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Energy & Utilities  Process Improvement Data & Analytics

Soaring to new heights: The power of process innovation and strategic growth for electric utilities

08/28/2024

by Annika Neldeberg

Urban expansion, population booms, aging infrastructure, the rise of data centers, manufacturing growth, and the adoption of electric vehicles (EVs) are just a few examples of the increasing market demands utility companies face today and will continue to encounter in the future. In the dynamic world of utilities, balancing day-to-day operations with the pressure to meet these unprecedented demands and drive strategic initiatives can seem daunting. However, this perspective can be reframed as an exciting opportunity to innovate, explore new approaches, and strengthen foundational processes. Achieving this balance is crucial for sustainable success.

The key lies in prioritizing foundational excellence to build a robust platform capable of supporting strategic initiatives. Here are three essential steps to achieve this balance:

• Conducting Current State Assessments
• Adopting Phased Implementations and Pilots
• Incorporating Retrospectives and Re-Prioritization

Although this may seem like a complex challenge, similar to the intricacies of flight, we can break it down into actionable approaches using the analogy of the four forces of flight: lift, weight, thrust, and drag.

A Flight Path to Sustainable Growth Begins with Foundational Process Innovation

Current State Assessment (Lift vs. Weight)

The first step in aligning foundational processes with strategic initiatives is thorough current state assessments. Just as lift must overcome weight for a plane to ascend, electric utilities must ensure their foundational processes (weight) are stable, efficient, and innovative enough to support strategic initiatives (lift). This involves evaluating existing operations, identifying strengths, and pinpointing areas for improvement.

There may be areas that need immediate attention, ones that are scalable for the future, and maybe ones that meet current and near-term growth but will require future attention to ensure long-term scalability. Current state assessments help prioritize resources effectively. Remember, “old habits die hard”—challenge outdated processes, technologies, and management practices that may hinder progress now and in the future. By updating these foundations, utilities can ensure that strategic initiatives have the support they need to take flight and drive growth.

Tips for Success:

• Conduct Mini Assessments: Focus on various functions of the organization and high-critical areas like grid management, disaster recovery planning, or persistent pain points such as misalignment in Distribution and Transmission work planning.
• Take Action: Don’t wait for perfection. Start assessing now—market demand won’t slow down, and foundational operations won’t optimize overnight. Initial focus areas will guide the direction, but other priorities may emerge as you proceed. Your current state will continue to evolve, requiring further assessments down the line.

Phased Approaches and Pilots (Balancing Thrust and Drag)

In aviation, thrust propels the aircraft forward, while drag resists that motion. Similarly, in the utility sector, market demand provides the thrust needed for growth and innovation, while organizational resistance to change can create drag, slowing progress. Gradual implementations help in addressing organizational resistance to change by demonstrating the value and feasibility of the new systems or processes on a smaller scale first.

For instance in inventory management outsourcing, instead of implementing a full-scale outsourcing strategy immediately, utilities can adopt a phased approach by piloting the outsourcing in a particular region. This method allows for the assessment of outcomes such as cost savings, efficiency improvements, and service levels before deciding whether to expand the initiative or make adjustments. This phased approach helps mitigate resistance by demonstrating the benefits in a controlled setting, thus easing the transition for the broader organization.

For predictive maintenance, an electric utility could pilot AI tools on a critical component of the infrastructure, such as transformers or substations, instead of deploying the technology across the entire grid all at once. This approach allows the organization to validate the technology’s effectiveness in predicting failures and optimizing maintenance schedules, while also managing internal resistance and existing foundational processes. Another example is the enhancement of data warehousing and meter data optimization. Utilities looking to improve billing accuracy and rate optimization might start with a pilot project focusing on a subset of meter data. This phased approach enables the utility to refine data collection, system integrations, and analysis processes before implementing broader strategic initiatives that rely on meter data.

Tips for Success:

• Set Clear Milestones and Success Metrics: Define specific goals and benchmarks for each phase or pilot. These milestones help track progress and determine when it’s appropriate to scale up.
• Pivot as Needed: Phased approaches and pilots allow for experimentation and incremental implementation with lower risk. If a phase or pilot encounters unexpected challenges or underperforms, be prepared to pivot and apply the insights gained. Remember, the effort is valuable because it provides crucial learnings rather than being a wasted endeavor, but it’s essential to pivot in a timely manner.

Retrospective and Re-Prioritization (Continuous Course Correction)

A pilot constantly monitors and adjusts the aircraft’s course to ensure a smooth flight; utilities must regularly review and refine their strategic initiatives through retrospectives and re-prioritization. These processes are crucial for uncovering successes, pinpointing areas that require enhancement, and determining the most effective reallocation of resources. By establishing a consistent feedback loop, organizations can ensure that initiatives are delivering their full potential and driving strategic objectives forward, adapting continuously.

For example, a recent series of storms might have exposed issues with a utility’s outage map and customer communication, revealing that the current system struggles to handle peak data volumes. This could prompt a re-prioritization to upgrade the outage management system or enhance communication protocols to better manage future events. Similarly, if an IT department’s current structure is found to be inadequate for supporting project intake and prioritization, re-prioritizing resources towards restructuring efforts could optimize IT’s role in supporting strategic growth.

Tips for Success:

• Dedicated Resources: Ensure that there are dedicated internal and external resources to focus on strategic thinking and retrospectives. When resources are required to juggle both tactical operations and strategic thinking, the immediate demands of tactical tasks often overshadow strategic planning, leading to a perpetual “fire-fighting” mode that hinders progress and prevents forward movement.
• Two-Way Communication: Engage in active, two-way communication with front-line workers and management to gather real-time feedback. This communication is vital for accurately assessing the impact of initiatives and for making informed decisions on re-prioritization.

Prepared For Takeoff?

Facing unprecedented market demands doesn’t have to be overwhelming. By focusing on foundational process innovation and adopting the above approaches, utility companies can effectively navigate these challenges and achieve long-term success.

If your utility organization is ready to embrace strategic initiatives while enhancing foundational operations, Sendero is here to help. With our utility experience in strategic planning, digital transformation, and organizational effectiveness, we can help you navigate the complexities of balancing foundational excellence with strategic growth. Contact us today to start your journey!

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