Creating a Market for Energy Efficiency Services

When Geoff Chapin started Next Step LivingTM as the market crashed in 2008, he wasn’t sure if the new economic reality would make or break the venture, but Next Step Living took off, largely because  it helped consumers save money when they needed to most. Since then, the company has helped consumers capture energy savings equivalent to the output of a twenty-four mile long coal train.    

After graduating from MIT Sloan in 2002, Geoff worked at Bain and Company as a consultant before joining The Bridgespan Group, Bain and Company’s nonprofit arm, where Geoff specialized in helping nonprofits scale. Then in 2007, Geoff saw an emerging market need: connecting home owners with utility-sponsored efficiency incentives. At the time, however, preferred partnerships between public utilities and energy-efficiency providers limited market entry for new players. Using his experience bridging the sectors, Geoff brought utility companies and regulators around the table. He thought that if consumers could select their own efficiency providers it would increase competition and improve service quality. Seeing the win-win-win for consumers, utility companies and regulators, the regulators agreed to consumer-driven partner selection.

In 2008, with the market infrastructure in place, Geoff launched Next Step Living, a company that analyzes home energy use and produces action plans for home owners to save energy and money, often with little or no upfront cost. The company also provides a range of other energy-related products and services such as solar system installations.  As the company has grown it has continued to focus on generating strong cross-sector partnerships, which Geoff believes is a point of distinction for the company. “We partner with public utilities, schools, churches, and other community organizations in the course of business. These relationships are woven into our strategy and are the foundation of our business model’s success.” Next Step Living’s relationships with public utilities, for example, link consumers to highly subsidized home assessments that save them money while utilities can delay paying for power plants because people are using less energy.  Partnerships with nonprofits and schools help consumers learn about Next Step Living while also showing a community’s commitment to energy efficiency. This simple but effective model has driven substantial growth. In five years Next Step Living has grown from four to almost 650 employees in Massachusetts and Connecticut and has made almost 50,000 homes more energy efficient and has created over 450 full-time jobs in Massachusetts. In August 2013, Inc. Magazine named Next Step Living as one of the fastest growing companies in the U.S.

Another essential aspect of the company’s success has been its human capital development strategy: Next Step Living energy auditing teams are comprised of two people, allowing seasoned staff to train newer hires. This apprenticeship model not only helps develop staff knowledge, but it also makes the auditing process more efficient, saving time for consumers and the company.

It was his time at MIT Sloan that focused Geoff on social sustainability, market creation, and system dynamics – all core principles in Next Step Living’s strategy and success. “MIT Sloan gave me the business fundamentals I needed to build on the market opportunity I was seeing. As a company, we use concepts from Systems Dynamics every day; we use it to predict how many consumers will move from initial interest to actual work so we have the staff to provide every customer with a great experience.” Geoff has also found professors from around MIT, such as Harvey Michaels, Sanjay Sarma, and Jason Jay, to be valuable thought partners. “MIT Sloan is a huge supporter of their alumni, even years after they’ve graduated. Arguably, I could get a similar education, but I couldn’t get the same post-grad support and connections at one of the other top tier schools, and that support has made a huge difference for me as a leader and entrepreneur and for Next Step Living as a company.”

Sloan is a huge supporter of their alumni [which] has made a huge difference for me as a leader and entrepreneur.