ENERGY SHIFT!
Wednesday, November 18th, 2009The title of this article is also the title of a book by Eric Spiegel and Neil McArthur, senior partners of the managing consulting firm, Booz & Company. I’ve ordered it because I believe I need to have a handle on the effects that the world’s need for energy will have on business, in the years to come.
It’s not something we have to think too hard about, but I’m willing to guess that there will be many in business – especially in the sectors of the economy that use large amounts of energy (like manufacturing and mining) – that haven’t thought about what will happen if they suddenly run out of electricity!
Transportation fuel and electric power prices, energy security, and climate change should be on every business leader’s mind. Recent shifts in scientific knowledge, public awareness, and political will are causing governments to take meaningful regulatory and legislative action. This has been borne out here in South Africa, through a number of conferences held around the country recently, and which have been well supported by the Department of Energy.
And, - multinational corporations are factoring new realities and uncertainties into their strategies and operations. But what, if anything, is small business doing about it?
A synopsis of the book from Booz & Company reads like this:
Energy Shift: Game-Changing Options for Fueling the Future is a one-stop resource for busy executives and senior policymakers who need a reliable, accessible guide to the big strategy questions surrounding energy.
Supported by the latest studies, articles, and research conducted by Booz & Company, Energy Shift is a visual guide that puts the most up-to date information on the future of energy in a handy, easy-to-use format. It provides essential knowledge on the forces shaping the energy industry, alongside practical advice for making the tough decisions that leaders in all walks of life will face.
Energy Shift helps you distinguish media-driven myths and misconceptions from the actual effects the energy crisis will have on a variety of businesses and organizations-from the smallest local enterprise to the largest multinational. Additionally, this forward-thinking handbook discusses the new opportunities that will arise for investors, corporations, and governments in such areas as Oil; Coal; Natural gas; Nuclear energy; Transportation alternatives, including biofuels, electricity, and hydrogen; renewable energy sources, including wind, solar, geothermal, and biomass Carbon reduction.
By 2030, the way the world uses energy will be massively transformed, and along the way there will be daunting challenges and abundant opportunities. The most savvy business leaders will be the ones already prepared to act, not react, using the information found in Energy Shift. (emphasis – mine.)
This article is not meant to be a plug to buy the book, and I will comment on it once I’ve had a chance to digest what it contains, but it does emphasise the fact that we are on the brink of some fairly significant paradigm shifts in the way we do business.
If you’re listening to business owners and investors right now, you will hear the buzz about alternate energy. It’s not something new; it’s just that it’s never got the attention its getting right now. And it started about two years ago, when we had all those power blackouts and outages, and everyone rushed around trying to buying generators. It was a warning sign!
More recent developments at ESCOM, the country’s power producer, have just served to confirm this, with promises of up to 45% per annum increases in the cost of electricity over the next few years.
In the midst of all this hype, it seems there are effectively three prevailing viewpoints:
- The short term viewpoint, – where every man and his dog is rushing around trying to set up a solar water heating business of one kind or another. Just within my own circle of friends, clients, acquaintances, there are about a dozen people (and that’s just here in the Durban/Pietermaritzburg/Midlands area), who are actively planning to diversify some (or all) of their investment into this sector of the economy. Each one has his own view, and each one believes his is the correct one, and is steaming ahead with it. This viewpoint is likely to be the one which many small business owners will fasten on to.
- The long term viewpoint, – where some serious players are quietly planning a whole new industry, and gearing up to take advantage of not just the alternate energy market, but the effects it will have (the spin-off) on the general economy, local and global. There will not be many with this viewpoint, but it will probably include major corporations and multinationals.
- The prophetic viewpoint, – where some serious thinkers are stepping back and looking at the whole world in the light of a significant number of global changes which are taking place, and of which alternate energy supply is but a small part, and examining ways and means of adapting to these changes. They understand the times and know what they should do! This will be the viewpoint of a select few. Scenario planners and Futurists are included, and the process will not just be about business!
It’s not my purpose in this article to say that one is wrong and the other right; it will depend entirely on the individuals involved, and the resources they have at their disposal. However, let me draw some parallels from recent history in commenting on those views:
In the early nineties (or thereabouts) the first cell phones became available. The short-termers rushed to get theirs, at considerable cost, because they just had to have one. The fact that they’d not needed one before was irrelevant, and I’m almost sure that not one of them could have forecast the effects that the cell phone would have on life in general. I know a number of cell phone businesses which sprang up, only to close down because they were ill-conceived and a knee-jerk response to a changing market. Not one of the cell phone providers fit into this short-term category. So while the Vodacom’s of this world went on to become Multi-billion Rand Companies, a number of smaller firms just lost their shirts!
The long-termers were not only into erecting cell-phone towers as Vodacom and MTN were, they were also planning to introduce a whole new fashion industry – where you could sport the latest cell phone and accessories – and it provided huge impetus to declining advertising revenues. Cell phone and related advertising now accounts for a significant portion of all media advertising in the country.
The prophets were realizing that it was not going to just be a business related industry; that cell phones could be owned by every member of the family. Even then, I doubt they realised the effect it would have on the lifestyles of the people. Children no longer write English ‘as she should be spoke’ – sms language has replaced classical English. Cell phones are now more important than relationships, and even the most trivial calls will interrupt the most important meetings. The current cell phone generation even walks differently, each with a cell phone to the ear, or furiously reading or tapping out a sms message, while in full stride. Some years back, Tiger Brands, the largest supplier of food in South Africa, noticed a decline in sales of even the basic foodstuffs. The reason was soon discovered, – more disposable income – even from the poorest people – was going on cell phone scratch cards!
One could draw similar parallels about the Internet and the IT industry and many will remember the Dotcom disasters of a decade or so ago.
One of the things we know about history is that, generally, no one ever learns from it! Perhaps, in these energy-sapping times ahead, you could give careful consideration to where your business is going to be positioned to take advantage of the changes that are definitely coming. And please, don’t rush off into it; look before you leap! You may not only keep your shirt, but end up building a whole wardrobe!
