Companies can evolve as long as people in steering positions maintain an entrepreneurial spirit. If no entrepreneurial decisions are made anymore, growth stagnates and organizations end up administrating themselves. In a world of stable energy prices and regulated markets, for energy companies agility and anticipation of the future were of lesser importance. Decision-making could be risk-averse and steady. In today’s environment, in which energy companies need to innovate their business models and take up new and emerging technologies to sustain competitiveness, this paradigm has changed.
Unfortunately, too often we see reluctance and inability to make decisions and take responsibility: no one wants to have the “monkey on the shoulder”, meaning, being held liable for a decision taken. This behavior mostly leads to negative business impact. If we look at the largest 10 European power producers only, there is a loss of more than €1.5 billion per year, because decisions are made hesitantly, if at all.
In this viewpoint we show how agile and digitally enhanced ways of working can contribute to tapping entrepreneurial decision power. Sometimes these are referred to as “new ways of working”.
The dilemma of energy companies
In our daily work with clients, we often see senior middle managers struggling to make decisions, while top management has a distanced and sometimes artificial view of the actual business challenges that their organizations face. Based on a sample of 20 companies, we have systematically assessed the timing and complexity of decisions across different industries (see figure), and find that these differ substantially between industries.
We see especially the Energy & Utilities sector – as a representative for asset-heavy companies – struggling with rapid decision-making.
Energy companies originate from a world in which the asset life-cycles of large power plants, transmission grids and pipelines typically span more than 40 years and where companies’ business models are driven by market regulation. Further, these businesses are often safety related or operate critical infrastructure of economies. These factors heavily determine the “DNA” of decision-making within energy companies.
In light of new technologies such as blockchain, distributed energy generation and storage, and increasing ambitions to enter service-related businesses, this “DNA” must be reinvented if energy companies wish to remain competitive in the future.