Load shedding lessons (and opportunities)

Dr Graeme Codrington offers insight for South Africans (and others) on how not to be left in the dark when it comes to strategic planning as well as attracting and retaining talented young people with creativity – particularly when traditional solutions aren’t working. Consider how you could use the current load shedding to your advantage!

Without a doubt the word on everyone’s lips, in fact the “word of the year” for South Africa at the moment, is “load shedding” – the wonderfully euphemistic title for the ongoing rolling blackouts that have plagued South Africans over the last few months. This as a direct consequence of electricity utility, Eskom, battling to keep up with demand, scheduled maintenance and technical difficulties with the national power supply. While it is absolutely critical to factor in variable electricity supply to any business scenario for the next seven to ten years in South Africa, and while there are many ways in which companies and individuals can mitigate against the effects of irregular electricity supply, there are definitely some other leadership lessons that can be learnt from this current crisis.

It hasn’t taken long to realise that the strategy for managing the national power grid now includes ongoing blackouts, normally scheduled to last no longer than two hours at a time, during hours of peak electricity demand. Many articles have been written on the subject, where the column inches are filled with everything from complaints about bad government foresight to suggestions that include taking traffic lights off the national grid or using spare private generators to add supply to the national grid so that hospitals, schools and other essential services can be kept in power. While it’s easy to point fingers at Eskom and to bemoan the bad business practices of this para-statal electricity utility, many companies have very similar practices and short-term thinking to the type of strategic management that got Eskom into the trouble it’s in right now.

In the Dark?

For many companies, the only point of difference that separates them from Eskom is that the lights don’t go out when their management systems are shown to be defective. So, next time the lights go out in your office, and you are forced to take a two hour break from pounding your keyboard, making phone calls or continuing your work, maybe what you want to do is sit back with your team and use the opportunity to reflect on some of the management lessons that your business could learn from the mistakes of others.

Probably the most important mistake that Eskom made was to be short-sighted in its strategic planning. Electrical generation is an industry that requires tremendous foresight with long lead times for building new capacity and bringing it online. Eskom did indeed have this foresight. Depending on who you choose to believe, somewhere between 10 and 30 years ago, scenario planners already knew that there would be a problem with electrical supply in South Africa. The senior management of Eskom approached the South African government – as late as the mid-1990s – to ask for funding to develop new power plants and increase the country’s electrical capacity. The government had other priorities at the time – short-term priorities – and so refused to grant Eskom’s request.

The Curse of Modern Business

Again, it’s easy to point fingers at the government at this point, but the lesson for each business to learn is that short-term thinking is the curse of modern business. This is especially true for publicly listed companies who report to shareholders (those listed on American stock exchanges do so every quarter!). This creates a quarterly “dance” where the emphasis in business is on maximising short-term returns to the shareholders. Twenty-seven year old stock brokers and technical analysts put pressure on corporate decision makers to think about current financial period returns and results, while not adequately rewarding them for thinking about future capacity and future demand.

In most cases, as in the case of Eskom, when this short-termism is exposed, the senior leaders suddenly resign or retire, taking with them extraordinarily huge compensation payouts that set them up to live like kings for the rest of their natural lives, but leaving behind the mess that they were instrumental in creating. There are many voices within these industries that worry about the effects of short-termism but these voices are often shouted down, ignored or silenced completely.

Giving up too Soon

Once Eskom had been denied funding by government, it could have stuck with the courage of its convictions, analysis and scenarios and looked for other ways to generate the necessary income to fund the capital expansion of electrical supply in South Africa. Private funding would no doubt have been available, as would loans from banks that were hungry for investment opportunities, or even international investors desperate for a piece of the emerging market action. A failure to act on the courage of the convictions of their insights is something that Eskom’s senior leaders must answer to. They knew there would be problems, they tried only one solution and then gave up because the traditional solution proved to be a dead-end.

Culture of the Creative

Creativity is an absolutely essential commodity in today’s business world. Business is not “usual” anymore. When typical and traditional methods fail, successful businesses of the future will be those that are able to look at non-traditional methods of fulfilling visions and dreams that their clever people have had.

But the trouble isn’t just historical. Right now it’s exceptionally clear that even if Eskom got the funding to double electrical generation capacity in South Africa, they would not have the ability to implement this because they do not have the necessary staff, especially engineers and top-end technical staff. This is a problem that Eskom shares with almost every company in every industry in the world at the moment. There is a global shortage of talent. Most companies just seem to have accepted that fact. Most companies just seem to be resigned to a new “reality” that they will not have the staff that they need, and that the staff they have will not stay more than a few years at a time.

While this certainly is descriptive of the current situation, I would like to contend that it by no means needs to be normative for companies. The most talented young people do not move companies because of some pathological urge for continual change that forces them to switch industries and switch professions every three to four years. What the young generation of talented staff are looking for is ongoing development, creative challenge and an inviting culture. This is easily found within a single company these days because of the tremendous changes inherent in the context of almost every business and industry in the world at the moment.

I am absolutely convinced that if companies were just prepared to be creative in the way in which they managed their talented staff, they would find very quickly that their most talented staff would stay with them and would contribute over a much longer period of time to the development and growth of the organisation. These companies would equally be able to attract the brightest stars in their industries and should have no reason to be understaffed in any of their critical areas. But this too requires a creative mind-shift in the types of work contracts, the terms and conditions of employment and the managerial styles required to manage these talented young people. This is a lesson Eskom still has to learn and until it does, even if it gets the funding it so urgently needs, it will not have the manpower to implement its turnaround plan.

Finally, having identified all the problems that Eskom has, a huge question must be asked why Eskom continually talks in year timeframes, sometimes even decade-long timeframes, about solutions to the current crisis. There are almost no businesses in the world that can afford to take the type of long-term hammering that Eskom seems to be willing to accept.

We have been told that it will take anywhere between seven and ten years to rectify the electrical supply problem in South Africa. Besides just being unacceptable from a country development perspective, this seems to be an absolutely ludicrous and untenable business proposition. When you have a country like China that is bringing a new power station on stream about once every six weeks, it seems inconceivable, given the urgency and the importance of the issue of electrical supply in South Africa, that it is impossible to speed up the approval, financing and implementation of electrical supply schemes. It seems clear that South Africa needs another nuclear power plant, yet Eskom only recently even called for tenders for the development of the technology towards the implementation of a solution in this area.

Reduce Bureaucratic Load

The amount of red-tape, bureaucracy, politics and “to- and fro-ing” that takes place before any decision is made is indicative of a company – and indeed an industry – in deep crisis. While it is easy to lay blame at Eskom’s door, maybe as you sit there in the darkness today, you and your team want to spend some time with pen and paper working out ways in which you can reduce the bureaucratic load that you have imposed on your company and staff. Every company has bureaucracy, every process has red-tape. Every manager’s greatest legacy could be the dramatic reduction of that bureaucratic load.

Sure Eskom needs to get its stuff sorted out and I hope that the managers at Eskom, when they have to load shed their own head office, take the two hours of interrupted power supply as an opportunity to reflect on some of these issues themselves. But your company is not immune from the same issues that are plaguing Eskom – it might just be easier to hide that you are on the same path as Eskom. As you sit in the darkness, I hope these thoughts haunt you and lead you to some good discussions in your team as you work out ways that you can move brightly into the clear future.

 
Dr Graeme Codrington is an expert on corporate talent and the future of work. As a member of the TomorrowToday team, he specializes in powerful, yet playful, keynote presentations. Contact Graeme at graeme@tomorrowtoday.biz

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