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Initiating Strategies, Actions and Measures for Optimal Results
By Rodger E. Smith, President
and Allen Dennis, Director, Energy Practice
Black & Veatch Enterprise Consulting Division
How do you develop a workable strategic plan for a utility when market conditions are unpredictable, environmental regulations are in flux, relationships with regulators are contentious and capital-spending priorities are unclear? We can do it by developing a process that utilities can use to maximize their value while fulfilling their obligations to stakeholders.
In this article, I will examine the issues that complicate the strategic planning process for utilities, then walk through a four-step approach to developing a flexible strategic plan — a plan that becomes a powerful tool for decision support and organizational communication. When implemented with a comprehensive program of measurement and consistent improvement, this plan creates value through improved productivity and profitability.
Using a recent case study as an example, I will explore the challenges faced by energy industry leaders and illustrate how our methodology for strategic value creation and performance management can help utilities identify issues, mitigate risks, predict outcomes and manage assets for optimal results.
Predicting an Uncertain Future
Turbulent market conditions and regulatory pressures are driving energy executives to focus on their core businesses. The mandate to create value within the organization, and to improve earnings for shareholders, demands that utilities understand and manage their risks and predict expected outcomes with more accuracy than in the past. An overburdened rate base, antiquated infrastructure and knowledge-worker attrition are all issues that can cloud their forecasts.
In the past, some utilities have taken a technical approach to strategic planning that ensures high service and supply reliability. Others have taken an economic approach that allocates capital resources based on disciplined financial analysis. These methods can leave gaps that result in an incomplete or inaccurate view of the issues and risks ahead.
Excerpt from "Initiating Strategies, Actions and Measures for Optimal Results," World Energy, Vol. 7 No. 2 2004. Copyright 2004 Black & Veatch, Kansas City, Mo. |
