, and customer satisfaction. We're driving all of that. Like I said before, we do have a number of initiatives rolling, and we're going to constantly bounce it back on that digital strategy that we're in the process of developing.

Michael Krigsman: The digital, where are you? I know it's early days. Where are you in this digital strategy, and what's the trajectory? Where do you see this strategy going? I know that a digital strategy is kind of an endless goal. There's no ultimate endpoint, but what's the trajectory that you see for this?

Andi Karaboutis: I like what you said, Michael. I'm glad you said that. It doesn't end. There is no end goal. There are a number of choices and tradeoffs that we make around digital opportunities and the overarching strategy that we have our sights set on.

Again, sorry I'm repeating myself, but we're continuing to look at these digital strategies in terms of what we can do for the efficiency, the reliability of our infrastructure, and employee efficiency, safety, et cetera. I had mentioned the bots. I mentioned some things that we've done with Block Island in Rhode Island, our U.K. metering business and some things we're doing there. We're doing a bit of work trying to understand what are the different customer engagement models. We have mobile apps in place that our customers can use to download not their bills, et cetera, but consumption, and see where they are compared to their neighbors on consumption and things like that. Some of those things have been in the works and have been in place for some time. They're all part of the digital strategy.

We're now looking through our ventures group and our business development what those next steps are. Clearly, there are some things I can't talk about, but I'm really excited about some of the things that we're doing and what we are thinking about in terms of those venture opportunities.

Michael Krigsman: It sounds like very clearly a part of this is a broader innovation strategy.

Andi Karaboutis: It really is. It really is. I'll tell you it's a mindset in the company as well. I think, as many of your guests have talked about, when you're talking about digital disruption, intermediation, transformation, et cetera, but really leveraging digital technologies and capabilities, and new technologies, we're reaching out and looking at what other companies in our industry are doing. We're also looking at other industries.

Before I joined, our CEO John Pettigrew and Matt Pearce on the leadership team had gone to the West Coast. That's a continual process where we're taking a look and seeing, what are some of the tech companies doing, how are they leveraging things, and what are some of the offerings that are out there as well? It's that mindset and quest for innovation for a startup.

I have a team actually called National Grid Labs. There's one in the U.K. and one in the U.S. that's part of the information services organization that I've got. They are doing some futuristic things: "Imagine a world where--" The way they do that is they think of problems, whether it's friction in the field force, or whether it's something that we think customers would really want. They listen ear to the ground.

Both of those labs, both of those teams have really done some interesting things. They are looking at tying Apple Watches into the field force, if the field force requires some alerts to happen, et cetera, to make it very, very easy. We also have a big initiative called Gas Business Enablement that is looking at the field force and how they operate and what's happening out in the field all the way back to, what would help a person out in the field who has to go do a repair? Well, geospatial maps showing that a pipe in the ground that may need to get tapped into for repair, what else is around it? Are there water lines nearby, et cetera? All of these things are already in the works in a number of the initiatives that we're doing.

Our regulators are really working with us to understand what could help customers and what could help with safety and reliability of the critical national infrastructure utility. We're working together to identify all of those and really try to drive the proper investments to bring those to bear.

Michael Krigsman: It sounds like you're looking across your entire value chain instead of processes in a very systematic way. That's how it comes across.

Andi Karaboutis: It is, but we're not necessarily saying what's next in the value chain and what we do there. We look and say, "What's the biggest value for our customers, for the safety of employees, for the reliability of the utility," et cetera because, at the end of the day, if you think about what our mission is, which is to bring energy to life, that uninterrupted energy source, that uninterrupted energy that people rely on, whether it's the patient that needs the heart monitor going or the children that need warmth--not to get too emotional on you, Michael--it's so important that we are looking at that and then saying, "Under the overarching umbrella of the decarbonization or the sort of interrupts that we have around decarbonization and decentralization, how do we continue to do that better and better and better?"

Michael Krigsman: You've broken it down into these various components that you've described. When you rethink, when you're looking at innovation, looking at what's coming next, and where you can make changes, it's all hinged on these several areas.

Andi Karaboutis: It is. We're a very proud company and I'm very proud to be part of this company. We always go back to, we bring energy to life. We want to do things in a better way, and we want to constantly challenge ourselves to make sure that we're working with our regulators, that we're listening to our customers, and customers being both on the source side as well as on the distribution, the end customer that utilizes the energy here in the U.S. We're constantly challenging ourselves for the better way, the newer way, and improved ways of doing business.

Michael Krigsman: Now, you've mentioned the regulators several times. Where does regulation come into play as you're thinking about these new technologies, IoT, blockchain, and so forth?

Andi Karaboutis: The majority of what we do, I'll talk a little bit about the U.S. business, the way the processes work. When we want to do something new, for example in information systems and digital, we go to the regulators. Because we're a natural monopoly, the regulators will ask and want to see the benefit to our customers or for safety, et cetera, all the items I talked about before, and will approve us doing that. At the end of the day, the way we are funded is part of the electric or the gas bill in the U.S. is made up of these things that we are doing. That's how we actually earn the money to do that is they have to be approved, and there has to be a good benefit towards them so we can add, for instance, to the bill in order to fund them.

Most people don't realize, but I think, National Grid, we're out and down in the single digits percentage of an overall gas or electric bill for our transmission and distribution services. Even at that, it's really important that everything we do is meaningful to our customers, whether it's cyber initiatives, digital initiatives, enablement initiatives, et cetera. We work very closely with our regulators for that.

Michael Krigsman: When you want to conduct some type of innovation, are they partners with you at every step of the way? Where do they come into play?

Andi Karaboutis: It's at various stages. We're a publicly owned utility, an investor-owned utility. If there is a pilot that we'd like to do, I mean I don't want to get into the underpinnings of the utility, but there are also shareholder investments. The executive team here is very scrutinous on the things that we're going to go forward and do. Then, through our regulators, the regulators will determine if there is benefit for our customers. We can then actually make it as part of the charge to our end customers or they will fund it. I'm speaking mostly in the U.S. on this with jurisdictions. We may try to do some pilots and things that they may fund or may come from shareholder funding as well.

Michael Krigsman: As we go towards the close of the show--this has been a very, very fast time--what are some of the advice that you have to organizations that are either very well-established organizations or in established industries that are undertaking these kinds of programs of change such as you're involved with?

Andi Karaboutis: My advice would be, first off, look at the value chain of your companies. Look at other companies that have used digital technologies and how they've used them for better efficiency, reliability, safety, profitability, whatever the end goal has been, and really try and see how to apply digital technologies to help improve and/or disintermediate your own businesses before someone else does - type of thing. Skills in science and technology, engineering, [and] math--which, Michael, you and I have touched on in prior shows--is critically important to be able to really leverage some of these digital technologies. Look at other industries, look at your value chain, and see what you can do.

Then there's this exercise that I absolutely love that’s the Futuring, "imagine a world where," or, "imagine a day where," where you sort of really walk away from all the paradigms of, well, utilities are regulated; well, the medical industry is regulated; well, we can't do this because. Lose all of that and see what you can come up with when you say, "Imagine a world where I can turn on and off my electricity usage on a daily basis versus at a more infrequent time and be able to really consume only what I need because I want to be greener," et cetera. How does technology enable you to do things like that, but even more futuristic than that?

Michael Krigsman: What about the nontechnology aspects, the workforce aspects, the talent management, hiring, the composition of the workforce, things like that, the skills and capabilities? What advice do you have? All of these comes into play. If a company is undertaking a program of digital transformation, they're thinking about all these things. They have to.

Andi Karaboutis: Yeah, it's a great question, Michael. I think the important thing there is a balance, a balance of knowledge of the industry. We have a wealth of knowledge, people that have been here for many years who really understand our business with a new idea, new thinking from other industries, bringing people in from the outside, and balancing that to really come up with optimal sort of spark, I call it, or solutions to go after. I'm a very strong proponent of the sciences: technology, engineering, mathematics, et cetera. I think taking that, along with some of the other disciplines and capabilities in the company and putting it together to again imagine a world where, and really to drive what is the value chain improvements and value chain changes that we can make.

I think it's that highly skilled, highly thoughtful, highly innovative and willing to really take a risk. We didn't talk about risks much, but risk-taking, fail fast, is really important in any industry. Obviously, we're not going to take risks in an area that would harm or ever impact our critical infrastructure but, for instance, the labs that I mentioned that we've got, our National Grid Labs, we take a lot of risks there, fail fast programs. All of those things that we've talked about before that are critically important to startups and innovation are very important in industries that are tried and true like ours.

Michael Krigsman: It sounds like your labs are not just technology labs, but also process experimentation labs, like you were describing the risk-taking, failing fast, and iterative kind of approaches.

Andi Karaboutis: Absolutely. If you think about agile, dev ops, all of that, we've got that in place, and we're continuing to strengthen it and make it even more mainstream. Processes are important in all of it. We start with an outward in look. What's the problem? What's the challenge? What's the friction? What's the opportunity we're trying to go after?

Sometimes we find a technology that's interesting, and we say, "Wow! That's interesting. Where could we use that?" It's sort of sparking on all of those things that's really important for us.

Michael Krigsman: In our final minute, any last-minute thoughts that you want to share about any of this?

Andi Karaboutis: A last minute thought I would share is to encourage people to not look at industries as those are sort of traditional, non-risk-taking industries. It was interesting. Before I joined National Grid, I had a couple of people tell me that. I would say it's anything but true. And so, people should, just like we say have an open mind around innovation, digital, technology, breakthrough, and new thinking, really look at all industries and say, "There are huge opportunities in all of them," and come in with an open mind. I say that to the talent that I'm trying to bring in to National Grid in digital and information technology.

Michael Krigsman: I guess that's where the opportunity lies because you have a field that's ripe for change and that knows it needs to change.

Andi Karaboutis: Exactly. Exactly. It's exciting. It really is exciting, Michael.

Michael Krigsman: Okay. Well, this has been a very fast 45 minutes. We've been speaking with Andi Karaboutis, who is the chief information and digital officer at National Grid, which is one of the largest energy transmission companies in the world. Thank you for coming on CxOTalk. This is your third appearance.

Thank you for watching, and we will see you again soon. Have a great day.