(September 2007) The impact of dividend policies, capital expenditures, and publicly traded equities highlights an in-depth look at what goes into the modified Dupont Model behind the ...
How to Achieve High Performance
Lessons from the top 40 utilities.
are tied to their core strategic intent and become deep specialists in that domain to steer the direction of R&D investments and standards.
8. Information Technology Fast Follower
For the most part, the industry has under-invested in its information technology (IT) architecture. At most utilities, the IT architecture and applications have evolved in a limited way over the past 10 years, and many of the core IT systems are lagging that of other industries. Technology evolution now appears to be at a tipping point, with the advent of smart meters, sensors, communications technology, service-oriented architectures, field-force automation technology, asset-management applications, and work-management applications.
Whereas over the past 10 years the impact of technology on utilities’ performance was debatable, we believe that successful adoption of technology going forward will, if implemented in the right way, drive superior levels of performance. Transforming an IT platform to support utility-of-the-future requirements will require five to seven years. The long lead time makes this a “here and now” issue, which many utilities have started to address in the last two to three years.
9. Diversified & Skilled Workforce
Although the challenge of a maturing workforce is not fully explored in this article, it is one leaders will need to confront. With large workforce retirements pending in the next decade, and with an even higher percentage of institutional knowledge departing, the leaders of tomorrow will need to combine a number of innovative solutions to address the issue. These include greater linkage with education; offshore skills building; outsourcing; process simplification; and creative knowledge management solutions. Winning the “war for talent” will require a proactive and multi-pronged approach (see Figure 5).
10. Mastering the Basics
In addition to the nine traits discussed here, today’s drivers of high performance—asset management, regulatory management, and strategic agility—will continue to be critical drivers of performance in the future. These core capabilities will stand the test of time in a regulated, asset-intensive industry.
Transforming to Get There
It is unlikely that the journey to become a high-performing utility in 2017 will be carried out in an incremental manner. In a recent cross-industry study of company transformations and response to disruptive change, we found that successful companies transform in a series of major step-level changes as opposed to a linear and gradual improvement in capabilities.
The term “business transformation” has become one of the latest management buzzwords over the last three to four years, but it is a fitting term for what utilities need to do to achieve a leadership position in the industry. Business transformation, as we see it, is a program through which a company can drive a step change in performance that is differentiated from traditional process improvement or re-engineering along the following dimensions. Business transformation:
• Addresses all levers of change; i.e., people, culture, organization and governance, process and technology, in unison;
• Requires strong and hands-on support and sponsorship from the C-suite;
• Is not a siloed effort and addresses changes and accountability end to end;
• Is not aimed at incremental improvement (3 to 5 percent) but at a