Thursday Dec 08, 2022

Lessons from green-tech unicorn Enpal – McKinsey

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Consumers are increasingly demanding sustainable products and services, and research from Leap by McKinsey shows that more than 90 percent of businesses plan to meet this demand in part through new-business building. Enpal, a green-energy start-up, is helping address the climate crisis by making solar installation and energy storage a viable and affordable option for consumers. While many people are interested in adopting solar, moving customers from interest to purchase has often been complicated by technical and cost barriers. In a conversation with McKinsey’s Jerome Königsfeld, Enpal CEO and founder, Mario Kohle, shares his vision of solar-based climate action and reflects on his experiences making a sustainable energy-generation solution a “no-brainer” for everybody. Kohle discusses how to tackle a big vision step-by-step, what kinds of people he hires to lead his company, and the importance of embracing a test-and-learn culture.

Key insight #1: Get customers on board with new technology by making adoption easy and reducing risk.

Jerome Königsfeld: Enpal is one of the fastest-growing green-tech companies in the world, with more than 1,700 employees. What was the motivation behind launching Enpal?

Mario Kohle: I did some research and discovered that we will run directly into a climate catastrophe if we don’t do enough solar installations. To address this problem, I used the “first-principles thinking” approach. I saw that solar installations and energy storage were already available, and electric cars were about to come to the market. I also learned that over 90 percent of people interviewed in surveys said they supported rooftop solar energy systems.

However, only about 10 percent of all homeowners with suitable rooftops in Germany purchased a solar installation.

I hypothesized that while solar is a product that many people want, only a few will get it because a no-brainer solution didn’t exist. At that time, customers who wanted to adopt solar needed to make a large up-front investment and answer several technical questions on their own, such as, “What is the right inverter?” or ”What is the right service provider?” They had to assume a lot of risk.

Jerome Königsfeld: How does Enpal address these pain points?

Mario Kohle: The primary question we wanted to answer was “What should a solar installation look like so that everyone wants one?” For example, in the automobile industry, car loans made the decision in favor of the automobile a no-brainer by significantly reducing up-front costs and risks.

So, we came up with a product package where customers can lease solar panels, storage, and charging technology for zero euros as an initial investment, and going forward, they pay lower monthly rates compared with what they paid for power and gasoline combined. We also give customers peace of mind, because we take care of all the maintenance. And after 20 years of operation, we will sell them the entire installation for one symbolic euro.

Key insight #2: Achieving a vision is a creative process that requires measurable actions.

Jerome Königsfeld: How did you validate this business concept?

Mario Kohle: Being short on resources is both a challenge and a source of innovation for start-ups; you must …….

Source: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/from-vision-to-green-tech-unicorn-lessons-from-enpal

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