As they navigate the shift toward renewable energy sources, leaders of today’s energy companies are simultaneously dealing with many other complications: geopolitical tensions, soaring prices, global slowdown anxieties, waves of restructuring, an aging workforce, and an imperative to build new relationships with non-traditional technology service providers and startup acquisitions. They fully expect the margins of the past to disappear and are under pressure to adapt their fundamental operating models.
To navigate these momentous shifts, many energy enterprises have embraced agile change management. Agile change management promises to deliver unforeseen innovations and rapid results through iterative “test-and-learn” approaches that enable individuals across the organization to design and drive change.
Unfortunately, through our change management work with energy companies around the world and our conversations with industry leaders, we have observed first-hand that agile change management in the energy sector often under-performs.
The problem, we have found, is that organizations often approach agile change management as a set of tools with catchy new names: sprints, daily “stand-ups” and the like. What is often forgotten is that the “secret sauce” of agile change management is a much more fundamental mindset shift. Agile approaches work because they actively engage and empower more people throughout the organization to define and drive change incrementally, rather than waiting on a “big bang” solution to arrive from the top.
Why Agile Change Management Fails
Often, senior leaders — especially those in corporate functions such as finance, human resources, risk management and other siloed departments — have experienced organizational change as a process in which leaders direct others to change. This entrenched culture of command and control impedes the distributed leadership model that is an absolute necessity for genuine business agility.
Even good intentions can end up backsliding. When organizations set up agile squads as silos amid traditional cost centres and resourcing plans, for example, the small agile teams are sidelined by the inertia of traditional hierarchies and industrial organizational arrangements. As soon as the familiar rhythms of the planning and budgeting cycles kick in, career managers tend to revert to the behaviours they’ve always used to win the periodic competition for department budgets. Leaders retreat to closed-door meetings, attempting to solve their own problems rather than leaning on more collaborative agile solutions.
Servant Leadership: A Catalyst for Agility
Navigating complexity and uncertainty in the energy sector will increasingly require leaders to acknowledge an uncomfortable truth: They don’t have all the answers, and they can’t guarantee or fully control linear progress towards strategic outcomes.
Rather than revert to traditional top-down structures, leaders in the energy industry can respond in a new way: They can become servant leaders. Servant leaders drive innovation by creating trusting, collaborative communities. They unlock creativity by encouraging employees to speak up even if it means challenging the thinking of company leadership. They motivate colleagues to learn from inevitable mistakes rather than avoid risks due to a fear of failure.
Crucially, servant leaders understand that top-down decision-making can have negative consequences as well as positive ones. During one recent client project, we took leaders through a simulation exercise in which they examined several potential outcomes from a key project decision. As they explored how their decisions cascaded in unforeseen ways throughout the project, they grasped in a concrete way how a command and control approach might actually impede change and innovation throughout the organization.
Servant Leadership’s Role in the Agile Process
Servant leadership is the bedrock of truly transformative agile change management. That’s because servant leadership is a key enabler of the other strategic tools and elements of agile change management, including:
- Design-led change: To deliver creativity and innovation, talent across the energy sector ecosystem needs to be assured that experimentation — including the periodic failed prototypes that result from bold experimentation — will be not only tolerated but welcomed. Design thinking principles promote a culture of human inquiry, co-creation, empowerment and psychological safety.
- Data-driven decision-making: Following the data, it turns out, often means admitting that you were wrong, and adjusting your approach as new data comes in. Agile servant leaders are primed to be swayed by convincing data, no matter how inconvenient it might be for them in the short term. On the other hand, overconfident leaders who minimize data that contradicts their long-term plans are likely to miss early signals that their current business model is headed for rough waters.
- Continuous learning: By encouraging continuous learning, particularly through experimentation, organizations can socialize practical skills and knowledge that will further enhance innovative solutions and encourage creative problem-solving. Continuous learning approaches can support senior leaders on their servant leadership journeys while also ensuring that agile change management is motivating for the entire workforce, thereby improving retention and productivity.
Strong partnerships with change professionals can support CEOs, CIOs, COOs and transformation leaders as they seek to nudge other leaders throughout the organization toward the servant leadership mindsets that enable design thinking, data-driven decision-making and continuous learning.
Making the Most of Agile Mindsets
Working in a truly agile organization can be a thrilling experience. In an organization defined by agile mindsets, as author and agile consultant Steve Denning eloquently puts it, people are “preoccupied — and sometimes obsessed — with innovating and delivering steadily more customer value, with getting work done in small self-organizing teams, and with collaborating together in an interactive network.”
To succeed in the 21st century, energy enterprises will need to disrupt their entrenched “business as usual” mindsets. Opportunities to innovate amid complexity will come from people all across the energy sector changing how they work, but change needs to start from the top. To prepare their organizations for momentous change, it’s time for senior leaders themselves to undergo momentous change.