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Nuclear Revolution

How to ease the coming upheaval in the nuclear power industry.

Fortnightly Magazine - July 2008

Russia with 31, South Korea with 20, Canada with 18, and India with 16.

Bringing in international leadership can cause culture shock several times over. First and most obvious, varied working styles rooted in general cultural differences between non-U.S. leaders and their new U.S. colleagues can be significant. Second, the culture of the national industry from which the new leader comes can differ from the very specific culture found in the U.S. industry. Third, differences from country to country in such areas as reactor design, regulatory environment, and public and political attitudes toward nuclear energy also shape leaders and their company cultures.

Another strategy will be to acquire talent as a result of M&A transactions. According to the most recent PricewaterhouseCoopers utilities global survey, which included 119 senior power utility executives from 114 companies in 44 countries, the shortage of skills and knowledge has become an increasingly important driver of M&A activity in the utilities industry as a whole (see Energy and Efficiency: The Changing Power Climate, PricewaterhouseCoopers, 2007) . In 2007, acquisition of skills was named as a deal driver by half of survey respondents, up from only a third in 2006. In the Americas the figure is 54 percent in 2007, up from 26 percent the previous year.

As anyone who does M&A deals knows, putting together two different company cultures, even in the same industry, is often difficult. Often, many of the most talented people in an acquired company leave because they feel slighted in the new order of things. Sometimes the acquirer, lacking the time and requisite expertise in talent assessment, fails to make the best use of newly acquired talent. Further, turf wars between top leaders of the two merged companies can erode the anticipated gains of the M&A strategy.

Promoting from within can avoid many of these pitfalls. Companies might find they have young talent with great technical knowledge and strong interpersonal skills whom they are willing to take a chance on in the top job. Although veteran nuclear executives might regard the leapfrogging of the generations this way as unrealistic, it offers some advantages. The young superstars likely will understand the current management culture and yet not be fully indoctrinated in it, enabling them to manage adroitly the transition to a new culture. Further, given that new nuclear plants are estimated to require 10 to 15 years from planning through authorization, young talent can provide a high degree of continuity through this crucial phase of the nuclear resurgence. Similarly, the emergence of new reactor designs and new construction techniques argue for continuity of leadership over the extended years of planning, construction, and operation. Finally, many young high-potential leaders tend to view the sector from a highly commercial perspective, which makes them an invaluable asset in marketing power externally.

Nevertheless, this “young superstars” approach to talent can have significant cultural repercussions. People who feel they have been passed over may leave prematurely, exacerbating the talent shortage. People who remain may chafe at the idea of suddenly finding themselves managed by someone whom they previously outranked. Further,