Navigating the Energy Transformation Journey Step One: Determine Goals and Objectives

Energy transformation is increasingly rising to the top ten list of organizational imperatives executives must navigate to meet growth and profitability goals, driven by investors and consumers. Despite authentic intention and increasing investment, many organizations are experiencing challenges and setbacks in executing these imperatives.

The first edition in our series focused on defining and navigating the energy transformation journey and outlined five steps organizations must follow to achieve their goals. When it comes to the energy transformation journey, the first step, “Determine Goals and Objectives” is an intensive process utilizing external data to establish internal metrics and success criteria.?

Read our newsletter outlining obstacles on “The Energy Transformation Journey”

Without clear expectations and alignment around goals and targets, it will be difficult to get a meaningful effort underway.? While this effort is largely an internal endeavor, external market insights are needed to inform and shape these targets.?Outputs of Step One include the establishment of an energy budget, alignment on risk tolerance and procedures, setting sustainability targets and establishing timelines for achievement.

The unique variety and number of cross-functional stakeholders in the outcome further underscores the necessity for alignment in setting and achieving realistic goals.? As a result, gaining buy-in and ensuring willingness to make a firm commitment are key.? Hurdles tend to arise unless clear expectations are set, reinforced, and adhered to, serving as a successful foundation for energy transformation. Aligning organizationally on a clear strategy for energy data and cost optimization, and establishing baselines for emissions and subsequent reductions, are critical first steps in energy transformation maturity.

Organizations face unique challenges in Step One that arise from a number of sources.? Policy makers, customers and investors are applying pressure and urgency to frame goals and objectives to mobilize the transformation.? These pressures exacerbate existing uncertainties about where to start, how to integrate with procurement, and project costs, timelines and impact on budgets.? Teams often feel threatened by a lack of experienced resources and expertise and are concerned about how aggressively to set targets, heightening fear of falling behind peers who have already established and published targets.?

Additional challenges encountered in Step One arise from several sources:

Where to start?

Undoubtably the first challenge most companies face - and one of the most perplexing hurdles - is where to actually begin the process. We recommend that companies begin with identifying their “why”? Getting to the root of the questions: "Why do we need to set an emissions reduction goal?” and/or “Why do we need to set an energy budget?” will quickly allow companies to assess their motivations.? Motivation is key because it underpins a company’s ambition and determines how aggressive a company needs to be setting their objectives. A company whose key customer is pressuring them to set a Science-Based Target (SBT) will have a very different approach to goal setting than one who is primarily motivated to comply with legislation.

What are peers doing?

Adding urgency to this initial step is the knowledge that many peer organizations and competitors may be substantially farther along in their respective journeys.? For US companies, progress against peers is paramount. In the absence of regulation on sustainability, customers are evaluating companies based on how they measure up against their competition and industry as a whole. Lack of insight into their respective strategies, targets, and progress can foster real concerns of falling behind the competition

Lacking expertise?

Early in the process, many teams lack the resources and expertise to assimilate the information needed to establish the most meaningful targets.? Concerns about setting targets too aggressively – or not aggressively enough – are common.? Further, acumen and experience in understanding what is possible for a company, and the cost of complying with different targets may not be available.

Establishing and aligning goals and objectives is critical for a successful start to the energy transformation journey.? In Step 2, “Gather Data and Measure”, some unique but surmountable challenges arise in the process of gathering, assimilating and rationalizing a broad set of information spanning regulatory, investor, customer and internal data.? We’ll tackle that in our next edition!

Successfully navigating the energy transformation journey is increasingly critical for organizations in order to meet regulatory requirements, exceed growth and profitability objectives, satisfy stakeholder expectations and achieve competitive advantage. ?Overcoming obstacles on this journey may feel challenging, but leveraging guidance to support strategic and resource constraints can both smooth and accelerate the process. Holistically approaching the transformation and leveraging synergies, spanning energy procurement and demand management with sustainability initiatives, can unlock growth while advancing strategic goals.

This is the second edition in a series of “Transformation Journey” newsletters dedicated to helping energy transformation executives identify obstacles and clear the path on their journey to energy transformation. In subsequent editions, we’ll continue to unpack each step of the journey in detail and provide insights to overcome obstacles you may encounter.

Let’s continue the conversation about your journey!?To schedule an initial discussion,?click here.?