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Weekly UpdatesThe forces of deregulation and the promise of low cost competitively priced power have created volatile market conditions and concurrent changes to organizations throughout the electric power industry over the past decade. This article examines how deregulation and restructuring induced changes in management strategies, organizational structures, and organizational culture in a nonprofit generation and transmission cooperative. Deregulation and other market forces set into motion changes that restructured the former cooperative into three legally distinct cooperatives with symbiotic relationships. Through a series of interviews, participants in the study upon which this article is based articulated their experiences and perceptions about the impacts on the organization. Data analysis indicates that changes to management strategies, while significant, were fairly straight-forward. While the ensuing changes in culture initially created adverse effects among the workforce, positive changes in leadership restored trust, developed a strong customer focus, and improved performance and collaboration among the three new cooperatives.
The original generation and transmission electric cooperative in Georgia, Oglethorpe Power Corporation (Oglethorpe), was unbundled into a generation cooperative which retained the Oglethorpe name and generation assets (OPC), a new transmission cooperative, Georgia Transmission Corporation (GTC), and a third services cooperative, Georgia System Operations Corporation (GSOC), as electricity market conditions changed in the mid-1990s. This reorganization effort was driven by impending deregulation activity in Georgia, as well as by the desires of the 39 Electric Member Cooperatives (EMCs) who owned the original Oglethorpe and who wished to better control their own destinies for future power resources and supply in the face of burgeoning electricity markets.
Management Strategy
Prior to deregulation efforts and the restructuring in 1997, Oglethorpe was a stable entity with its generation and transmission functions operating as business unit silos (see Figure 1). In the new world--after the restructuring and commencement of partial requirements contracts by the Electric Member Cooperatives (EMCs)--GSOC and its sister cooperatives realized the necessity to shift their management strategy from a technical focus to one that was more concerned with managing costs and providing better customer service. (Today placards are posted prominently around the GSOC compound that stress three corporate goals: cost, quality, and customer service.) Numerous participants in the study stressed the importance of continual process improvements as critical for achieving lower operational costs, higher productivity, and higher quality customer service.
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Strategic Decision-Making Models
Prior to its restructuring, Oglethorpe utilized a long-range forecasting model and managed its assets to match predicted customer demand. When EMCs were all-requirements members, the issues of customer service and operational efficiency were not as critical as they were to become in a partial-requirements environment. This change in the power supply equation precipitated a paradigm shift in strategic development for Oglethorpe and required a different model.
After the restructuring, strategic planning for the three new entities diverged as each company developed its own focus and strategy. While there was an overall "family" of strategies for the three cooperatives, it represented a dramatic change from the past in which there was just one strategy for the company. OPC and GTC continued to utilize efficient asset management as a key strategic development tool but they were also driven by the expectations and demands of the EMCs, which became more involved in strategic decision-making than previously occurred. As a service provider, GSOC's strategy was more reactive than that of OPC and GTC. GSOC developed an emergent strategy to better cope with these conflicting missions as it realized that it had limited ability to shape its future. It now was under greater pressure to meet or react to member expectations.
Process Improvements
GSOC adopted a philosophy of continuous improvement, encouraging staff to continually look for ways to make its processes more efficient and effective and to deliver products and services on a less costly basis to increase value for the customer. Current and new employees were trained in process improvement to ensure that the corporate commitment was stressed and reinforced. GSOC utilized stretch goals implemented as corporate, team, and individual goals--as part of its variable pay program to challenge employees and encourage their development. The variable pay program was considered effective for achieving corporate goals and team goals, and adding value to the business.
Recruiting the Best
A key source of competitive advantage resides in a highly skilled and dedicated workforce. Seeking talented and experienced employees to help GSOC meet the cooperative's goals was a strategic decision on the part of senior management. As one study participant explained, "We sought to get the very best people we could, the best and the brightest." Candidates were screened against known successful profiles of high performers within GSOC and new employees that were selected not only met the technical requirements of positions, but also fit into the new GSOC culture. A talented and experienced workforce positioned GSOC well to meet the customer service nature of its business. As a services provider, the GSOC position was distinctive within what had come to be called the "Georgia Family of Companies." As one GSOC staff member explained, "We operate in a somewhat unique environment in that GSOC has a very limited customer group; we serve OPC, GTC and our members." To meet the needs of its members, GSOC focused heavily on providing excellent customer service.
As GSOC grappled with the changes wrought by the restructuring, developing a customer-focused culture became paramount to the survival of the services cooperative. A strong commitment to developing this customer focus was driven from the top of the organization. A concise message was sent to all associates and the EMCs: "We don't tolerate people who aren't focused on our members anymore."
Radical Organizational Change
As deregulation efforts loomed in Georgia and the desire of the EMCs to control power supplies reached critical mass in the mid-1990s, Oglethorpe unbundled in a fashion similar to other electrical utilities (see Figure 2). Restructuring was, perhaps, not the initial choice of Oglethorpe to deal with the impending threat of deregulation; instead it came about almost as a means of self-preservation. In the face of promises by energy marketing entities of "penny power", some EMCs were not happy with Oglethorpe's rate structure and threatened to pull out of the cooperative. Responding to the membership, the three separate companies were created.
Restructuring in the electricity industry combined with rapidly changing conditions within the workplace caused some turmoil within and between the three new organizations. Given the different missions of the three companies, schisms began to appear almost immediately--with some resonating with staff for several years.
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Disputes over authority and territory challenged the disparate cooperatives from the beginning of the restructuring. Turf wars and other disagreements between the three cooperatives were referred to as "The Tucker Wars" by the EMCs (named after the Atlanta suburb where the cooperative headquarters are located). Personality differences among the early leadership also contributed to the tension. Further contributing to the discontent was GSOC's decision to outsource ancillary services--which was a wrenching change for many employees. Although no physical move occurred, numerous former cooperative employees were involuntarily transferred to an outside services vendor. One participant commented, "It was odd, because now the Shared Services group felt like they weren't part of the company, like they were pulled out of the company." Outsourced employees felt betrayed by the cooperative. Morale among staff suffered considerably (see Figure 3).
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As events unfolded, the outsourcing of Shared Services ultimately was deemed to be ineffective and the "exiled" employees were absorbed back into GSOC in 2000. But some feelings of inequity among the formerly outsourced employees lingered on past the reunion. While most of these issues appeared to fade over time, there was a palpable underlying current of discontent with the outsourcing experience that continued to impact the organizational cultures and relationships between GSOC and its sister cooperatives.
Divergent Organizational Cultures
The divergent missions of the three cooperatives created multiple cultures within the Family of Companies following the restructuring. Over time there developed three distinct cultures among the three companies. Many survey participants observed this phenomenon and remarked on how it impacted relationships and communications between the cooperatives, "There used to be one culture, whereas today, the culture of OPC is a little different than the culture of GTC and GSOC. You have to think about which company you are dealing with and think about how it should be dealt with," noted one participant. Over time, GSOC also developed two distinct subcultures: Operations and Shared Services.
Regardless of the multiple cultures found within the Georgia Family of Companies, in recent years all three cooperatives have focused on adding value to their member-owners and providing excellent customer service. To achieve these goals and to build a competitive advantage, the cooperatives made a commitment to develop a learning organization and capture institutional knowledge from an aging workforce.
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