Sunday, April 03, 2011

Who Will Blink First: Energy Solution Consumers or Providers?

I just finished reading yet another online forum that questions why businesses fail to adopt the obvious benefits of energy efficiency. Energy efficiency proponents across the globe are discovering the same hurdle. The real culprit here is the threat of change. Organizations cannot address their energy performance without making changes to their status quo. I refer here to changes to capital investment priorities, maintenance procedures, and operational behavior. An energy efficiency upgrade implies change on any or all of these dimensions. Remember also that a team of decision makers has a say in the process. Each decision maker has a unique perception of the risks that change will bring to their domain. Therefore, these managers have varying levels of (dis)interest in the solution and its outcome. What’s good for the organization as a whole—energy savings—cannot be accomplished if the pursuit has differential impacts on departmental agendas. Simply put, if Department A pays for it and Department B books the savings, the energy solution is a non-starter.

The very nature of energy use makes efficiency solutions difficult for an organization to adopt. Energy consumption has impacts that span departmental boundaries. No one person truly “owns” responsibility for energy consumption. It reflects daily operating decisions as well as multi-year capital planning cycles. Staff of all description, at all levels, bear no personal accountability for the energy they consume on the job. All of this begs an explanation, which I’ll offer here in two parts:

1. Silos are a problem in the very organizations that would receive energy solutions. “Silos” manifest around departments in an organization. Managers of these departments develop mental and emotional barriers that define their needs, priorities, and willingness to act. Silos are the consequence of the organization’s long-standing goals, responsibilities, and cultural norms. Silos are the reason why departmental managers battle each other for budget dollars and functional authority. In this internally competitive environment, managers focus on their budget position, not the company’s total bottom line. The value of energy efficiency—a true enhancement of the bottom line—is squandered by the inter-departmental dynamic of silo vs. silo.

2. Silos are a problem among energy solution providers. Energy solutions are so often presented as ENERGY solutions—not as BUSINESS solutions. So by definition, an energy solution is its own silo relative to the larger population of business concerns. What exactly is the benefit of energy efficiency? The traditional answer: “utility cost reduction” and “additional cash flow to the bottom line.” These results mean almost nothing to managers who measure their success relative to the internal competition for authority, budget resources, and departmental domain. Energy solution advocates need to overhaul their message accordingly.

Industrial energy efficiency already has a large and growing inventory of proven technical solutions. The “gears” are already there. What’s needed is the grease that allows those gears to turn. That “grease” would be the motivation for managers to embrace initiatives that transcend departmental silos for the entire organization’s bottom line benefit.

As for removing the silos, who will blink first, the providers or the adopters of energy solutions? The culture of departmental silos and budget hoarding need to give way to a new paradigm. Facility management should perceived not as a cost to minimize, but as a source of value. After all, energy is an inescapable ingredient of business. As long as an organization operates, energy will shape cash flow in one of two ways: savings that accrue to retained earnings or expenses paid for energy waste. Recaptured energy waste is a cash flow subsidy to the core business agenda. In this paradigm, the facility manager is an ally and not a combatant relative to other departments in the same organization. Show me a facility management agenda that pursues the recapture of energy value, and I’ll show you a facility department that holds the key to its durable survival.



Post a Comment

<< Home

Who links to my website?