by Carole Gaudet
One of the most exciting things that Itamar Goldminz T’10 has learned in his 3 ½ years at his current employer, an energy efficiency company, is not simply the potential for energy savings. It’s the idea that much of what the company does can be applied to other industries, and can address many other social problems. For this Israeli native who looks for an “emotional connection” to the work he does, that’s an exciting proposition.
Goldminz is Senior Manager of Product Management Operations at Opower, a company that provides energy efficiency software and solutions to utilities, helping them to engage customers and fulfill their energy efficiency mandates. Opower's software provides customers with better information about their energy consumption, along with personalized ways to save energy and money.
“We have a multifaceted energy problem,” Goldminz told a group of Tuck students who gathered to hear his thoughts about pursuing a nontraditional career after graduation. “Demand exceeds supply. Our infrastructure is old and dysfunctional, and we’re trying to bring new resources into the grid, but each one has its own unique challenges. Energy production degrades the environment.”
Opower’s solution to the energy problem is to focus on energy efficiency. “It’s estimated that about 400 billion dollars per year are wasted in energy production. Our system is so inefficient that for every unit of energy used, 9 units get lost in the process. The positive side is that for every unit of energy we save, we can save 9 more on the production side.”
Opower and its 415 employees have helped utility customers save about 3 terawatt hours to date – the amount of energy the 600,000 people in Baltimore, Maryland consume in a year. These results, says Goldminz, are measured with the same level of experimental rigor as when seeking FDA approval for a new drug. The company compares the behaviors of customers who receive the company’s energy usage reports with “almost identical” people who are not receiving the company’s products – “basically the largest randomized control test in the world.”
Goldminz says that only 10-20% of a given utility’s customers are deeply engaged with energy efficiency. “It’s a tough problem to solve,” Goldminz admitted, because “people spend only about 6 minutes each year thinking about their energy usage. Energy is boring, confusing, and in most places, it’s rather inexpensive.”
It’s Opower’s mission to help those unengaged customers “cross the engagement chasm” by taking on their perspective and helping them with what they truly care about – reducing their bills. The company’s secret sauce is behavioral science – an extensive trove of knowledge about how people really behave, and the reasons behind that behavior. These insights into human motivations are sometimes surprising and counterintuitive.
For example, the company experimented with different messages that would give customers reasons to cut back on energy usage, such as saving money, saving the planet, or being a good citizen. But none of these motivations encouraged as much engagement as the winning message: “your neighbors are doing better at saving electricity and money – and you should, too.” People, Goldminz says, are more motivated by their peers than by other factors.
How can these insights be used to solve other social problems? Goldminz pointed to the McKinsey curve, a study of different ways to curtail carbon emissions. Many people fail to take actions that save both money and carbon, despite the fact that these actions provide a double benefit. For example, most people don’t sign up for energy efficiency audits for their homes.
The reason, says Goldminz, is a market failure – a behavioral problem that needs a behavioral solution, not a market solution. “Most customers are unengaged. Through personalization and the use of behavioral science, you can adopt the customer’s point of view and move them across the engagement chasm.” This approach can work in other industries, such as health care. According to Goldminz, 40% of premature deaths in US are caused by behavioral reasons: obesity, smoking, substance abuse, conditions that are behavioral in nature and can be prevented through behavior change. “Behavioral science has great power,” Goldminz told the students. “Use that power for good.”
Goldminz’s visit was co-sponsored by the Center for Business & Society at Tuck, in conjunction with the Dartmouth Energy Collaborative and Net Impact. The Center regularly invites alumni and other industry leaders to speak with students about how they use business knowledge to address the world’s most vexing environmental and social problems.