Polar Vortexes, Covid, and Black Swans. Are your organizations ready?

Two weeks ago, we saw an extraordinary cold front sweep across the country. A key area of focus ended up being Texas and the challenges its energy infrastructure and services encountered as a result of unusually cold temperatures. In fact, on Wed. the 17, one source claimed parts of Texas were colder than Alaska!

There are a combination of factors that led to the Texas challenges: 

• Existing infrastructure not matched to such weather extremes
• A lack of innovative technologies to expand resilience (grid-scale storage)
• A deregulated market that shifted massively in the wake of supply and demand imbalance requiring controlled outages to manage load
• A nearly stand-alone power grid strategy making emergency interconnection difficult

All of these issues were brough to the forefront by an Anomalous event. Something that is not highly considered when managing risk or change, due to its extreme unlikelihood. The Polar Vortex might also be called a Black Swan event – a term made synonymous by statistician and author Nassim Nicholas Taleb

A Black Swan is an event no one saw coming. Or, “…  high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.”

Many people also have labeled the COVID Pandemic as a Black Swan. But for the purposes of this post, I would ask you to join me in challenging this easily applied moniker. Taleb himself has criticized that a Black Swan should not be a convenient labeling of things that just catch us off-guard and excuse us from accountability. While Arctic temperatures in Texas, and a globe-stopping pandemic are arguably anomalous, we could have, and actually have, to varying degrees, predicted them. An emerging term of White Swans explains a “slow moving train wreck” that while impactful, was to some degree, probable and either avoidable or manageable. 

So what am I getting at? 

Well, crazy things happen. And if you feel like I do about this last year, they’re happing more often, in greater numbers, and sometimes out of nowhere. So how do we see the crazy coming, and how do we as organizations react when crazy shows up. How  do our organizations remain viable and even competitive amidst the craziness?

In the spirit of learning from failure, and practicing disciplined after action reviews, I will ask you to join me in taking a moment to think about how we could learn from these White Swans, and consider how we might change our organizations to be better prepared for extreme change.

Ironically, a great case study for overcoming scenarios like this is actually the Electrical Utility space itself. For the sake of our conversation I’d like us to understand Black Swans and White Swans as Disruption, or evolutions, slow or fast within a system that are significantly impactful, and if not predictable, perhaps manageable.  And man, has the Electric Utility space been disrupted. Some organizations in that industry are having a hard time, but others are getting it right and defining the future of energy services.

Let’s start at the beginning.

For over a century now, when we flip on a light switch in our house, the lights go on. Simple. But think about how amazing that is, they go on nearly all of the time. Only when they don’t are we aware of our local electric utility provider. Most of us have no idea of the complexity of the business and operations that keep our lights on. And, if a Utility is doing their job well, that thankless paradigm is actually an indicator of success. 

Today however, just making sure the light goes on is not enough.

All North American utilities, large or small, public or private, are at varying degrees of managing industry disruption that continues to expose under preparedness  and/or mis-prioritized strategies. While easy to point out, these shortcomings are in no way easy to actually manage and overcome. 

And let me be abundantly clear. I’m not throwing shade at the industry. I work in it, and I actually love the progress and change I’ve been a part of in helping utilities manage this disruption. In fact, the story of disruption in the Energy sector is a great case study in innovation. We have a lot to learn from the progressive Utilities that looked to set a new path, and are seizing the moment and shifting risk into opportunity and advantage. 

Now, given the maturity and complexity of the industry, I would tell the Utility industry as it struggles with change and anomalies, the same thing they said in Good Will Hunting – “It’s not your fault.” At least not initially.

Think about it. The first centralized utility was established in the late 1800’s. We’re well over a century down this path. Along that journey, electric service providers successfully evolved to energize our country and power the second industrial revolution. All good stuff.

Not only did the Utility become critical to our livelihood, but jobs in utilities were also  great jobs to have, especially in the 30’s as the lights still had to stay on. 

But now, add to this maturing industry regulation, compliance, and public scrutiny. These factors, combined with a strong command-and-control leadership style early-on, resulted in organizations that evolved to be, in general, slow to learn, slow to adapt, and slow to innovate. Honestly, they didn’t have to. Keep the lights on – most of what we did yesterday will still work today. Status quo. 

Again, this evolution of the Utility made sense because things in the past did work fine. Going too far out on a limb was possibly unsafe, uncompliant, or unpopular with the community, and maintaining a strong role in society was nothing to mess with.  

But then Elon showed up.

Today, we get pestered at Home Depot by companies that want to put solar on our roofs. I can buy a new home in a subdevelopment near Denver that has solar pre-installed and linked to a Tesla Battery in the garage. 

All of the sudden, the relationship with our energy provider has changed. And, so has the paradigm of energy services overall. 

• Generation can be distributed and private
• Energy is now expected to be bi-directional on the grid
• Microgrids and their interconnects are real now
• The electrification of the home and business continues to expand 
• The expectation for unmatched reliability and availability continues to increase
• The promise of small and large scale storage will accelerate renewables’ already amazing expansion and price drop and make a new market unto itself
• We may be actually approaching a $0 commodity market

The utility of yesteryear does not match up with this new and rapidly evolving market landscape. 

With these and other unprecedented change to the market, your local Utility, often times a 75 year-old or older organization, needs to innovate, prioritize customers, and generate value in all new ways that it has in the past.

Today’s utilities needs to become tech start-ups overnight if they expect to remain competitive and viable.

While daunting, this snapshot in time is also filled with opportunity. 

What other industry already has wired most of society together, has a chance to collaborate with them, and can add data intelligence and automation to their assets the way Utilities can? And, they’re already embedded with the customer base. While disruptors like Elon, and renewables, and batteries are challenging and complex, they are pushing our utilities to be more if they choose. 

So now that Utilities know where they came from, they can also choose where they’re going - It’s a new landscape ripe for innovation if you’re willing to reinvent.

There are Utilities that are all over this opportunity and are ahead of their competitors in transforming to be the utility of tomorrow. But before we look at what they’re doing and what we might learn from it, let’s take a sec to realize just how prevalent this scenario is – it’s not just happening in Energy.

How many of you work in a mature industry sector? One that may have been:

• Originally driven by strong top-down leadership
• That may be regulated
• That is slow to change or innovate
• That is required to be highly compliant
• That may have strong divisions between senior leadership and the front line
• Perhaps you have a Union component

 And now you’ve got your own Elon-swan showing up:

• You’re seeing new fast moving competitors – think apps that customers use to manage you
• Technology and is playing a critical role in your operations, and likely in your offerings
• Data and Artificial Intelligence are defining their place in how you optimize work and manage risk
• Your customers’ expectations for quality, response, and technology integration are evolving rapidly
• Your workforce is more diverse and wants a different experience
• Your leadership needs to support new ways of working 
• Margins are smaller, the bar is higher, and engaging employees and customers is the new model for achievement
• Your organization cannot afford to miss opportunity, minimize risk, and still remain focused on your vision – all in real time 

Just for example, ponder these scenarios:

Communications > 5G, Gig WiFi, Starlink, Slack, MS Teams

Media > TikTok, Instagram, Netflix, Roku, Disney+, etc.

Healthcare > Pandemics, Telehealth, Selfcare and Wellness

Manufacturing > Logistics, Automation, Robotics

Transportation > Uber/Lyft, Mass Transit, Micro Transit (scooters), Electric Vehicles

Education > Virtual, Free, Specialized, Just-in-time

Real-estate > Zillow, Trulia, Lending Tree, WeWork, AirBnB

Employees >  Remote, autonomous, diverse, purpose-driven, want to contribute

In a now antiquated article in Harvard Business Review, many industries were aware of disruption, but look at the bottom of the list - specifically Healthcare. They had not experienced COVID yet.

In a newer article, also from HBR, they share a great 2x2 from Accenture. Where does your organization fall? Are you ready?

So how do you make it through all this?

Honestly, I’ve droned on too long, but here’s my high level take:

It’s all about Strategy, Leaders, and Culture.

Strategies have to look farther and wider, while looking right in front of us at the same time. They have to be living organisms not 1 and 5 year plans built on the mountain and brought down to the masses, but continually revised, redesigned, and redeployed by everyone in the organization. 

Leaders have to translate fast-moving and new strategic initiatives with extreme efficiency, deep engagement of people, and with innovation baked in. they need to empower and unleash their people rather than govern them. 

And the organization itself must be committed to continually promoting the behaviors that define how we approach work, and each other, that results in an operating culture that sustains performance overtime. A culture that balances valuing people and results to define a new standard of quality that makes customers, and employees’ lives flourish. 

Easy right? Well yes, and of course no. But I’ve seen it done. 

Companies that embrace change and self-disrupt continually rise anew. They try new things, take their lumps and end up leading the way and defining the new.                                                                                     

Whole-company strategy design for engagement, buy-in, commitment and accountability is the new way of pursuing goals but through those people that do the work each day. These strategies are fresh, agile, and stem from the ideas and diverse experience of the people doing the work each day. 

Leaders that faced the music of self-analysis and feedback to truly transform how they engage and empower their people then truly transform their unit or company. They unleash accountability, performance and innovation through inclusion and co-creation.

And then, a culture that was once defined by a strong hand of leadership that limited workers through rules, approval and co-dependence – allowing no room to be heard or evolve, has let go. It now promotes behaviors where respectful challenge, learning from trying, and realizing innovation and change is owned by the employees and culture becomes the bedrock for sustained performance through engagement.   

Make no mistake, this is not a culture of politeness, but rather one of healthy debate, unwavering pursuit of goals and quality, and one that is defined, approached, achieved, and celebrated by all.

These organizations painstakingly seek-out Black Swans as a norm to exploit the opportunity of seeing change coming sooner than the competitors. And, knowing they can’t catch them all, they react to the ones they didn’t see through cultures of agility, innovation, and accountability –  supported by leaders that relinquish control for empowering those that can solve the problem best. Because they understand the clear vision, and they know their purpose, they will never miss the chance to contribute.

These are the organizations that have finally realized what we’ve know all along. 

It’s about people. 

It’s about the inclusion of all in forming who the organization is through the diverse thoughts and experience we all bring with us every day. Now we all get to call the shots (to some  degree).

Once the direction is set, and the achievement is clearly defined, it is the people that will get us there. It is the people that will define, revise and evolve the processes that optimize the system. It’s the people that will find and select and leverage the technology that speeds us forward. It’s the people that will overcome challenge and seek out the new not because their leaders make them, but because their leaders knew they have the best answers and cultivate the environments that let them exceed.

It’s about people, it’s about inclusion, and it’s about knowing our world will only become more diverse, more complicated, and more confusing. It’s about knowing that if we all get to define how we overcome, we all move forward for the benefit of all. 

As always, I'd love to hear your feedback in the comments or reach out directly to open a dialog!