Demand for energy is at an unprecedented level. Last year, global consumption grew at its fastest since 2010, thanks to a combination of a cold winter in the US and hot summer in developing, air-conditioned countries. This is emblematic of a wider problem.
Catering to this demand will require the use of specialized and increasingly sophisticated technologies, and thus specialized forms of knowledge. This means bringing in the right engineering talent, but it also means that management should be aware of the technology they’re overseeing.
Why does Classical Management?
According to classical management theory, which was popularised in the wake of the industrial revolution, an ideal workplace is one that’s rigidly hierarchical and specialized. Big and complex tasks can be completed by lots of workers, each of which contributes a narrow, deep slice of expertise. All of this is overseen by three layers of management so that the top of the pyramid rarely interacts with the bottom. The advantages of this approach in a production line saw it become a model to be emulated.
In the modern energy industry, this approach has been exposed as inflexible and cumbersome. New challenges are being presented almost daily, and it’s crucial that management is made aware of what’s going on at the coal-face (or the fission reactor, or wind turbine) rather than waiting for information to trickle up from the bottom.
Classical management techniques rely on experience and de-emphasize creativity. In an industry where innovation is paramount, this is precisely the opposite approach to the one that’s required.
What challenges are energy suppliers facing?
The supply chain for oil and gas is incredibly complex. Even the largest, most vertically integrated organizations like ExxonMobil must at some stage deal with third parties when hyper-specialized equipment and skills are called for. The same applies to smaller renewable companies, too.
Another challenge comes from recruitment. The vast majority of unexploited resources are to be found in developing economies, where skilled labor is difficult to come by. This pressure is exacerbated by the desire of many skilled workers to retire. Needless to say, retaining an existing employee is far more valuable than training a new one – even if the retention is only for a few extra months. Any business which fails to offer the right incentives and training is, therefore, putting itself at a considerable disadvantage.
This training should extend to management, too. Too often, the executive performance was associated with shareholder-pleasing cost-cutting exercises. The industry must redefine success in terms of the value being delivered in the long term.
On its way from the generator to the wall socket, a given portion of electrical energy will be wasted as heat. That sources of waste along this journey be identified is absolutely crucial. After all, an abundance of some natural resource, whether it be oil, gas, or sunlight, is worthless if there isn’t the right infrastructure to get the electricity to where the demand is.
Efficiency is also a concern for the appliance which ultimately uses the energy. Modern switching power supplies are far more efficient than their linear forebears, and thus their introduction should be encouraged in modern electronic equipment. This applies to bulky ‘black box’ laptop supplies just as much too tiny surface mount components.