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Thought Leadership from Sieben Energy Associates

Five Keys to a Robust Energy Strategy

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Too many organizations of all sizes view energy as a cost to be managed rather than an opportunity to be leveraged. The most successful organizations often have an advanced strategic approach to energy. In the January–February 2017 issue of Harvard Business Review, three authors reveal the five key steps for building a robust energy strategy in their paper "Energy Strategy for the C-Suite."

How do organizations create a competitive advantage? They can either keep costs low (ensuring greater profitability relative to their peers) or differentiate their business (introducing new products, services, or value-added features).

The paper's authors, Andrew Winston, George Favaloro, and Tim Healy contend that a smart approach to energy management accomplishes both objectives:

  1. First, organizations can reduce cost by optimizing energy procurement practices, and pursuing energy efficiency projects. The math is straightforward. If an organization uses less energy, and pays a lower rate for the energy it does use, energy costs will decrease.
  2. And second, organizations can burnish their reputation for sustainability by proactively addressing their carbon footprint. Prospective employees, customers, and investors increasingly consider a company's position on climate change and activity to address carbon emissions. No organization wants to be viewed as a bad neighbor or out of touch with societal trends.

The authors surveyed 145 large companies from across sectors and geographies, rating their performance on 15 measures of energy practice. They identified specifically how the leaders drove business value through energy management. In the most successful organizations, energy management is integrated into—rather than isolated from—overall strategy for business growth. Indeed, at companies such as Microsoft, the president and CFO view energy as a critical issue in which they must and should be actively involved.

Based on their exhaustive research, the authors identified the following five steps for building a robust energy strategy:

  1. Start with a C-Level Mandate
  2. Integrate Energy into the Company's Vision and Operations
  3. Track Energy at All Levels
  4. Shift to Renewables and Other Advanced Energy Technologies
  5. Engage Key Stakeholders

While they acknowledge that none of these five steps is revolutionary, the authors illustrate that it takes real time and real effort to do them well. While each of the five steps is critical, the whole is considerably greater than the sum of the parts. Attempting only one or two of these steps, while ignoring the rest, charts a certain path to limited success at best, or pronounced failure at worst.

From our experience, the most common mistake that many organizations make is bypassing the very first step. Energy touches every individual within an organization. Energy deserves the attention of the president, COO, CFO, and maybe even CEO. Energy teams that never have the active support of their C-suite will hit a ceiling far below what they might have achieved if senior executives had expressed, in word and deed, energy's importance to the entire organization.

And at the opposite end of the framework, organizations that do very well with energy internally, achieving their goals on steps one through four, miss a big opportunity to multiply their success if they don't tackle step five. Organizations must engage their workforce, their community, their local and state government, and other stakeholders to influence behaviors, policies, and investments that create long-term value and opportunity. And more engaged and informed employees are more committed employees. In other words, by expanding its network and working with others in the domain of energy, successful companies can help themselves too.

Over 26-plus years, Sieben Energy Associates has seen first-hand the benefits that accrue to organizations that follow all five of these steps, and, conversely, the challenges that beset organizations that follow just some or even none of these steps. Energy management is a rapidly evolving field. Electricity generation resources in the U.S. today look remarkably different from just a decade ago. Cutting-edge lighting and controls technologies in buildings today are dramatically improved from just a decade ago.

Now more than ever, organizations seeking to drive business value through a smart approach to energy management need the guidance of an experienced energy consultant such as Sieben Energy Associates. If your organization is unsure what to do next with respect to energy, we may be able to help. Let's talk to determine together if Sieben Energy Associates is a good fit to work with your organization.

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