Baseload, Bioenergy, Geothermal, Hydropower, Solar, Wind Power

Renewable Energy is Here—But Are Energy & Utilities Leaders Ready?

Don’t let recent negative news, such as the bankruptcy filing at SunEdison, fool you — renewable energy’s time has arrived. Though market adoption has been slow, renewable energy — driven largely by wind and solar — has gained market share over the past few years, overtaking nuclear power in 2011 and accounting for more than 10 percent of all energy used in the U.S. in 2015. As interest and demand for renewables continue to build, setbacks like the SunEdison collapse should serve as a warning sign to renewable energy and utility (E&U) companies to carefully consider how they innovate and build scale in their business.

The obstacles plaguing both renewables and traditional utility companies today typically come in two distinct forms — technology transitions and major industry shifts — both with the end goal of better serving and connecting with customers. Though both obstacles have their own unique challenges, the strategies to implementing and scaling change efforts to overcome each issue are largely the same. Organizations need to look beyond cascaded changes and understand how to inspire organization-wide action toward accelerating their most critical strategies. It all hinges on three key steps:

Aim the Entire Organization Toward a “Big Opportunity”

This call-to-action, which is short, compelling and accurate, is centered on the opportunity ahead. It should ultimately define “This is how we can win right now” in an understandable, tangible and compelling way to generate excitement and urgency among employees across all levels and functions of the organization. If communicated effectively, this opportunity statement can help overcome complacency, which is especially important for companies in the utilities industry — a sector that has historically been quite resistant and slow to adjust.  

For example, when we partnered with a major Italian utility undergoing a technology platform transition, leadership centered the change around an opportunity for the company to leap to the forefront of changes transforming their sector. The new IT system would enable teams to better manage business operations, push the boundaries of how workers could connect with and engage customers and allow the firm to leapfrog the competition with its mobile, tablet-armed workforce. Centering the initiative around this opportunity was critical to building an employee movement across the entire organization to drive change at a speed few thought possible.

Champion a Network Approach

To speed up the adoption of change across the organization — be it technological or procedural — leaders can leverage the power of an informal networked team structure, running alongside the traditional organizational hierarchy of the combined firm.

While hierarchical organizational structures are important to ensure day-to-day tasks run smoothly in any company, they aren’t always as successful when it comes to driving change among employees, especially in an industry like renewable energy where constantly shifting external environments necessitate nimble responses to change. A volunteer network, championed by senior leadership and co-existing alongside a traditional hierarchy, allows new ideas to surface and be tested and successful innovations to be communicated and scaled throughout the organization with astonishing speed.

For the Italian utility company, it was the employees on the ground — designated “angels” — who surrounded other employees immediately after the technology implementation of handheld devices for field staff to identify needs, get help, provide encouragement and help troubleshoot issues. Through these efforts they drove the adoption of the new IT system at the grassroots level. These angels also delivered in excess of 100 million euro in cost and revenue enhancements in the past 12 months related to the technology change. 

Ultimately, these informal networked groups, running alongside the traditional hierarchy (forming a “dual operating system”), were crucial to accelerating the implementation of the new technology system and addressing the people challenges of making change happen, and stick.

Generate and Celebrate “Small Wins” to Maintain Momentum

Once teams are put into action, small technological or procedural successes can serve as a springboard to major transformations. The key to this happening, however, is generating and celebrating small wins to maintain excitement and momentum around realizing the opportunity — an opportunity that should have the power to create an almost unfair, competitive advantage if effectively executed.

As more customers transition to using renewable energy in the coming years, many new customer questions are likely to arise that utility companies will need to answer quickly. For another one of our clients in the utilities sector, quickly responding to customer concerns was a critical priority. The utility company saw improving the estimated time to restore (ETR) metric as low-hanging fruit in improving customer relations and responsiveness.

After a 90-day change initiative “accelerator” program — which strove to improve ETR accuracy and reduce changes — the company saw estimation accuracy for restoration time increase by 75 percent, compared to base-line data from the previous six months. This small win encouraged employees across the organization to maintain momentum and continue pushing for even further improvements.

For renewable companies planning their next stage of growth to keep pace with increasing demand, it’s important to keep in mind these three key steps to ensure changes are not only accomplished quickly enough to adapt to market realities, but also are “sticky.” At a bare minimum, fast and sustainable change must keep pace with the rate of change that we’re seeing in the renewable market. Absent the collective urgency to embrace new business models now, they will face the same fate as SunEdison.

David Carder (left) is a Managing Director with Kotter International, the strategy execution firm founded by world renowned Harvard Business School professor, Dr. John Kotter. For over 15 years, David has worked with global clients to accelerate the execution of their business strategies and drive the development of their top leadership talent.

Justin Wasserman (right) is a Managing Director with Kotter International. For almost 20 years, Justin has worked with organizations around the globe to accelerate their most critical business strategies from record size M&A deals and growth strategies to process and product innovation.

Lead image credit: Tony Webster | Flickr