Because of historic low U.S. energy costs and plentiful supply, our energy management track record has been less than stellar. New market realties of higher and rising energy costs, and global pressures on reducing fossil fuel intensity, now make the rewards proportionally higher. The bottom line is a huge opportunity that can be captured quickly using productivity management basics that most companies are familiar with.
Given this background, why is it still the norm that many, if not most, new energy management programs hit implementation fatigue at relatively early stages and almost universally fail to gain long-term traction? In short, why do energy productivity programs run out of energy?
Lets begin with the key challenge for any major new opportunity: leadership. In almost every case, a successful program needs a respected, senior energy general manager. This new role is often viewed with skepticism by at least some of the leadership, and too often filled by someone who lacks the necessary skills and passion.
The ideal candidate understands how economics, procurement, technology and daily management play together. He or she is able to inspire excitement about a subject traditionally ignored or viewed as dull and technical. The person also needs to be able to work in great detail on energy data and goal setting, individual management programs and projects, yet still keep the strategic clouds of the big picture in focus. The energy general manager also must have a natural instinct to visibly celebrate success, however small or large, and to challenge failure without losing team support. In short, the skills of an effective energy general manager are identical to the skills of any effective general manager.
If your energy management program is slowing or failing to gather momentum, the first place to look is at the profile of the energy general manager, and the support the role is being given by more senior leaders. All too often, the role is filled not by someone with the right skills, but by someone who is available and, as a colleague of mine recently remarked, Availability is not a skill.
Lets now turn to expectations. The program is launched amidst much fanfare with breakthrough goals positioning millions of dollars of high-return rewards. As the implementation rolls out, the lack of good energy usage and cost data becomes increasingly evident, making it hard to establish baselines and demonstrate that early-stage programs really did deliver. At the same time, the efficient cost-management systems of most companies immediately reveals what is being spent on training, consultants, meetings, engineering and material. It doesnt take long before the perception starts to build that while the costs are clear, the benefits arent.
Add to this the reality that effort and investment always precede results, combined with residual elements of organizational skepticism, and it isnt long before the whispering says to reduce the cost of the program because of uncertain benefits. Thus begins the kiss of death.
What needs to happen to avoid this is obvious. First, establish data availability and clearly measurable, time-related goals very early in the process. This is a non-negotiable requirement. The energy general manager has a critical communication role to play through this early stage. As teams are formed and small process successes start, they should be widely communicated and celebrated. How these early successes extrapolate into much larger future benefits through their own growth or by proliferation to multiple sites should be clearly and simply spelled out. Goals should be adjusted upwards as reality hits.
Another area that causes slowdown is all too frequently brushed under the table and deserves some airing. In many circles and conversations, managing energy for maximum productivity is seen as the kind of thing only tree-huggers and technical wimps worry about, and real macho managers worry about other things. As I once overheard in a utility management meeting, Energy efficiency is not important, our real role is to build enough power stations and transmission lines.
This is often reinforced by management assigning responsibility for energy and climate change leadership and corporate communication to units traditionally seen as non-operational, such as Environmental, Health and Safety. The obvious way to avoid this is for the most senior managers to challenge this attitude by demanding accountability for energy productivity as a normal and expected part of professional management.
At the most senior level, the board, shareholders and customers must hold the CEO accountable for the millions of dollars of potential productivity, and not be persuaded that this is too hard or too costly to collect. Under this kind of pressure, energy management gets macho pretty quickly.
Next month, I will continue explaining how energy programs run out of energy by examining the insidious and effective slowdown caused by past habits and inertia.
Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].