THEME: Some Thoughts On Current and Emerging Trends
FOCUS: The Transformation of Energy
Monday morning: August 23, 2010
Dear friends,
Over the years, I have worked with a number of clients in the energy generation, transmission, and conservation business. First, let it be known that these are good men and woman who are smart, thoughtful and level headed. Every day, they face difficult challenges and handle complex questions. They meet these difficulties and solve these situations with good problem-solving skills. Putting BP’s Gulf coast challenges to the side for the moment, I am convinced that the majority of people working in this industry do know what needs to be done and do want to do things right the first time.
However, due to BP’s actions in the Gulf coast and other issues that were surfacing before this disaster took place, energy use is now clearly on the front burner of hot topics to be fixed. The difficulty is around the word “fixed.” By definition and implication, the word “fix” assumes that there is a single permanent solution which will solve a problem and restore order or normalcy. Our challenge is that there is not a single permanent solution to energy use in the United States.
For example, there is a rising tide to eliminate coal in the United States. Many say natural gas is the solution. Currently, it does not appear that we have the transmission system to handle the potential volume of natural gas that would be needed to replace coal based generation.
Next, we have the continued rise of electric cars, e.g. the Chevy Volt, and mixed use cars such as the Prius. The public does not like the expense of fossil fuels, the dangers of off-shore drilling, or the importation of petroleum from the Middle East. With cries for the demise of the combustion engine and the rise of the battery based life style, we come full circle to having to create more energy so the batteries can stay fully charged. Recognizing that some will argue over the science of global warming until the cows come home, and others will argue that alternative or green energy is the solution but not until we have a national transmission infrastructure that is comparable to Eisenhower’s interstate highway system, we nevertheless must all walk to the bathroom, look into the mirror, and ask ourselves a simple but difficult question: “Am I willing to change my energy habits?”
For example, this past weekend I borrowed the neighbor’s cordless lawn mower and cut the grass at our house. I have been wanting to try it out and see how well it works. Quiet and no fumes, the little 20 inch Toro mower moved through the wet grass cleanly and easily. When I was done, I returned it and just plugged it in. I never thought that a battery operated mower could handle the job and I was wrong. It worked like a charm. It makes me think twice about the push mower that I currently own.
While many will point fingers at the energy industrial complex as the source of all evil, few will commit to changing their own lifestyle. As senior executives, we know that organizational transformation is the sum of individual transformation. It is the same with the transformation of energy use. If we seek to generate, transmit, and use new sources of energy in new ways, then we have to be willing to understand our own personal energy choices. We are the solution and the problem all wrapped up in one.
What intrigues me on top of our personal choices is the degree to which energy management is creeping into organization’s strategic planning. While, in the past, the price of energy would have surfaced in a traditional SWOT analysis, or a more innovative PESTAL analysis, more and more organizations are starting to put energy management into their strategic plans. While this group is still small in numbers, it is slowly growing as awareness shifts to understanding. Nevertheless, we all must realize that the power industry will not change on a dime unless a large majority of people are willing to invest the capital to build a new infrastructure and the capacity to maintain this infrastructure.
In short, let’s not paint the power industry as people with limited perception or understanding. In recent conversations, they are acutely aware of what is happening in the world related to energy, and understand the short and long term implications of ours and their choices. This week we as senior leaders need to make energy management a part of all future strategic plans. As I mentioned before, our individual choices will impact our collective choices.
Have a great week,
Geery
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