Saturday, August 19, 2017

A European Utility Re-Envisioning Energy: An Opportunity for Visionary Leadership

When Eneco began a business called CrowdNett in which the company would sell large home-batteries to people having solar panels, the Dutch electric utility was on the way toward putting its electricity-production business out of business. The company would continue, though radically transformed. The strikingly different strategic-course correction was based on a rather unique vision of a novel social reality in which homes generate their own energy and then some. In the context of climate change and accumulating carbon dioxide in the atmosphere, Eneco’s CEO had an opportunity in 2017 to lead not only organizationally, but societally as well by promoting the radical social reality already envisioned.
Already by 2017, surplus power generated by houses with the solar panels could be stored in large batteries. Eneco could tap into “a portion of that storage to help balance the electricity grid. Customers [received] 450 euros, or $530, a year for allowing use of their batteries.”[1] The customers could also rent a meter called a Toon for €3.50 a month for an expected energy savings of 10 percent. However, to give customers an incentive to produce as much energy as possible beyond their consumption, Eneco should have agreed to pay per unit of energy sold to the company and given the Toon monitors away (or with a small initial fee). The incentives of the customers as producers would have been more closely aligned to Eneco's strategy. Even so, the value of the company's vision is unimpeachable.
It may seem odd in conventional terms that Eneco would encourage its customers to buy less electricity; such an approach to selling a commodity would under normal circumstances be quite bizarre, but the company’s management did not view the company as necessarily being in a commodity business for long. Moreover, the management questioned the very notion that large power plants are necessarily the default means of energy production in spite of the fact that they were at the time. The people at Eneco were utilizing their energy to transform not only the company, but also the entire energy sector, with implications far beyond the E.U.
How did the management get to that point? When the company was “locked in a profit-zapping battle with competitors, cutting prices for electric power and natural gas,” the management “decided that a radical change was necessary.”[2] Hans Valk, a former head of Eneco’s customer business, explained the thinking at the time as: “What we are trying to do is switch from selling a pure commodity to selling energy as a service.”[3] That is, Eneco would provide services to the people generating the energy. The company bought Jedlix, for instance, so to be able to get into the business of providing charging services for electric cars. Leveraging the information available from the home energy monitors, Eneco could enjoy a sustainable competitive advantage in solar-panel repairs.
In terms of the original energy-production end of the business, when “large volumes of wind and solar-generated electricity” undermined “the economics of traditional power plants,” Eneco could perceive “the outlines of a future in which conventional power plants on longer [would] supply the bulk of a home’s electricity.”[4] In a dramatic reversal, the home would be the generating site and Eneco would purchase the right to draw surplus energy in order to transfer it to homes in need of an infusion of energy. Eneco could thus potentially transition itself into being a transfer-conduit and balancer rather than a producer. The company would be juggling “a thousand points of light,” or sources thereof, and the light would be cleaner and thus in line with limiting climate change. This picture is tailor made for visionary leadership, not only organizationally, but for a societal and even global audience as well. 
In his 1989 inaugural address, U.S. President George H.W. Bush had envisioned a thousand points of light in terms of community service. He was attempting to call forth the dispersed energy of the American people. Similarly, Eneco’s CEO had an opportunity as early as 2010 to take up the mantel of visionary leadership to envision for the world a future wherein homes and businesses are the sites of energy production from wind and the sun. In parallel terms, the CEO could have extrapolated to home gardens and local farmers’ markets as potentially playing a much greater role in food production, hence reducing the carbon footprint in transporting foodstuffs. The coherence of such a vision would be amazing, such that the leadership could be quite effective in the promotion of the vision. It could be called, Radical Decentralization in a Globalized World. Such a vision is the stuff that leaders are made for. Even the radical strategic shift in buying energy-servicing companies pales by comparison. To be sure, strategic management and leadership differ; each has its own purview.[5] When the two are conflated, the bottom line usually sees to it that strategic considerations dwarf or compromise the more ethereal visionary leadership. Yet as the European energy utility demonstrates, strategic change need not be the whole story, and the combination of strategic redirection and a radical vision going even beyond the organization itself can be huge, with major dividends in the long term.

For more on visionary leadership and management, see The Essence of Leadership: A Cross-Cultural Foundation, available in print and as an ebook at Amazon. 

1 Stanley Reed, “Dutch Utility Bets Its Future on an Unusual Strategy: Selling Less Power,” The New York Times, August 18, 2017.
2. Ibid.
3. Ibid.
4. Ibid.
5. Skip Worden, The Essence of Leadership: A Cross-Cultural Foundation (Seattle, WA: Amazon Books, 2017).