MANAGEMENT OF TECHNOLOGY

IEE MANAGEMENT DIVISION CHAIRMAN’S ADDRESS

Ma the 21

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1 0 0 .ng electric1 centuyy

tY the sleeping giants awake

by J. R. Lowen

et us return to the time of the last century. We have come a long way from the L ‘magic’ of the Faraday laboratory. In

the late 1870s electricity supply was based on generation in small sheds and basements. Pioneers in the UK such as Ferranti and Parsons, and Insull and Edison in the USA, developed the technology and the comple- mentary business financial structure to create in the early 1890s hundreds of independent undertakings selling electricity to their local areas. It was during this period that the entrepreneurs of yesterday effectively started the electricity supply industry through the use and development of technology linked to the risks they were taking in building their businesses. Some became huge companies through acquisition and takeover as the first quarter of the century progressed. It was a time

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0 in

Slipping back 100 years and comparing what was happening in the electricity supply industry then with now superficially paints a very similar picture. But, although the turmoil is equivalent, new sGlls are needed for ihe engineers, the managers, the leaders who will lead the electricity supply companies into the next century. Today we have a superb range of businesses in electricity supply and related equipment manufacturers which face significant challenges in the 21st century, which will bring to the fore the electrical engineer -a challenge which is wai&g to be grasped and won.

of enormous development and turmoil that in reality established the ‘electric age’ (Fig. 1).

There were many hundreds of sep,arate companies and by the 1920s the industry m as at a crossroads. In London alone there were more than 50 systems for supplying electricity and between them they generated at 14 different voltages and at least a dozen frequencies. This was in reality a situation that could not conrinue and in 1926 the government moved to start to

to

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Fig. 1 Faraday Institute

282

co-ordinate the industry and establish a grid. It was in fact on Friday, 29th October 1937 that quite unofficially a control engineer in London thought he would try linking seven grids together and it worked and a completely integrated system existed for the first time. Eventually in 1938 the integrated grid system was officially formed-the biggest in the world at that time. From then on the grid system grew, the power stations grew, and over extended periods of time as technology developed the manufacturers grew, and the industry expanded, becoming nationalised in 1948 and staying remarkably stable for 40 years, except for technologically driven changes, until 1990. Then turmoil started over again, but driven this time principally from a business rather than technical perspective.

Recent history In March 1990 the electricity supply

industry became a changed industry. This followed the government’s proposals of 1988 which envisaged a wholesale restructuring and

quently, change has been rampant and sustained. The more cosy technically domi- nated years of the previous decades were gone for ever. The CEGB and the ‘old’ Area Boards were jolted into a new world where compe- tition was the keyword. The industry awoke from its slumbers and as these sleeping giants awoke, new companies, new businesses were formed to take the industry into the next century. The basis of the industry in the UK was changed overnight, and I don’t think anybody then would have seen the effect this

ENGINEERING

privatisation. On that date in 1990, and subse-

would have had, not only in the British Isles but also around the world.

The old established CEGB, the 12 Area Boards in England and Wales, the Electricity Council, the North of Scotland Hydro Electric Board, and the South of Scotland Electricity Board were swept away to be replaced by commercial enterprises with specific licences for generation, transmission, distribution and supply. The new companies had a clear business focus and, for the first time, they had to perform to stock ma5ket expectations.

The way in which the electricity supply industry worked, its procedural base, and its hierarchical authority in controlling electricity supply was changed overnight. Many people in the industry were nervous. Could the security of supply be maintained? It was, although I can say quite honestly there were some hiccups in those early months in 1990 apparent then to a few engineers in the industry. But they solved the problems, in some respects solved them in a matter of minutes not months or years, and the lights stayed on. I believe the events and

engineers in the industry who, as well as operating the new companies in this brave new world, also worked with colleagues in law and finance to help carve out the new financial and legal base for these new electricity businesses.

The introduction of competition and customer choice were fundamental in invigo- rating the industry, invigorating the engineers, the managers and the leaders in the industry to create a new future.

The key feature in the development of the new industry in England and Wales was the

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successes of 1990 are a tribute to the quality of

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unbundling of what previously were integrated activities. Generation, transmission, distribu- tion and the supply of electricity to the end customer are now separate business activities. Even when they remain in single ownership, these activities now have their own manage- ment objectives and are subject to strict regulatory and financial separation.

The comparison is stark when comparing the culture before and after 1990. The nationalised industry was supply-side dominated, there was a prime need to deliver capacity, it was technology driven with centralised, hierarchical structures. The changed industry has compe- tition wherever possible, is customer driven, works with and to market disciplines, and flatter structures prevail in order to react to a constantly changing business environment.

The UK took the lead in liberalisation in the early 1990s. We were viewed with complete scepticism by our European colleagues. They thought we were slightly, if not completely, mad to open up the values of technology-driven decisions and centralised planning to the rigorous exploration of business finance and customer needs. Has anything changed-were not the original entrepreneurs of the electricity industry at the turn of the century thought of in similar vein?

Current drivers for change in the industry Change, of course, is continuous and in the

last two years there has been a lot of activity on the business front through mergers and take- overs, and also in regulation with the constant drive to bring forward value to the customers.

Removal of the government’s ‘golden share’ in the Regional Electricity Companies in 1995 signalled the start of mergers and acquisition activity, leading to yet a new ownership structure within the electricity industry.

Acquisitions from US companies have been driven by tax benefits and prospects of good, low-risk revenue streams providing greater returns than those achievable in the USA. This also heralds the start of the global market and to that extent provides the springboard for these companies to move into Europe as the European market develops. Undoubtedly, further mergers are possible. The US companies have for two decades been cutting costs and merging different regional electricity utilities in the USA. They have great experience in this area. They could now apply the simple efficiency gaining criteria of reducing over- heads and streamlining billing procedures

through mergers within the UK. It is not exactly brain surgery, just the application of simple financial calculations and processes. Although this may come, another explanation for why the US companies have bought into the English market is to gain experience in a rnore deregulated UKmarket so that they can use that experience subsequently back in the USA as their own market restructures.

Multi-utilities have also been formed as a result of takeovers and mergers. Utilities :such as Hyder in South Wales, United Utilities in the North West, and Scottish Power’s acquisitions in England and Wales. These were created on the basis of the savings through synergies. ‘This multi-utility company philosophy is likely to spread further as liberalisation spreads around the world. In fact for many years there have been small municipal type organisations that have supplied a variety of services. These were multi-utilities on a very small scale finding benefits and efficiencies in their operations. Now, the big multi-utilities are emerging as ‘one stop shops’ for customers. It is the acceleration of competition in countries, particularly in the UK, which is the driving force behind the companies striving tcl be multi-utilities, and as liberalisation sprzads across the world it may well be that more of these companies will develop to cover electricity, gas, water and telecommunications to efficiently meet the end customers’ needs.

Integrated energy companies also came to the fore, but the National Power and Powergen bids for Southern and Midlands were blocked by the government. However, Hanson’s energy group was formed through acquisition and organic growth and others still aspire to this mix of vertical integration.

The position in the summer of 1997 looks much different from that of 1990. What further changes will happen? Are there not some simi- larities with the turn of the last century when it was mergers and acquisitions that, at the ttirth of the industry, spurred the tremendous changes that had to be managed then? These changes will need to be managed now and it is undoubtedly the engineers in these companies who will need to create the future succe:ises. The engineers’ ability to manage and lead will be a key factor in the evolution of these companies in an energy sector which enables the generation of so much wealth for the world economy.

That is what has happened. But what may happen in the future? How will it impact or1 the

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management competencies of engineers within these industries?

Gas is viewed as abundant and development of its use may well influence the size of power stations built and connected to the grid net- work (Fig. 2). There is increased environmental legislation, liberalisation of the gas and electricity markets, and new entrants such as banks and supermarkets into the energy supply business. All create change in what was, prior to 1990, an industry driven essentially by much slower technological change.

Regulation is also likely to change. In June 1997 Margaret Beckett, President of the Board of Trade, announced a review of utility regulation concentrating on gas, electricity, telecomms and water, the objective being to provide a long-term stable framework which

regulators, a wider remit, and the form of regulation may or may not change. One thing is certain, further change is likely in this area, but the underlying principle of introducing competition into the emerging market will continue.

is seen as fair to all. We may see merged

What will these future changes mean? These changes currently taking place and still

to come will impact on the industry. A picture of the future UK industry can be painted that will need to be created and managed through

economic development. Thus the onus is on engineers to improve relative electricity con- sumption by improving appliances (low-power computers, fridges etc.) and cut pollution from the original fuel source. To date domestic generation ,has not proved economically attractive so the last two parts of the chain, distribution and consumption, look to be relatively robust for the foreseeable future. However, the diversity of fuel sources driven by gas and renewables suggest that the first three parts of the chain will be at the heart of a changing environment.

Fuel sources are traditionally coal, oil, nuclear, hydro, gas and other mainly renewable resources. A reasoned view can be taken on most of these sources. However, the renewablednew technology area is more difficult to predict. Currently these are fringe activities, but in a 10-20 year timescale economic breakthroughs in fuel cells, wave power and photovoltaics should provide a range of small-scale generation plant suitable for low-voltage transmission. Such a break- through could have a wide-ranging impact on the current supply chain and the companies within the supply industry.

This may well be the next major challenge for the industry after the current and future changes I have referred to previously in the business environment. The jury is out on such

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technological change and it may be many years before such technology becomes economic. But it is something the managers and leaders in the present businesses must keep an eye on in order to position the companies for the significant changes that could develop. The future will change significantly from the past, with timescales for change lasting up to some 20-30 years.

Considering the national grid, the traditional value of the grid to the country has been on the basis of carrying ‘coal by wire’, security of supply, frequency and voltage stability, minimising economic levels of reserves and providing diversity of fuel supply. Changes will occur in these areas which will undoubtedly focus the minds of people in that part of the industry

Today the grid has to prove its worth in the supply chain. New connections need to be to customers’ timescales and need, and day- to-day operation needs to maximise the use of the assets available. This requires new build techniques, new designs for equipment, and new operating techniques. This scene is constantly changing and the relationships with manufacturers are clearly going to change as the manufacturers will also have to adjust and work closely with their customers to make the right type of equipment and provide the right support over its lifetime.

Liberalisation Looking further afield to Europe and the rest

of the world, the situation today is far different from that which pertained at the turn of the last century. In many parts of the world electricity has matured and both in the developed and less developed countries the industry is entering into a totally new era. It is interesting to note that the same pressures for change are prevalent in both the developed and underdeveloped countries.

In developed countries, there is low growth in transmission. But the unbundling of trans- mission through liberalisation and privatisation is creating considerable change. In developing countries there is a high growth, driven by the need for an electricity transmission

with fundamental decisions on how the new industry will be structured. In both cases business boundaries are less defined and partnerships are essential to achieving success. These pressures for change can be exploited by those companies which already hold the skills

infrastructure to spur development, coupled

and expertise, provided that financing can be engineered and the risk profile managed effectively from the overall business perspective. Many opportunities can arise for engineers within the electricity industry.

Liberalisation is undoubtedly taking hold around the world. The UK led this mol e in the early 1990s and has influenced the way the world industry will probably develop. Greater wealth in the industry, greater economic benefits from the service and products the industry provides are now likely to be driven forward in a new competitive liberalised environment.

Liberalisation in Europe In Europe the EU directive to open up the

electricity market has been set in place. It can by no means be said that this has established a real drive for liberalisation, as the timescales for implementation mean that Europe would not meet the 1990 position in the UK for yet another six years! The large monopoly based electricity companies in many of the European member states have purposely striven to protect their narrow interests. These compsnies are still mainly technology driven and it is apparent that the rigours of the competitive market and of regulatory scrutiny are viewed with great apprehension.

Risk management in a competitive market is not an obvious competency of many electricity supply industry executives in Europe. There is a Brussels directive, the UK and the Scandi- navian markets are open, there are major structural changes in Portugal, Spain and the Netherlands; and despite all of this great swathes of Europe’s power industry rernain managed by career technically driven engineers largely immune to the modern techniques of commercial management.

Given the history of Europe’s electricity industry this affection for the status quo is not a surprise. Post war reconstruction, technical integrity, security of supply and long-term planning have predominated. Market forces were never to the fore in such decisions. They are becoming more so now and if there are wrong decisions the market will react and

of long-term planning would allow. In the future, the structure of Europe’s power industry will be driven by the need to manage risk, both business and technical risk. Liberal- isation will unleash market forces which will make electricity prices more volatile but

adjust far more quickly than the old techniques

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Table 1 Anticipated price changes in Europe 1998-2004

1998 2001 2004 __- Country

UK France Germany Spain Greece Italy Netherlands Denmark

-7% -5% -3% -3% 0 0

-2% 0

-9% -7% -7% -7% -5% -3% -3%

1 Yo

-1 1% -1 0% -1 0% -1 0% -7% -5% -5%

-3%

Source: Market line, May 1997

generally cheaper and market related. Antici- pated price changes in Europe (Table 1)are predicted to decline from 1998 to 2004 with the UK leading the way with likely prices falling by 7% in 1998. By a further reduction of 9% in 2001 and a further 11% in 2004.

In the UK we have experienced such change. We therefore have engineers who can lead the world, their capability and competence have been tried and tested and will continue to be tried and tested in a much broader business environment. The dinosaurs of Europe still exist and before they become extinct we should take every business advantage. EU directives will not set the pace of liberalisation in Western Europe. The liberalisation in theUK, in the Nordic countries and in the emerging Eastern European countries will put great pressure on the rest of Europe.

In Eastern Europe the transmission focus is mainly on refurbishment not new capacity. Some of the governments are encouraging private power investment as they move away from the legacy of the planned economy and its inherent constraints. In the rest of Western Europe there is, as I have said, slow progress, due to the resistance to opening up access to existing grid systems. It is likely that member state governments will eventually set a time- table which will differ across Europe. We are well placed to take advantage, we should not act with normal engineer reticence but with confidence and vigour to establish the engineer’s contribution alongside the financial and legal sectors in these developments.

Liberalisation in the rest of the world Further afield around the world, the picture

is also rapidly changing. Liberalisation has been adopted in Argentina, in Chile, in the Victoria State of Australia, in New Zealand, in Alberta, Canada, in India, in Spain and in the Ukraine. It is also being considered in a number of states in the USA, by the other states in Australia, and many other countries.

Wherever we look in the world restructuring

of the electricity industry is underway. In developing countries there are distinct trends towards private investment to meet the demands for electricity, whether generation or transmission. However, the political risk can be very high in these countries. In countries such as Australia, privatisation linked to liberalisa- tion of the market is firmly underway. As we move into the future the electricity supply industry is increasingly becoming a global business with opportunities in most parts of the world. There is no ‘ideal’ model but in all instances the key components of generation, transmission, distribution and supply are treated as discrete entities. The model adopted will be influenced by the size of the market, the pre-existing structure and ownership, govern- ment objectives, investment needs and indeed culture.

The accelerating liberalisation trend To understand the speed of change it is

necessary to step back to 1990 and look at the world maps when only Great Britain, Chile and Spain were liberalising their electricity markets and creating independent transmission companies. Now in 1997 when we look at the map of the world (Fig. 3) we can see clearly how the trend in liberalisation has accelerated.

It is this fact of emergent liberalisation that will, in opening up the energy markets, provide the greatest changes and create turmoil in the industry around the world not seen since the days 100 years ago when the industry was being created. We are now creating a new industry to serve the never ending demands of progress in civilisation, a tremendous environment which challenges the engineers to really deliver through leadership and management,

Environment-health O n the environmental front the issues facing

the industry are considerable. They are asso- ciaced with the impact of electricity on both the environment and health. A key issue this decade has been the alleged health effects of EMFs-electric and magnetic fields. In a nutshell this has come to mean one question: does electricity cause cancer? The most recent and largest studies on the science have, to a large extent, indicated that they do not. While the science may be supportive, the public concerns continue to exist and the issues need to be managed by the electricity industry. They need to be understood and taken into account by the engineers in managing the industry.

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Independent Transmission Companies in 1997

One overriding characteristic of EMF issue management is the mix of local politics and global media coverage. Fuelling people’s fears have been countless television and radio items and newspaper articles in all industrial- ised countries around the world. This media coverage, by its nature, almost always tends to concentrate on the negative.

It is undoubtedly true that people react to what they see, and they need answers, quickly. So, in Britain, the electricity industry combined during the 1990s to provide information arid explanation for those seeking it. A network of informed people is in place, throughout the industry, to provide a co-ordinated response to the concerns raised by the general public. I[n addition a central focus group also exists to ensure that the industry can address this issue on a UK and global basis. In fact the National Grid Company takes a clear lead in this area on behalf of the industry to ensure that the general public and the important organisations in this field of work are indeed realistically informed.

The policy of taking a global approach and translating this to local parish requirements has been working well in Britain. By listening LO

and talking with concerned people, a recent

line went ahead to connect a new generating station to the national grid system. This is an area that is different from IO0 years ago. People are now more aware, more demanding and the engineers must be able to convey persuasive argument. Communication skills are a key

protest group accepted that a new transmission

competency for today’s engineer and can slxve as a benefit to the profession in many other ways. However, concerns on EMFs will continue and, for as long as they do, the industry needs to be prepared to listen and to provide the answers.

Certainly recent science should protide reassurances. Last year, a 16 member committee of the national research council, which is part of the US National Academy of Sciences, published a report on its examination of over 500 studies spanning 17 years.

The chairman of the committee, Charles F. Stevens, said: ‘Research has not shown in any convincing way that electromagnetic fields common in homes can cause health problt”, and extensive laborato y tests have not shown that EMFs can damage the cell in the way h a t is harmful to human health’.

The report does concede that: ‘There is a weak but statistically signGCant correlation between the incidence of childhood leukaemia, which is rare, and with wire configurations’. However, the report finds that: ‘Outside wiring correlates poorly with measurements of actual fields inside the home, and that it accounts for only a fraction of the fields inside’,

with leukaemia have failed to link the disease to EMFs. The link between power lines and childhood leukaemia, the report suggests, may be to do with other factors common to houses near power lines-high traffic density, local air quality and construction features common to

Fig. 3 The world of electricity liberalisation in 1997-independent transmission companies

Measurements inside the homes of chilclren

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older homes. More recently, in July, the largest ever study

of children with leukaemia was published by the US National Cancer Institute. The report found that:

‘The risk of childhood acute lymphoblastic leukaemia was not linked to summary time- weighted average residential magnetic-field levels, categorised according to a prior criteria.’

Well over 80 reviews of existing research undertaken throughout the world do not demonstrate a causal link between EMF and ill health.

For 18 years epidemiologists have argued about whether power lines cause leukaemia in children. How can you explain the longevity of the debate about EMFs and cancer? In a different world, the constant flow of negative, statistically insignificant and sometimes in- consistent results would have led to a loss of interest years ago. But we live in fearful times. There is no fame, and little funding, for epidemiologists who disprove hypothetical links between diseases and invisible environ- mental threats. And journalists win no prizes for publicising such research. The irony could be considered as obvious. The electricity we use today transmitted through power lines has liberated us from old chores and given us more time to think. This time has been used to constantly review the possible environmental risk and impact it poses. With the latest results, there is a chance to stop all this and it should be seized.

There are two fundamental facts that clearly provide some logical comfort. One is that although the use of electricity has increased exponentially over the last 40 years, the incidence of childhood leukaemia, which is a devastating health problem, has remained constant. Secondly there is really no related industrial health problem in the electricity supply industry which has been around for 100 years.

However, the interest shows no sign of disappearing. This is an issue which cannot be ignored by the leaders and managers in the industry. It actually complicates the environ- ment in which the industry now works and can be compared with the concerns at the turn of the century when people found electricity new and mysterious and were frightened of it.

Environment-visual amenity Alongside health concerns, visual amenity is

high on the list of people’s concerns, much more so than 100 years ago. New ways of minimising the impact of electrical supply are required and a need to communicate effectively is paramount in order to progress the develop- ments we need for business growth. Environ- mental agencies are now far more demanding than they were previously, and rightly so. All this creates a business environment which demands high levels of skill from the engineers, managers and leaders involved.

The environmental aspect is undoubtedly a far higher profile than previously and there are real issues and problems to solve. However, as an industry we not only have to satisfy the respective shareholders of these businesses and meet the customer’s needs and expectations but we also need quite clearly, to retain the ‘agreement’ of society at large. This is the ‘right’ to be in business without which there is no business. Consequently the engineers who manage and lead the industry need to balance many more aspects than in the past.

Now as we approach the turn of this century, the industry has to be managed through significant change and turmoil. With public concerns heightened and greater public aware- ness, this requires engineers not only to be mindful of the impact the industry has but to proactively communicate and influence public opinion. This is a key factor that will influence the progress the industry makes.

Capital management Another new aspect needing new skills is

capital management which is now entering a new phase. Old equipment purchased in the mid 1960s when the electricity supply industry expanded is now reaching the end of its life. It will need replacement and this brings about yet further new challenges for engineers. When should plant and equipment be replaced to meet business needs? What equipment should be replaced and with what new equipment? How do you retain the service to customers while replacing equipment? These questions provide a greater challenge than that posed by continual new growth to meet customer demands. New thinking is required, and the manufacturers who supply the industry also need new thinking to identify the necessary innovative ways of replacing old equipment.

This will require the manufacturers and their customers in the electricity supply industry to

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Y

that integrates well with other equipment. The functional specification will have to be

normalised with that of other companies. Gone are the days when a company can take the risk of using uniquely designed equipment. The responsibility to provide support for equip- ment sold will also be required of the manufacturers and they will need to change the way they work in order to meet these new requirements. Companies such as GEC, Reyrolle, ABB, Siemens etc., are all now thinking how to change the way they work, the equipment they provide, the services they offer as the electricity supply industry changes in the face of liberalisation.

This will require closer participation on the part of the industry customer and supplier in order to create mutual benefits and revitalise the assets of the industry at the same time as controlling the many other business changes and society impacts driving the industry into the next century-a clear challenge for engineers to create solutions with true entrepreneurial spirit.

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Impact on engineers-the leaders and managers

This industry has awakened. It has been, to some extent, forced to awaken by the impact of liberalisation. This will continue into the next century. One thing is certain: it will be the engineers in these industries who will shape the future, engineers of all ages whatever role they are undertaking.

The real question is: How are the engineers to be equipped to meet the challenge of the future? How do they equip themselves and how does the industry ensure they equip their people for the future? Undoubtedly engineers now need not only a knowledge of the broad practice of business management but also to consciously and confidently apply such h o w -

for finding solutions, and engineering those solutions to meet business needs. British managers are not recognised for their true value in the world. There is a natural British reticence, a natural tendency for self criticism and self analysis. This must be seen as a strength and

ledge to complement their unique propensity

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capitalised on through increasing communica- tion skills.

Employer and employee The contract between employer and

employee has changed, or is changing. It is incumbent upon industry to ensure that their people are capable of accepting and contri- buting to the changes taking place. Continual learning is essential in creating the engineers and managers of the future and industry must address these needs, not leave it to the employees.

Companies must move towards greater co-operation between employer and employee. Salaries, bonuses, training, and other benefits are all involved in getting this right. The employer and employee are both in the same boat and share the same fate. In the future these relationships will need a sharper focus. Excellent employee relations based on reward and training and a primary objective to avoid confrontation with employees will bring the greatest opportunities to add value. This is possibly another aspect that differs from the industry of 100 years ago and will require managers in the future to display more complex capabilities than previously.

In the electricity sector the companies which address the employability, the learning, the status and the invigoration of their engineers will be the ones which realise their potential and create value and benefits in the future. To achieve this is key to the future success of companies as we move forward into the next century.

The information age We are, in terms of ‘ages’, entering a new age,

where information and its easy availability anywhere around the world will change the way we work. We could call it the information age (Fig. 5). It will have a tremendous impact on the way businesses are managed and achieve success. The changes in the electricity industry require that the skills demanded in this information age are deployed now. The speed of change, the extent of change, the globalisation of change, the impact across all aspects of the electricity industry from research, design, development, manufacture, application and service provision demand that the engineers in the interrelated electricity industries embrace the concepts of the new age. The turmoil in this business is a fertile seed bed in which to cultivate engineers to become the

managers and leaders of tomorrow. Some of the old tenets of management will need to change- must change.

Knowledge and employability People will not be as dependent on an

individual company as they were in the past. Knowledge will be a key strength which extends the employability of people and gives them many other options for employment. Such people get bored, such people will not be retained or used to full effect through traditional organisations with levels of authority. But these are the people that businesses will need in the future, and managers will need to know how to get the most out of this new breed of employees, how to nurture their capabilities, how to create value for the company whilst further increasing their employability.

Control and authority Leaders of industry need to command

commitment not compliance and more and more decisions will be questioned from within the organisation. The boundaries of authority will be different and the traditional top-down authority will be challenged.

Traditionally, control has been everything for a manager. It is easy to manage through control but it breeds bureaucracy, it denies entre- preneurial spirit, it eventually suffocates the people in an organisation. This type of manage- ment environment cannot be perpetuated as we move forward. In any case control is often a figment of some manager’s imagination. In the world we are moving to it is probable that resources will move more and more away from the direct control so beloved by many managers in the past. The hierarchy will eventually become a network where businesses will be dependent on the relationships, alliances, partnerships they form with other businesses.

Loyalty and experience How do you create loyalty, create the

beneficial relationship between employer and employee? Over the last few years downsizing, right sizing and re-engineering have severely tested and weakened the loyalty of employees. Loyalty must be seen as a total commitment while working for the company, whilst in return the company increases the employee’s employability. The link with experience comes in here as historically both were associated with length of employment. How long an employee

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was with a company was seen to count towards experience and loyalty. In the future, such experience could be considered a problem. Experience is the past. How experience is obtained and what that experience is will be key to the future. It will be necessary for managers and leaders in the future to invigorate those young people who possibly relate more readily to the future so as not to suppress their ideas, their experience and their contribution to the business.

It is a salutary thought that the future is seldom missed by companies because the future is unknown; the future can be missed because experience blinds them to new opportunities.

Global boundaries and global vision In the electricity industry, both the manu-

facturing and service businesses will realise the opportunities created by a broader world

resources. As a result the clear boundaries of control will change and we, the engineers, need to be able to generate wealth for the business working in and creating a new invigorating business environment.

The electricity industry is, as indicated, in a

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market through a dependence on far flung

state of flux. New multinational companies, new multi-utilities are being formed. The electrical manufacturing industry is also re- positioning itself for the changed world. National boundaries are becoming irrelevant. Will not the companies of the future have to really understand that global means global. not a set of national oriented businesses vying with one another for supremacy. They will hate to work for each other to realise the global opportunities that exist.

In such a global market there needs to be a vision of what can be achieved. But managers are not visionaries. Managers generally work in the ‘now’, where ‘doing’ counts more than thinking. However, the future needs leaders, more people capable of leadership, more engineers capable of management and leadership. Such leadership will be an essential need as the future unfolds because, unless a

remain trapped in the past.

Management of tomorrow These are just a few areas where change will

be necessary, there are many other areas where the management of tomorrow will be different

Fig. 5 The information age

compelling view of the future is created, we will

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Fig. 6 Liberated leaders from that of today. To quote Gary Hamel, a leading strategic thinker in business manage- ment, these words really identify the challenge that faces us all:

‘In the world of the emerging information economy, the past does not have to be an anchor, industry doesn’t have to be a destiny, borders don’t have to be boundaries, employment doesn’t have to be servitude and loyalty doesn’t have to be acquiescence. The language, tools, roles and responsibilities of management in this new world are only now being invented.’

The two Ls After considering the past and present of the

electricity supply industry it is apparent that the key change for the future is liberalisation- liberalisation of the electricity market in which many companies operate and the consequent upheaval and turmoil in business organisation. Today and tomorrow challenges and problems face us on the environmental front, where the acceptance of society at large is essential. This will require persuasive argument to be used and a much greater focus on articulate communi- cation with people in society not, as in the past, just within an industry. Also the global businesses emerging in electricity supply and the manufacturers require a new agenda, new relationships, partnerships to bring forward mutual value. Lastly, the relationship between employer and employee is on the verge of significant change. Both are dependent on each other and conflict and acquiescence must be replaced with mutual benefit and commitment.

It is, therefore, essential that leadership in managers, currently a scarce commodity, is found, is created, is developed, is nurtured, as this is the key to the future. ‘Liberated leader- ship’ is a prerequisite for a sustainable future (Fig. 6). Liberated leadership which comes from liberalisation of managers and leaders and results in liberated people employed by the successful companies in the electricity industry.

Conclusion This is a challenge for all engineers who

aspire to lead this industry forward. The parallels between the turmoil at the start of the century and the change and turmoil as this electricity industry moves into the next century have been identified. The differences that create the need for new thinking, and a picture of an industry moving rapidly through change have also been identified. This provides a platform to create and to engineer the solutions for management in the future.

It is a challenge that must be grasped. The sleeping giants of the electricity supply industry have awoken-they are not the only ones who must awake-we all must to become liberated leaders.

Delivered before the IEE Management Division on the 14th October 1997.

0 IEE: 1997 John Lowen joined the CEGB in 1965 as a Student Apprentice and started work at Radcliffe on Soar Power Station, but soon switched to the System Operation area of work in which he undertook various posts. In 1987 he moved to the CEGB Headquarters in London as Develop- ment Manager (System Control) with responsibility for the conceptual development, specification and evaluation of System Control facilities. In 1988 he was appointed to the position of National Control Manager in the National Grid Company, responsible for the secure and economic operation of the transmission system in England and Wales, meeting customer demands and ‘keeping the lights on’. During this period he was deeply involved in the development of the new electricity market place in which the National Grid Company has a key role and has participated in discussion tours throughout Europe concerning NGC’s role in the UK‘s privatised electricity supply system. From 1992 he has held positions where he was responsible for the management of the National Grid Company assets which included the Cross Channel Interconnector with continental Europe. These culminated in his appointment in March 1994 as General manager-Asset Management where he was responsible for strategic management of the Company’s transmission assets in England and Wales. In October 1996 he was appointed General Manager-Network Services. He is now responsible for management of all maintenance activities to deliver the reliability and availability of the Company’s assets throughout England and Wales.‘He is an IEE Fellow.

292 ENGINEERING MANAGEMENT JOURNAL DECEMBER 1997