Explosive Truths – Lessons for Smart Grid Initiatives

An Independent Review Panel convened by the California Public Utilities Commission (CPUC) to study the causes of the September 9, 2010 gas pipeline explosion in San Bruno, California released its findings late last week. This tragic event caused the loss of eight lives, and scores more were impacted with losses of property and displacement. The report recommendations were targeted to gas pipeline operations at Pacific Gas and Electric and the CPUC, but some of their conclusions about corporate culture have relevance to Smart Grid projects and deployments for all utilities and regulatory agencies.

Those specific conclusions focus on how organizational culture frames internal communications and deployment of new technologies. As the report noted, it is “difficult to capture the full spectrum of factors that make an organization unique, such as history, hierarchy, mission, leadership, experiences, attitudes and values. “ But utility and regulatory cultures must change into innovation cultures to plan and manage the transformations that Smart Grid technologies and services can play in the electricity value chain to benefit consumers and society.

First, the silos that are common to most utilities can impede successful deployment of Smart Grid technologies. Several panelists at the Electricity Storage Association conference in San Jose last week pointed out that energy storage challenges the traditional utility classifications (silos) of generation, transmission, and distribution. Depending on the type of storage technology and application, it can be considered time-shifted generation, or a service to bolster power quality for transmission purposes, or a distribution asset to improve reliability, or a mobile battery for geo-shifted generation. Pity the energy storage vendor with a solution that crosscuts silos. Both utilities and their regulators must take care to not use siloed thinking about innovative technologies or solutions – they must think on a bigger, broader scale of what safe, reliable, and cost-effective electricity means and not in the context of limited applications for a single link of the electricity value chain.

Second, investing all organizational energy into emerging technology deployments without concomitant process, policy, and people changes is a sign of pending doom for project success. It’s like slapping fresh paint on a termite-riddled house – ignoring the structural weaknesses undermine the results of the paint job. It’s a common trap across all types of businesses. Experienced project managers will tell you that technology deployments are easy compared to planning and implementing organizational change.

Change management can facilitate cultural change. It is a necessary component to any successful Smart Grid project, and vital to any project that has visible or disruptive impacts to consumers. Business research shows that the most common reason for failure of major projects is the lack of change management plans that build internal consensus and support. Managing change within a utility requires an in-depth communications plan and targeted messages that are delivered at all organizational levels in all functional areas. Successful Smart Grid projects must also extend communications to external audiences – consumers- as well, to educate and enlighten them about the short and long-term benefits of new technologies or services. “Trust us” is not a communications strategy. Regulatory agencies must recognize the value of cultural change and support utility change management and communications activities as necessary steps to successful Smart Grid initiatives.

We’ll discuss tactics in a webinar on June 21 about change management and communications about Smart Grid benefits to internal and external constituencies. Join us to learn more about transforming operations to support innovation cultures.

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