Executiveaction
series
No. 160 September 2005
Business & Energy in the 21st Century
Navigating Energy Management:
A Roadmap for Business
by Charles J. Bennett, Ph.D. and Meredith Armstrong Whiting
That energy is essential is a givenwithout it no company would
be in business. Thus all businesses must manage energy to an
extent, if only to ensure its availability. Beyond that basic need,
decisions relative to energy options and opportunities will depend
on how significant the cost and environmental effects of energy
are to business operations, broader business strategy and positioning
considerations and, for some, new market opportunities.
From the purchasing department to the board room, businesses Missed Opportunities?
today are more focused on managing energy than at any When The Conference Board began its Business & Energy in
other time in recent decades. Energy is increasingly seen as the 21st Century project in 2002, research showed that while
a strategic business concern, whether it be: there had been successes in corporate energy management
whether measured by assuring reliable supplies at predictable
Guaranteeing a reliable supply to support critical business costs, increasing energy efficiency and thus reducing its cost,
processes ranging from manufacturing operations to or identifying new business opportunitiesmany companies
assuring the integrity of key company data;
were approaching energy management in an unsystematic
Maximizing efficiency to reduce use, cost and fashion, or not at all. This suggested the strong possibility
environmental impact; or that business opportunities were being missed.
Developing new products or services to take advantage of
a dramatically changing energy marketplace.
Given rapidly rising energy costs, growing concern about It is comprehensive, intended to help companies
avoid missing potential benefits by addressing
global competition and supply, and a generally increasing
opportunities for enhancing:
sensitivity to the whole notion of energy security
(whether at a company or national level), The Energy supply,
Conference Board sought to develop a roadmap for
energy planning and management for businesses. Energy efficiency, and
Energy products and services.
The Roadmap Is a Guide, Not a Recipe
It is scalable and can be applied at the level of an
individual process or facility, or enterprise-wide.
This Roadmap is intended to guide companies in
identifying energy-related business opportunities and It should be noted too that while the roadmap is unique
developing the strategic framework for realizing them; in its focus on energy planning and management, the
it is not intended be a cookbook approach for overall logic and approach is consistent with
implementation. established approaches to strategic planning and
management across a variety of disciplines. The
There is no single strategy for energy. Each company uniquenessand valueof this project is its focus on
will develop a unique approach based on its energy and the fact that it represents the collective
perception of risks and opportunities, specific targets,
wisdom of many companies consolidated in a format
available resources, schedule, etc.
that will be useful for many others.
Each company has a unique culture and will develop
its own management approach to realize energy
opportunities.
Extensive information on managing energy The Roadmap:
A Summary
strategically is available. Organizations such as the
Alliance to Save Energy, and government agencies in
the United States have developed and posted
guidance and tools which companies can adapt to There are four steps in the overall process:
their own needs. Energy service organizations and
numerous consulting and engineering firms also offer Step 1: Initial Assessment
expertise tailored to the needs of any business. A
partial listing of resources for advice and guidance Step 2: Design the Process
appears at the conclusion of the Roadmap report. Step 3: Evaluate Opportunities
Step 4: Implementation
(See Editors Note below).
Editors Note: In the summer of 2002 The Conference Board launched the Business & Energy in the 21st Century project with
a grant from ENERGY STAR and support from several member companies. While energy was an important issue at the
outset, it has catapulted to a much higher level of national and global attention during the three-year life of the project. In
the course of the project much was learned about corporate energy management through research, meetings and
conferences, and interactions with business executives, academics and government personnel. The cumulative findings
were published in July 2005, A Roadmap for Strategic Energy Planning and Management (The Conference Board Research
Report R 1365-05-RR).
2 executive action navigating energy management: a roadmap for business the conference board
Drivers for Company Energy Management
Step 1: Initial Assessment
How Energy Management Can Impact Corporate Planning
This first step involves a thorough, organization-wide
assessment of the importance of energy to the company
in relation to its overall needs, risks, goals, image and
reputation, and of potential business opportunities
Business Opportunities
Most efficient use
through energy-related products or services. Properly
Supply/price management
implemented, the assessment can provide clear direction
Opportunities to Company
Positioning
as to the potential inherent in a strategic approach to
sell energy products,
services, credits, etc.
energy planning and management.
What kind of
company are we?
Potential Risks
Where do we
The key question posed by the assessment process is
Supply reliability
stand on key
Key Fuel Availability
what are the business opportunities related to energy?
issues?
Regulations
This framework provides the context for evaluating
Geopolitics/terrorism
energy as more than simply a cost of operation.
Others
Companies that have embarked on such an evaluation
have asked themselves very fundamental questions about
how energy relates to:
Potential business opportunities;
Potential business risks; and
The overall positioning of the company
Chart1:
Energy Planning & Management "Roadmap"
Step 1 Step 2 Step 3 Step 4
Initial Design Evaluate Implementation
Assessment Process Opportunities Efficiency
Measures
What is the How much Create Inventory
Business Energy do of Opportunities
Opportunity we Need? and Energy
Related to Baseline Design
Organization
Energy Supply
Implement
Options
What is the
Costs etc. Best Way(s) Decide Scale of Initial Efforts
-
Risks/Opportunities? To Meet this Prioritize Opportunities
Company Image etc. Need? Etc.
Products &
Services
executive action navigating energy management: a roadmap for business the conference board 3
The bottom line is that while cost is an increasingly What technical and financial resources are available
important factor, companies evaluate the importance of (this is closely related to the scale question): are they
energy from multiple perspectives. Other factors such as internal, external, or both? What are the competing
risk management, reputation, and even product-line priorities for these resources?
issues may carry weight as well. As one advisory
committee member Howard Stanley of Corning, Inc. Are there programs or processes already in place (e.g.
observes: Six Sigma) with which energy management could be
integrated?
Cost and consumption are key elements of managing
energy. You have to gather your data and implement These and other questions frame the overall approach
strategies to affect the factors you can control. Even if that a company will choose and can greatly influence the
your energy dependence is low, if energy is important to chances for early success, which is critical to establishing
your company, then a review is justified. a sustainable management process that will maximize
potential benefits.
The outcome of this step is a decision: to go forward with
a more strategic approach to energy management, or not.
Step 3: Evaluate Opportunities
This step is the nuts and bolts of the energy strategy
Step 2: Design the Process and management planning process because it is where
The design and planning process begins with an real opportunities can be realized. It is where the real
assessment of a companys actual energy needs versus work gets done, but because of its potential size and
business as usual practices and an investigation into complexity, especially in larger, diversified and energy
the most promising solutions for meeting those needs. intensive businesses, if not well mapped out and
Taking this approachasking the fundamental question systematically approached, significant opportunities may
of how much energy do we need?encourages be missed, or momentum may be lost that will be
thinking beyond the familiar and the comfortable and difficult to regain.
exploring possibilities for innovation. It is important that
process design and planning consider all factors that Essential to this third and crucial step in the process is a
could inhibit success, from corporate culture to baseline that reflects the types, quantities, and costs of
appropriate scale to resources, funding and organization. energy used in each significant component of the
business. Ideally this will include facilities, operations,
Key questions to consider: and transportation and distribution, and in some cases
even the energy consumed by the product itself,
At what scale should we initially approach energy especially if that issue is increasing in importance in a
management: a single facility or division, or enterprise business sector. Also, for certain companies, this will
wide? This decision is driven by the potential for
include an assessment of new or expanded energy-related
success in the early stages and consequent
products and services that may benefit the company.
sustainability of the overall management process.
4 executive action navigating energy management: a roadmap for business the conference board
Opportunities fall into three categories, although not Because these influencing factors, including energy cost,
all will be relevant for all companies: are dynamic, a strategic approach to energy planning and
management must be dynamic and iterative rather than
Energy efficiency reduces the amount of energy used, static. Only in this way will opportunities be
reducing both cost and environmental impact. continuously identified and realized.
Energy supply management can help to control costs
and assure reliability. Step 4: Implementation
This fourth and final process step follows a classic
Energy related products and services can help management system model and involves determining and
existing products to be more competitive in the setting in place an organizational structure that will
marketplace or create new markets. ensure that the program is integrated into the overall
company management culture and that the new energy
At any point in time, in addition to the cost of energy, management goals are achieved. Regardless of the
a range of factors influence the opportunities that are framework decided upon, certain management principles
available. and tools must be in place to achieve significant results.
These include:
Factors Influencing Energy Opportunities
at a Given Point in Time
Leadership at the very top of the company with a
clear commitment to results;
Clearly stated goals and measurable objectives at
appropriate levels;
Existing products,
processes, capital
facilities and equipment Clear accountability for results, whether in a single or
multiple executives;
Work practices and Opportunities at
reward systems
in place
a point in time Sufficient resources to enable achievement of the
objectives and goals;
New market and
business possibilities Periodic review and updating of goals, objectives and
resource commitments; and
Recognition of progress and reward for achievements.
executive action navigating energy management: a roadmap for business the conference board 5
One simple and widely adopted management system Meredith Armstrong Whiting has served as a Senior
model and guidelines has been developed by ENERGY Research Fellow of The Conference Board since 1987.
She authors research on topics relating to public policy,
STAR in consultation with many of its partner
environmental issues, safety and health, corporate citi
companies:
zenship, sustainability and energy, and organized The
Conference Boards first council for chief environmental,
The specific system adopted is not as important as health, and safety executives.
whether it meets the fundamental principles for success
and fits a specific companys operating culture.
ENERGY STAR The Conference Boards Strategic Energy
Guidelines for Energy Management Management Advisory Group
At the invitation of The Conference Board, eight mem
ber companies from a variety of industries, all with
Make commitment extensive experience in strategic planning for energy
management, formed an advisory group to assist in the
creation of the Roadmap for Corporate Energy
Strategy. Members included executives from Abbott,
Assess Performance
Cargill, Corning, DuPont, Duke Energy, Florida Power &
Light, IBM, and ICF Consulting.
and Set Goals
Over a period of six months, in a series of meetings
and conference calls, the ten executives involved pro
Create vided guidance and raised issues that needed to be
Action Plan
considered by companies attempting to implement or
Re-Assess
refine an energy strategy. Reflecting the combined
decades of experience that they represent, many of
their comments, organized by category throughout this
Recognize Implement report, paint a vivid picture of the challenges and suc
Achievements Action Plan
cesses that have honed their own and their companies
insights into energy management.
Evaluate
Progress
Acknowledgements
The Conference Board gratefully acknowledges ENERGY
STAR for its support of the Business & Energy in the 21st
Century program, and Abbott Laboratories for its gener
About the authors ous support of the Roadmap for Strategic Energy
Charles J. Bennett, a Senior Research Associate at
Planning and Management project.
The Conference Board, is associated with the Global
Thanks go also to the members of The
Corporate Citizenship Research Group and coordinates
Conference Boards Advisory Group on
The Conference Boards environment, health, and
Strategic Energy Management for their
safety council and research programs. His published
dedication to the concept and continuing
research focuses on a wide range of topics, including
input and assistance in the development
sustainability, corporate citizenship, environment,
of the Roadmap.
health and safety, and energy.
6 executive action navigating energy management: a roadmap for business the conference board
