Take the COO challenge
Is the chief operating officer (COO) role the most challenging in power and utilities (P&U)? What actions are outstanding COOs taking now to ensure their companies are ready for the greatest transformation in the sector’s history? Alain Bollack reports.
In the P&U sector, an outstanding COO can make a significant difference to a company’s ability to successfully navigate challenging times.
Our global experience supporting COOs has helped us identify the three core actions being taken by the world’s leading P&U COOs as they respond to the sector’s rapid changes:
Core action 1: Broaden your view of the world
Leading COOs are changing their perspective. Gone are the days when the operational leaders of P&U could look just to the inner workings of their organization. Now they must broaden their outlook and develop an external focus.
Huge and rapid changes are taking place in the P&U sector, including:
- Increasing regulations
- The push for renewables
- Aging infrastructure
- Affordability pressures
This means COOs must now be acutely aware of the outside factors impacting their business and understand how these can best be addressed.
Outstanding COOs draw on their knowledge of these factors to make key decisions regarding their companies’ strategies to address sector changes. They also forge strong links with their compliance and legal teams, as well as those who lead on forecasting, simulation and modeling.
“To realize the peculiarities of it, you need to deeply understand the key issues of the industry and the piece of the value chain you’re operating in,” explains Luca Alippi, E.ON Energia’s General Manager. “We operate in a liberalized market, for example, but it is still highly regulated in many aspects: opportunities and challenges result, therefore, from both the market and the regulations.”
Core action 2: Be the “conscience” of the boardroom
More than any of their C-suite colleagues, COOs bring a broad overview of the business and a deeper understanding of how potential decisions could strengthen – or threaten – a utility’s ability to successfully adapt to changes.
This allows COOs a rare opportunity to better define their role during strategic planning discussions, using their insights and deep knowledge of external factors to act as a kind of “conscience” for the boardroom, ensuring decisions are responsible and well-grounded.
Making the most of this opportunity will require high-level skills and experience in formulating strategy, mapping key objectives, resources, initiatives and milestones, as well as financial savvy.
Core action 3: “Get smart” and design a customer-driven operating model
Outstanding P&U COOs are those adapting their operating model in response to two significant trends:
- The emergence of today’s more empowered customers, who are demanding more from their utilities – expanded and improved services, transparent and competitive pricing, and the power to interact with their provider when and how they choose.
COOs must meet these needs and develop the customer-driven business model of the future. They will need knowledge of price strategies, how these might work in practice, when they are best deployed and how they ultimately relate back to the fundamentals of the business. They also must be able to review and analyze the growing volume of customer usage data and identify key trends.
- The smart transformation – including the smart-meter rollout and development of smart-grid infrastructure. This will require both major technology investments and complex workforce management plans.
“It’s about finding the correct balance between the vision and the operating solution, and the ability to generate an operational basis that delivers on the vision,” explains Luca Valerio Camerano, the CEO of GDF Suez Energia.
One of the greatest challenges facing P&U COOs today is the need to keep pace with rapid change. As Matt Idle, Customer Operations Director at British Gas, explains, “The COO role keeps growing, so my position is constantly evolving and building out.”
Amid such challenging circumstances, understanding the mix of expertise and skills that make up an outstanding COO can help those in this important role deliver more value to utilities at a critical time.
How we can help
The COO program seeks to provide insight and guidance on aspects of interest to COOs and future operations leaders. It aims to support them as they constantly adapt to a fast-changing corporate and economic environment — one in which they must possess a mastery of change to help translate strategic vision into action.
For more information
Read our report Aiming for the top: a guide for aspiring COOs and their organization. and our P&U-specific guide, Routes to the top: how to develop industry-specific skills.