Ensure breakthrough improvements in your energy management program

Sept. 11, 2006
Don't be lulled into the status quo when building your energy management program. Instead, invest in consultants that bring a new way of thinking to the same old problems, says Peter Garforth in his latest Energy Expert column.

We looked at the crucial role of leadership (or more frequently, lack thereof) in August, as the most probable single reason why even the best conceived corporate energy management programs lose inertia. The skill of the energy manager is key, as is the respect  one can command in the organization. Almost equally important is the unquestioning and continuous commitment of the CEO in supporting challenging goals.

But is the combination of senior sponsorship, qualified and respected program leadership and unambiguous goals a guaranteed antidote to flagging enthusiasm and energy program fatigue? Unfortunately, no. There is a graveyard of well led and well designed programs that failed to gain traction and deliver their promise. So what other factors are at play?

A company taking a new look at energy will be looking for new energy expertise, frequently in the form of specialist consultancy or energy engineering. How these experts are selected is a crucial factor in ensuring the breakthroughs are delivered. In most cases, the existing staff establishes the selection criteria based on their own past experiences and perception of what measures and improvements are reasonable. Naturally, they also will tend to short-list the advisors with whom they are most comfortable.

All too often, they select advisors whose experience is likely to be based on the status quo of the local market, and whose view of energy productivity is most likely to parallel the existing view of the company management. This in turn sets in motion a series of programs that, at best, deliver useful, but incremental, energy productivity gains.

It also has the effect of reinforcing the currently held views of what is and isn’t possible, further minimizing the probability of new thinking. At its worst, this cycle supports a view that the company is already doing a pretty good job of managing energy, and the small incremental gains can be captured without “costly” experts or a special focus or new energy management disciplines.

How do companies avoid this slippery slope to the status quo? First, thorough external benchmarking during the design of the energy programs is crucial. Understanding how companies like Toyota, BASF and Alcoa, among many others, achieve energy productivity levels clearly far superior to their industry peers is crucial to making sure goals are truly challenging. Second, the energy management targets must be included in the targets for the outside consultants and be clearly understood by them as non-negotiable.

The company also should seek advisors who clearly bring new thinking. Given the global nature of the energy challenge, these may come from other industries and other parts of the world. As just one example, unlike the United States, Europe has had to live with high energy prices for decades. As a result, expertise and experience in renewable energy, cogeneration, heat recovery, high-efficiency buildings, advanced industrial process control and other management practices are somewhat more widely available.

A company looking for expertise in these areas, at a minimum, should be open to looking beyond U.S. borders for expertise. This isn’t always a comfortable exercise. Different cultures, engineering traditions and even measurement units systems have to learn to work together, which takes time and mutual understanding.

I’m currently working with a large corporation that sees the value of bringing in new perspectives from around the world. They are including German energy engineering and economic expertise in evaluating integrated energy solutions. This already has resulted in projects that will save hundreds of thousands of dollars in energy costs per year with higher than anticipated rates of return.

The Energy General Manager should consciously seek out new perspectives and encourage colleagues around the corporation to challenge conventional or incremental thinking. It’s also useful to validate selections with some of the benchmark companies. If their comments about potential resources sound something like, “We thought they were crazy with the goals they were prepared to commit too, but we have to admit they exceeded even these levels,” they are probably a team to consider.

Picking the right energy advisors also challenges the company’s own management to embrace and deliver challenging energy performance goals. This brings us to the other key aspect as to why energy management programs lose inertia. With the launch of the energy program, it’s understandable and appropriate to emphasize the need to educate and engage management in an effort to build early-stage enthusiasm. From the launch of the program, management must learn to shift from an essentially persuasive stance to one that expects accountability for delivering the energy results. I’ve heard this jokingly described as a process that moves from “best practice sharing” to “peer shaming” to “career limiting” if there proves to be reluctance to embrace the energy goals. We would never bow to management reluctance to accept safety or other strategic productivity goals. Given the growing competitive importance of energy, it should be no different.

Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].

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