Ivar Patterson_AES Presentation_JK IPJ_ Sep 2011

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BUSINESS SUSTAINABILITY BUSINESS SUSTAINABILITY of of UTILITIES UTILITIES at the at the  BASE OF THE PYRAMID BASE OF THE PYRAMID & General Comments on how to do it 4TH ANNUAL SUMMIT ON PEACE  AND PROSPERIT Y THROUGH TRADE AND COMMERCE University of San Diego September 2011 Ivar Pettersson Ivar Pettersson
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Transcript of Ivar Patterson_AES Presentation_JK IPJ_ Sep 2011

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    BUSINESS SUSTAINABILITYBUSINESS SUSTAINABILITY

    ofofUTILITIESUTILITIES at theat the

    BASE OF THE PYRAMIDBASE OF THE PYRAMID

    &General Comments

    on how to do it

    4TH ANNUAL SUMMIT ON PEACEAND PROSPERITY THROUGH

    TRADE AND COMMERCE

    University of San Diego

    September 2011Ivar PetterssonIvar Pettersson

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    An old industry focused on planned communities

    In this pictures: each rancho has electricity

    Dilemma: a problem or a market?

    Market option demands a deep revision of business models

    Aspiration as a new variable in the equation to be solved

    A MUST for business sustainability in developing countries

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    Well established engineering

    solutions

    and administrative processes

    Urban complexity and electrical

    grid evolves in parallel

    A formidable mismatch between

    the informal urbanism and the

    development of utilitys

    distribution grid

    but each household consumes

    some 200 Kw-h per month

    TV, refrigerators, sound

    equipment, in some

    cases microwave oven

    Deep penetration of mobile

    phones

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    Caracas 2004

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    The measure of success

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    Results

    EDC, starting 2004After two years , 50,000 former illegal consumers

    had been transformed into clients, 60 projects to

    improve quality of service was ongoing in the

    barrios, a kind of debit card was in use for many

    of these new customers. In one case, crime was

    reduced in 80% because of improved public

    lightning.

    ELETROPAULO, starting 2005Educational actions and regularization process yielded an average

    consumption reduction from 250 kWh to 151 kWh per month. The rate

    of non-payment also decreased from 98 percent before 32 percent.

    Clear perception of improved quality of life among the households where rewiring

    was done or refrigerators exchanged, along with a perception of improved savings

    after such initiatives. All of this led to overall project approval ratings between 83

    percent and 98 percent. The reasons for approval most frequently mentioned by

    respondents were these:

    - No more fire risk due to short circuits or overload

    - Having a proof of address, which provided a series of benefits

    - Safe installations, without the risk of burning- out electric appliances

    - No more outages.

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    These initiatives from

    a management perspective

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    The Case

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    The Case

    An important goal have

    been setup

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    The Case

    Several models have been

    implemented, all missing

    the goal

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    The Case

    Several models have been

    implemented, all missingthe goal

    An important goal has

    been setup- Business models generation

    capability seems to be exhausted

    -The goal is of a new sort of whichno much is known

    - There is nobody to ask

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    The Case

    Several models have been

    implemented, all missingthe goal

    An important goal has

    been setup

    and we can not give

    up the goal

    - Business models generation

    capability seems to be exhausted

    -The goal is of a new sort of whichno much is known

    - There is nobody to ask

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    Bolero de Ravel syndrome

    Same melody, with different emphasis, againand again.

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    So, whats next ??

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    Probably not thisonly

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    We identify eight characteristics in this type of approach

    1. Pointlike Future: unrealistic paradigm

    2. Adaptability: critical capability

    3. Merge of Change Process

    with Final Objective

    4. The pipeline

    5. Gentle Touch management

    6. Getting closer to the objective

    . Fixing processes and controls:

    electing what works better

    8. Project has been completed.

    Processesruns operation Observe

    Reflect

    Act

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    Basic objectives clearly identified

    No cookbook at hand

    Unknown environment

    Business-today: not sure will respond to visualized futures

    Future has bandwidth

    Go for results in that bandwidth

    1. Pointlike Future: unrealistic paradigm

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    Disruptive environment: we must respond effectively

    Anticipatory thinking:Process systems that responds to disruptive changes Disruptive responses from the Company

    Balance external complexity with internal complexity

    Value creation from anticipatory capability

    Perpetual Novelty: Behavior of the efficiently adaptive organization

    Reacting and anticipating well: Desired complementarity

    Theory of Real Options: Explains value creation from anticipatory capability

    2. Adaptability: critical capability

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    New kind of unfamiliar objectives

    More algorithmic than equational

    History-based models: insufficiency of proyective capability

    The Objective is not a perfectly well defined point, neither is

    the Road to follow

    Build a model that generates possible roads to reach the objective

    3. Merge of Change Process with Final Objective

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    4. The Pipeline

    Objective at end of a pipeline of acceptable roads

    Correct path when process tends to get out of pipeline

    Some amazing results could emerge

    Flexibility in the design, firmness in the conduction

    Extra degrees of freedom neccesary so the process

    can explore possibilities non visualized

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    Manage increasing momentum of the process

    Accurate corrective touches. The process is gaining intelligence

    You can manage a complex process using small amounts of

    energy in controlling its evolution

    The leader must inspire trust particularly at the beginning

    Positive results increases confidence among the team as well

    as in the rest of the organization

    Organization surprised by how an avalanche of good results emerge

    from a process not fully understood at the beginning

    5. Gentle Touch management

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    Some objectives has been achieved

    The process has its own intelligence and now we can identify patterns

    We start to understand the emerging dynamics

    Our anticipatoty capability has increased

    Still, some surprises come up, but less frequently

    We have good control on the processes and confidence in

    our capability to execute properly the last steps

    6. Getting closer to the objective

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    Efficient patterns becomes established processes

    No more gentle touches. Cost accounting and controls assures

    capitalization of the learning

    In its evolution the process has produced results that validates it

    in the eyes of the people in the company, but not everybody

    understands what really happened

    Details are worked out to assure desired quality in results

    Now, the company has a team of people with skills to deal with

    complex processes beyond traditional projects

    7. Fixing processes and controls: selecting whatworks better

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    Intellectual capital of the company has been significantly enriched

    It is important to write the playbook of the experience

    The process converge toward efficient routines with desired sigmas

    Company has learned to manage complexity

    8. Change has been completed. Processes runs operation

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    In a nutshell

    Stop insisting with proved and failed repertoire

    Dont spend too much time trying to understand WHYs

    Focus on new type of unassuming opportunistic business models

    Guide rather than control the rollout of the model

    Make frequent reality-adjustment to the model as it gains momentum

    Leadership with special talents is required to lead the process

    Try to hit the goal as close as possible

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    Barrio Elctrico case

    Sao Paulo case

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    Thanks

    By its very nature, success in BOP markets

    will break existing paradigmsC.K. Phaladad

    [email protected]