Plannins;

Finds Its Way

After losing its way
in utilities and cor-
porate America in Back
general^ strategic planning is returning^ this
time on a new path. By Eric Krell

H
ailed as management pioneers in the

mid-1960s, strategic planners brought

form to a strategy-making process that

had long operated more on guts and

instincts than on discipline. They manned newly created corporate stra-

tegic planning departments. Their mission was to design specialized

planning systems and new ways of going about the process. These sys-

tems and metliodologies churned out precise instructions to which their

colleagues in operations and other functions adhered so that they could

craft and execute strategies without erring from the plans.

34 ELECTRIC PERSPECTIVES
/
 Wood
Mackenzie
5847 San Felipe, Suite 1000
Houston, TX 77057
713/470-1600
www.woodmac.com
Contact
Mara Safe
mara.saltz@woodmac.com
Wood Mackenzie is a leading provider
of independent, objective research and
consulting services to the globai energy
industry. For more than 30 years, it has
been recognized as a trusted advisor and
world-ciass brand.
The company provides services to more
than 400 clients-including major energy
companies, financial institutions, nationai
oii companies, governments, and govern-
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Wood Mackenzie's North American power
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Mackenzie
3e ELECTRIC PERSPECTIVES
As the new departments gained in that already exist," Mintzberg wrote.
popularity, they aiso grew in size—and, "When companies understand the dif-
some complained, in their extreme ad- ference between planning and strate-
herence to an academic and theoreti- gic thinking, they can get back to what
cal approach to their jobs. By the early the strategy-making process should be:
1990s, their over-formalized and tidy Capturing what the manager learns
assessments of corporate strengths and from all sources (both the soft insights
weaknesses had grown too detached from bis or her personal experiences
from the messy reality of and the experiences of
dynamic business risks otbers throughout the
and opportunities. organization and the
GE's Jack Welch, tired When companies bard data from market
of all the big binders fiill research and the like)
understand the and then synthesiz-
of strategy blueprints
that often stayed on the difference between ing that learning into
planning and strategic a vision of the direc-
bookshelves, famously
fired his strategic plan- thinking, they can get tion that the business
ners. Hastening strategic should pursue."
back to what the
pianning's fall from the Mintzberg migbt be
strategy-making pleased that his kind of
corporate garden's grace
was The Rise and Fall of process should be. strategy making thrives
Strategic Planning (New within electric utilities
York: The Free Press) in 1994 by re- in 2007. In many companies, strategy-
nowned management professor Henry making and strategic thinking work
Mintzberg. The book pronounced stra- hand-in-hand. Strategic planners facil-
tegic planning a failure and strategic itate healthy collaboration inside and
planners the culprits in an inflexible outside the organization, generating
corporate world. fresh and actionable insights on the
"Strategic planning, as it has been
practiced, has really been strategic
huge issues: baseload capacity con-
struction, potential carbon constraints,
renewable energy standards, advanced
programming, the articulation and
elaboration of strategies, or visions,
Eric Krell is a business writer in Austin, 7X
metering infrastructure, energy effi-
ciency, and other bet-the-company

KEMA
67 South Bedford Street
Suite 201 East
Burlington, MA 01803
781/273-5700
www.kema.com
Contact
Krjsten Brewitt, Corporate Communications
kri sten .brewitt® kema. com
With 80 years of experience in serving
energy and utiiity clients, KEMA has de-
veloped a reputation for integrating deep
technical and functional capabilities with
management expertise to provide soiutions
that deliver profitable, reliable, sustainable
results. KEMA specializes in business and
technical consulting, operationai support,
measurement and inspection, testing, and
certification.
More than 500 energy and utility clients
in more than 70 countries rely on KEMA's
impartial, objective, and expert consult-
ing services to plan, build, and maintain
their strategies for growth. KEMA's clients
include energy and utility companies, in-
vestors, government agencies, and major
industrial electricity consumers. KEMA also
serves energy and utility sector suppliers,
electrical component and end-product
manufacturers, and retail and wholesale
energy traders.
challenges. The strate-
gic-planning processes
help synthesize insights
from diverse sources for
the CEOs and their execu-
tive teams to digest and
then relay strategies to an
expansive team of stake-
holders with objectives
that can be monitored,
managed, and, above all,
executed.
"It's all about starting
witb the vision from the
CHO and tbe board," ex-
plains Mark Myers, vice president of
corporate panning at Progress Energy.
"You need to understand where they
want to take the company and then
translate it in a way that allows you to
set up tbe organization to work in a
collaborative way to move that agenda
forward. For strategic planning to be
successful, it needs to be as collabora-
tive as possible tbrougbout the orga-
nization."
Are the strategic plan-
ning efforts among eiec-
tric utilities devoid of
obstacles? Not by a long
shot. I lowever, it is appar-
ent to many in tbe indus-
try that strategic planning
staffs are more focused
and better equipped to
facilitate and, in many
cases, participate in stra-
tegic planning tbal bas
evolved beyond a discreet
annual exercise into an
ongoing process.
"We do not have a single document
we update. There is no tome that says,
'This is Ameren's corporate strategy."'
says Steve Kidwell, the company's man-
ager of strategic planning. "It's much
more a set of processes, meetings, and
other forms of collaboration."
That strategic thinking thrives in
many companies within an industry
where it had faded away—unseen dur-
ing tbe recent back-to-basics push, or

KEMA's 1,500 professionais dedicated

to the global energy and utility industries
include ieading authorities and innovators
in energy and utility technologies and mar-
kets, as well as in business and manage-
ment processes.

KEMA's North American business opera-

tions are headquartered in Burlington, MA.
Parent company, N.V. KEMA, is headquar-
tered in Arnhem, the Netherlands, with
subsidiaries and offices worldwide, www.
kema.com

KEMAi
38 ELECTRIC PERSPECTIVES
 Huron
Consulting
Group
550 West Van Buren Street
Chicago, IL 60607
866/229-8700
312/583^700
www.huronconsultjnggfoup.com

Contact
Michael Laros
312/880-3874
mlaros@huronconsuitin^roup.com

Michael O'Connor
312/583-8724
moconnor@huronconsultin^oup.com

Huron Consulting Group helps clients et-

fectively address complex challenges that
arise in litigation, disputes, investigations,
regulatory compiiance, procurement,
financial distress, and other sources of
significant conflict or change. The company
also helps clients deliver superior customer
and capital market performance through
integrated strategic, operational, and orga-
nizational change. Huron's staff provides
services to a wide variety of both financially
sound and distressed organizations, includ-
ing Fortune 500 companies and medium-
sized businesses.
Our utility consulting professionals provide
rate case, financial, and operational con-
suiting services to utility companies. We
deliver the crucial combination of industry
experience and commercial expertise
needed to address a full range of complex
issues affecting the cost, quality, and reli-
ability of service that electric, gas, water,
and telecommunications executives face
today. Our world-class utility consulting
team consists ot former corporate execu-
tives from Fortune 100 utility companies as
well as seasoned consultants, many hav-
ing more than 20 years of relevant utility
experience.
For more Information, please contact us at
www.huronconsultinggrQup.com.
even further back, prior to deregula- ning and insist that the process is the
tion, when planning referred almost mission of the entire organization. At
exclusively to resource planning, not many utilities, the strategic planning
corporate planning—represents a par- group, whether nestled in the finance
adox Mintzberg might or legal functions or op-
enjoy. After all, his coy erating as a stand-alone
proclamation of strate- unit, has never been
gic pianning's demise leaner. Yet, its reach
Electric utilities
actually contained a appears to have grown
detailed plan for its im- both large and small stronger, more visible,
provement, which by have significantly and more thoughtful
most counts, appears to changed their than ever before.
have taken root among strategic planning "The conventional
electric utilities of varied wisdom now holds
shapes and sizes. structures, approaches,
that there is a differ-
"There was a sense and roles in the past ence between strategic
that we needed to do five years. planning and strategic
some strategic planning thinking, or strategy de-
to better prepare ourselves for out- velopment," says Dean Maschoff, vice
comes that are simply not predictable president of energy and environment
or static as they were a number of years practice for CRA International. "There
ago," notes Ian Yeates, manager of cor- was a sense in the industry that strate-
porate planning and regulatory affairs gic planning was becoming too much
for SaskPower. "As a result, planning of a check-the-box exercise and not
throughout the industry began to oc- enough time was being spent on the
cur in a more traditional strategic plan- actual development of strategy. That
ning context. When you start adding it sense caused some major rethinking
all up, the old planning world of simply about the role of the strategic planning
sorting out engineering shortfalls and function—and some major changes."
basing business plans and budgets on
those needs just doesn't cut it." A Different Planet

Hur«n CONSULTING GROUP

Other paradoxes appear in current
strategic planning approaches. Lead-
ing strategic planners simultaneously
take responsibility for strategic plan-
Electric utilities both large and small
have significantly changed their stra-
tegic planning structures, approaches,
and roles in the past five years. Go back

4O FLECTRIC PERSPECTIVES
 CRA
International
CRA International is a world leader in
providing economic and financial expertise
and management consulting services to
the energy sector (oil, natural gas, power,
coal, and renewable energy).

For over 40 years, CRA lias offered a

unique combination of deep industry expe-
rience, broad expertise in a range of func-
tional disciplines, and rigorous economic,
financial, and market analysis to senior ex-
ecutives, regulators, policymakers, and law
firms around tbe world. Our btgb-stakes as-
signments include asset valuation, market
design, auctions, litigation, environmental
strategy, and advice on strategic decisions
sucb as business restructuring and bedg-
ing. We have structured multi-billton-dollar
markets, offered expert testimony in cases
involving billions of dollars in claimed dam-
ages, and played a key role in most electric
utility mergers and acquisitions In North
America over the past decade.
Headquartered in Boston, CRA bas over 20
offices on four continents. More informa-
tion is available at www.crai.com.
INTERNATIONAL
ten to fifteen years, and the contrast
grows even more dramatic. Deregtila-
tion, the back-to-basics push, geopo-
litical uncertainty, a recent
proliferation of environ-
mental issues, and other
external forces sparked
the change.
"It may not be unprece-
dented, but we're certainly
entering another period
driven by different chal-
lenges than in the past,
great uncertainty about
future and, therefore, real
challenges in strategic
planning," Kidwell notes.
Prior to deregulation, so-called
"strat planning" focused squarely on
regulated returns, asset build up, and
long-term demand projections within
well-defined service jurisdictions.
"Strat pianning was almost limited lo
the engineering function," recalls Joe
Scalise, a partner in Bain & Company's
global energy and utilities practice. As
such, strategic planning previously re-
lied much more on calculating supply
and demand projects than on compli-
cated evaluations of more intangible
and interrelated uncertainties, such
as public and political perceptions of
energy use, geopolitical unrest, regula-
tory trends, shareholder sentiments,
fast-growing Asian economies, and
worldwide demographic trends, says
Scalise.
Ten years ago, Sask-
Power conducted fa-
cilities, engineering, and
capacity planning to sort
out when it needed new
generating facilities to
deal with load growth,
new wires to connect
customers, and new
transmission lines. "It
was done purely on an
engineering basis," Yeates
recalls. "The underlying
assumption was that to-
morrow will be just like today except
bigger. Strategic planning didn t really
occur. Since that time there have heen
so many changes to that essentially
static environment that it's a com-
pletely different planet."
As a result, SaskPower and many
other electric utilities now count re-
source planning, regulatory relations.

42 ELECTRIC PERSPECTIVES
Enspiria
Solutions, Inc.
6560 South Greenwood Plaza Boulevard,
Suite 500
Greenwood Village, CO 80111-7100
www.enspiria.com

Contact
Cindy Menon, Marketing Manager
303/520-2513
cmenon@enspiria.com

Enspiria Soiutions Is a leading provider

of consulting and systems integration
services to the utility industry. We help
utilities improve operational effectiveness,
asset performance, customer service,
and energy efficiency. Headquartered in
Denver, Enspiria Solutions is backed by the
financial strength of its parent company
Osmose Holdings, Inc., with $550 million
in annual revenue.

At Enspiria Soiutions, we are very proud

of our satisfied customers. With over 2,700 and community relalions as integrated Ameren's three operating business
client engagements, we have gained an
components of the strategic planning segments and its corporate functions
unparalleled depth of industry subject mat-
process. CEOs and boards of direc- also have taken more active roles in
ter expertise, in the emerging arena of ad-
vanced metering infrastructure, Enspiria's
tors have taken a much more active strategic planning. Finally, Kidwell and
staff has performed AMI projects for more and visible role in the his group now collabo-
than 15 utilities, touching more tiian 35 process. And more ex- rate with the finance
million meters across North America. ecutives, managers, and and human resources
employees throughout Wlien tlie system is functions to establish
Enspiria Solutions specializes in the organization now tighter links between
used as intended, it
• Advanced metering Infrastructure contribute to a contin- strategy, performance,
• Asset/work management ual process. transforms strategic and compensation.
• Demand response "We involve many planning from a theo- "Our compensation
• Distribution/substation automation
more people up front," retical exercise into is tied to the 'Balanced
• Enterprise infrastructure/integration
says Eric Norberg, Min- measura ble—and Scorecard,' and those
• Field force automation
• Geographic information systems
nesota Power's senior scorecards are driven
vice president of strat- therefore, managable— from strategy," says
• Outage management systems
• Smart grid egy and planning. "No action. Kidwell. "That helps
longer does a strategic establish a strong link
Our personnel are industry leaders in the pianning department once every three between the mission, vision, and val-
design, business case development, justi- years update a big formal plan that is ues of the company, our corporate
fication, deployment, systems integration, then put on the shelf. We're keying on strategic initiatives, and individual
and enhancement of IT systems. flexible plans that can be continually performance."
reviewed, updated, and adapted to Developed in 1992, the Balanced
change. It is not a static plan." Scorecard is a management system
Ameren's strategic planning process that helps the company translate
has been anything but static in the past strategy into action by measuring and
nspiria' 'SOLUTIONS
36 months. The company's board of
directors embraced a more active role
communicating the status of corporate
objectives as they are supported, to
An Osmose, Company
as a strategy counselor, as evidenced varying degrees, by various processes,
by two strategic off-site retreats with initiatives, and key performance indi-
the officer group in the past two years. cators throughout the entire organi-

ELECTRIC PERSPECTIVES
zation. When the system says Kidwell. "The impor-
is used as intended, it tant thing is for the group
transforms strategic to leverage expertise and
planning from a tlieoret- engage the organization.
ical exercise into mea- There are a lot of good
surable—and therefore, thinkers out there. Strategy
manageable—action. is not the sort of thing you
sit in room and dream up
Participatory with staff people. You have
Faciiitation: to get out there and prime
More Than Two Vague the pump of the operations
Words folks." He also counts on
Many of Ameren's sig- functions such as finance
nificant changes ema- and human resources (HR)
nate from a strategic planning group as key collaboration partners.
that consists of five people, includ- Myers' corporate planning group
ing Kidwell. Operating ieanly requires at Progress Energy also features a lean
Kidwell to seed his staff with diverse staff. When he assumed the role two
skill sets and experience and to foster years ago, Myers says strategic plan-
intensive collaboration on the plan- ning represented more of an academic
ning process throughout the entire exercise. "It was not integrated with
organization. (See the sidebar, "New more tangible financial and perfor-
Ideas.") mance measures that clarified the value
"The core group should be small," of the strategy," he explains. To correct
that, Progress revamped Its corporate
planning group, which now includes
strategic planning, financial planning,
regulatory planning, and corporate de-
velopment (such as evaluating mergers
and acquisition opportunities), and re-
ports to the chief financial officer.
"Our group consists of a handful of
people," Myers says. "Where you really
need the expertise is out in the func-
tional areas. We're a facilitation group
to get the people together.'"
Facilitation is a tricky word in the
strategic planning vernacular. Critics
like Mintzberg dismissed planners for
"over-facilitating"—focusing too much,
and from a removed vantage point, on
structure and process. Most planners,
according to Maschoff, no longer focus
exclusively on planning; they're more
involved with the creation of strategy,
working beside operational executives
and the c;i;O. "In most cases," Maschoff
says, "the person now sits at the table

A High Fidelity Approach to Utility i

Mark Johnson - Audiophile, handy man, amateur landscaper,
travel enthusiast, gas and electric subject matter expert

When it comes to sound reproduction. Mark Johnson's quest is for

absolute clarity, precision and resolution. With a passion for
uncovering the best technology and a knack for getting the highest
quality for the lov*/est investment, it's no surprise that Mark's vocation
mirrors his favorite past-time, Mark's 27 years of utility IT experience,
along v^ith his ability to listen for details and hear the subtleties, have
resonated deeply with his long list of utility clients. Each component of
every spatial integration project he plans and deploys — from the
database to the engineering design tools — operates in total
synchronicity. ideally matched to each utility's needs. The result? Pitch
perfect systems integration — every time.

iiria
)LUTIONS

Real People with Inspired Solutions to Re

wvvw.enspiria.com •

JULY/AUGUST 2007

Accenture
180 North LaSalle
Chicago, IL 60601
www.accenture.com/utilities6
Contact
Mark Papia, North America Utilities
Marketing Manager
727/687-0803
mark.d.papia@accenture.com
Jim Sayles, Global Marketing Director,
Utilities
206/839-2368
jim.m.sayles@accenture.com
Accenture is a global management
consulting, technology services, and
outsourcing company. Committed to
delivering innovation, our Utilities industry
group collaborates with its clients to
help them become high-performance
businesses.
With deep industry and business process
expertise, broad global capabilities, and
a proven track record, Accenture can
mobilize the right people, skills, and
technologies to help our utilities ciients
improve their performance.
We work with over 300 utilities in 43
countries and serve 83 percent of the
Global Fortune 500 utilities. As an industry
participant, Accenture serves 15 million
utilities end-customers in North America
and Europe, processes 50 million bills at
99.9 percent accuracy, reads 30 million
meters, and handles over 10 million
customer inquiries annually.
To learn more, visit our web site at
accenture.com/utilities6.
accenture
High performance. Delivered.
ELECTRIC PERSPECTIVES
and is part of the strategy development job experience and planning skills, the
process."'
Many of the people interviewed for
credibility necessary to spark produc-
tive collaboration throughout their or-
this story would be better described ganizations. (See the sidebar, "Making
as "participatory facilitators." They are Off-Sites Work.")
just as likely to possess 15 years of op- Other strategic pianning executives
erational experience as an MBA. Each of prefer to crystallize their roles in even
them has earned, through their on-the- simpler terms. "The tnarching orders I
teve Kidwell, Ameren's manager ol strategic planning, possesses an undergradu-
ate degree in physics, a master's degree in nuclear engineering, another master's in
energy analysis and pubiic policy, an MBA. and more than two decades ot experience
throughout the energy and utility businesses of the St. Louis-based holding company. And
he still feels a bit under-qualitied tor the rigors of strategic planning. "I'm threatening to get
a Ph.D. in philosophy," he says.
In theory, the blueprin! tor strategic planning is not nuclear science: Identity risks and
opportunities, agree on objectives, and chart a course. In practice, the execution of a strate-
gic plan frequently collides with a diverse collection ot obstacles, Executives can't carve out
planning time from schedules laden with pressing regulatory and competitive issues that
consume their attention, Veteran operational leaders balk at requests for insight. Turt battles
crop up constantly.
Overcoming those and other
challenges require what Kidwell
describes as diversity ot thought
within the corporate planning
function. That variety, he notes,
strengthens the communica-
tions about the strategic planning
process throughout the organiza-
tion. "There is a natural, healtliy
tension among corporations and
their business segments around
who controls the execution and
development ot strategy, how success is determined, how this whole process runs," Kidwell
says. "You need people who are capable ot exploiting the potential strengths ot that tension
as opposed to making it destructive or dysfunctional."
That explains why Kidwell emphasizes relationship-building skills as he helps his boss,
Ameren vice president ot corporate planning Michael Moehn, create more knowledge, ma-
turity, and experiential diversity within their tunction.
At Progress Energy, vice president of corporate planning Mark Myers seeks a similar
mixture ot expertise in his group. "We have a collection of people who bring a variety ot
backgrounds to the process," he notes. "We've got some engineers, some financial people,
and some operations people. That assortment strengthens our ability to probe, ask the right
questions, and key up the right issues tor the entire organization to consider,"
I Kidwell tinds that managers and employees throughout Ameren love to talk about strat-
egy. His deep and varied background and expertise plays a valuable role in facilitating those
communications. So, too, does his busy travel schedule. He regularly attends operationai-
level strategic planning meetings, such as the management review meetings that Ameren's
nuclear operation holds quarterly, to maintain connected with the issues and thinking ttiere.
"Strategic planning is everybody's job," Kidwell says, "I try to get out and talk to operational
groups in the tield whenever I get the chance. Strategy gets executed every day tor good or
ill. The more you communicate about the need tor processes to be aligned with the execu-
tion ot strategy, the better the whole plan works."
liave really come down as a philosophy
from the top," notes Geoffrey Lubbock,
NSTAR's vice president of financial and
strategic planning and poticy. "The
philosophy that comes from our CEO
is that we reatly do what's best for the
customer. We start off with the end
goaj, which is to do the thing right and
then we work back to how we make
money at it. The strategy as it comes
down to me is 'Gofixit, Geoff.'"
Fundamental Steps
Lubbock oversimpiifies, but only
slightly. He and several of his coun-
terparts at other utilities emphasize
that the fundamental steps of strategic
planning are straightforward.
"If 1 had to identify a bottom line
to strategy, trust is number one. Actu-
ally, trust is probably number one, two,
three, four, and five," Lubbock says.
"Strategic planning is not running a
thousand numbers or iooking for new
markets. My job on the strategic plan-
ning side is to align interests."
For example, NSTAR's collabora-
tion with Cambridge, MA, and other
state and commimity organizations
on a $100 million-plus efficiency ef-
fort (designed to reduce annual green-
house gas emissions from the city by
10 percent during the next four years)
represents an alignment of interests.

Making Off-Sites Work

e strategy retreats promise enriching collaboration, but Al the meeting
i they frequently come up short of their potential. Executives m Get the participants to talk in the right way.
who gather in woodsy conference centers to brainstorm on • Break down hierarchy.
the tuture direction of their companies typically discuss too many • Keep the conversation disciplined—don't let it stray.
topics, with the wrong people, in the wrong way. with inappropriate • Balance analysis with process^analysis is important, but pro-
data, resulting in no clear conclusion, says Bob Frisch, managing cess maintains progress.
partner o( the Strategic Offsites Grcup, a firm that counsels clients • Use frameworks to move the strategy conversation forward—ex-
on methods of gaining greater vaiue trom their strategic retreats. plain right off the bat what the conversation's goals are and what, in
Frisch, whose guidance on the topic appeared In a Harvard general terms, the result will look like.
Business Reviewbes\ practice article he co-authored last year, es- • Balance the rational, political, and emotional.
timates that a $1 billion company • Seek genuine alignment.
spends $185,000 to $295,000 on Attet the meeting
a typical three- to four-day off-site m Follow up on the outcome
strategy session when travel costs of the meeting.
and the opportunity costs of the It may sound like a para-
participants' salaries are tallied. dox, but structure—on the
Of course, the costs of misman- agenda, in thelacilitator's
aged off-site planning sessions are opening description of ttie
more difficult to quantify—and far meeting's objectives, and
greater. in themanagement of the
The agendas (or those meet- discussion—helps enable
ings, says Frisch, are otten a creative ideas to tlow. Rather
hodge-podge of customer surveys, than checking otf tangible
capitai expansion reports, and agenda items, such as re-
department budgets. (And usually viewing budget numbers and
golf.) Instead, those responsibie then turning over the meeting
for planning and running off-site sessions should embrace a more to open-ended brainstorming, Frisch suggests a more sequential
structured approach. The planning should begin 60 days before the process. That includes identifying and sticking to time limits for
meeting and include follow-through steps that occur after everyone brainstorming on specific topics with clear objectives.
has returned to their offices, advises Frisch, who offers tfie follow- It also involves quantifying opinions. For example, facilitators
ing tips for facilitators of off-site meetings: should ask specific questions and then tally how the meeting's
Before (he meeting participants respond. Concluding that 75 percent ot the attendees
m Invite the righ! people—that is, the people who can best inform believe the growth prospects in a jurisdiction are 10 percent to 15
the discussion and the decisions, percent represents more useful and actionable data than walking
• Identity the right topics to cover—avoid the hodge-podge. away thinking that growth prospects "are pretty good."
• Design the ends ot the conversation—that is, how are you going "A small amount of effort can really optimize this crucial and not
to wrap things up, describe action items, etc. insignificant investment." Frisch says, "Companies that decided to
• Filter the data in a way that gets to the point. invest a bit more in really thinking about how to drive more value
• Quantity opinions—don't let decisicns come about without sub- out of off-site have ended up with a significantly upgraded strategy
stance behind them. process."
 "When we conserve for customers, and
Navigant we can recoup costs througli, for ex-
ample, decoupling, that's alignment,"
Consultingjnc. Lubbock explains. "It's
aiso my job to ensure
615 North Wabash Avenue that the regulatory side
CtiicagolL 60611
understands that the
800/621-8390, ext, 5736
alignment exists." De-
www.navigantconsulting.com
coupling is a regulatory
measure that allows util-
Contact
Laverne Gosling ities to separate profit
202/481-7336 from how much energy
laverne,gosling@navigantconsulting.com they sell, therehy ensur-
ing a profit when they
encourage consumers
Navigant Consulting is an independent con-
sulting firm providing professional services to conserve energy.
to help clients identify practical solutions to
Kansas City Power
the challenges of uncertainty and risk. We
& Light (KCP&L) conducted a massive to five years, although each plan is
focus on highly regulated industries that
strategic planning effort from 2004 to
are undergoing significant change-
As the energy industry continues to face
2006 by collecting information and
critical challenges, clients turn to Navigant
insights about energy needs and per-
Consulting for our independent views, deep
ceptions from com-
knowledge of the energy and financiai munity, political,
markets, practical operations soiutions, and regulatory
technology expertise, and strategy and stakeholders
business experience. That's true for power and synthesiz-
generators, transmission owners, energy ing that infor-
end-users, equipment manufacturers, mation within the
regulators, and investors alike. Our work organization to pro-
reflects our soiid understanding of energy duce a comprehen-
fundamentals: pricing, supply and demand sive energy plan that
dynamics, regulatory process, market
was vetted to each
design, customer needs, fuel sourcing,
external stake-
technolo©', and finance.
holder group for
review and input.
When you need to tackle critical issues and (See the sidehar,
create greater value for your organization, "Award-Winning
turn to Navigant Consulting. External Collabo-
ration.")
"All strategic
planning processes
are the same, they
just have different
lexicons," says Yeates.
"You sort out what you
want to do at the end
of the day and what
you do now. You exam-
ine your values, look
at your environment,
look at your resources,
and then you plot your
route. Doing it properly
NAVIGANT is highly time-consuming
and resource-consuming,
C O N S U L T I N G
but basically that's all it is."
5O ELECTRIC
The chalienge lies in the implemen-
tation. The gears of execution, strate-
gic planners say, are oiled by executive
and board support,
communications, col-
laboration, accurate
Many electric utilities information, and a
healthy dose of territo-
conduct a comprehen- rial tension among the
sive strategic planning different business units
process about once and functions within
every three to five tbe corporation.
years...each plan is Many electric utili-
ties now conduct a
monitored closely and
comprehensive stra-
adjusted as needed. tegic planning process
about once every three
monitored closely throughout the year
and adjusted as needed. Those adjust-
ments can occur because of the on-
going monitoring and because many
strategic planners also host annual
planning exercises designed to identify
and prioritize shorter-term strategic
initiatives.
Progress Energy favors a partici-
patory approacb. Myers credits the
presidents of the corporation's two
operating companies. Progress En-
ergy Florida and Progress Energy
Carolinas, with taking an active
role in the exercises Myer's group
organized.
The group formed several
teams charged with thinking
about a specific strategic is-
sue. Each issue related to
the vision that the CEO and
board communicated to
the strategic planning
group. For example, one
team focused solely on
generation planning.
Recent changes at the
federal level made
nuclear a viable op-
tion for Progress,
and one facet of
the planning pro-
cess examined
the implications
\ on custom-
ers, sharehol-
ers, and other
stakeholders of
 Preng &
Associates
2925 Briarpark, Suite 1111
Houston, TX 77042
713/266-2600
www.preng.com
Contact
George M. Rickus
grickus@preng.com
Preng & Associates specializes in executive
search services to the electric power indus-
try. For 25 years, we have helped energy
companies fill key strategic leadership
positions up to and including the C-suite
by identifying and evaluating all of the best
talent within the energy industry.
Today, companies in the power sector face
new business challenges and may not have
the leadership talent to meet these chal-
lenges. An aging leadership team heading
towards retirement, actual retirements,
downsizing of the officer core, and attrac-
tive severance packages have all taken
their toll on overall leadership capability
and bench strength.
Preng & Associates is helping power com-
panies effectively meet this leadership void.
Accessing our global network of competent
leaders, we succeed through excellent
research, networking activities and direct
contact with the best talent in the energy
industry. Many recruitment firms limit their
approach to known job seekers and over-
look the best candidates for the position
who may not be in the job market. Preng
works diligently to ciearly define the search
criteria and match the right individual to
the position and the company's culture.
To strengthen your leadership team, con-
tact George Rickus, Power Practice Leader
at Preng & Associates.
Award-Winning External
Coilaboration
' ansas City Power & Light (KCP&L), a subsidiary of Great Plains Energy, breathed
new lite into its strategic planning process in 2004 by obtaining an unprecedented
level of input and guidance from the communities it serves. The company received
"one of Edison Electric Institute's Edison Awards last June in recognition of this ground-
breaking initiative.
• The approach included a series of community sessions, designed to resemble town hall
rneetings, with customers as well as environmental and community groups. The insights
generated at those meetings were captured, analyzed, and distiiled into a $1.6-billion,
five-year comprehensive energy plan designed to supply
the region with reliable, affordable energy from cfeaner
sources today and into the future.
"The traditional approach used to call for setting
strategy firs! and then telling the community about it after-
ward," says KCP&L director ot public attairs Matl Tidwell,
who played a major role in organizing the community
outreach ettorts. "We flipped that on its ear and said, let's
go talk to the community first, find out what they have to
think, say, and teel about where we ought to go in the re-
gion regarding energy—and Ihen use that to help set our
strategy.' We think that's the smartest way to do business,
and it's been extremeiy successful tor us."
Tidwell identities three practices that contributed lo the
success of the community collaboration.
Long lead times, KCPSL began Ihe outreach process
about 18 months before the finalized plan took altect in 2006. "Starting the process that tar
in advance gives you the time to feather your nest betore you need to use it," he says.
Community first. Whiie the company could have reached out initially lo other external
stakeholders, such as regulators or legisiators, it chose to coliaborate with the community
first as part its CPR strategy—community, political, regulatory—tor a clear reason. "We
consciously chose to do conduct outreach in the community before we went to the political
and regulatory [stakeholders]," Tidweli says. "If you do it right, you can then go to the leg-
islative halls and have a very receptive ear because they understand that you have a good
image In the community."
Objective experts. Rather than larding the agenda with its own speakers and experts,
KCP&L enlisted independent subject matter experts from the Rocky Mountain Institute and
other environmental and community organizations to speak at the community seminars.
Doing so reinforced the company's role as facilitating, rather than leading or shaping, the
discussion and debate. It also expanded the expertise and insights that uitimately intormed
the comprehensive energy plan^

PRENG & .ASSOCIATES
T/ie GJofoal Energv Search Specialists
tiuilding new power plants. The teams
also weighed the potential financial
implications of new plants at the oper-
ating and holding company levels.
Another senior leadership team
dedicated to strategic planning exam-
ined all the information the strategic
planning group assembled and con-
ducted a series of three-hour meet-
ings with about 600 managers from
throughout the corporation after the
CEO and board finalized the plan. The
lengthy sessions ensured that "every-
one down to front-line supervisors un-
derstands where the company is trying
to go, what we're trying to do, and how
his or her role, work, and leadership
affect the company's progress toward
our objectives," Myers says.
In addition, Myers heads up a man-

52 ELECTRIC PERSPECTIVES
agement group in each process to a once-a- nature of their activities, electric utility
of the two operating year exercise. Numer- strategic planners regularly mention
companies. The groups ous companies hold four other essential elements when
Urgent projects
meet monthly to review large-scale planning discussing effective practices.
administrative, perfor- demand the attention CEO and board support. It sounds like
sessions on a quarterly
mance, and strategic is- of senior management, basis and invite subject a cliche—what major corporate pro-
sues. One committee of and executives matter experts to con- cess or project's success doesn't hinge
each group is responsi- must carve out time duct presentations on on executive support?—but strategic
ble for framing strategic timely issues for the of- planners identify three qualities that
decisions that require to do strategic
ficer team and/or board define effective executive support.
evaluation. They pres- planning the way it throughout the year. First, the executive that supports the
ent their research dur- must be done. "Utilities now use much process dedicates time to it. This can
ing a two-day planning less consulting support be difficult: Urgent projects demand
session, and the senior management for strategic planning because they've the attention of senior management,
team from each operating company taken ownership of the activity," says and executives must carve out time to
evaluates the research. The insights Brad Kitchens, president and CEO of do strategic planning the way it must
from those planning sessions ulti- ScottMadden, noting that clients are be done.
mately feed the comprehensive plans more interested in hiring consultants Second, they create a vision. The
presented to the larger board during for advice and insights on specific strategic mission should originate from
an off-site special session dedicated to components of a strategic plan than the CEO—in the utility of 20 years ago,
strategic planning. an entire plan. this was not necessarily the case.
Many strategic planning processes Third, there must be alignment.
are similarly exhaustive and contin- Getting It Done The CEO's decisions should support
ual, and fewer companies relegate the In addition to emphasizing the ongoing the strategic plan. That may sound

HIP TEAMS
for tomorrow's challenges
n Specializing in the power industry
:: Vice president to C-suite executives
•: Global network of connpetent leaders
:: identifying leaders who fit the company culture

PRENG & ASSOCIATES

Tfie Gbfool Energy Search Specialists

www.prenq.com

JULY/AUGUST 2007 B3
 like a no-brainer, but it KCP&L'S current strate-
FTI Consulting, has been violated many
times.
gic plan came out of one
of the industry's most
Inc. Collaboration. Effec-
tive collaboration ex-
extensive collaborations
with external stakehold-
3 Times Square. 11th Floor ers ever. Effective col-
tends throughout and
New York, NY 10036
beyond tlie corpora- laboration enables those
www.fticonsulting.com
tion, and it depends on and other "data inputs,"
Contact
structure. "We spend such as results of enter-
Mike Hamilton, Senior Managing Director
a lot of time working to prise risk assessments, to
212/499-3608 understand both the ex- strengthen the scope and
Mike.Hamilton@fticonsutting,com pectations and the per- content of the ultimate
ceptions of our different strategic plan.
The energy professionals at FTI Consulting stakeholders," explains Productive tension.
help companies develop strategic soiutions Greg Bolloni, assistant Collaboration sounds
to address a range of compiex, analytic- vice president of energy fine in theory. In prac-
based problems. Ourfeam is comprised of planning for Madison Gas & Eiectric. "A tice, however, it typically generates
over 40 professionais and includes former
successful strategy allows us to satisfy a friction among different business units
industry executives with deep operational
variety of different stakeholders—cus- and corporate functions. After all, the
and management experience. These cross-
functional teams provide advice for
tomers, shareholders, regulators, and strategic plan helps determine and
the community at large." prioritize initiatives, which in turn af-
• Regulatory strategies
• Restructuring valuation and market
modeling
• Transaction advisory services
• Trading and risk management
• Dispute management
• Transfer pricing studies
• Expert testimony
" Rate case management
• Dispute analysis & forensic accounting
• Public policy
• Anti-trust
• Commodity pricing
• Technology investment decisions
• Internationai arbitration
• Process optimization

Our energy solutions professionals have

worked on many of the industry's high-
est-profile business and legal issues. Our
experience inciudes;

• Buy-side and sell-side transactions.

• Extensive expert testimony before
Congress, federal state and regulatory
agencies and courts, as well as domestic
and international arbitration panels,
• Expert witness testimony in numerous
restructuring and litigation cases.
• Strategic consulting on some of the most
complex business, financial and
economic issues.

F T I

54 ELECTRIC PERSPECTIVES
AlixPartners,
LLP
2000 Town Center, Suite 2400
Southfield, Ml 48075
www.alixpartners.com

Contact
Jim Peters, 214/647-7500
Kevin M. Johnson, 212/490-2500

Nothing energizes your bottom line like

operational excellence.

Today, utility executives must focus on core

operations including generation, transmis-
sion and distribution to deiiver dramatically
improved performance. At the same time,
the overall operating environment is mov-
ing faster. And presenting huge challenges
to management and boards of directors.

Stakeholders are demanding results

quicker than ever before. How do you get
them?

With help from AlixPartners. We deliver

results fast by using small teams of senior
professionals. What's more, our compensa-
feet budgets, staffing, and priorities tegic planner's most important re-
tion model aligns our interests with your
objectives. Our track record shows that
throughout the corporation. "Planning sponsibility. After all, planners must
we've successfully helped power compa- challenges and opportunities cross communicate to secure executive sup-
nies achieve the performance-changing lines all the time," says Kitchens. "More port, foster internal and external col-
results they expect. people are poking their noses in others' laboration, and shepherd a productive
hackyards. That creates conversation to help
Our approach, simply stated, is results, increased tension. And finalize strategic plans.
not reports. We've set a new standard for since the strategic plan- They must also convey
working collaborativeiy with executives to ning process is con- the finished plan to
identify, quantify and execute actions that One of the keys to a
tinual, so is the tension internal and external
generate value and thus improve perfor-
it fosters." The trick, successful strategy is stakeholders.
mance in:
Kitchens adds, involves making sure everyone "One of the keys to
• Business transformation
channeling the tension understands that you a successful strategy,"
• Supply chain management to achieve results. have that strategy, why says Bollom, "is mak-
• Due diligence Progress Energy does ing sure everyone un-
you have that strategy, derstands that you have
• Post-merger integration so through lively de-
• Asset management bates among the differ- and how it's being that strategy, why you
" SG&A optimization ent disciplines. "We've implemented. have that strategy, and
gone to great lengths how it's heing imple-
We have locations in Chicago, Dallas, to create transparency around all the mented. Being able to communicate
Detroit, DCisseldorf, London, Los Angeles, that effectively is a key to successfully
decisions that the strategic planning
Milan, Munich, New York, Paris, San Fran-
process produces," says Steve McDow- implementing it."
cisco, Shanghai, and Tokyo.
ell, a Progress Energy strategic planner.
"Doing so helps prevent participants Execution Is Key

AlixPartners Achieve
from holding their cards too closely to
their chests."
Communications. In many ways,
Once the strategic plan has been con-
ceived, synthesized, approved, and
communicated, the company must
communicating represents the stra- execute it. When asked what distin-

ELECTRIC PERSPECTIVES
 EquaTerra
3 Riverway, Suite 1660
Houston, TX 77056
www.equaterra.com

Contact
Lee Ann Moore, 713/669-9292
leeann.moore@equaterra.com

• Reduce operating costs,

• Improve service levels.
• Gain greater control and visibility of your
administrative processes.
• Benefit from an unbiased, balanced
approach with respect to administrative
initiatives.

EquaTerra's Utility & Energy practice suc-

cessfully leads clients through outsourcing
and insourcing initiatives to achieve an
effective service delivery model. Across
administrative processes such as Human
Resources. Finance & Accounting, informa-
tion Technology, Customer Service and
Procurement—we add value throughout the
entire lifecycle, from strategy and assess-
ment through implementation, transition,
guishes effective strategic planning on the execution of its strategic plans
and governance.
processesfromthose that are not, Mas- for about a decade.
choff does not hesitate. "Execution." In fact, the new breed of strategic
Our recent utility and energy clients include he says. "It boils down to how a com- planner talks much more about score-
TXU, Xcel Energy, DTE Energy and Hydro pany measures per- cards, performance
One. formance and holds Accenture monitoring, com-
itself accountable. A www.accenture.com/utilities6 pensation links, and
Our advisors have utility industry depth half decent strategy AlixPartners, LLP
other components
and regulatory expertise regarding cost executed excellently www-alixpartners.com of execution than
recovery. is tnuch better than planning methodolo-
CRA International
a great strategy ex- www.crai.com
gies. On that count,
We have over 160 advisors a\«raging 20+
ecuted poorly." Mintzberg would be
years experience. Enspiria Solutions, inc.
"Once you've cho- www.enspiria.com
pleased. Strategic
Last year, we advised on outsourcing
sen a strategy, you planning functions at
EquaTerra
contracts with more than $5 billion in total need the discipline to many electric utility
www.equaterra.com
contract value. stick with it," Scalise companies are leaner
FTI Consulting, Inc. and more focused on
says. "That discipline
www. fticonsu Iti ng.com
Our advisors possess skill sets unparalleled comes from creating strategic thinking than
elsewhere in the industry; bringing multi-di- the metrics and gov- Huron Consuming Group they were a decade
www.huronconsultinggroup.com
mensional experience as enterprise execu- ernance process and ago. While reading
tives, service providers, and consultants to sticking to monitor- KEMA Mintzberg may have
each client engagement. www.kema.com
ing." That helps strate- helped strategic plan-
gic planners' fondness Navigant Consuming ners mold their func-
for the Balanced www.navigantconsulting.com tions during the past
Scorecard. SaskPower Oliver Wyman few years, reading l-x-
recently began us- www.oliverwyman.com ecution: Vie Discipline
ing the performance Preng & Associates of Getting Things Done
management tool, www.preng.com may prove more valu-
and Ameren has used able in helping them
EQUATERRA the methodology to
Wood Mackenzie
www.woodmac.com guide their organiza-
tions in the future. •
monitor and report

58 ELECTRIC PERSPECTIVES