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2020 | Buch

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The Corporate Energy Strategist’s Handbook

Frameworks to Achieve Environmental Sustainability and Competitive Advantage

verfasst von: Jimmy Y. Jia

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft" , Springer Professional "Technik"

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Über dieses Buch

In an era in which scientists say we are approaching a point of no return in terms of climate change, companies are looking for ways to improve productivity of innovations that reduce environmental footprints. Among the questions they are looking to answer are: How can financial tools be leveraged for positive energy outcomes? How can the energy strategy be integrated into board responsibility?

This book provides answers to these questions and more, presenting a selection of decision-making frameworks for strategy and sustainability management. Comprehensive in scope, its 120 frameworks—some well-known while others are original—provide a thorough, practical guide to inform the sustainability strategy of your organization. In addition to learning how to green your organizational strategy, you will also learn how to communicate your strategy to your teams.

An essential source for executives desiring to be more responsible in energy performance and to decarbonize their operations, this book will prove useful in your day-to-day organizational work.

Inhaltsverzeichnis

Frontmatter

1. Prologue: Why Create a Toolkit of Frameworks?

Abstract

Both students and professionals struggle to choose which frameworks to use under what circumstances. The business field swarms with many books, each teaching their own frameworks and retelling case studies of others through their lens. Even after leaders read entire bookshelves, they still have to figure out which framework is applicable to their situation. This problem is especially acute in energy and sustainability management, disciplines that require holistic and systems approaches. Instead, this book is a collection of frameworks with brief explanation, examples, and graphics. For readers who are acquainted with the tools, please use this book as a reference book. For those who are at the beginning of their journey, the concepts in each chapter are arranged to build upon each other.

Jimmy Y. Jia

Energy as Strategy

Frontmatter

2. Introduction to Part I: What Is Energy as Strategy?

Abstract

Strategy is the art of achieving advantage in the face of uncertainties and constrained by limited resources. Money is a limited resource, mediating the exchange for goods and services. Energy is a limited resource that humanity has consumed for its entire history, as animal power, fire, wind, fossil fuels, and so on. Carbon is becoming a global constraint as an externality from our fossil-fuel-based economy. Energy as Strategy is a new discipline that creates strategic competitive advantages at the nexus of constraints between energy, carbon, and money. Because of their interrelated nature, the strategies, risks, and opportunities of each resource affect those of the others. Part I explores these nexuses in five chapters.

Jimmy Y. Jia

3. Strategy Literacy: Seeking Competitive Advantage

Abstract

Strategy, as a discipline of the holistic, is more important than ever, especially as our infrastructure converges, sectors intersect, and different disciplines overlap. These forces are creating a unique challenge and opportunity for companies to create new frameworks and management methodologies that reflect our rapidly changing environment. Strategy is grounded in one’s own experiences. If one has been in the situation before, one knows what to do. If the situation is new, one may fail while trying to make decisions. The energy strategist needs to know their strategic context quickly so as to diagnose what type of problem they may have and what responses are appropriate. Picking the right strategy will help the organization gain a competitive edge over their peers.

Jimmy Y. Jia

4. Energy Literacy: The Energy Balance for Business Decisions

Abstract

Everyday business decisions have an impact on energy. Although many consider energy to be an engineering discipline, the management of it is actually an organizational problem. Behind every electric bill is a piece of equipment that consumed it, a person operating the equipment, a team managing the person, and so on until we reach corporate policies and strategies. This chapter uses energy equations to explore which variables are determined by technical achievements and which are governed by human behavior. This will demonstrate the relationships between business decisions and energy outcomes. Energy strategists need to be aware of these linkages and can use this chapter to diagnose which decisions in one’s organization may have an underappreciated impact on energy.

Jimmy Y. Jia

5. Financial Statements: The Universal Language of Business

Abstract

This chapter gives a cursory overview of fundamental financial and accounting principles. It reviews the three main financial statements as well as criteria used in making long-term versus short-term decisions. The financial statements are the formal methodologies for understanding a company’s performance and they are an essential and versatile tool. The success of the financial statements as a MetricsSystem framework can be seen in their ubiquity, from capital markets to day trading, from executive decision-makers to departmental P&L managers, from macro-economists to every individual managing their home finances. Energy strategists need to speak in the language of finance, the common tongue of business. Fluency in its components, structure, and capabilities is critical when trying to craft, communicate, and implement strategy.

Jimmy Y. Jia

6. Energy Statements: Mediating Decision Cycles

Abstract

We describe a new framework for a metrics system that unifies the reporting of energy across an organization. Today, the energy management discipline is focused primarily on the flow of energy. The stereotypical goal of energy managers is to save money on utility bills, but bills only represent this flow. In reality, energy-related costs occur on different cycles for different durations. The data is needed by many stakeholders—accountants, engineers, impact investors, and so on. Energy statements enable the shift from managing energy-as-a-commodity flows to managing energy-as-strategy decision cycles. This framework analyzes a company’s performance through a nonfinancial lens. It improves the management of assets and elucidates the risks and opportunities of an organization to achieve a sustainable energy outcome.

Jimmy Y. Jia

7. Carbon Strategies: De-risking Exposures

Abstract

Some strategies can decouple energy consumption from revenue, profits, and other financial indicators. At the nexus of finance, energy, and carbon, the constraints, strategies, risks, and opportunities in one system will also affect the other systems. Thus, one can seek strategies that affect all three attributes simultaneously. For instance, carbon emissions can be used as an internal indicator of waste and inefficiency. Alternatively, emissions can be used as an external indicator of climate risk exposures. The energy strategist needs to know the decisions and prioritizations that can reduce carbon risk exposure as well as decouple carbon emissions from financial indicators.

Jimmy Y. Jia

On System Properties

Frontmatter

8. Introduction to Part II: What Is a System?

Abstract

Energy is a large systems problem and energy strategists need to think in systems to be effective in making change. A system is a group of interacting and interrelating objects that function as a whole. On the inside are processes and on the outside is the environment, or context. These two are separated by the boundary. Boundaries can be a limiting constraint, eliminating distractions and focusing the team onto what’s important. Boundaries can be an enabling constraint, giving an anchor for exploration and unlocking play. Performance improvements happen inside the boundaries. Disruptive innovations happen at the boundaries. Communicating in boundary conditions can communicate entire systems. Part II develops these concepts further in three chapters.

Jimmy Y. Jia

9. Systems Literacy: How to Think in Systems

Abstract

System thinkers are those who are able to synthesize the connectedness of components, flows, and processes that become part of the greater whole. They are holistic in their approach to a problem and able to visualize possibilities of the system, not just the expected outcomes. Novices to systems thinking sometimes use the interconnectedness of the components as an excuse to not take any action. Thinking in systems is to think in boundary conditions to predict how a system will behave under normal circumstances and when under stress, and under what conditions it will break. Energy strategists will be called upon to make decisions about scenarios that are beyond our experiences to manage. A leader needs to quickly understand the situation they are in and respond appropriately.

Jimmy Y. Jia

10. Metrics Systems: Managing Resource Flows

Abstract

Metrics systems are far more than just keeping track of a numerical value. A threshold is merely a numerical boundary condition that determines what’s in and out. A metrics system also implies how the threshold got set at that specific value, the process to change it, and the consequences for missing it. Because there are many nuances to good metrics, leaders need to continuously verify that the metrics system is relevant and representative of its purpose and intention. Energy strategists need to know what they are measuring and why. Frequently, what they are measuring has never been monitored before. Creating effective metrics and reporting systems will enable the continuous monitoring of operations, gathering critical data to support a strategic goal.

Jimmy Y. Jia

11. How to Create Your Own Framework

Abstract

This chapter describes several techniques to create new frameworks. Not every situation will have an off-the-shelf method ready for use. Even this book, which lists over 120 frameworks, does not cover every situation to be encountered. As such, one needs to know how to create custom solutions that are fit for purpose. Designing a new framework is a form of innovation and one can apply these principles to many situations. Energy strategists will encounter new problems where no framework exists to manage it. The strategists will need to analyze the system properties of the problem and try to craft their own boutique solution. As energy strategy, climate management, and sustainability are still fields in their infancy, there is still a strong demand for new tools.

Jimmy Y. Jia

On Leadership

Frontmatter

12. Introduction to Part III: What Is a Leader?

Abstract

The role of a leader is to unlock the possibilities within each individual, be the nexus of information for their surroundings, and communicate ideas verbally and nonverbally to make the entire team stronger. Energy strategist is an emerging leadership role for those who wish to grapple with the realities of sustainability and climate change. These leaders need to tame the ambiguous uncertainties of a company’s exposure to climate risks over decade-long time horizons and help define a new vision for the future. Although energy subject matter expertise is necessary to understand technical tradeoffs, leadership skills are just as important to mobilize a team to operationalize decisions. Part III explores concepts of organizations, decision-making, and communication in three chapters.

Jimmy Y. Jia

13. Organizational and Decision-Making Tools

Abstract

This chapter includes a selection of organizational management, decision-making, and business process frameworks. It delves into the people, teams, and structures designed to manage the flow of information, resources, and decisions. Organizations are formal or informal groups of individuals, teams, or other organizations. Organizational structure contains the institutional wisdom, traditions, and also inertia to change. Decision-making tools are the thought processes, priorities, and trade-offs that managers need to think through when making a decision. As much as an energy strategist needs to understand the details of energy and carbon, they must also know how to work as a team. In today’s fast-changing and ambiguous scenarios, strategists will need to guide with certainty into an uncertain future.

Jimmy Y. Jia

14. Communication: Using Structures to Send Information

Abstract

Energy concepts are complex enough to begin with that they needn’t be handicapped with poor communications. Ideas are only as effective as their dissemination and eventual adoption. Structured communication improves getting the message across because it encodes the information into a familiar and logical progression. If the receiver recognizes the structure, it decreases the processing time for them to internalize and synthesize the information, enabling faster comprehension and decision-making. Energy strategists need to know how to simplify their message enough to get the gist across, but not too much as to become meaningless, vague generalities. A well-crafted message will strike the balance based on audience needs.

Jimmy Y. Jia

15. Communication: Perceiving Structures When Receiving Information

Abstract

The quantity of information being generated on energy and climate threatens to overwhelm any energy strategist. How quickly one internalizes information being received is just as important as sending the information. If the sender and receiver use the same structure, then there is high likelihood the two will share similar contexts as well, reducing the probability of misunderstandings. Organizing the new information in a way that is digestible to the receiver will help increase uptake and comprehension. Conversely, the receiver can increase comprehension by looking for structure when faced with a new document. All of these help cut through the noise of unstructured or poorly structured information. This helps professionals process ideas faster and be more effective at decision-making.

Jimmy Y. Jia

On Innovation

Frontmatter

16. Introduction to Part IV: What Is Innovation?

Abstract

The energy sector is experiencing a rapid growth in innovations, both directly and indirectly. Innovation in general can be divided into three broad regimes. Micro-innovations are process improvements that squeeze out efficiencies from existing methods. They are rules based and function as routines. Meso-innovations emerge from combining the rules of different methods to redefine the system boundaries and create new frames of reference. Revolutionary ideas usually begin as the innocent merging of two seemingly disparate ideas. Macro-innovations scale adoption of the new frame of reference to society at large, creating new relationships between suppliers and buyers. This process includes creating new boundaries or barriers to market entry. Each innovation method is appropriate under different circumstances. Part IV explores the multiple facets of innovation in four chapters.

Jimmy Y. Jia

17. How to Ask Questions

Abstract

Questions focus creative sparks onto a problem. The right question lies at the heart of innovations. Indeed, to achieve out-of-the-box thinking, one needs to perform out-of-the-box questioning. Closed questions have constricted answers, whether yes/no, true/false, or multiple choice. They are suitable for rapid-fire feedback and confirmation of ideas. Open questions have long-form answers. They invite respondents to elaborate on their ideas, conveying the contextual nuance of a situation. Cleverly crafted questions contain within them a frame of reference that guides the respondent’s analysis and answer. Energy strategists need to constantly probe for gaps in knowledge, opportunities to chase, and unknowns to learn. Nurturing a culture of inquiry can help open the team’s minds to ideas beyond one’s experiences.

Jimmy Y. Jia

18. Micro-innovations: Incremental Process Improvements

Abstract

Micro-innovations are ideas that squeeze out efficiencies from existing processes. The approach philosophy is to reduce variability of a process so as to produce the same results every time. The outcome is a procedure or process that minimizes waste and defects while maximizes output. Micro-innovations require deep knowledge and expertise in a field. Whereas generalists need to know how things connect, a subject matter expert needs to be intimately familiar with the details and how processes can be improved. These experts can implement continuous improvement processes, an incremental approach to making change. As an energy strategist, one needs to continuously identify, reduce, and eliminate energy and carbon waste across an organization.

Jimmy Y. Jia

19. Meso-innovations: Creating Serendipity for Emergent Ideas

Abstract

Meso-innovations are the stereotypical “innovation” most people think of—the smartphone, the self-driving automobile, a possible HIV vaccine, and so forth. By the time these technologies are presented to the public, they seem like giant leaps forward. Yet they start their lives as new links created between concepts, people, or fields and take years of arduous incremental improvements. To maximize the moments of insights, one needs to create intentional environments for serendipity to occur. To the outsider, meso-innovations look like playing, because it is. The properties of having fun share a great deal with the process of innovating. Whether inventing new frameworks, new products, and services, or adapting existing ones to contemporary priorities, energy strategists will need to fill gaps and opportunities with meso-innovations.

Jimmy Y. Jia

20. Macro-innovations: The Discipline of Scaling Adoption

Abstract

Macro-innovations are those that help technologies and ideas diffuse into general usage. Much is written about great strategies and ground-breaking inventions. Yet successful entrepreneurs are those who are disciplined in the execution of tactics. A well-executed operation can overcome the shortfalls of a mediocre strategy. The roles of an entrepreneur and intrapreneur are very similar. An entrepreneur tries to make a change to an external system, while an intrapreneur does that for the internal system. Energy strategists need to know how to scale ideas, whether internally for organizational change or externally for market transformations. They need to interact with employees to adopt best practices, explain the benefits of Energy as Strategy to executives, and communicate compelling messages to a broad range of customers, investors, and stakeholders.

Jimmy Y. Jia

Non-Financial Indicators for Corporate Governance

Frontmatter

21. Introduction to Part V: What Is Governance?

Abstract

Governance resides in the world of it depends. Board members need to use their best judgment and broad experience to decide what’s important to pay attention to. Board membership is voted by investors, and some of them use environmental, social, and governance (ESG) indicators to make investment decisions. ESG contains non-financial metrics, such as energy and emissions, to evaluate the health of an organization. Internally, boards need to synthesize climate reports presented by the executive team. Externally, boards need to be responsive to investors and global concerns. Energy strategists need to supervise these interrelated communication flows, helping to make sense out of it all. Part V has two chapters that examine energy indicators through the internal and external roles of a board.

Jimmy Y. Jia

22. Influence of Energy on Internal Reporting

Abstract

Several departments use energy data in their work within an organization. Unfortunately, each department analyzes a different subset of energy data and uses the results to support differing purposes. These issues can originate from any level of a corporate hierarchy and affect the entire organization, from ESG strategy to utility bills to green purchasing policies. To act as the translator, the energy strategist needs to understand the problem that an energy-related report was intended to answer, the different goals of each department, and the functional tools they have at their disposal. By doing so, the energy strategist becomes a nexus of information, helping the board manage the intersections of energy and corporate strategy.

Jimmy Y. Jia

23. External ESG Reporting Frameworks

Abstract

There are many reporting frameworks for environmental, social, and governance (ESG) factors. The common intention is to disclose information to investors that is material to their investment decisions. Yet materiality is defined differently by various standards-setting organizations. Therefore, to understand the purpose of a reporting framework, one needs to understand the decision it is designed to support, the question it is trying to answer, and the problem it is trying to solve. Energy strategists need to know how their investors are demanding energy and climate data. They may be called upon to draft the reports or give their interpretations of reports of other organizations for insights and best practices.

Jimmy Y. Jia

Epilogue

Frontmatter

24. Epilogue: Advice to an Energy Strategist

Abstract

Strategy is a craft, and frameworks are its tools. Frameworks can be very powerful tools, aligning activities of entire global sectors to achieve an agreed-upon outcome. Yet they can also be abusive tools, used to hide, ignore, or conveniently overlook critical externalities that threaten the entire system. Leaders need to use their judgment and wisdom to know which framework to pick, to modify, and, if necessary, when to stop using a framework. Unfortunately, there is no prescribed way to tell the difference, only the art of knowing what to do based on years of experience. Leaders can hone their skills by applying these tools to various situations and becoming familiar with the outcomes. As energy strategists, which problem is worth solving for you?

Jimmy Y. Jia

Backmatter

Titel: The Corporate Energy Strategist’s Handbook
verfasst von: Jimmy Y. Jia
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-36838-8
Print ISBN: 978-3-030-36837-1
DOI: https://doi.org/10.1007/978-3-030-36838-8