Ivar Patterson_AES Presentation_JK IPJ_ Sep 2011

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BUSINESS SUSTAINABILITYBUSINESS SUSTAINABILITY

of of UTILITIESUTILITIES at theat the

BASE OF THE PYRAMIDBASE OF THE PYRAMID

&General Comments

on how to do it

4TH ANNUAL SUMMIT ON PEACE AND PROSPERITY THROUGH

TRADE AND COMMERCE

University of San Diego

September 2011Ivar PetterssonIvar Pettersson



• 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



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 utility´s

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



Caracas 2004



The measure of success



Results

EDC, starting 2004 After 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.



These initiatives from

a management perspective



The Case



The Case

An important goal have

been setup



The Case

Several models have been

implemented, all missing

the goal



The Case


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



The Case


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



Bolero de Ravel syndrome

Same melody, with different emphasis, again…and again.



So, what´s next ??



Probably not this…only



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.

Processes runs operation Observe

Reflect

Act



• 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



• 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



• 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



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



• 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



• 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



• 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



• 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



In a nutshell…

• Stop insisting with proved and failed repertoire

• Don´t spend too much time trying to understand WHY´s

• 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



Barrio Eléctrico case

Sao Paulo case



Thanks

By its very nature, success in BOP markets

will break existing paradigmsC.K. Phaladad

[email protected]

Ivar Patterson_AES Presentation_JK IPJ_ Sep 2011

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