Managing Change in the Digital Age EDITOR-IN-CHIEF GRAPHIC DESIGNER, DTP Paweł Kubisiak Alicja Gliwa
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HARVARD BUSINESS REVIEW POLSKA PRESENTS PKP Energetyka – a case study Managing change in the digital age EDITOR-IN-CHIEF GRAPHIC DESIGNER, DTP Paweł Kubisiak Alicja Gliwa CONTENT EDITOR PRODUCTION MANAGER Katarzyna Koper Marcin Opoński EDITORIAL ASSISTANT PROOFREADING Urszula Gabryelska Andrzej Retkiewicz AUTHORS MEDIA & MARKETING Tomasz Besztak SOLUTIONS DIRECTOR Ryszard Bryła Ewa Szczesik-Czerwińska Friederike Fabritius Phone no. 664 933 232 Paweł Górecki Beata Górniak ENGLISH VERSION Anna Hyży Marek Kleszczewski TRANSLATOR Katarzyna Koper Łukasz Łyp Stanisław Kubacki Paweł Kubisiak PROOFREADER Régis Lemmens Sue Sheikh Paweł Majka Ian Spriggs Hubert Malinowski Marek Mazierski Agnieszka Nosal Piotr Obrycki Robert Ryszkowski Marek Szumlewicz Filip Szumowski Mateusz Żurawik All rights reserved. This content cannot be copied, distributed or archived in any physical or digital form without the publisher’s consent. Quoting parts of articles or their reviews in any printed or digital form without the consent of the publisher (ICAN Spółka z ograniczoną odpowiedzialnością Sp.k.) is a copyright violation. ICAN Institute PKP Energetyka al. Niepodległości 18 ul. Hoża 63/67 02-653 Warszawa 00-681 Warszawa e-mail: [email protected] [email protected] www.ican.pl www.pkpenergetyka.pl Managing change in the digital age 2 Laying the ground for change 34 Next station: Digitization The process of change is a huge challenge for From support process automation to the AI support both leaders and employees of the transformed for railroad grid network and distribution network organisation. That is why the board implemented monitoring, digitisation converts data dispersed its programme of change using existing staff as far throughout a company into an operationally and as possible, only bringing in new staff in areas commercially meaningful information stream. where specific new competences were required. 40 Higher standards of organization 8 Aspire, inspire, deliver Within two years PKP Energetyka has increased How to efficiently implement an organisational its management process efficiency level to transformation and what role the leader plays in above market average. This has been achieved this process is the topic of conversation between through a combination of employee and outside Wojciech Orzech, CEO of PKP Energetyka and expert engagement in transforming processes Paweł Kubisiak, Deputy Editor-in-chief of HBRP. and practices to global best standards. 14 Unleashing employee potential Immediately after the PKP Energetyka take-over, not only was a transformation process launched, but also broad activities that built employee engagement. Changes were made step by step, with the broad and very active participation of midlevel managers, line managers and field teams. 22 Investing in the future The PKP Energetyka investment programme is a key component in the transformation of Polish railways aimed at adapting railway infrastructure for increased transport volumes and speeds. 28 The drive for innovation Energy storage, modern railway infrastructure diagnostics, helicopters and drones examining the power grid, or a failure prediction system – a culture of innovative thinking and acting was introduced into PKP Energetyka from the very beginning of the transformation process. Laying the ground for change The process of change is a tremendous challenge for both leaders and employees of an organization poised for transformation. This is the very reason why the management board chose to work with its existing personnel to implement its transformation program and only hired new talent in areas where specific new competences were required. Author: Paweł Kubisiak, Deputy Chief Editor ‘Harvard Business Review Polska’ PKP ENERGETYKA is one of the big grid with 3 kV power, PKP Ener a private equity fund. CVC con gest energy companies in Poland. getyka is an entity responsible for firmed its decision to acquire PKP The company operates in three key the maintenance of the national Energetyka by announcing its in areas: it manages the sales and dis railway traction system, its own tention to implement a longterm tribution of electricity via its own traction network and power sup development strategy to turn PKP distribution grid all across Poland, ply system as well as the power Energetyka into one of the main provides power grid services as grid managed by PKP Polskie Linie companies heavily involved in the well as maintenance service of the Kolejowe (PLK – Polish Railways). modernization of the Polish rail railway power grid. The company’s The company was formally crea ways. This declaration was made clients are mostly businesses, in ted in 2001 by separating the Rail to the trade unions and employees cluding railway transport compa way Electrical Power Department of PKP Energetyka working in nies such as PKP Intercity, PKP from the National Railway (PKP). fifteen plants. CVC assured them Cargo, POLREGIO and Lotos Rail PKP Energetyka was acquired that it would develop and moder way. As a key national electricity from PKP in 2015 by Citicorp Ven nize the company, in line with distributor, powering the railway ture Capital (CVC Capital Partners), its goal of achieving the highest 2 PKP Energetyka case study organizational and managerial Choosing areas for change Wojciech Orzech, an experien standards in power and railway PKP Energetyka was facing several ced director who had spent many industries globally. debilitating challenges when it was years on the management board of CVC Capital Partners was es acquired: its financial situation several companies, was appointed tablished in 1981 and currently has was shaky and it had been strug the new CEO of PKP Energetyka. 24 offices throughout Europe, Asia gling with organizational difficul He was both familiar with the pow and America, with current invest ties. Having previously invested er industry and had a proven track ments valued at over $50 billion. It in related industries, CVC repre record in transforming organiza manages the accounts of over 300 sentatives quickly spotted the po tions. Over time, other directors investors from 40 countries, seve tential to improve the company’s with solid experiences in leading ral of which are the biggest, most standards of quality and efficiency. strategic projects came onto the professional and most demand These initial observations were management board: Konrad Tyra ing institutions in the world. The later confirmed following a due dil jski, Leszek Hołda and Christo acquisition of PKP Energetyka was igence process which identified all pher Biedermann. The new board CVC’s first investment in Poland. areas that required investment. was entrusted with a longterm Managing change in the digital age 3 development project aimed at how the Top 400 Group was created. improve the standard of its main achieving operational perfection The group was divided into smaller tenance services and plan invest in PKP Energetyka by conforming teams that identified areas for im ments better. Real transformation to the best global standards. provement. As a result, 29 work began only when a structured pro The board started its prepara teams were formed to scrutinize gram called The Diamond Project tions for organizational change specific areas, verify the possibili was implemented. Each of the 29 by defining the areas which need ties for change, and work out pre work teams was given the task of ed changes urgently. From the liminary solutions. delivering specific initiative pro outset, a decision was made to en The investor had held certain posals to raise organizational effi gage the entire managerial team ideas and hypotheses about what ciency within two to three months. in the process of implementing could be improved in the company, The work was supervised by those changes, from board mem i.e., to manage the railway power a steering committee that coordi bers to line managers. This was grid maintenance more efficiently, nated the efforts of those teams, supervised the impact of their work, and corrected the direc tion and flow of work whenever From the outset, a decision was made necessary. to engage the entire managerial The board’s main principle team in the process of implementing was to involve its own employees in the process of transformation changes, from board members to line because these were the people managers. This was how the Top 400 who knew the company inside out, knew its problems like the back Group was created, followed by the of their hands and, thus, could formation of 29 task teams. readily identify areas which RIALS E A MAT K TY E RG E PHOTOS: PKP EN PHOTOS: 4 PKP Energetyka case study Operational efficiency in key company activity areas in 2015 BELOW MARKET BEST MANAGEMENT AREA BASIC ADVANCED AVERAGE AVERAGE PRACTICE Operational efficiency 1.8 Commercial efficiency 2.6 Finances, controlling and accounting 1.5 Purchases and logistics 1.8 Energy sales efficiency 1.2 IT systems 1.6 Project management 3.7 Human resource management 2.8 Internal communication 2.0 Distribution investment projects 3.7 SOURCE: McKinsey needed improvement. This ex and human resources. The first comparable quality or efficiency plains why most of the members step in the project was to conduct indicators in place. of the task teams were PKP Ener an internal audit. This provided From Day One, the board had getyka’s employees who had a perfect starting point for the made changes by leveraging on highlyspecialized knowledge of new board and gave them a chance the engagement of its current and their fields. However, there were to really learn and understand how new employees which is why a lot areas where certain competences the business works. A review of its of time and energy were dedicated were lacking, especially where assets and resources showed that to collaboration efforts with the digitalization and innovation the company employed several in Top 400 group. The first significant were sorely needed. dividuals with highly unique com objective was to convince them To this end, external hires were petences.