The Future of Power Utilities

This article is the first in a series that addresses the challenges and opportunities faced by power utilities. This piece is reproduced and summarized from a recent publication in the TVPPA magazine.

Organizations in every industry today are facing increasing uncertainty, complexity, and tremendous change.?Utilities are facing change from a multitude of directions: increasing demand, supply constraints, aging infrastructure, new market entrants, shifting regulatory pressures, and calls for electrification, decarbonization, and digitization. Municipal, state, and federal regulations that constrain the response from utilities are complicating matters.

Reliably and safely operating billions of dollars of assets and connecting households and businesses to the power they need presents its own challenges. Having to keep up with changes in the external context, while doing this, can often feel like building the plane while flying it.

The challenges in the current environment can feel overwhelming, but this turbulence also brings with it the opportunity to shape and accelerate toward a better future. That opportunity is emerging in numerous forms, including distributed generation and renewable energy, the promise of safer networks through digitization and robotics, and new incentives from government and municipal leaders looking to lead the energy transition – like the recent $1.2 trillion bipartisan Infrastructure Investment and Jobs Act .

This series of articles will share learnings from our research and experience to help utility leaders and organizations address some of the most pressing and immediate challenges and opportunities. In this introductory piece, we provide tactics for seizing transformative opportunities by cultivating more leadership and engaging the entire workforce to resolve threats, eliminate roadblocks, and accelerate progress.

1.????Counter anxiety and fear through transparency and trust

Human responses to change are informed by hardwiring in our brains and bodies that evolved to keep us safe. When the sympathetic nervous system (which is triggered by threats) becomes highly active, we are unable to think expansively or exercise curiosity. This ‘survive’ response can limit our potential for innovation and strategic decision-making. In these uncertain times, how many employees are surviving, rather than thriving? Acknowledging stress and uncertainty, or even sharing a few of your own struggles, can relieve some of this internal anxiety while fostering a greater sense of community among teams.

Leaders can make huge strides through relatively simple actions, like hosting town halls, or scheduling “question and answer time” with their teams. It only takes small but authentic gestures to make a big impact. For example, a busy vice president sends an unscripted “selfie video,” rather than an email, celebrating a team’s effort to bring empathy, humanity, and relief to hardworking colleagues.?By sharing plans, being honest about what is and isn’t known, and communicating regularly, leaders can start to activate “thrive” in their teams.

2.????Create a culture of ownership and experimentation

Teams on the front lines are experts in what they do. Even more than the executive suite, these teams have ideas on how to improve what they do, but don’t often get a chance to act on them. Leaders can help teams unlock and test out these ideas by embracing a culture of innovation.

Large mature businesses can learn from smaller, nimbler startups that use rapid experimentation — coupled with measurement of impact — to quickly explore new ideas for products, processes, and systems. Seek this kind of thinking from your teams. Focus on smaller prototypes to explore concepts, test use cases, and identify gaps before investing in full-scale, multi-year projects. Infusing this sort of innovation into your organization can pay off significantly. We’ve seen regulated companies increase profitability by up to 55% and engagement by over 66% (while rising to the Forbes “Best Places to Work List”) through enabling this kind of agility and flexibility in the workplace.

3.????Invest in capability building and continuous learning

Both companies and employees are looking to develop the skills of the future and stay competitive in the marketplace. Many organizations are investing heavily in new assets and technologies. Some reports show digital transformation spending, across sectors, is up to $700 billion a year.

We’ve seen firms spend tens of millions on consultants and coders to build pricy enterprise-wide systems. What is often overlooked is the need to build internal capacity to maintain the system and deliver the promised return on investment. Are you investing in building the new behaviors and skills as much as you are in the system?

Mitigating this risk by building internal capabilities across teams can not only help optimize systems, but also increase employee engagement, retention, and upskilling. One electrical utility we worked with was looking to digitize complex analog systems. In addition to piloting the technology, they invested in two years of learning, traveling, and on-the-job training for two field technicians. These technicians are currently two of the nation’s foremost experts in this technology who can help train their colleagues and further the exploration of how to best use the technology.

4.????Develop a network across your organization

Traditionally, hierarchical structures are a source of efficiency, reliability, order, and compliance, all of which are critical to a utility. Yet, a strict hierarchy can also cement certain mindsets and behaviors. Ideas and innovation can struggle to filter up, and hierarchies are not usually adept at driving rapid change. That is where organizational networks come in.

It is critical to build new cross-functional, cross-level coalitions and teams across an organization. Networks that work alongside a traditional hierarchy are much more successful at leading change. While they can support and drive strategic initiatives, these networks also model new ways of working and build engagement and commitment to change amongst their peers. By creating opportunities for people across the organization, and even stakeholders outside the organization to work together, leaders will start to create the relationships needed to respond and lead agile change across the business.

The scale and scope of change that energy companies must navigate demands an empowered workforce that makes decisions and acts with autonomy. Leaders must enable an environment and culture that encourages this level of engagement and participation. While there is no silver bullet, the tactics described in this introductory article can help inspire employees, remove barriers, encourage innovation, and create the collaboration that is required to succeed in an increasingly volatile and complex landscape.

In future articles in this series, we will expand on the specific challenges faced by the utility industry and the effective approaches we are seeing companies take to be at the forefront of transformation and the future of energy.