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Marketing & Competing

Fortnightly Magazine - April 1 1996

When Joel Singer headed the North American Gas Practice at Arthur D. Little, Inc., he helped large companies rethink business strategies to adapt to deregulating markets. Singer called his business model the "competitive strategy framework": "You do not reengineer your way into growth. You've got to figure out what's the growth strategy, then look at building business processes around that."

Singer's approach is becoming evident at Bay State Gas Co. in Westborough, MA. The $418-million utility (em which serves 287,000 customers in Massachusetts, New Hampshire, and Maine (em hired Singer as chief operating officer just months ago. On his first day, the executive was on his feet, talking with groups of employees. The employees had seen restructuring before. They wanted to know if layoffs were coming, why they 'had to go through this,' what the competitive strategy framework meant for them.

The employees quickly learned that this change would be different from those they'd seen before. In December, key middle-management employees among the company's 1,350 workers (em half of them union workers (em began a three-month-long "accelerated transition plan." At the end of the process, employees will be asked: What is your answer for change? How did you work as a team? Did you learn a new strategy, a new organization? What drives the workplace culture and makes it change? Did you learn how to use technology to competitive advantage?

Singer's philosophy is straightforward: Gas companies must capture customers now. Singer believes that gas utilities must position themselves as total providers to meet customers' energy needs, not simply as retail gas marketers. Once they do that, they'll become unregulated retail energy marketers, providing many solutions.

Offerings could include energy commodities, down to lumens of light and Btus (British thermal units) of heating or cooling. Or high-value products, such as those for energy conservation and gas-fired cooling equipment. Or high-value services, such as commodities bundling and products. Even such services as financing and leasing.

A low-cost position, customer intimacy, and brand recognition are the keys to this competitive advantage, Singer says. Not to be forgotten are mass marketing, sophisticated information systems, low transaction costs, and outstanding customer service.

But none of it can happen without the right employee culture (em a workplace that's highly customer-focused, team-based, and competition-ready, with most employees compensated through incentives. Change sticks, Singer says, when people learn on the way: "[Companies] are not learning in the sense of learning how to grow their businesses, they're cutting costs. And I think, in the long run, they've lost the trust and respect of their people. And that's what we're trying to avoid."

Singer believes employee culture can be shaped, based on compensation, hiring and firing, promotion, training, and management policies. Michael J. O'Shea, president of United Steelworkers of America Local 12026 and a Bay State crew leader/ heavy equipment operator, says employees are redesigning their jobs, looking at inefficiencies, having a voice in their futures. And that's building a "buy-in."

O'Shea says the gain-sharing plan, underway at two company locations since the last union contract, has been a hit. The plan