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
"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
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
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