[BETA] Fortnightly

Electric utilities are informationally dysfunctional. When we surveyed electric utility managers from around the country, we found a general consensus: Individual employees may possess vital information, but typically they do not know what to do with it. They don't understand why it's important or who may need it. As a result, decisions proceed on the basis of old data or generally held beliefs (em not on reality.

Managers, feeling assaulted by competitive change, fear that the increasing number and type of new market entrants will only increase the data deluge. They also realize that, for the most part, their organizations have not built an effective "information infrastructure" to effectively channel and apply vital intelligence. More specifically, these managers feel their organizations suffer from intelligence deficits that will affect them in three areas:

s Customer Retention. Customer (em not competitor (em intelligence is desperately needed.

s Competitor Costs. As prices drive markets, utilities must learn how competitors use technology to gain a cost advantage.

s Market Savvy. Recognizing threats means more than just crunching the numbers. It means converting raw data into a strategy that will expose a competitive weakness.

Alex Mandl, head of AT&T's Communications Service's Group, was quoted recently in the Wall Street Journal on opportunities in the telecommunications industry: "It's a fast-moving business. You can't be a ponderous machine that studies everything as opportunity passes you by. Our challenge is to take advantage of our scale, but still act like a small company."1

This quote exposes the great irony. Electric utilities, according to the managers we spoke with, have always behaved like large corporations, complete with all the usual bureaucratic complexities. Yet, compared to large, multinational corporations like Corning, Canon, Xerox, and Kraft (em nonutilities that have used intelligence successfully (em nearly all utilities appear relatively small. Why can't utilities, with their relatively compact employee base and regional markets, use intelligence as effectively as companies many times their size, with a far greater mix of products or services, whose market is truly global?

The key to successful use of intelligence in all these companies is focus: A focus on the competitive issues that matter most, and on how to gather and apply the information to quickly and expediently address these issues. Corning and Xerox will reverse-engineer a competitor's product and then communicate the findings to a broad audience, knowing that an engineer will use the resulting intelligence differently than a marketer. Corning's management realizes that the entire corporation will benefit from the information in the end. When Kraft realized that much of its competitive data was squirreled away throughout the corporation, it decided to audit and index these "hidden" resources so all managers could benefit from them. Canon knows that much of its market knowledge lies outside Japan and has decided to translate critical technical and competitor information into Japanese, thus making it accessible to all company management.

None of these approaches to organizing and using intelligence are profound. They are simple and effective. Nevertheless, the new competitive forces have launched utilities on a strategic roller coaster, leaving them somewhat