Energy efficiency: Just another walk in the (P)ARC
Posted by EDF Climate Corps Fellow | March 29, 2011
By Eva Zlotnicka, 2010 Climate Corps fellow at Genzyme, Joint degree MBA/MESc candidate at Yale School of Management and Yale School of Forestry & Environmental Studies, Yale University, Member of Net Impact
This is the first in a series of blog posts from our EDF Climate Corps alumni fellows.
As the EDF Climate Corps program gears up for another summer of seeking energy savings, I can't help but reflect on my own experiences with the program. In fact, since my return to Yale last fall I often refer back to my time as a Climate Corps fellow at Genzyme Corporation where I discovered first-hand the importance of numbers and frameworks in making the business case for energy efficiency.
Quantitative models and numbers are an integral part of making this case. However, analytical tools do not themselves implement change; organizations and their members do. With my background in economics and engineering, I understand the hesitation in giving up spreadsheets for so-called strategic "frameworks" used to qualitatively analyze an organization. That said, during my time at Genzyme Corporation I learned that you can have your frameworks and your spreadsheets, too. In fact, you need them both to effectively implement energy efficiency opportunities.
The typical business school curriculum teaches a plethora of structures used to evaluate internal organizational design, so it‘s no surprise that I found a way to integrate the (P)ARC framework into my work with Genzyme. (P)ARC represents the "levers" that tweak an organization towards greater competitive advantage -- People, Architecture, Routines and Culture. (For a more detailed explanation of (P)ARC, I recommend "Strategic Management" by Saloner et al.) The core message behind the framework is that the four levers must be designed to reinforce one another as well as the company's overall strategy.
While my project last summer focused on identifying a software tool that will centralize energy efficiency investment decisions across Genzyme's buildings, each of these organizational elements was also essential to the tool's success:
- People. The appropriate people and talent must be in place to take responsibility for the tool, such as a central energy manager, in addition to the people expected to use it and populate the data, such as individual site managers.
- Architecture. This refers to the communication paths established among the software tool users. Reporting mechanisms, whether formal or informal, must be reflective of the information flow needed to make the tool work.
- Routines. The systems and processes express how decisions are made and how people interface with one another. In a decentralized organization, individual site managers are likely to already have their own decision-making procedure; these must be integrated and standardized in order to make the data and information provided through a central software tool easily understood and processed by other individuals.
- Culture. People have to feel motivated to use the tool and believe in its mission. For this, buy-in from both the corporate level as well as the local site level must be achieved.
My final recommendations for Genzyme thus had to be accompanied by a corresponding implementation plan. It was not enough to rely on a stack of numbers to hold its own; it was imperative to include the supporting people, process, and policies to ensure the tool's adoption and overall success.
My summer with Climate Corps is evident in my other experiences at business school as well. This past semester, my coursework included a project for a social enterprise in India. My team built a financial model that suggested the organization should scale up its sales volume in order to meet its funding gap. Upon learning more about its culture and structure, however, we realized our initial recommendation was not aligned with the enterprise's core competency. Instead, a sister for-profit company could handle sales, while the non-profit would receive royalties that allowed it to focus on its social mission.
It turns out that whether your organization is a global corporation evaluating energy efficiency or a local non-profit growing its business, numbers and words both matter.
"Last year, our EDF Climate Corps fellow identified $1.2 million in energy savings in our rail yards and data centers."
-- Skip Elliott, Vice President of Public Safety and Environment, CSX