The challenge
The immediate and pressing nature of the journey to net zero means that, climate skeptics aside, everyone has agreed on where we must end up. How we get there, however, is still being debated. This was at the heart of a recent collaboration between Eraneos Strategy and a European utility company, where we were tasked with undertaking a review of the organization’s many processes before creating a new, future-proof strategy.
The client reached out to us for help refining its strategy, which had become too complex, beset by too many initiatives and plagued by governance issues. We had to analyze the client’s existing strategy to understand where it was coming from and what it was already engaged in. In total, we encountered more than 50 initiatives spread across a complex group setup. The client had subsidiaries in five European countries, which meant any cohesive strategy had to take into account a complex mix of geographies, markets, and legal structures.
The energy transition presents utility firms, like our client, with major challenges at every level of the value chain and in almost every cross-sectional function. With these challenges come opportunities. In order for the client to position itself optimally within this fast-changing industry, a clearly defined and future-oriented strategy was essential.
The approach
With the energy transition gathering pace, we had to refine the client’s strategy in such a way that enabled it to take advantage of new products and services, the shift to a decentralized energy ecosystems, and employ innovative collaboration models, processes, digitalization and much more as a critical basis for success. Our first step in reviewing the client’s strategy involved an in-depth analysis of the company’s current situation and market environment, taking into account both internal and external perspectives.
Based on this analysis, we defined the client’s North Star, ensuring measurability was at its center. In addition to a qualitative vision, quantifiable ambitions were outlined. We then created concrete fields of action, reflecting the most important strategic priorities of the company.
We reduced the complexity that had grown within the company on a strategic level – cutting the number of initiatives from over 50 to around 20.
Overall, the strategic review embodied both a top-down and bottom-up approach. A combination of top-down and bottom-up approaches in the (iterative) process created transparency regarding the necessary content and ensured the necessary commitment for implementation. An effective governance structure was also established.
The results
A clearly defined and future-oriented strategy is the key to corporate success – especially for energy suppliers who are facing far-reaching challenges. A comprehensive strategy review helps to build on what already exists and at the same time add new priorities in order to shape a future path for employees and customers.
As a result of our strategic review, we fostered a close sense of collaboration between all employees at different levels, both internal and external. We reduced the complexity that had grown within the company on a strategic level – cutting the number of initiatives from over 50 to around 20.
The entire strategic review process took around four months, with Eraneos Strategy and the client collaborating across the entire refining and centralizing process. We also prioritized the strong communication of results, partnering with the client’s marketing team to ensure transparency and a clear overview of any new developments.
After conducting our work with the client, the following remains true: “Structure follows Strategy.” The energy transition will undoubtedly cause disruption for utility firms, but the right strategy will ensure they are robust enough to navigate it and come out the other side with a view to long-term success. The future-oriented strategy we worked on with this client will make that a reality.