What’s the role of innovation for an energy company like Shell?
The world and its energy needs are changing. We know that the only way Shell will thrive for another 100 years is through continuous innovation and human ingenuity.
That doesn’t mean giving up what we do today. It means adapting so that we can give customers what they need.
Take a simple question: what will a refuelling station look like in 100 years?
Shell has around 43,000 branded refuelling stations worldwide. What if every car were electric, or shared, in the future? That would have huge implications for our company.
We can’t sit around and wait for the answer. We have to keep innovating in every area of our business.
We could adapt those refuelling stations and create new opportunities.
That’s why, for example, we have just opened the UK’s first branded hydrogen fuel filling station, after successful trials in Germany. We are also under consideration for the installation of seven hydrogen refuelling stations in the US state of California.
We have seen a flurry of digital disrupters such as Airbnb for hoteliers, Uber for taxi drivers or Stripe for online payments. Is there an equivalent in the energy industry?
Those companies have one great benefit: they don’t have to move a physical commodity. They are simply bridging supply and demand.
Much of the energy system is still hydrocarbon and electron-based.
These are commodities that have to be moved around, requiring large investments in physical infrastructure. So it’s difficult to see today how that model would be disrupted digitally in the same way.
That said, at Shell we can identify future possibilities based on trends.
For example, imagine what would happen if cities like London or Kuala Lumpur decided that delivery companies needed to connect to a wider network in order to have a license.
You could have Uber drivers picking up packages or lorries picking up passengers – provided they met safety standards.
It would be a fundamental urban disruption and is ultimately based on the same concept: matching demand and supply.
More widely, what is the role for digital technology?
Digital technology is changing how Shell operates, from maintenance and repair of our deep-water facilities to finding new energy sources.
We have invested, for example, in a US firm called Veros Systems.
Their technology predicts potential mechanical failures of engines powering pumps and turbines weeks before they might happen. That drives significant cost savings.
At the end of 2016, we also invested in a Finnish company called Rocsole which specialises in producing three-dimensional scans of pipelines.
We have just invested in a German same-day delivery company called tirimazoo. This digital service connects retailers with customers in order to coordinate delivery of products on the same day to over 150 cities across Germany, Austria, Sweden and the Netherlands.
It will help us explore new digital business models to improve the transport of goods and services.
What do you look for when investing in companies?
Shell Ventures is Shell’s venture capital arm and we look for ideas in three areas: oil and gas technologies, renewables and information technology. For me, an idea has to meet five core criteria.
The first is linked to the market. Are entrepreneurs targeting a market that is growing rapidly with little competition? If so, that’s generally attractive.
The second is technology. Does the start-up have intellectual property and knowledge that could not be replicated easily elsewhere?
The third is staffing. Who is the team behind this idea? Do they have the right blend of people to work around the clock for the next three years?
The fourth is the start-up’s financial metrics. How much capital does this start-up need to get to the first set of milestones that new investors will take seriously?
Those milestones are not buying the first office football table or throwing a launch party. It’s signing the first customer or the first partnership agreement.
The fifth is what I call the “special sauce”. We have to be clear why this team, in this market, with this technology and this amount of capital could be successful.
That is down to an investor’s gut sense.