The time-honored discounted cash flow method for determining appropriate utility returns falls short when interest rates are low. Inadequate ROEs ultimately increase cost of capital and wipe away...
Strategies for surviving the industry’s transition.
place across the organization.
Finally, an effective leadership program includes a simple set of metrics and related goals, ideally in a balanced scorecard framework, which are impossible to achieve without actually exhibiting the new behaviors. For example, if the objective is to create a learning environment and more responsiveness to customer needs and interests, the top team will monitor the rate at which innovative programs are proposed and implemented.
Next, the organizational structure and processes will need to be reworked to achieve and sustain needed changes. This will start with change decision processes, allowing greater autonomy of work group teams to make operating decisions, but also compelling them to explicitly consider the customer experience in their designs. One strategy that can be effective is to realign work groups by specific smart-grid processes, such as demand response, rather than functions, and then delegating decision-making authority to them. This is a way of stimulating adaptation, while also creating greater integration and starting to move the culture, at least within the smart-grid process groups.
Also related to the organizational structure, all roles and accountabilities should be redesigned to underscore the smart-grid outcomes desired. This is a simple way to define and reinforce for employees a new focus expected in their work. For example, the customer-service representative job could be redesigned as customer energy consultant or smart-grid marketing consultant. Likewise, engineers responsible for asset planning could have roles reframed as smart-grid planning engineer or demand-response asset planning engineer. Changes in accountabilities also should include an update of performance objectives and, if warranted, compensation to ensure alignment of expectations.
Changes in organizational structures or processes will require communications and training, especially for managers and supervisors. When executing a fundamental realignment of duties, it’s important to provide as much support as possible. Getting management capabilities and expectations aligned so they can better lead employees is a key success factor.
Employees and customers alike need to be engaged in the change program with as much collaboration as possible. This is extremely important to ensure the customer experience is tightly monitored and managed. Here, social media strategies can make it easy and transparent for all those involved to share perspectives on what is working and what could work better. Microsoft One Note provides such a capability, as do blogs and utility Web sites.
Also, in managing the customer experience, it will be useful to start with simple program and rate structures and then move on to the more complex. This will allow for the capture of key lessons learned and, again, promote a sense of collaboration and engagement. It also will help avoid major disconnects between customer expectations and their actual experiences as can happen when, for example, opportunities for bill reductions are not realized.
Finally, employees and customers can benefit from an examination of conservation programs that have been conducted. Key will be the identification of customer characteristics that have been associated with participation and sustained results. This will provide the source of hypotheses that can be tested in any experimental designs.
It isn’t altogether clear that utilities are