“Simplicity is a great virtue but it requires hard work to achieve it and education to appreciate it. And to make matters worse: complexity sells better.”
― Edsger W. Dijkstra

We are taking a break today from the series on understanding retail supplier pricing to discuss an increasing trend in the energy industry and, more broadly, in our world: complexity. Everything about the energy industry seems to be growing more complex, and this presents us with certain challenges.

The complexity of technology choices

There are more technology options available to the energy manager than ever before. The options range from systems for lighting, cooling, heating, even generating electricity on-site. Some of these technologies are tried and true, some are new and promising, many are untested.  Managing this kind of technology change is a new challenge for maenergy managers.

Stakeholder demands

Complexity extends beyond technology to business models and regulatory environments in the energy arena. For a few examples, consider these questions:

What is a micro grid, anyway?

What will be asked of you and your organization in the future?

How are we going to navigate the shut down of Indian Point? Will these changes impact how your organization uses and pays for electricity, natural gas?

What is Utility 2.0?

How will well-intentioned regulatory changes impact your community and your organization?
What role do you play as a customer?

Are you impacted by Governor Cuomo’s Excelsior Scholarship program?

What about the Clean Energy Standard? Does it add value, or just costs? What pressure does that place on you as a higher ed administrator?

And then there are customers, both internal and external. The demands on most energy professionals far outpace the time and expertise of any one person. External customers and stakeholders have social media at their fingertips. One mis-step and the entire organization can be thrown off course. Customers and other external stakeholders are themselves bombarded with messages and demands, which they pass on to you and your organization.

The growing complexity in technology, business model, regulatory and communications place greater demands on the people doing the work of energy management.  This stress can create low morale, inefficient workplaces, and, perhaps worst of all, poor decisions that result in mis-allocation of time and money. 

Great, now what?

Here are a few thoughts on how to address complexity in the energy-related work place.

1. Get organized. You can’t manage what you don’t measure. This is an axiom that is attributed to management guru Peter Drucker. There are plenty of people who argue that too much focus on measurement causes paralysis in an organization. We agree. But in the energy industry and among our customers, lack of analytics and poor data management can hamstring energy and finance professionals. Today’s business environment is too complex to rely on gut or habit when making decisions. We think that not enough measuring and managing only create confusion and add to the complexity of your work. Why have we, in the industry, put up with the lack of meaningful, actionable information? The answer, we think is that for decades we have all been told that getting clear, straightforward, actionable information was impossible. It couldn’t be done. Just too hard. That answer is unacceptable now.
2. Put processes in place for repeatable, ongoing work. We find that too often in our industry, and probably in others as well, work is characterized by fire drills and episodic interventions. Often, purchasing energy, for example, is not well thought out, planned or integrated in to ongoing process finance or facilities processes. Often, energy purchasing is considered a standalone activity that occurs once a year at random times driven by consultants, brokers or suppliers who remind you that it is time to buy.This organizational approach contributes to the myth that energy costs are impossible to control. If you step back and take time to look at your energy strategy and goals, you’ll notice that in fact much of your work would benefit from integrating a thoughtful, consistent, ongoing process, instead of viewing energy purchasing as a one-time activity. If you integrate energy cost management strategy and purchasing with reporting and planning, you will be better able to track the results of your efforts and will integrate strategic and tactical activities. In doing so, you will find that you are better able to control and manage costs, rather than living with the feeling that energy costs are forever outside of your control. With a system and process in place, you will take complexity in hand and create a far clearer path forward.
3. Set priorities. It may seem obvious, but it is difficult to adhere to the rule that you should spend most of your time on the highest value activities. We like a recent article published in the Harvard Business Review that goes further, focusing on the highest contribution you can make, coupled with the activities about which you are most passionate. Take a look at Amy Jen Su’s January 2017 article titled How To Prioritize your Work When Your Manager Doesn’t. There is helpful advice here. If you use Su’s framework as you consider energy projects, it will help you order your activities based on what you prioritize, what you must tolerate, and what you should elevate.
4. Get educated, to simplify. Much of our work in the energy industry has been made needlessly complex. There are a range of options for getting educated, from the Association of Energy Engineers courses, professional associations, as well as The MWh University’s upcoming online courses.

Bottom line for energy and finance professionals. 

1. We live in a complex world. Especially in the energy industry. But it doesn’t have to be as challenging and mystifying as it has been.
2. Don’t settle for opacity or inscrutable information.
3. Simplify your work, your information and your processes wherever you can, so that you can measure and manage.
4. Let data and analytics help to guide your decision making.

What do you do to help simplify your work? Let us know by leaving a comment.