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Time:March 23-25, 2019
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2018丨【Shell】LESSONS FOR THE ENERGY INDUSTRY FROM DISRUPTIVE CHANGE IN OTHER SECTORS

The prevailing structural shifts that are facing the energy industry are not unique – other sectors have experienced and responded to similar shifts in the past. For example, the postal sector has faced structurally lower demand as letter volumes have steadily declined since the early 2000s – which has historically been a major source of value – and has had a severe impact on the financial performance of postal companies. More recently, power generation utilities have faced disruptive technologies, in the form of ever-cheaper renewable generation backed by favourable public policy, which has affected the profitability and longevity of their traditional thermal power generation assets.


The trends of lower prices (because of lower demand) and increasing technological disruptions have caused fundamental, structural shifts in both these sectors. Firms have employed a range of business strategies to respond to these trends, and have subsequently often had to adjust their organisational structure to facilitate the new strategies. This paper analyses the response of three firms in the postal industry and three firms in the power utility industry, at specific points in time, to better understand the factors influencing the adoption of different strategies when responding to similar sector-wide trends (see Figure 1). 



These case studies provide lessons for the energy industry, facing similar structural shifts.  Studying other sectors that have experienced similar price and technology trends can help inform the future strategy and organisational decisions of energy companies. It provides an understanding of the potential consequences of different types of responses and the factors that motivate these responses, particularly when there is no clear dominant strategy for adapting to these structural shifts.