How to Win in Smart Energy: Study Maslow’s Hierarchy

Posted on August 25, 2011


With the Smart Grid/Energy market expected to exceed $100 billion in sales by 2015, the stakes are huge for those who take a market leadership position. And it’s likely that smartphone companies want to have a big piece of the pie.  Apple leads the smartphone market with its flagship iPhone. Google enables the leading platform for smartphone mass production. Samsung has the broadest portfolio of consumer electronics and appliances for the home. So which company will win the battle over Smart (Home) Energy Management?

The potential winner in the Smart Energy market will require expertise in understanding consumer motivation. Many are familiar with Abraham Maslow’s Hierarchy of Needs that he published in his 1943 paper titled A Theory of Human Motivation. The five needs can be applied to the Smart Energy industry ecosystem. So I have created a pyramid called Valdez’ Hierarchy of Needs in Smart Energy. The winner will be the one who can best meet the higher needs. The needs are listed below in ascending order from the lowest need (#1) to the highest need (#5) and are illustrated in the pyramid diagram:

1.       Physiological Needs: What you need to survive = Power/Energy Providers (PG&E, Con Edison, etc.). Utility companies are piloting their approach to the Smart Energy market by installing smart grid meters at homes across the country and enhancing their web-based energy monitoring software.

2.       Safety Needs:  What you need to feel safe/secure = Network Providers (AT&T, Verizon et al.) and Internet Service Providers (Time Warner, Comcast, etc.). The networks need electricity to function and consumers need the wireless network and the internet to communicate. Last week, AT&T announced a partnership with Digi to provide home energy monitoring solutions that would work with thermostats, appliances and load control devices. Verizon is likely to launch their home energy devices and solutions before the end of September. Comcast and Time Warner are also developing partnerships to enter the fray.

3.       Social Needs: Belonging to family, friends, community = Wireless Products (Smartphones, tablets, etc.). Wireless gadgets allow consumers to stay connected to their social circles of family, friends and social media communities (e.g., Facebook). Without the other two needs met (electricity and the network), an iPhone would be a basic iPod because the wireless network and the internet would be disabled).

4.       Esteem Needs: Confidence, Respect by Others = Brand Image (Apple, Samsung, etc.). Interbrand’s 2010 Global Brand Ranking showed Apple at #17 and Samsung at #19. Apple had moved higher by 3 slots and Samsung stayed the same. Either way, there is a reason consumers choose the brand leaders: each brand conveys an image (confidence, chic, cool, etc.) to the outside world.

5.       Self-Actualization: Achieving your potential, creativity, spontaneity = User Experience (e.g., iOS/Android + Apps).  Apple’s iPhone 4 and iPhone 3GS are the #1 and #2 selling smartphones in the US today (source: NPD).  Although the touch pad was invented in 1988, Apple created the touch revolution with the iPhone launch in 2007 – a new and welcomed user experience. In March 2011, JD Power confirmed that Apple’s iPhone rated the highest in customer satisfaction. Why? User experience. In addition, through applications, users can experience their unique creativity/spontaneity and fulfill more of their potential. The #1 Apps Store on the planet is from Apple.

There have been some noteworthy attempts in the Smart Energy market, yet three memorable launches tried and failed:

  • Google PowerMeter launched in 2009 and will officially be terminated on Sept. 16, 2011.
  • Microsoft Hohm was announced in June, 2009 and will be terminated on May 31, 2012.
  • Cisco announced their Home Energy Controller in 2010 and discontinued it this month.

Companies will fail in this field if consumers’ Hierarchy of Needs in Smart Energy are not fulfilled. Today’s Smart Energy services/solutions are no higher than #2 (Safety/Security Needs) because there are devices that provide the capability, yet there are no Smart Energy applications that provide the connection to family, friends or the community. What would some of the best Smart Energy application features be? Stay tuned for the next Blog article.

What Smart Energy Features would you like to see? Your comments are welcome.

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© 2011 by Ed Valdez. All rights reserved.
Posted in: Eco Leader