Leveraging our 30 years of energy expertise, this report examines the differences between public power and cooperatives, the process for gaining coherence and alignment, and the four keys to success.
Gaining coherence and alignment is extremely important, but it can be challenging. The Board should develop the initial strategic priorities but heavily influenced by management. Management must then connect the priorities to the business plan and drive execution. This article reviews the approach and success factors for achieving coherence and alignment related to the players involved (the Board and management), preparation, plan development, output, and execution and monitoring.
Strategic Planning in Public Power and Cooperatives
- Gaining Coherence and Alignment
Contents
- What Is Different for Public Power and Cooperatives? What Is the Process for Gaining Coherence and Alignment? The Players The Preparation The Plan Development The Output The Execution and Monitoring Lessons Learned: What Are the General Keys to Success?
- Strategic Planning in Public Power and Cooperatives
What Is Different for Public Power and Cooperatives?
- Board makeup often has limited direct industry experience Boards are appointed (public power), or member-owners (cooperatives). Missions of the companies are not-for-profit, often self-regulated with no PUC oversight. Increased focus on economic development and related activities Stakeholder input to the planning process requiring active education and engagement
- An industry with increasing complexity and high-stakes challenges A high fixed-cost business with long-lived assets, thus frequent bet the farm capital decisions A need for careful planning, strategic vision, and alignment between the Board and management
- What Is Different?
- What Is Not Different?
- Gaining coherence and alignment is even more important and can be more challenging.
- Strategic Planning in Public Power and Cooperatives
What Is the Process for Gaining Coherence and Alignment?
- The Board drives the initial strategic priorities but is heavily influenced by management. Later in the process, management must connect the priorities to the business plan and drive execution
- Strategic Planning in Public Power and Cooperatives
The Players
- Keys to Success Gaining agreement on the roles Engaging Board and management consistent with their roles
- Basic Approach Board (own the process) Represent the interests of their member-owners, but wearing their Board hats; Ask the tough questions to ensure clarity of issues, decisions, and actions. Own the directives; support management with execution and stakeholder management Management (lead the process). Demonstrate understanding of the key strategic issues; Educate Board members so they can challenge and offer direction Link priorities to annual business planning and drive execution
- Strategic Planning in Public Power and Cooperatives
The Basic Approach is to Look externally at the industry environment. Agree on business drivers and develop planning assumptions. Interview Board members and management or conduct a survey to gauge and prioritize a range of strategic issues. Use results to inform The Plan Development portion of the process Sample Information-Gathering Survey Output
- The Preparation
- Keys to Success Good balance of internal and external perspective, so it is true to context Early engagement of Board to ensure the right items are being addressed
- Strategic Planning in Public Power and Cooperatives
Basic Approach Convene Board and management. Develop robust agenda that is part education and part review, and decision-making; Ensure the agenda allows time for engagement and challenge; Strive for clear strategic priorities alignment and coherence; Gain breadth of perspective on each strategic issue; Maximize input and guidance from the Board Make decisions on the preferred, high-level strategic priorities.
- The Plan Development
- Keys to Success Focus on what to do. Later, the focus will turn to how to do it. A planning retreat works best to help Board and management focus on the right whats and become aligned.
- Strategic Planning in Public Power and Cooperatives
Basic Approach Strategic priorities should: Have a time horizon Be succinct but clear statements; Include a simple framing of the strategic priority (strategic considerations or issues to consider); Include targets and methods of measuring progress; Be supported by an initial set of initiatives to advance the strategic priorities Concisely state each priority on one page.
- The Output
- Keys to Success Stick with a manageable number of strategic priorities (generally five to eight)
- Strategic Planning in Public Power and Cooperatives
Basic Approach Led by management. Build a business plan which incorporates strategic priorities and identifies initiatives to advance each with actions, time frames, owners, targets, and metrics; Determine budget implications of initiatives; Develop metrics and reporting mechanism for Board monitoring and oversight.
- The Execution and Monitoring
- Keys to Success: The right metrics with associated targets; Scheduled reviews for Board engagement and oversight.
- Strategic Planning in Public Power and Cooperatives.
Lessons Learned: What Are the General Keys to Success?
- Remember the purposes of a strategic planning process. To decide what is most important to the company; To gain understanding and agreement on direction for the company; To drive coherence and alignment with management and the Board; Utilize a thoughtful and structured process; A process that allows for education, discussion and debate, and clear decisions; More than a retreat with a SWOT discussion and no clear decisions; Insist on good engagement between Board and management (from start to finish). Governance: Board hats throughout the process (whats best for the company?). Identify strategic priorities that are: Practical and achievable, Followed by a business plan (key initiatives) owned by management
- Strategic Planning in Public Power and Cooperatives
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