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Successful Companies Embrace, Exploit Change
UtiliCorp United, Duke Energy and Enron have a lot in common, and it has a lot to do with how they "embrace and exploit change" rather than resist it, according to Arthur Andersen's Doug King. King, a partner in the London office, told attendees at the Houston Energy Symposium last week that the three companies have learned the same lessons, which have led to their present success.
CEOs from the three companies, including Utilicorp's Richard C. Green Jr., Bruce A. Williamson, of Duke Energy International, and Michael S. McConnell, of Enron Global Markets, spoke about their strategies for success at the opening plenary session.
Green said his company has built its success by replicating its business model to other types of businesses and following the "value cycle philosophy" mantra of "invest, optimize, monetize." Green said the modeling was first put in place in 1986 with its gas marketing business, followed in 1990 with pipelines and then power marketing in 1996. Two years ago, the company began gas marketing in Canada and last year set up a gas storage facility in Katy, TX.
Now, the company is replicating its model for the broadband market, and last week, Utilicorp Communications Services, a subsidiary of UtiliCorp United, said it had formed a partnership with Prairie iNet as part of an effort to bridge the "digital divide" between cities and rural areas of the U.S. Mid-continent region.
"We had an earnings growth of 4% in 1995. This year, it's 20% growth, and we expect that rate to continue into the future," said Green. "We replicated the Aquila model in Canada in 1996," and he said that by replicating in new markets, such as Australia and Europe, the company has built on its success.
While he does not foresee UtiliCorp picking up any new acquisitions in the United States in the near future, he said a lot of growth will come from global markets, especially Europe and Australia.
Both Duke and Enron have also relied on their core competencies --- originally supplying gas and electric services --- to grow, said King. International businesses have been built in wholesale marketing and trading, and now the growth companies like UtiliCorp are looking toward the broadband market.
"All three have ceased to be traditional utilities," said King, referring to the companies' growth path, which has led to stunning success in North America and global markets. By looking toward future markets, and revising their strategies as the market changed, King said that the three offered lessons to other energy companies.
Another key to the three powerhouses' success is that they refer to themselves as "knowledge-based companies," and have tuned in to the technology age, employing and training their workforces to suit the times. And, by not only buying assets but not being afraid to sell them, the three have kept their burgeoning businesses streamlined and efficient.
Enron's McConnell said that the global business is divided into two large business divisions, the traditional energy division and the new communications division. Energy comprises the transmission and distribution markets, wholesale energy trading and retail markets. Communications are Enron's broadband services arena.
Carolyn Davis, Houston
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