Ep.2 - Francesco Starace / ex-CEO Enel - Life after 23 years at the helm of Enel

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Good morning everybody. This is Marco Marinucci, the founder and CEO at Mindy Bridge. Welcome to the second episode of the Open Innovation Talks, the Mandy Bridge chat with the industry leader in innovation today. My guest is Francesco Starace. Up until recently CEO of the Enel Group where he was the CEO for, you know, since 2014. It was actually the main driver of turning Enel into the major producer of renewable energy in the world. So very interesting conversation. Looking forward to it. Good morning everybody. Today we have a great pleasure to have an old friend of mine, the Bridge, an old friend of this pod we had him on multiple times. Welcome to Francesco Staracha.

Hello Malcolm. And hello everybody. It's a pleasure to be back.

Yeah, it is to be back because I was checking here the interview in 2012 when you were the CEO of and empowered and again 2015 and then the last time was right in the middle of a pandemic where we were really sheltering place and talking about what if, what could we do in 2020 during just in the middle of a pandemic. And that's great to have you back I think in a very important moment, I think in your personal and professional career. Last week was your last week at Enel after if I'm counting correctly, 20 plus years. 23 years, is that correct?

20, yeah, 23 years.

Wow, that's an easy math because you started there in 2000, right? 23 years. I'm getting some of this math by the way, as everybody's today from the AI. So if you get some mistakes here, it's not my fault is this time.

Or Russia started at the end of 2000. I've been using.

Have you tested Google's AI, the BART after they launch it in a new edition on Friday. It was actually pretty exciting. So I was asking a bunch of questions about you. So I guess you most of them were correct. So you started working in 1981, so 42 years. That means that you spent more than half of your career at Enel, is that right?

More or less, yes. Half of my working life was with Enel.

So two big steps there. 2008 promoted CEO of Enel Green Power and then since 2014 the CEO of the Whole group officially I think around May that was your Last day as a CEO and we're trying actually to imagine what is it the last day of a CEO of enel. How do you end your day there? I don't expect you to get out with a box with your laptop and stuff. As people could see on tv more.

Or less at the end, yes. The last thing you carry with you is your PC. Eventually you cannot live without one. So more or less that's what happens. But the last day is basically the gm. In our case, it's like that. So the board ends and you are part of the board and your board comes up, you're not in that board. So it's your last day. And then of course you have some handing over some kind of work that you have to carry out with whoever replaces you. But you know, you're preparing for it. It's not something that happens overnight, so you know it a little bit ahead of time. You have a lot of things you need to fix, mostly on your private life. You know, lots of things that you all of a sudden have to understand that you cannot do it by yourself and get ready for that. And that's it.

More time to go cycling and do stuff and do things that you're passionate about.

Not exactly because of those things that you have to do by yourself, but require a lot of dedication and learning. So far I'm not really having that much of a spare time. Well, clearly there is a sad part, which is the fact that you know, company you like and your company that was part of your life all this time, there's no more the place where you go every day. And that's clearly sad. But you know more or less that this was going to happen sooner or later.

So I will start from the somewhat easy part and just looking back. So first of all, thanks again to dedicate a little time here to review probably for the first time after you're being with the ending your long activity at NL to have a chat about your previous 23 years. If you were to summarize a few, maybe let's just say three of the highlights of those 23 years. What would come to mind? Highlights?

Well, I think first of all the establishment of the liberalization of the energy markets across Europe and in Italy in particular, that was about 2005, 2004. Everybody was free to choose their supplier and I was putting in charge of that division, you know, basically all the customers and we're talking about more than 30 million customers in one shot. A lot of work. And then again the anchoring power idea and The IPO that we carried out in a very special moment, which was right after the financial crisis of 2009, 2008, and the growth that then should. And then finally the transformation of NL through the concepts that we have somehow established and pioneered in Green Power, which was something that took place in the last part of my career. These three moments, which were not really one day pretty large moments, but they were basically the key points. And it's a big task. It's a huge company, It's a fantastic group of people. The moment we defined our values, the moment that we defined altogether the purpose of the company was, I think, the turning point. The story of Enel, in many ways.

Yeah, that's excellent. It's true. There's some continuity in decades here. Among those. Any regrets over this past.

When you leave a company like this that you love so much, you say, I could have done that and that and that. And you know that this is actually the moment you see that you feel that it is futile because there's always something to be done to improve things. So, yeah, we could have done the same job maybe a little earlier. I think we could have probably anticipated the war or not. Maybe not. I think the largest regret is not being able to foresee this tragedy that was taking place as soon as it started, because it was really bad from the beginning. But we all thought it was going to last just a few months, but it's still going on right now. And having maybe had that insight, we should have probably done something different in a shorter time frame. But that's basically it, if I'm correct, actually.

I mean, again, Bart says you did have a conversation with Putin right before the war. Is that correct?

Yeah, yeah. Typically, because we were investor in Russia, Right. And we had like once every six months, either meeting, which was very cumbersome, you had to go there and wait for a long time, or a video call through the COVID times, which was a lot better. So this was a call, a video call.

Right.

It was like 20 days before the war started. Yeah. No one had a clue that this was going to happen anyway.

No, not so quickly. I mean, one question that I have can be controversial because I think it's structurally very Italian. So the government influence over the appointments of CEOs of the energy companies. It's not just Italians. There are several big economies that do it. France, Spain, Greece. But it's still a controversial issue. What is your take of it? I mean, do you see pros and cons there?

Well, I think it's not Particularly understandable if the government Today owns a 23.6% share. So it's a large shareholder, and I think they indicate their preferred candidates. I think the process is just a little bit old. Let's say that it is something that might be improved insofar as the process is concerned, not the fact that the largest shareholder more or less proposes to the others a CEO makes sense. I mean, I don't think a CEO and a list of candidates for the board. I don't think that is particularly or anything wrong with that. I think it's just the way in which this process is articulated and the rights that single shareholders have to say yes or no to that kind of proposal is maybe something that can. Can be improved. Like all things, it probably reflects a time that is no more there. It comes from a distant past. It's maybe not really adequate for what investors see as their fundamental rights. But having said that, I've been appointed three times by different governments over a period of nine years. I saw six governments, basically.

Yes.

So, I mean, do nine years of a CEO term and another four as CEO of a listed company, which was long enough time.

Yeah, yeah. And yours was more an exception, honestly, from the number of years that you were able actually to put together in such an important company. But yeah, so it is something that can be improved. I mean, it's not particularly unique, but probably I think it's time to some of the process.

The process can be improved. Yeah, yeah. All right.

I will start from, you know, 30,000ft. And from your very long experience here, try to address. What do you think is the biggest challenge or the biggest challenges that are facing today, the energy industry?

Well, I think the energy industry is a big word. So if you have basically two industries into one world, the electricity world and the rest. So basically fossil fuel companies, and here the paths are really diverging. I think the electricity industry has a challenge, which is to accelerate decarbonizing and invest in electrifying other parts of the economy, other parts of our social life. So push electricity into the mix. Given the fact that by decarbonizing electricity, you make it cheaper and you make it also stably cheaper going forward. And therefore electricity becomes clearly available for other uses. And therefore the penetration of the electricity mix is increasing. And I think the task of the electricity companies is to invest in infrastructure, basically transmission line, distribution lines and generating facilities that make this happening and help customers embrace electrification. I think that's really the core task of these companies. The other ones, if you want the posted industry, coal and oil and gas industry, I think they should push to become more efficient. Reduce methane leaks, for example, reduce their carbon footprint insofar as their operations are concerned and maybe prepare for some moments in which their precious carbons and hydrocarbons are no more needed or are needed less and less and try to understand when is the time to shift and do something else. I think that's a different story. Much more if you want. Somber but definitely many industries of that kind need to take a hard look at what their operations are and decide when it is time to rein in investments and start generating cash for the shareholders.

Yeah, and innovate at the end of the day. And on that topic I think we were discussing right in the middle of the pandemic, 2020, do you think actually our ability to innovate has changed, has improved? Maybe over Covid? What do you think is there's anything spec specific happen around that process?

Funny, because you wonder how can people really start to become more innovative being locked in or isolated or unable to meet and discuss things in person. I think we proved that innovation is extremely resilient even to these kind of strange situations. And by the way, I think we had innovation. We continue to have innovation both in technology and in and say processes that not necessarily are technological but have to do with the way in which people interact most of the time. I think it's a proof that innovation is actually part of our brains, it's part of ourselves. So no matter what you do, you can be in very difficult conditions. You still innovate. I mean actually innovation is part of our genes. I think. I think what you can observe is that it may be changed a little bit the direction in which it is going. And it's probably starting to go in some way in different directions than inertially was pursuing before the COVID and before the war. But I'm quite surprised and myself, I'm quite happy to see that innovation keeps flourishing and keeps moving in big ways. I think it's much more sensible to demographic issues and to say socio political conditions rather than overall catastrophic events like the one we had.

Yeah, I mean one thing actually that happened since we last spoke was this big breakthrough infusion actually happened not too far from here, one of the labs in Northern California. What do you think about the role of nuclear power in the future of energy?

Well, I think there are two worlds again here. Fissile nuclear power and fusion and fissile nuclear power. I think it's clear that there must be and there is rebirth of fissile nuclear energy out of the uranium plutonium cycle, going into thorium and other fissile materials with completely different technologies. And it's clear that the classic uranium plutonium based technologies have reached some kind of a dead end. The way in which technology has evolved. So there is now going back and changing track to see if this is going somewhere else. It helps because there is the need to complement electricity production with some of that on fusion, honestly, I think it's still mostly research, basically basic R and D, apart from the fact that you have some improvement in the fusion conditions, in the fusion stability, in the balance of energy between what you need to achieve fusion and what you extract out of fusion. But we're talking about something that is.

How many years, how many years are we far from commercialization, you think?

Generations at least.

Oh wow. People said actually here I graduated in 19. I was about to say that's where you're coming from already.

It was already a fusion of today, more or less. It didn't move that much in unfortunately more than 40 years. So you have to be, you have to be realistic about fusion. I mean, it's not something that is as easy as it looks. Imagine that you have a hydrogen bomb not exploding, but generating energy in a controlled way. That's the task. So it's not so simple.

Speaking of which, do you think what are the biggest risks that today the energy industry is facing? Is security one of them?

No, I think it's not security is the carbon balance. I think the energy industry as a whole, so that includes also fissile, that includes also fossil fuels and fossil components, has not fully decarbonized. I think that's the core issue. We have to decarbonize. And I think if we don't do that easily and fast enough, I mean, we might find ourselves in situations that are really, really dangerous. So that's the task and that's the risk of the energy industry that you might reach a point where you don't need that much of an energy because of catastrophic events that happened on top of you. And therefore your energy needs are really not that important because you don't have that much to do anymore. I think that's really the point. I think the energy industry has that clear mission, decarbonize as much as possible and quickly.

So as you said, you graduated from those topics. If you were to give advices and advice to young people that are interested in a career in energy today, what would you tell them to do? If you were to start your career today, 20, 23, what would you look at?

I would still look at engineering, but more on the material science standpoint. So I think material science is really the key to innovation in the future. It's been always like that, but now it's so obvious and it's so incredibly in front of us that I would look at that.

What are your thoughts about the role of AI in the energy industry? We cannot not talk about AI. I've never seen myself something that is so hyper accelerated every two days. There is something that is compounding, at least in the world that we're living in. Can that be a game changer also for the energy development? It might be in biotech and deep research. Right. Where world is vast computational power.

I think any field that has, let's say the available data or incredibly large data basis and energy has that. Any field that has repetitive patterns and energy has that and has to do with millions and millions and millions of customers and energy has that is a fantastic field for AI. I think the ecological environment where you can prosper with AI is there in the energy field you have lots of data, you have repetitive actions continuously and you have millions and millions and millions of customers. Great field for AI, definitely.

I want to talk a little bit about your view in our home country. I mean I've got now two, but I'm talking about Italy here. But in the ability to innovate, to be today competitive. And I wonder what is your view today in 2023? You think Italy is well suited to address the challenges of tomorrow? Is that competitive compared to similar sized economies? But one thing that happened again over these last few years is the intervention of gdp, cdp. That is the close, probably the closest thing to a sovereign fund that Italy has and their push and their investment pretty heavily actually in the startup economy, certain number of acceleration accelerators, the push for open innovation, the funds of funds. How do you see it? Which path is Italy on?

I think that if you look at the Italian economy, it is much larger than Italy. So the Italian economy, you cannot explain it. Looking at Italy itself, it's definitely much larger in size and reach than the country in its own population and its own dimension would ever allow it to be. So clearly this is an economy that has to do with the world. So it's much more the projection of Italy around the world than Italy itself. That said, I think there is an incredible amount of innovation within the Italian economy that is not aware of itself. So there is an innovation that has no consciousness about it being innovative. That is the limit of if you want the innovation world of Italy, they innovate without knowing it. We just innovate and that is a loss. That is value distraction at the end, you know, you don't really grasp the whole value of that. So what can be done to make it more self conscious? Lots of things. Talk about it, explain what it is, innovation and make it sure that. Make sure that people understand. Look at laws protecting intellectual property. Intellectual property and stuff. Not really the money. I mean, the money is not really the point. And so I think in a way the actions that you just mentioned have some kind of potential positive impact. Because clearly if you push a fund on innovation, you have to explain to people what is it that they need to do to qualify for it. But the value is that it's not the money. The value is that people understand what innovation is really and then say, oh, but we've been doing that already. They say, okay, just keep doing it. But remember it's innovation and you have the right to protect it and you have the right to really be conscious about it because from that you can have a lot more value than what you really think. That's really the Achilles heel of the Italian innovation story, the lack of consciousness about the innovative content that the economy has.

Yeah, that's very true. I mean, I need to go through a session of self awareness.

It's amazing. Yeah, yeah.

Let's talk about your future now. Finally here we're talking to Francesco Staracha, the person and not the role that you play. And so now you're in full control. What now? How are you planning to spend your time now other than, you know, chilling, biking, spending time with the family? What gets you excited?

Yeah, you know me a little bit and I'm pretty chilled myself on my own, being in the heat of the. Being the CEO. I've never been that of a manic, but overall I think I will keep basically my role in some of the sustainability initiatives that I'm still involved with because I think that front needs to be pushed and I enjoy doing that and I really think it's worthwhile. The time and the effort mostly is pro bono, I would say.

So is it no profit world or.

Is that a non profit thing? But I really enjoy it and by the way, I learned a lot of things out of that. And then there is going to be another business driven initiative which I will be able to disclose only after the end of May. I gave myself time until then to select and define through the many, many different offers that I was quite surprised to get in these days. I mean, it's like pretty crazy, but. And I gave my set time until May and then after that is defined, take some vacation. But before that fix this. And unfortunately I'm in the middle of it, but it's going to be something fun and interesting for sure. And of course, business driven.

Can you share at least if you would stay in Italy or would you move abroad?

It's going to be global anyway. Okay, it's going to be Italy. I love to live in Italy, but it's going to be global.

Yeah, okay. Oh well. So can't wait to hear by the end of end of May. So we're all excited about your next step. So Francesco, thanks again. Thank you for everything that you did. Actually, I think your footprint is all over the place and is much appreciated and can't wait to see next chapter. So all the best.

Take care.

Thanks everybody for listening. In the next episode, my partner in crime, Alberto Netti, will be sitting with Thierry Goliard of Swiss Post. If you care. If you enjoy this podcast, feel free to follow us also throughout the different channels that we have online. In particular, our Mind the bridge on LinkedIn page will have all the details of what's coming up in our world.

Thank you for being with us today and see you in the next episode of Open Innovation Talks. Mind the Bridge. Chat with industry leaders.