Lessons from Corporate Innovators

Open Innovation Challenges with Josh Gould, Head of Duquesne Light Innovation Center

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Josh Gould is the Director of Innovation at the Duquesne Light Company. He & his team have kicked off a $750k open innovation challenge around monitoring underground electrical cables. He talks a little bit more about this on the episode. The submissions are due March 15th so we wanted to get this out there, make you aware of it in case it fits any of your startups. I also think for anybody listening to this, it’s really a great perspective around how to do outside in kind of external innovation.

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Sean Ammirati (00:08):
Welcome to Agile Giants-Lessons from Corporate Innovators. I’m Sean Ammirati, your host co-founder and director of the Carnegie Mellon Corporate Startup Lab and partner at the early stage venture capital fund Birchmere Ventures. Each week, I’m going to talk to guests who are experts at creating startups inside large corporations. I believe fundamentally a startup within a company is the same as one inside the proverbial garage, a group of entrepreneurs, trying to make the world a better place using new ideas and inventions. However, I also believe some of the techniques and processes are just inherently different. This podcast is going to explore those similarities and differences.
Sean Ammirati (00:56):
Welcome to infrastructure week at Agile Giants. No I’m just kidding, but I do have a special guest today. Josh Gould is the Director of Innovation at the Duquesne Light Company, and I’m interrupting our normal broadcast break here to just come in and talk for a moment with Josh about a three quarter of a million dollar open innovation challenge that Josh and his team have launched around monitoring underground electrical cables. He talks a little bit more about this on the episode. The submissions are due March 15th so we wanted to get this out there, make you aware of it in case it fits any of your startups. I also think for anybody listening to this, it’s really a great perspective around how to do outside in kind of external innovation. I will say I mentioned this later into the episode, but just so you know, this right up front, Josh does work with a firm that I helped start with two of my former students called Extovate that does external innovation mapping.
Sean Ammirati (01:58):
Josh and I do have this customer relationship as well. He talks a little about that in the episode later as well. But I’d really encourage you to listen to this episode and think about how maybe it can help you think about external innovation. I would also say for those entrepreneurs again, if this is something that you can solve, it’s amazing opportunity to get a reference customer and some capital. Finally, at the very end of the episode, Josh also mentions a second innovation challenge around redesigning the Christmas Tree in Pittsburgh. I think that’ll be mostly relevant for Pittsburgh folks, but the reason I left it into the episode is because I think it does show the perspective this team has on really partnering with outsiders to solve problems. So if you stick around to the very end of the episode, you can learn a little bit more about that.
Sean Ammirati (02:57):
All right, we’re back with another kind of interrupting or regularly scheduled break here. Special episode. I have Josh Gould with me. Josh is the Director of Innovation at Duquesne light and he’s got a special open innovation challenge that we’re going to get to in a few minutes, that’s timely. And so we wanted to take a moment and have Josh join us talking about that. But before we do, Josh if you wouldn’t mind, I think for folks who may not be in the Pittsburgh region, they may not be familiar with Duquesne light. So maybe a way to start is just talk a little bit about Duquesne Light and then we’ll talk about your role leading innovation there.
Josh Gould (03:34):
Great. Yeah. So Duquesne Light is a electric utility headquartered right here in beautiful Pittsburgh PA. We have the privilege of serving the million or two folks who live in the broader region, electric utility. We also have two other smaller businesses under our corporate umbrella and energy services business and a telecommunications business. By normal corporate standards, I think we are decent size. By utility standards, we are generously referred to as a medium sized.
Sean Ammirati (04:06):
Yeah, I think some of that depends is the region. People think of Pittsburgh, because it has an NFL team as probably being a bigger city than it is. It’s kind of a mid-market utility because it’s kind of a mid-market region. You’ve been in the energy clean tech space for… Maybe just your background that led you to Duquesne light and then we’ll we’ll can dive into a little bit what you’re doing there.
Josh Gould (04:28):
Yeah. Well someone once told me corporate innovation folks, they are heavily represented by failed entrepreneurs. I’m part of that group. I did a couple startups myself. One of them went okay. Another one, not so much. I did a short stint with [Clayton Christensen’s 00:04:49] venture firm, which was a whole lot of fun. Then I was employee number three, commercialization employee number three at a place called arpa.e. That is the sister agency of DARPA, with the people who actually didn’t invent the internet. This is the moonshot agency for energy. So there, in the really early days as we were standing that up and trying to get energy related products to market, left there after a couple years started an innovation group at Con Edison, which is the utility in New York city. Then came here about two years ago to start Duquesne Lights Innovation Center. So just a blend of entrepreneurship and energy and innovation stuff.
Sean Ammirati (05:27):
Yeah. So talk a little bit about kind of the broad portfolio of the innovation center at Duquesne. Then we can get specifically to this timely announcement that you have that I think a lot of our entrepreneurs who are listening will be interested in.
Josh Gould (05:40):
Yeah, absolutely. I would bucket what we do into two very broad categories. There’s what we call the brilliant basics. So what you think today of your utility delivering, reliable, affordable, safe power to you and doing that more effectively, more efficiently, safer, more sustainably. That’s a kind of bucket of innovation around doing what we’ve always done better, faster, cheaper. The other bucket is growth, innovation, new products and services to keep up with changing customer demand. That’s the two broad buckets of what we do. We’ve got a portfolio of opportunities that are sort of diversified against those two broad objectives, but that’s the short summary there.
Sean Ammirati (06:20):
Maybe just so… I don’t want you to go through the whole portfolio, but maybe just to give a four instance of each. Could you give one or two examples of each just to make that a little more real for people?
Josh Gould (06:30):
Yeah, absolutely. One of the things we do pretty regularly is you’d imagine an electric utility would do is to inspect our infrastructure to make sure nothing is going to harm your reliability. We’ve done that for hundreds of years with traditional human inspections. We’re looking to augment that with drones, AI, et cetera. Drones have been used in the transmission network for quite some time. So think your electron super highway, the big, big, really big poles and wires you see near the highway, we are applying it. I wouldn’t call it bleeding edge, but leading edge to the distribution networks of the poles and wires you see around you in the neighborhood to basically augment what humans see, throw some AI in there, throw some machine learning in there. That’s an example of a brilliant basics. What we’re doing is what we always do and to make sure your power is reliable. We’re just doing that in a different way. Adding some drones and AI and ML on top to, to make sure we’re augmenting the sort of traditional capabilities of the utility. That’s a brilliant basics example.
Sean Ammirati (07:35):
Okay. And then what about the other side?
Josh Gould (07:37):
Yeah. Growth and new product and services. We piloted a number of smart city devices. We, in municipalities outside of Pittsburgh, we own and operate the streetlight network and there’s a lot of thing. There’s a lot of smart city devices, smart parking meter, et cetera that we can add on to those existing services. So those are partnerships we’ve looked at and pilots we’ve done in that space. Think your security camera, your shot spotter, your parking meter, that sort of thing. That’s just an example of kind of what we mean by new products and services.
Sean Ammirati (08:11):
Perfect. And this probably starts to lead to some of the open innovation stuff as well. But just philosophically when you look across your group and you think about that role and it’s okay if it’s different and be interesting if it was different in the two different categories you’re talking about. But how much of it would you describe broadly as outside in innovation where you guys are driving it, partnering with somebody, bringing them in to do it versus inside out where maybe it’s your team or other people from Duquesne that are working on this.
Josh Gould (08:42):
Yeah. Philosophically, it’s actually a great question. Philosophically, what we try to do really rigorously in every circumstance is make sure that that inside out problem definition is really thoughtful and rigorous. We’re not a big enough utility to… We don’t have an R and D lab, you’re looking the innovation center isn’t huge. Again by utility standards, we’re not that large. We’re going to have to leverage and essentially every circumstance, the wisdom of the crowd, the knowledge of the crowd and bring things from the outside in. I think sometimes what gets missed with that is it’s not a sort of random grab bag like, Hey, just give us your good ideas. There’s a lot of work and thought in bounding that and targeting it the right way and being really thoughtful and strategic on what is the problem we’re trying to solve? How do we enable someone to learn enough about what we’re doing to solve that problem in a new and unique way? So again, problem definition inside out, but solutions outside in.
Sean Ammirati (09:42):
Outside in. That’s awesome. That’s great. Yeah. Cool. And so I thought it would be interesting to talk a little bit about this challenge that you have right now, this open innovation challenge. So maybe talk a little bit about the challenge itself to start with. And then I’d love to understand some of the mechanics around it, how you’re thinking about, what led to it as well? But I think, the basic emphasis is how can you inspect these underground electrical cables, right? What are you looking for, what led you to choose that? Maybe talk a little bit about the challenge and how it came to be all of that would be great.
Josh Gould (10:19):
Yeah, absolutely happy to do that. I think what a lot of the average customer out there doesn’t understand is the last mile of power delivery is often underground. So there’s wires oftentimes under your feet, which is what we all rely on for safe and reliable electric service. We know less about those cables than we would like to, but that has some potential safety implications, that has some reliability implications. And so typically how we’ll monitor those cable is pretty manual. This is not something that’s unique to Duquesne Light. We’ll have a human enter a manhole, he or she will have some basic equipment, some cameras and things like that, to detect whether there’s a failure in the cable as they enter the manhole.
Josh Gould (11:10):
As you can imagine, there’s got to be a better way to do that. We’d like to have a lot more intelligence such that every time you put a person in that manhole, you put them at some type of risk. Every time you’re opening the manhole to some degree, there’s a public risk associated with that. We typically kind of wall off where we’re actually doing work. But as you can imagine, again, that’s not unique to us. It feels like a pretty 20th century way to do things to enter in a manhole and inspect it manually. And so what we’re looking for is what tools and technologies will enable us to better monitor and ultimately better predict the failure of our cable. It can last over a hundred years. It can fail in a year or two. So age is a imperfect proxy for whether it’s going to fail or not. That’s what we’re looking more, with intentionally broad, new tools, new technologies to better monitor our underground electric cable and ultimately better help us predict what might fail and what to replace.
Sean Ammirati (12:14):
Yeah. I guess not to bury the lead here, what’s the prize and how are you thinking about picking these? What’s the process to be part of this?
Josh Gould (12:22):
Yeah. It’s an open innovation challenge. I’m guessing most of your listeners are familiar with that, but that the way that process works is you describe a problem and you open up literally to the world. So it’s on an online platform, we’re using a challenge provider by the name of HeroX. We described essentially what I just described to you as the nature of that challenge. It’s a three tiered challenge. So first is give us your ideas, show that it doesn’t violate the laws of thermodynamics or something crazy. And then we down select five winners from that. Second stage is prototype it. It can be in a lab and we’re looking for real data. And last but not least, is actually piloting the technology on a live electric network. The entire value of the challenge is $750,000, and that’s a meaningful amount of money. We’re also paying people for development. Once it gets past stage one, where you give us your good ideas, we’re going to fund your development. We’re going to fund your testing. We’re going to fund your pilot to deploy that technology. That’s kind of what it looks like.
Sean Ammirati (13:28):
Yeah. So just again, to not bury the lead here. If this is something that you have already experience in as an entrepreneur, there’s an opportunity to get a customer relationship with Duquesne through that, get three quarters of a million dollars and get some of the actual engineering work funded. So it’s pretty compelling from the startups perspective. What kind of led you to do this from your perspective with where you are, how’d you pick this problem? How’d you get to this point?
Josh Gould (14:01):
Yeah, absolutely. What I think people outside our industry don’t appreciate is that we work in an industry where it’s candidly all too common. That your average frontline worker, at serious risk for serious injury and really adverse events. And typically when those types of things happen, the public can be at risk as well. It is a very safety and rightly so, it is a very safety conscious culture here at a utility and at detain specifically. The motivation for this was, we asked how might we avoid any sort of incident happening by ultimately removing the human from the manhole? There’s going to be a lot of steps in that process. That’s a big, that’s actually a big ambition.
Josh Gould (14:58):
The first step of that process is you got to have better knowledge on what exists in that manhole before you go down. That’s a good first step to avoiding any harm or injury. That’s sort of how we came up and we asked that big question, how might we avoid any serious harm injury in the future by taking a person in manhole? This is kind of how we got to a good first step, because again we are not the largest utility in the world. We’re humble, humble Pittsburghers. So we know we’re not necessarily the biggest brand name and that’s totally fine. That’s all the more reason we’re going to have to leverage the crowd and leverage the collective wisdom of the public out there. That was really the motive, putting those two things together and safety, conscious culture and understanding who we are and our need to leverage the collective wisdom. That’s how we got here.
Sean Ammirati (15:48):
And you may not be comfortable sharing this, which is fine, but I’m just curious, how’d you land on the dollar price amount too?
Josh Gould (15:55):
Yeah. It was more art than science. We spent a lot of time doing both primary and secondary research because one of the things we wanted to make sure… if someone had a ready made solution out there, by the way, please give it to us. Please please apply to the challenge. We’d love to see it. We did a lot of leg work, did not encounter one. And so then the question we started asking ourselves is, what would we pay for? What would that mean to us? That’s kind of how we arrived there. It wasn’t exact science, it wasn’t sort of really rigorous arithmetic. But it we did get to value and we did think about what would that opportunity be worth to us. That’s sort how we arrived there.
Sean Ammirati (16:41):
Yeah. So it sounds kind of data informed at least, right? So you have sort of rough data, maybe not be a completely data driven thing, but data informed. I guess that did prompt me to actually say for full disclosure, I am an owner in a company that helps Josh with some of their external innovation searches as well. Not on the open innovation side, but company called Extovate that people who’ve listened to this may have heard me talk about before but-
Josh Gould (17:05):
Shout out. They do great work.
Sean Ammirati (17:09):
I’d love to actually hear though for a minute. Just generally this one, this open innovation challenge with HeroX is one approach to this. You guys are pretty aggressive in general at scanning that kind of stuff, obviously. But how do you think about the suite of tools that help you do this and sort of where the right places are to engage in different things?
Josh Gould (17:33):
Yeah. This must be the unfortunate side effect of being an Economics undergrad. The way I’d answer that, we think rigorously about incentives. So how a lot of people, how I’ve seen other folks look at this space is they’ll often go to incubator or accelerator. And they’ll say, Hey look, I’m looking at this piece of the industry. I’m looking at whatever solar or whatever it is. Then you go to the incubator accelerator, say, you’re looking at a ton of companies. What do you see? What is the best kind of companies you see? Well, what are you going to get? If they’re investing in that space, they’re going to tell you that whatever three portfolio companies are the best portfolio companies you’ve seen.
Josh Gould (18:17):
So that’s one solution is somebody who has invested interest in telling you what the answer is. Another solutions go full scale, like big name consulting firm to do a big scouting thing. What we’ve thought about is we want someone with the right incentives and we want someone matched to our size and budget and capabilities. We’re looking for someone who essentially is paid and is compensated to provide value to us and only us.
Josh Gould (18:45):
That’s not taking bets, financial bets, doesn’t have skin in the game on the companies that they’re recommending. There’s a couple, particularly in our industry, there’s generalist firms like Extovate who we’re looking at that. And there’s a couple more focused ones in our industry. But going back to the beginning, that’s how we think of it. I think it’s really important to start from incentives. Who is going to be incented to give you a intellectually honest answer when they know that you are asking about scouting for a given space because you want to buy something, you want to procure something. So it’s just really important up front to think about again. What are the incentives there and how can I match my needs to the appropriate incentives? That’s kind of how we think about it.
Sean Ammirati (19:29):
Yeah. I mean again, that was actually not intended for you to do it a commercial for Extovate, although that was very gracious of you to include it. What I would say like generally is that’s actually for what it’s worth. Why Neil and I, and Delal did this because I think we wanted pure recommendations driven by the client in a couple weeks. Because one of the things I kept experiencing, these companies would come visit Carnegie Mellon and they’d have hired some consulting firm, paid them a ton of money to do a beautiful PowerPoint to get a list of 20 names but as part of a hundred slide deck. What I realized is, the mental model at that company then was, oh, if I want to find a partner to help me with this, I need to spend six figures and three months of work.
Sean Ammirati (20:15):
I feel like there’s just a bunch of matches that aren’t happening. Actually what I love about what you’re doing with this open innovation challenge as well. There’s like you can systematically go out and approach it. Then in areas where you’re okay, this is incredibly strategic to us through this HeroX platform. Almost like shoot a flare up. Let’s let the world know this is really important to Duquesne Light and let’s see what comes back to us. So just because we have a bunch of different audiences here, I think for the corporate innovation folks that listen, which is a large percentage of the audience, this has been incredibly helpful. I don’t want to stop the recording before I ask a couple questions from the entrepreneurs side. Because we do have entrepreneurs who listen to this. And I think some of this, they’re probably more interested in coming back to this three quarters of a million dollar conversation than the strategy behind it. Let’s start with just some basics. When do they need to kind of get their first phase of the application in by?
Josh Gould (21:23):
First submissions are due March-
Sean Ammirati (21:23):
March 15th. I’ve got it up here in front of me. The judging, it looks like it starts at March 16th but March 15th at 2:00 PM Pacific. So you’re talking about 5:00 PM Eastern basically on March 15th. They got to get their data in or they got to get their first submission into you by then. We’ll include a link in the show notes to this challenge as well. So people can just click right through and see those details. But just give them a sense on the general timeline from there as well. I’d say dates beyond that are less important. The point is if you’re an entrepreneur listening to this and you’re like, I think I can help Josh and Duquesne with this problem, you’re on the clock, March 15th is around the corner. Get going on that. But just give a sense on the general timeline line beyond that.
Josh Gould (22:09):
Yeah, sure. So March 15th, initial submissions. Prototyping will happen in the middle of this year and then actual deployment will happen in 23. At a high level, that’s where if your software listeners are probably like, oh my gosh, that is the most turtle timeline. We have tortoise timeline. One of the important things to remember about our industry is our customers expect as many nines of reliability, 99.9 nine nine percent. The whole move fast and break things, very customer friendly way to go. When you’re talking about your power, that’s why this takes a little bit longer. There can be some hardware components, but again, initial applications through March 15th, paid for development the rest of this year and then deployment in 23.
Sean Ammirati (23:01):
Perfect. And just coming back to that, if you’re in Pittsburgh today, you’re really glad that Duquesne light, doesn’t move fast and break things. Because the electrical grid feels critical path right now to keeping everybody’s pipes, not frozen and harms home swarm. We totally understand, totally understand that element of it. What I wanted to end with is just more of a general question for maybe the last audience who listens to this, which is I have a lot of MBA students obviously and other graduate students that interact with at Carnegie Mellon who love to listen to these as they’re trying to figure out what to do in their career. I found everybody finds these interesting, but this question kind of targets that audience. I would love to know Josh, if you wound the clock back in, think about yourself coming out of school and thinking about trying to have a career like yours. Maybe one or two pieces of advice you’d give them as we wrap up the interview.
Josh Gould (23:59):
Relationships are everything. That’s the first thing I would say. I could give you an answer or you do A, and you do B and you do C and I made a joke at the beginning of the podcast about being a failed entrepreneur. There is no single, necessary path to a corporate innovation job. What I would see in common across anyone with a successful career, but especially in this space is that relationships are just everything. The impression you make on people at every stage in your career really matters. Even just as a human being, the nature and depth of those relationships matter.
Josh Gould (24:38):
So I would tell you to cultivate people who are seem to be part of your tribe, who’s opinions and ways of working you respect. Continue to stay in touch with them and cultivate those relationships and think about how you can add value to those people. Then what you’ll find will typically happen is those relationships will have a huge ROI and pay off. It’ll happen in ways you never really expected. It’ll happen sort of when you’re least expecting it or someone who knows that person. So cultivate those relationships with integrity, with kindness. That a very high level kind of generic advice. I can give more specific but that’s what I’ve seen.
Sean Ammirati (25:23):
That’s great. That’s the kind of thing where that I like to end these on. That’s awesome. Again, there’ll be a link to the innovation challenge in the show notes here. Josh really appreciate you coming on to chat a little bit about this. I hope for our corporate entrepreneurs who listen, who are running similar groups, maybe this prompts you to think a little bit more about some open innovation challenges yourself. And for our entrepreneurs who listen, if this is a problem you can solve, it’s a meaningful commitment with a great first customer for you, or a great reference customer for you. And hopefully a chance to really scale that up and not only create a valuable business, but also do meaningful work for a critical part of our infrastructure, which is certainly in the news a lot these days. So-
Josh Gould (26:09):
Hey, one more thing. Speaking of entrepreneurs, believe it or not, it just so happens that we have two open innovation challenges out, the Holiday Tree for local Pittsburgh resident. If you haven’t been here, you can see all three rivers converging. There’s a really large tree, it’s been around about 40 years. It is actually a historic Native American burial ground. Therefore the foundation under it is unstable. So we’ve got to rethink the tree. It’s been a Pittsburgh icon. We’re actually running a second innovation challenge on reimagining the Holiday Tree. We’re engaging the local community on this and think about the circumstances of that particular site. We can’t do exactly what we did before. We’ve got to rethink it. And there’s also prizes for folks to give us winning proposals around. What should the next version, whether it’s a tree or something else, look like. How do we involve in and have a community participation? So that’s another challenge that’s on the street as a prize associated with that, and is more focused on the local Pittsburgh community.
Sean Ammirati (27:17):
That sounds great. So both these links will be in the show notes. My senses, most people will be interested in the first one. But I also think it’s a great illustration of taking this approach to solve lots of critical challenges and innovation challenges. So appreciate you adding that at the end Josh and thanks again for the time today.
Josh Gould (27:36):
Hey, thanks so much, Sean. Great chatting with you.
Sean Ammirati (27:44):
I hope you enjoyed this episode of Agile Giants. If so, consider sharing it with a friend. And if you think it’s worth five stars, which I hope you do, please go to iTunes and rate it so that others can find this content as well.

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