Fortnightly speaks to five CEOs who exemplify industry leadership: David L. Sokol, MidAmerican Energy Holdings Co.; Peter A. Darbee, PG&E Corp.; Jeff Sterba, PNM Resources; Peggy Fowler...
Get ready for fundamental changes.
offer customers the price stability they desire.
The world is changing at an accelerating rate. In fact, according to an IBM survey, almost 70 percent of utility CEOs consider substantial change to be inevitable in the near-term future.
The pace of change presents challenges to leaders, as they are responsible for their organizations being designed properly, and ensuring that the design correctly focuses people’s work and shapes responses to customers and other stakeholders. It’s imperative that the various parts of the organization work well together to achieve goals.
Leaders create innovation and change, while keeping followers comfortable and engaged. They do this by creating a nurturing culture; having an organizational structure that encourages innovation and is able to make quick and frequent changes; and including people in the change process.
A culture that encourages innovation and change is one in which people are valued and nurtured, where they don’t feel at risk for job loss or risk taking. In a nurturing culture, leaders and managers care deeply about customers, stockholders and their people. They strongly value people and processes that can create useful change. It’s where leaders and managers pay close attention to all their constituencies and initiate change when needed to serve the organization’s legitimate interests, often by taking large risks. In such organizations, people consider the whole organization to be more important than its parts, boundaries between groups are minimized, and equality and trust are primary values.
Modern organizations were created to resist chaos, complexity and uncertainty, and as a result they have structures and rules that resist change. Leaders have been firmly in control. This served well when organizations didn’t have to change frequently, but that’s no longer the case. Organizations need to make a shift toward horizontal structures, with teams of front-line people who are empowered in self-managed teams, and where innovation is greatly encouraged across the organization. The horizontal structure fosters decentralization, employee freedom and empowerment, and encourages innovation and new ideas.
People are more motivated to change if they have an opportunity to contribute, if they believe in the purpose and if they understand the wider implications of their work. As a result, the best way to keep followers comfortable with change is to involve them in the change process.
The electric utility industry will see significant change and challenges during the next decade. Those organizations that have strategic foresight, and are innovative and flexible, will see opportunities and prosper. Those that don’t will struggle and likely will be absorbed into successful entities.