Dan Cohen, Deloitte Consulting
Many electric and utility companies have acquired or merged with other firms in the past few years. As a result, these companies have realized occasional efficiency improvements and economies of scale. But these benefits merely represent the tip of the iceberg, with few companies realizing the full return on investment (ROI) that they had anticipated.
 Dan Cohen |
The reason that so many aggregated utility companies have been disappointed with their returns is that change issues often block the benefits of consolidation. In order to generate maximum value from consolidation, companies must move to common platforms and common business processes. This type of transformation requires more than new cultures, strategies and systems; it requires people to change their behavior.
Our research, which was based on interviews with hundreds of people within public and private sector organizations, including utilities, around the world in the midst of large-scale change, revealed that getting people to do things differently is the single biggest challenge in any transformation. And people change their behavior less because they are given analyses that shift their thinking, than because they are shown a compelling truth that influences their feelings. Emotions then trigger action—impelling people to behave in the often radically different and difficult ways that substantial change demands. This three-part process of seeing what the problems are; feeling an urgency to solve them; and being emotionally compelled to act is the fundamental process that lies at the heart of every successful change effort.
That's why successful change leaders frequently use compelling, eye-catching, dramatic situations to show people what the problems are and to create an urgent need to do something about them. For example, one executive placed stacks and stacks of overpriced supplies on a boardroom table to highlight the inefficiencies that resulted when multiple buyers within the same company purchased the same items. Another videotaped an angry customer and showed the testimony to disbelieving and complacent employees. These types of visualizations provide useful ideas that hit people at a deeper level than surface thinking. They evoke a visceral response that reduces emotions that block change (complacency, fear and anger) and enhance those that support it (urgency, optimism and faith).
The costs of not speaking to emotions are high. For example, we encountered one utility company during our research that wanted to leverage technology to do business consistently across all of its operating units. Based on data and analyses, everyone agreed, especially the CEO, that the project would generate sound ROI. But once implementation began, something went terribly wrong.
The project manager explains, "Within a few months, my phone rang off the hook. People would say, 'How long is this going to take?' 'In MY business we can'tU ' 'The cost versus benefit to OUR business unit is no good.' The list went on and on. Basically each division had many people who wanted to continue to run their business the way they had always run it. They would accept new software, as long as they suffered little inconvenience and little change except reduced costs. They wanted their financial reporting to have their traditional look and feel to it. They wanted to do maintenance scheduling their way and not the way it was being suggested. To make a long story short, we hit a wall. We had to stop, go back and start over. It was tough work, the second time around."
Quite simply, these people had not been shown in an emotionally compelling way why they should change their behaviors, so they did not feel the need to do so. For leaders in the utility and power industry, who are often steeped in analytical training, applying the see-feel-change tactic is an especially difficult shift. Yet, learning to rely more on "show" and less on "tell" is the single most important thing they can do to improve their change leadership abilities and to help their companies realize the full value of their consolidation efforts. elp
Cohen is a principal with Deloitte Consulting, soon to be Braxton, and co-author, with John P. Kotter, of "The Heart of Change." "The Heart of Change: Real-Life Stories of How People Change Their Organizations" is published by Harvard Business School Press.
