Our industry is full of buzzword bingo and acronyms

Stefan Schmidt has written an article on his interpretation of the Global State of Operational Excellence Survey Report - Critical Challenges & Future Trends - 2018/2019.  Click here to download the full Survey Report 2018/19.  

 

The Most Comprehensive Study of Critical Challenges and Future Trends within Operational Excellence

With nearly 1000 respondents, 37 insightful questions, detailed analysis & insights from 40 industry thought leaders, and the BTOES Insights executive team, this 130 page report is recognised as the most comprehensive study of critical challenges and future trends within Operational Excellence, and is considered a key resource for the industry. Areas covered include:

• The Critical Operational Excellence Challenges faced by executives.

• The Current Scope of Operational Excellence.

• How is Operational Excellence success measured?

• Key Findings & Roadblocks.

• What are executives focusing on over the next 12-18 months?

• What have been the greatest developments?

• What are the key drivers pushing change in Operational Excellence?

• Industry Perspectives.

• Small, Medium & Large Corporation Perspectives.

• Detail Analysis & Insights from BTOES Insights Executive Team.

• Detailed Analysis & Insights from 40 Industry Thought Leaders.

• Analysis of key themes, including Cultural Transformation, Customer Delight, Sustaining an Operational Excellence program, Need for end-to-end Business Transformation, Keeping up with new technologies/impact of digitalization and Leadership Buy-in & Understanding.

 

 

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Our industry is full of buzzword bingo and acronyms

Our industry is full of buzzword bingo and acronyms. And I can’t stand it. Sometimes, I wonder if my industry’s obsession with buzzwords and acronyms to some extend confuses the client or simply covers up a consultants’ lack of customer understanding.

 

Keep it simple

The truth is – and most consultants should agree on that – that the oldest philosophies, with the simplest solutions, and coincidentally with the fewest buzzwords, are in general the most impactful ones. Understanding customers, and putting them at the heart of the organization, should be the first priority for every business.This rather simple strategy has caught out a number of European utilities. Click here to read the full Survey Report 2018/19.   

 

A lack of ability to quickly adjust to customers’ demands and needs, ultimately had a profound impact on utilities’ business models. Whether it has been misjudging the market for residential solar PV, or being agile enough to grapple with the flood of small, highly tailored, digital suppliers, the utility industry has struggled lately.

 

In the past, utilities have focused on well-known tools, such as classical lean management and cost efficiency, but they have done little to prepare the business for the unknown unknowns of innovation and customer demands. It wasn’t promising for an asset heavy business – but simply, it was also not necessary to cultivate an innovative company culture and concentrate on the customer experience.

 

 

This all changed in the 2010s.

The energy revolution – moving away from conventional power such as coal and nuclear towards renewable energy – became a game changer for many large utilities. For more than hundred years, they have successfully delivered products and services across the entire value chain: exploration, conventional power generation, grid & infrastructure and retail business.

 

The paradigm change caused by the energy revolution and digitalization requires a new modus operandi. Traditional industries often wonder when they will have their kodak moment and will no longer be relevant to customers – for utilities this has become clear over the last ten years.

 

 

Building on more than a decade of fostering operational excellence and lean principles within the energy industry, I have seen many classical lean or efficiency improvement programs and methodologies that didn’t succeed.

 

That has been especially obvious when I look back at the turbulent and dramatic changes that we experienced during the last few years in the European energy industry. It challenged us to develop a new way of working, and here is our story…

 

 

How innogy responded to the energy revolution

Today we can proudly say that innogy, one of Europe’s largest utilities, has transformed from a traditional, fully integrated utility to a multi-sided, innovative company, focusing on customer needs, operational excellence and lean principles. We have established a culture of continuous improvement and enabling employees. And most importantly, we developed a leadership style that is focusing on sustainability and systemic change.

 

Based on our experience, a combination of operational excellence and systemic perceiving was crucial to successfully shape our company and the entire energy industry  and to get closer to the customer. There is empirical evidence that large transformations are only successful if two factors have been considered: the “what” and the “how”. “What” means having the right strategy in place to achieve the financial goals that have been set. “How” relates to systemic perceiving, values of customer orientation, outward orientation, performance culture and people enablement. Systemic perceiving is having a sense for what is going on in your team and in the organization on a deeper level.

 

 

Combining “what“ and “how“ is the key to success

At innogy we established a program called “New Way of Working” that combines operational excellence and lean philosophies, with systemic change management and the ability of systemic perceiving. It aims to put customers at the heart of the business, drive financial performance and give employees at all levels a greater voice. It contains of four main principles that are closely linked:

 

1. Customers: improve customer satisfaction

2. Financials: increase operating cash flow and reduce costs

3. Leadership: enable and support leaders

4. Employees: enable employees and improve employee satisfaction

 

Whereas classical lean methods are focusing on shop floor performance and E2E process improvements, we think of this approach as too narrow for today’s complex and interlinked value chains. To provide sustainable solutions for our value chain, including administrative and cross-functional departments, other qualities and abilities were crucial. A shift from traditional lead excellence performance to a new value proposition towards customers was necessary. We focused on a philosophy rather than only on tools. Keeping it simple, making it happen and focusing on the customers was always of utmost importance to us.

 

innogy’s Operational Excellence Program is driven by our philosophy of “measure, learn and improve”. It aims to continuously increase performance:

 

Our program aims at performance targets which are challenging and ambitious. They are designed to be achievable by teams and to motivate them. innogy’s transformation program changed daily work and the relationship between leadership and employees, continuously promoting and improving practices.

 

 

Our main levers for success

In my opinion, the success factors for  are:

 

• Standardizing our way of working and building-up capabilities that lead to a changed mindset and transform customer experience into quick, high impact and lowcost operations

• Prioritizing speed and execution over perfection – which requires agility in delivering products to customers and quickly learning from them

• Driving the management system, advancing lean leadership – focusing on results, being supportive, seeking different perspectives and solving problems effectively

• Bringing out the best in people, capability building at scale; increasing the value employees can contribute

 

 

What we achieved with our new way of working

The implementation of this philosophy and approach helped to generate more business across Europe with continuous improvements. More than 70 projects have been conducted following our new approach, covering generation, grid, infrastructure, renewables, administration and x-function businesses in Central and Eastern Europe. More than 26,000 employees along the entire value chain have been enabled. With 300 directly trained experts and a developed central academy to ensure sustained and continues learning, projects are handed over to the clients once they reach a self-sustaining state.

 

Today, innogy is the world’s 3^rd largest offshore operator; Germany’s 2^nd largest grid operator and a leading integrator of renewable energy and EV charging. innogy is also the top energy retailer in four core markets with a total of 23 million customers across Europe. Our partner RWE, is an international leader in conventional power generation and energy trading.

 

There is still room for improvement and we are not tired of the challenge. We enjoy the opportunity to challenge the status-quo, to further improve customer satisfaction, and in turn our business, our teams and ourselves.

 

So next time you are in a board room, with another round of buzzword bingo from your favorite strategy consultancy, just remember: you really can’t go wrong by focusing on the customer to drive the change you need in your organization. It has worked for innogy, and it could work for you, too.

Today even other businesses come and talk to us to find out more about our journey and how to adopt ideas for themselves.

Inspired how to shape your industry with operational excellence and systemic change? Do not hesitate to reach out and get in touch.