Utilities are under the gun for the first time from regulators, investors, and competitors. They could go the "traditional path of the recluse, or perhaps they should take aim and fire back.
As one of the world's most established industries, well-known for slow, but fruitful growth over the decades, the utility industry is cash-rich, and still on top. Yet, utilities have historically been more conservative in their competitive positioning, and fairly reclusive in their communications.
Traditionally, they have been cautious in their communications, and primarily reactive in nature, responding to negative publicity surrounding events like failures in service, natural disasters, or rate increases. Still, over the decades, this market continues to grow and mature, despite only minimal efforts made to promote differentiation through advances in technology or competitive marketing strategies.
With these expectations in check, executives leveraged their tight network of contacts to maintain brand awareness and market share, downplaying the role of communications as a strategy to market leadership and growth.
So today, when utilities find themselves under fire, the reaction to change is the same as it's always been: retrenchment over risk. Why? It's quicker, easier, and perceived to be risk-free. But market pressures are causing enough pain to force utilities to alter their thinking and reconsider the value of communications.
As a result of these new competitive, financial, and regulatory pressures, for the first time in decades, utilities are facing a change they are just starting to understand - hopefully, one that yields more opportunities than threats. With deregulation pressures on the horizon, M&As threatening a trend in consolidation, and rising customer relationship management (CRM) pressures, utilities are for the first time in dire need of competitive differentiation.
Pressure from financial analysts to demonstrate growth and sustainability, as well as internal and external pressures to reduce costs and increase shareholder value, are forcing utilities to change their business and communications strategies. They can no longer rely upon reputation and longevity alone. Competitive differentiation through demonstrated bottom-line growth and increased customer value are musts in the new energy era.
As such, utilities are under more pressure than ever to increase earnings per share, improve customer service and community relations, and reduce operational costs while maintaining market share and mindshare.
This has created a prime opportunity for communications to take the lead in driving thought leadership by influencing and shaping industry trends, positioning management as active experts in industry, regulatory and financial venues, and communicating often with industry influencers.
These influencers should include the state Public Utility Commissions (PUCs), Federal Energy Regulatory Commission (FERC), the investment community, local city councils and political committees, media, industry analysts, and served communities.
Utilities do an excellent job of leveraging influencers for market research and M&A advice, but need to embrace these relationships as conduits for disseminating their competitive messages to the marketplace.
Influencers are in dire need of education from utility companies. Today, influencers rely primarily on resources from consultancies and select analyst firms that may not always accurately depict a company's positioning.
Utility companies need to take control and communicate their differentiators and value propositions, while building strong relationships with industry influencers, to ensure accurate perceptions of market and competitive positioning.
To effectively achieve this, leadership needs to take center stage and be proactive in educating all influencers. With the highly publicized statistics of executive turnover across several industries, it is especially critical to showcase a strong leadership team that can consistently educate key audiences, demonstrate support of company objectives, accurately predict company results, and cultivate a cohesive corporate culture. Not only to improve corporate communications and investor relations, but to help build back credibility and trust in corporate leadership.
In tough times, those utilities need to demonstrate and communicate cost reduction strategies with effective ROI; a competent management team that drives thought leadership and progressive use of technology to improve the quality of service to customers. The companies that demonstrate those qualities will succeed in elevating their company profile by shaping their company's brand, articulating those brand values effectively, driving thought leadership, and generating positive momentum for their company.
So the debate remains: Does the "New Energy Era bring crisis or opportunity?
Realistically, both will exist in tandem, but ultimately, utilities have the power to shed their tendencies towards inertia (or perceived reclusion), and take control of their destinies by influencing perceptions and educating influencers through effective, consistent communications.
- Jennifer Schenberg is VP, corporate communications and marketing at Orcom, which offers utility companies a suite of services and resources to help them operate more efficiently. She is a former VP at Fitzgerald Communications in New York, and has a bachelor's degree in communications, and a master's degree in telecommunications.