Few sectors are as challenged by as many changes in market conditions as the utility sector.
With a heritage of being very traditional and inflexible, companies in this sector need to try new things to survive. The following case study gives an example of a successful next step that a service provider in the utility sector took in its strategy work, ushering in an agile future.
In our work we realised that traditional strategy efforts are outdated. The pace of change is accelerating more rapidly than ever. Successful companies need to be flexible and agile, and to understand trends. The ability to bring new products to market swiftly is key. A critical requirement in rapidly changing times is for the company’s aims to be clearly communicated and reflected in a transparent company vision. Only with a clear vision are companies able to set up a market-winning strategy.
Traditional strategy work is a kind of bureaucratic process focusing on the long-term goals of a company.
We often see strategies developed with a focus on the next 10 years, using a hierarchical process that involves strategy experts and external consulting companies. This process can take six to 12 months. This long duration can lead to the results being outdated by finalisation, communication and implementation of initiatives. In addition, the traditional strategy approach mainly involves strategy experts in the process. Research in many European companies over the last 10 years has shown that the majority of employees believe that strategies do not reflect their company’s current position or its environment, and that they have no real impact on their daily work.
Employees see strategy work as being reserved for senior management, and as a process that fails to take the abundant know-how of the employees into account.
We came to the conclusion that we had to reinvent the strategy world. Similar to a plant that constantly grows, adapts to its environment and competes with other plants in its surroundings, a company competes with other companies for resources and market share. A company will outperform its rivals by having a better survival strategy. A better survival strategy enables a company to use the right resources in the best and most efficient way by reacting to market impacts and trends. Adjustments need to be made rapidly and flexibly. Therefore, a company needs to respond decisively and swiftly to internal and external feedback, developments and trends. This requires a fundamental change in strategy work so that the corporate vision, mission and strategic objectives are subject to continuous adjustment, where a strategy is never final. As you will see in the remainder of this section, this conclusion affected the entire framing of our strategy, the process itself, the resources involved and the way of involving people in the process.
We designed and implemented a new framework, the Living Strategy, by combining elements of design thinking and agile project management into a new way of doing strategy work. This enables the company to adjust swiftly and flexibly to the environment.
To take into account environmental changes that impact the company’s business models, organisation and processes, we adjust key elements such as the vision, mission and strategy itself on a regular basis by performing sprints of approximately six to 12 weeks. In each sprint, a special deep-dive topic is discussed for its impact on the strategy.
The results of a given sprint form the basis for the next sprint. The decision on which deep-dive topic will be the focus of each sprint is taken by the (Product) Owner of the strategy together with the company’s Management Board, in so-called ‘Strategy Scrum Meetings’, which take place before each sprint. The strategy team (organised as a department reporting directly to the CEO) prepares these scrum meetings. They suggest topics and prepare the sprint by collecting all necessary internal and external information. In addition, an analysis will be performed to find out which employees need to be involved and which (workshop) methods need to be selected. In some cases, external support will be requested, depending on the sprint topic.
In the sprint, the strategy team works with three major tools. The Strategy One-Pager describes the future picture of the company. The Strategy Radar illustrates the focus areas that encompass initiatives and projects, monitored via our Strategic Roadmap. As the result of a sprint, all these three instruments will be adjusted and the results will be presented in the scrum meeting. Indicators of how successful we are in establishing the future picture will be monitored via the Balanced Score Card.
The Living Strategy is not only a new process; it is also a cultural change, or can be part of one. It is of utmost importance to involve all employees, external experts and customers in discussing and creating the future of a company.
For example, we invited all interested employees for strategy workshops in Sprint 1, developing an initial future company picture, mission and strategic objectives, as well as defining strategic focus areas. The workshops were performed with 200 participants all over Europe with very good results. This approach was highly appreciated by the managing directors of the company.
