With the world set to add as much renewable power in the next five years as it did over the past 20, scaling production to capitalize on this demand is increasingly becoming a challenge.
Demand is far outstripping manufacturing capacity, and ongoing supply chain constraints are exacerbating the challenges, according to a recent Deloitte study. Further complicating the picture is a tight labor market, ever-changing government policies, and an economic environment that makes capital investment more difficult.
Uncertainty and volatility are particularly being felt in the renewable energy sector. It’s grappling with evolving government incentives and growing consumer interest in “green” business practices. Leaders with the best chance of successfully addressing those challenges are those who are driving productivity improvements across the supply chain, and adopting ways of working that make possible rapid adjustment to change.
How can organizations meet demand and continue to grow in such an environment? Productivity and adaptability are key. Following are some strategies for improving them in the renewable energy sector.
Enable productivity without investing more capital. As demand continues to spike and supply trails, organizations can rapidly increase productivity by adopting more efficient processes and information flows. They must give employees permission to try out new strategies for achieving those goals. This can be done by creating small “hubs” that think outside their normal roles. Such groups can provide a space for ideation outside the traditional hierarchical structure. Cross-functional teams with shared goals can help renewable energy organizations sidestep some of the more traditional blockers, such as siloed thinking, over-reliance on technical expertise instead of innovation; and conflicting priorities across teams.
Keep planning nimble. Shifting regulations and subsidies make it more important than ever to have contingency plans that are constantly being re-evaluated. Instead of relying on overly prescriptive strategic plans, companies need to take a more flexible approach, one that clearly articulates the assumptions underpinning current decisions, and allows for faster pivots when those assumptions change. Leaders and their teams must be prepared to adapt quickly and work effectively with stakeholders and subject matter experts to ensure that all work is compliant with the latest regulations.
Build adaptability to combat uncertainty. To build adaptability in the face of uncertainty, teams must maintain open information flows, both within and beyond the organization. Partnerships with government organizations and stakeholders can provide the foundation for adapting more smoothly to changing policies. Regulators often have a legacy-based mindset in how they operate, but renewable energy leaders can confront this tendency by recruiting subject-matter experts to demonstrate the need for change.
All employees and partners should be constantly on the lookout for changes in external conditions that present new opportunities for constructive action. Information should flow smoothly up the organization so that all participants can experiment, learn, reassess and move fast.
The path toward renewable energy production is well underway, and progress can be accelerated by creating the agility needed to meet the challenges of today’s environment. In a world of constantly shifting demand, competition, incentives, financing vehicles and regulatory policies, this quality isn’t just helpful, but is necessary for continued success.
Martha Deery is a principal, and Gaurav Gupta is managing director, of Kotter.
