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

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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 long-term 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 long-term

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 e rials ty k a mat e PKP En e rg 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 highly-specialized 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. These individuals were of the validity and necessity for brought in to introduce new best then plucked to form a specialized organizational transformation. market practices to the company. team that functioned as the core The objective was to include the New members of management source of transformation. managers in discussions and to were mostly employed in the head­ Unfortunately, a lot of unfavor­ create changes which would devel­ quarters while minimal changes able news appeared at the same op the company further. This was were made to the teams in the re­ time, mostly regarding the com­ the company’s first success mile­ gional branches. Consultants from pany’s disappointing service stan­ stone. The second objective was the best companies in a given mar­ dards and a lack of efficiency in to prioritize tasks properly. When ket specialization were also roped many areas. An issue that was key areas that needed change in to collaborate on this project. most concerning to PKP Energe­ were identified, the issues high­ The Diamond Project was tyka then was the high amount lighted were then separated into implemented throughout the of complaints received from PKP two categories:­ those which were company, from its operational PLK, a railroad network and power either urgent or significant and activities to the departments of grid owner, regarding its service those that could wait. For instance, finance, technology, investment quality as it had no reliable or in the case of field operations,

Managing change in the digital age 5 changes were preceded by were performed step-by-step and selected. The operational effi­ thorough preparations to ensure there was no pressure to shorten ciency in those selected areas was a good service standard for the key the period needed to implement then compared to existing market customer, PKP PLK. Here, the those changes. The goal was to standards, not only in the infra­ transformation process focused ensure that the changes were structure or power industry but on actions that led to the best pos­ welcomed within the organization also among companies which had sible service of operational pro­ and accepted by all its personnel. similar processes or organiza­ cesses. The final objective was tional structures. to gradually introduce changes Process quality evaluation In every operational area in specific areas. For example, The next step taken was to iden­ that was analyzed, the reference the transformation process of tify areas which had the poten­ point chosen was not limited to back office activities, such as the tial to significantly raise efficien­ railway infrastructure compa­ implementation of IT solutions, cy levels and enhance company nies; it included companies which automation and digitalization, value. Ten such key areas were maintained assets that were large and dispersed. Companies which possess such assets or manage them on behalf of their client, just as PKP Energetyka does for PKP PKL, have a set of maintenance pro­ cesses, strategies and teams which perform work, quality control pro­ cedures and so on. This method of using the best reference points available was applied in the analy­ sis of all other operational areas. As such, in terms of commercial efficiency or sales, the company was compared to other Polish energy companies as well as others in the banking sector where e-com­ merce and online customer service conform to the world’s highest standards. In this way, PKP Ener­ getyka was able to understand its precise position in the market and industry in terms of operational, organizational and process factors. The entire process of detailed analysis was supervised by an inde­ pendent auditor. Once benchmarks were set, work teams evaluated the processes in a systematic man­ ner, analyzing if any of them could help the company achieve the de­ sired level of efficiency. A system­ atic assessment was performed on practices in areas such as internal process management, market pro­ cess approach, investment process efficiency, price policy, financial/ controlling/accounting process quality, purchasing approach, technological solution quality,

6 PKP Energetyka case study human resource processes and risk management. Of course, good practices alone are not enough to guaran­ tee success since external factors could also exert influence on the outcome. Yet, at the same time, implementing best practices which the company did not previously have was a necessary condition for real transformation. This is why the teams were trying to evaluate if the practices used in each iden­ tified area were the world’s best, market average or below average. The results of this evaluation are presented in the table ‘Operational efficiency in key company activity areas in 2015’. At that point in time, compared to the best benchmarks available, PKP Energetyka’s position in most areas was deemed to be either A basic and necessary condition for weak or significantly below aver­ transformation was to implement the age. But two areas were strikingly best managerial practices and effective positive: project management and distribution investment projects. processes in areas where they had been These were crucial areas as the lacking in the company. company had just implemented the biggest investment program in its history – the Project to Modernize program 2013-2017 cost around a hundred installations worth the Power Supply System (Polish 1 billion PLN and mostly focused on about 1 billion PLN, mostly on acronym: MUZa). This project is the main railway line E65 running routes from Warsaw to Białystok, an element of one of the greatest through Poland from the north in Lublin, Radom and Poznań, and changes in the Polish railway mar­ Gdynia to the south in Zebrzydo­ from Poznań to Szczecin. ket to modernize its power supply wice via Warsaw and Katowice. Project management and invest­ system. It was a crucial step that Once the modernization proj­ ment projects were highly evalu­ would enable modern trains such as ect was completed, railway net­ ated at 3.7 points on a scale of 0 to Pendolino to run on the Polish rail­ works were ready to welcome 5 but that did not mean that they way networks. The introduction of trains travelling at speeds of up could not be further improved. high-speed train lines necessitated to 125 mph. With this accomplish­ Most of the other areas scored less, a thorough modernization of the ment, PKP Energetyka completed from 0 to 2, which revealed low pro­ connecting power supply system. a highly demanding project and cess efficiency but, on the other These were gigantic projects made investment management program. hand, pointed to a large potential up of several hundred investment This created a very promising futu­ of the planned change. Evaluation ventures, each of them a separate re for the next stage of the MUZa results collected within the frame­ project dependent on construction modernization scheme which was work of the Diamond Project clear­ permits, employee access and close then planned to occur during the ly pointed out areas and directions collaboration with PLK along with next European Union investment for transformation. A further part other sub-contractors. PKP Ener­ program. In this following project, of the case study presents the getyka investments in power sup­ the modernization of railway lines change process from the board’s ply systems which were support­ from east to west was planned to perspective and transformation of ed by the European Union subsidy include the construction of almost selected organizational areas. #

Managing change in the digital age 7 Aspire, inspire, deliver

In unpredictable and turbulent market conditions, the only thing that is certain and remains constant in the running of a business is change. What role does the leader play in the transformation of an organization and what does it take to ensure that it is implemented efficiently? Wojciech Orzech, CEO of PKP Energetyka, shares his thoughts on these topics with Paweł Kubisiak, Deputy Editor-in-chief of HBRP. In 2015, you embarked on an market by comparing its strengths do their job well. When this doesn’t ambitious project to transform and weaknesses to other players in happen, the most common reason PKP Energetyka from within and the same field. for it is the different types of hur­ engaged 400 of the company’s Next, it’s good to use this dles that they cannot overcome. leading managers to do so. Three analysis to refine the objectives And it can result in burnout and years on, can you say that there of transformation and identify frustration. A precise and under­ is a universal “recipe” for change key elements that should be de­ standable vision, pointing to the management? veloped and utilized in the process objective and how to achieve it, is The transformation of any enter­ of change and those that you have a good way to help our employees prise is accompanied by so many to get rid of as soon as possible. overcome these hurdles and individual and subjective factors, You used the phrase “step-by- unleash their potential. But this that there simply cannot be one -step” and this methodology, taken first requires an in-depth know­ universal recipe for success in such from the philosophy of Kaizen, ledge of the company. In the case a complex process. However, my has just been implemented in of PKP Energetyka, the method experience from having success­ PKP Energetyka. The Step-by-Step we adopted to understand the fully spearheaded similar pro­ Program creates the possibility of company, and then shape its vision cesses elsewhere has enabled me active participation for every shift and how to communicate it, was to identify five factors which can worker as it gives them the oppor­ through our Top 400 which we facilitate the implementation of tunity to influence the organiza­ created to bring together a group change and can significantly raise tion of their workplace, standards, of higher ranking managers and the odds of success in every case. processes and procedures, up to line managers. This direct connec­ and including decision-making. tion with the line managers Let’s try to identify these As a result, every employee has allowed the management board to activities one at a time, a real opportunity to influence the understand the issues that really ‘step-by-step’ as it were. way the company runs and to raise mattered to employees in the field. Where should we start? the standards of quality, safety, By working closely with the Top Transformation should only be commitment, and, in the long run, 400, we figured out many solutions introduced once the management efficiency. together. Without it, we would only has an in-depth understanding of have had a narrow perspective the company and understood the So, we start by examining and limited possibilities to really purpose of reorganization. When the company from the inside learn about the company. All of that we analyze mergers and acquisi­ out and then we establish would have resulted in a failure tions in general, it turns out that the objectives of transformation. to meet the first key condition for 80% of these types of transactions What should the next steps be? a successful change. tend to end in either a smaller or Once we have a thorough under­ bigger failure. In many cases, the standing of the organization we I understand that those two first root of the problem lies in the lack have to change and learned its steps taken were from the frame- of sufficient knowledge of the strengths and weaknesses, we work of the Diamond Project. Its acquired company or an ill-defined should outline the vision of change objective was for the board to objective. very clearly. This is important beca­ learn about the company, its This is the very reason why it is use a crucial element of change is advantages, to identify areas for worth our time to start every pro­ rooted in the commitment of the improvement and to communi- cess of change by establishing people responsible for implement­ cate their vision of transforma- a clear understanding of the kind ing it. This is why employees must tion to the employees. of company we are dealing with, fully understand what this process And there was more to it. Thanks what kind of employees it has, relies on and where it is heading to the success of those steps taken, its organizational culture, what towards. At this point, we should we could move on to the third step challenges lie ahead, and where also allow them to step into their to engage our employees, not only the problems really are. You also roles as fully-fledged and active in the process of change, but also k owalczy have to understand the market co-creators of change instead of in setting objectives. From the per­ in which it operates, its situation being mere participants. spective of the headquarters, we and the specifics of it. You need to Based on my own observations, do not know what is the best way

Photo: mar ek k Photo: determine its exact position in the I can tell that employees want to to arrange and co-ordinate the

Managing change in the digital age 9 schedule of network trains, possible to discuss with four their complaints, and to give them nor of the teams responsible for hundred people at the same immediate feedback. the maintenance of the electric time? And surely, in such a group, These groups still work in the railway networks, or its energy there would be both supporters same way now and we run work­ distribution networks. We do not and opponents to change? shops with them. Top 400 meetings know how to improve safety stan­ It was not an easy process, espe­ are held twice a year and there are dards in specific work divisions or cially since we were less interest­ meticulous preparations for them. how to optimize work service pro­ ed in one-sided communication but Once the meetings end, we contin­ cesses. This is where the line mana­ more focused on engaging in real ue working on the proposals that gers come in because their know­ dialogue with them. I did not want were submitted. Each proposal is ledge puts them in the best position to speak ex cathedra to the mana­ analyzed carefully and its authors to set the direction of change in gers gathered in a meeting hall. are given feedback in the form of their fields. As a result of this We wanted to hear what the oth­ a report. Many of these proposals awareness and a consistent effort er side had to say, how they under­ are implemented in the company to include a broad range of direc­ stood some proposals in terms of while the rest are rejected or kept tors in managerial processes, we their merit and how they took it on hold for the right moment. In are able to harness the real poten­ emotionally. So, we found a way. three years, the Top 400 has grown tial of our staff. In this way, the Top We divided the Top 400 group into to Top 450. We are always adding 400 members are conferred an im­ smaller task teams consisting of on new managers who are keen to portant role as co-creators of trans­ several to over twenty employees. join the team. We now know how formation and, in some areas, as Each team was given the task to conduct effective conversations the main creators of the solution. of defining an existing problem with and in a larger group and can and working out its solution. We see its positive effects throughout It must be very difficult to involve could talk directly to every one the company. such a large group of people of the managers in those groups, We then present the company in the process of change. Is it to listen to their comments, even with what was worked on by those

The five steps to becoming a transformational leader

Strive to get to know 1 the organization well 4

Consult staff to establish company values

2

5 3 Draw up a vision of Be a leader who Draw on the change can see both the energy and broader perspective potential of and its details co-workers

10 PKP Energetyka case study teams and prepare a recommen­ dation list. I think this is the best method for a company to draw on the energy of its people, create engagement and to include mana­ gers in the company’s co-creation process.

What arguments or tools have you used to break the ice, have dialogues with your employees and motivate them to collaborate fully with you? We built our organizational culture from day one based on a set of four values which has helped me tremendously. The first value is to deliver the highest stan­ dard of services to the customer. The second value is to prioritize employee safety. Due to challen­ ging and variable work conditions, especially on the power grid and railway power grid, prioritizing employee safety must be firmly embedded in the company’s DNA. The fifth rule is to lead others effi­ inspiring the Top 400 group to work The third value – to build ciently towards the achievement of out concrete preliminary objec­ employee engagement – is abso­ objectives. In this last step, I have tives and the ways in which we can lutely crucial because engage­ found one rule to be very helpful in accomplish them. Thanks to the ment is one of the few elements of my role as a leader: ‘Aspire, inspire work done in task teams, we have advantage which are difficult to and deliver’. I think that an orga­ successfully managed to accom­ copy nowadays. All other elements, nization managed by me and the plish these objectives. including innovation, can be copied people who work for it are able The third aspect is to work on relatively easily. to achieve much more than they the delivery. By this, we mean that And the fourth and final value: have achieved so far, more than we do not live exclusively with to raise business efficiency. Every any of them thinks, which is why visions dictated by high manage­ company is created for the pur­ I am unafraid to make the PKP ment; we want to execute defined pose of making money, and to do Energetyka team deal with ambi­ daily tasks well all across the com­ this well, it must be efficient. This tious objectives. My basic role as pany. We know what the objec­ is why we must first define objec­ a CEO is to inspire and motivate tive is and what must be done to tives, then we tie in expectations the team to implement changes. achieve it. to the indicators and, finally, we I do not believe that I can achieve I think that, for a manager, a big measure the outcomes achieved. this through motivational talks or challenge is to switch modes from

e rials ty k a mat In our case, as a company taking speeches, but only by real involve­ being aspiring to delivering. This care of the distribution of electri­ ment at the management level in requires a continuous shift in focus cal energy, this is also important a dialogue with the right people to from the micro to the macro levels because a large portion of profit develop the company further. and vice versa as the situation made is re-invested into the grid This is why, as soon as we estab­ demands it. Although every one of

e PKP En e rg , Photo: since this is the main essence of lished general objectives which us usually has a comfort zone and

k toc our activity. highlighted our aspirations as an prefers to work either at a general i S organization to improve manage­ level or getting into the nitty-gritty And now we have come to the ment standards and organizational (even outright micromanagement),­

hics: gra p hics: fifth and final element. efficiency, I could then work on I try to be flexible and to frequently

Managing change in the digital age 11 move back and forth between organized and insufficient indica­ the most competent. It turned out the bigger picture and the details. tors or markers we used to track that some managers were reluctant progress. This, in turn, was very to take on the responsibility. Many These five elements have helped closely connected with the IT sys­ managers from the headquarters PKP Energetyka undergo signifi- tems which support management. came to me for a decision which cant change. However, some of These were the issues that we were they could easily have made them­ the elements of change which working on quite intensively. As selves. When that happened, they you mentioned earlier are its a result, we implemented signifi­ got no answers from me, only hints. unpredictability and its individual cant changes to the way work was In time, they accepted my manage­ character. What was something organized for our staff by reinforc­ ment style and took the responsi­ unexpected that surprised you ing it with integrated IT tools and bility of decision-making onto their most in the transformation a comprehensive system of track­ own shoulders. Personally, I con­ process of PKP Energetyka? ing and measurement which we sider this to be one of my highest The biggest surprise for me was created for all relevant elements achievements as a leader. the difference between the high of our business activity. company, or employee, potential The second issue involved One of the most important and the relatively low service getting the managers on board with effects of transformation in the standard that was uncovered from the changes and empowering them company you manage is the digi- a large volume of customer com­ with the authority to take action. tization of many operational pro- plaints. I needed to dedicate a lot My goal was to shift decision- cesses – to transfer data from of time to resolve this issue. There -making responsibilities to the low­ the analogue to the digital world. were many reasons for this situa­ er organizational levels so that line So when we talk about PKP Ener- tion and I found that the main ones managers are able to make quick getyka now, do you think it is ap- were related to the way work was decisions in areas in which they are propriate to refer to it using the trendy term ‘Company 4.0’? If we define the 4.0 term as a busi­ ness which is highly digitized and automated, using artificial intelli­ gence, algorithms or big data, then, from this perspective, I can agree we are on a good path to becoming Company 4.0. Yet, I am aware that there is still a lot of work ahead of us, both conceptual work and implementation, before we learn to use digital technologies opti­ mally while simultaneously raising our service standards, levels of effic� ciency and employee safety, and managing the infrastructure grid. We certainly have a very good team of people with the right competen­ cies and energy necessary to build Company 4.0. In an era of such dy­ namic technological development, one thing that is certain in busi­ ness is the inevitability of change. In this sense, I can safely say that we, as an organization, or rather k owalczy as a team, have now equipped our­ selves with the right skills, know­ Planer – a system for work and equipment ledge and experience to know how management in crisis situations.

to turn it to our advantage. # mar ek k Photo:

12 PKP Energetyka case study Friederike Fabritius: Change begins in the head

Success in the change process depends to a large extent organisations you can still encoun- on the ability to manage difficult emotions prevailing ter ‘fight or flight’ reactions, which in the transformed companies. This is one of the biggest in extreme cases can lead to verbal challenges facing the leader, says Friederike Fabritius, aggression or the avoidance of cer- a world-class expert in the field of neuro-leadership. tain situations. When we know that our comfort zone is torn down, we From the point of view of neurology, their headquarters during restruc- suffer from a serious lack of moti- in order for a real change to happen, turing. The company’s morale was vation caused by a sense of threat. it must have an emotional meaning. very low and the situation tense. The A leader should do everything to In other words, when we change worst thing that a mid-level manager compensate for this feeling. our behaviour, we do not make can say when standing in front of his For many, the process of change decisions on a rational level, but team is: “The president has ordered means new possibilities – people on an emotional level. The same us to...”. This is a huge mistake. It change departments or get new applies to an organisation, but for shows that he is not convinced by responsibilities. One of the ways to employees, a change in the com- the changes himself, and is unsure calm the situation is a fair division pany’s functioning often means not about what he wants to convey. of duties and remuneration. A lot only the necessity to adopt new Because we are equipped with of research describes the fact that habits, but also more work, which mirror neurons as humans, we sub- a sense of justice is very important can lower morale. A leader who consciously pick up the emotions to people. This means that we pay wants to transform their company of others based on their behaviour. attention not so much to what costs must make sure that the employees That is why body language is such we incur due to the change, but want to be a part of it, and not act an important element of commu- above all on whether our colleagues as a brake on the process. nication. Even if someone is talk- pay a comparable price. Therefore, That is why the task of the leader ing about a deep need for change, a good move that a leader could is to indicate the objective and interesting new challenges and an make is to agree to incur certain the direction of action, so leaders exciting way to meet the objective, losses resulting from the company’s must be very coherent in what they but his body shows something com- reorganisation. Such action would say and do. Therefore, the board pletely different, you can be sure confirm the whole team in the belief should show that they really care that the listeners will notice this that change is indeed necessary about the introduction of change, contradiction and discover his real and that it is not carried out solely but if they are not convinced them- emotions. The manager’s task is to for the leader’s own benefits. selves, people will not follow them. convey the message in a reliable A good way to maintain a high I know a few very determined and way – even if he disagrees with it. level of team involvement is open consistent leaders who made it We can explain the resistance recognition of employees after each clear: “Our company is on the verge to change scientifically. Our brains difficult stage of change. People of change. Stay on board or leave, try to use as little energy as pos- are not just working for money. but do not block this process.” It sible, which is why we feel comfort- They want to be appreciated for was a good approach because the able in situations we already know, their contribution to the life of the architect of change must not only and why it is difficult to change organisation. Remember that after inspire, but also take disciplinary old habits. This mechanism is so months of overtime and stress measures every time someone strong that any kind of change employees can be exhausted, but openly presents a hostile attitude. can make us feel threatened, and it is still their work that helps bring The role of middle and lower level we react by launching a defensive the whole process to a happy managers is also very important in mechanism. From an evolutionary ending. the process of change, because point of view, this mechanism Author: Filip Szumowski they give feedback to their direct allowed our ancestors to prepare subordinates. Therefore, they for defence against physical dan- Friederike Fabritius is a world class should pay attention to how they ger. Today, people do not experi- specialist on Neuroleadership and communicate their expectations. ence these kind of threats, but their co-author of the book ‘Mind of the I cooperated with a company which brains are the same as thousands Leader’, considered one of the had to fire many employees from of years ago. This is why in modern best business books in 2017.

Managing change in the digital age 13 Unleashing employee potential

A change the company’s ownership is often associated with a fall in employee engagement levels because uncertainty triggers fears about their future in the organisation. So, once the company was acquired, a transformation process was launched immediately with a plethora of activities designed to enhance employee engagement. Changes were made in incremental steps involving staff from all spheres within the company.

Author: Mateusz Żurawik, Editor HBRP Cooperation: Beata Górniak and Anna Hyży Before it was acquired about consciously constructing and It was crucial to first prepare the by CVC Capital Partners, PKP Ener­ implementing programs and proj­ line managers for the change getyka had all its Human Resource ects based on the results of system­ by equipping them with relevant (HR) activities already centralised. atically conducted research. managerial skills and to get them This was continued in the post- It was only when the HR struc­ accustomed to the new level of acquisition phase by pooling its tures and employee competence autonomy which were about to staff services and payroll activities profiles were changed did a real be introduced. in a Shared Service Centre (SSC) possibility to build the foundation These employees were then in­ in Łódź and sharpening up the pro­ for an organisational culture based cluded in consultations and given file of HR employees both at the on four main values appear, one the opportunity to share their ex­ company’s headquarters and in of which was engagement. This periences with the management the field. A team of employees who was facilitated by communicating board and with one another. For specialised in three areas – salary, the company’s vision from the top this purpose, the Managers’ Acade­ personnel development and HR management to the line managers my was created where a number Business Partnerships – was estab­ in direct and one-to-one dialogues. of training sessions and workshops lished. These areas of HR speciali­ So, one of the basic tools used to were conducted. Line managers sation supported PKP Energetyka’s prepare the company for new mar­ were encouraged to take on business development in line with ket realities following a change in increasingly more responsibilities, its overall strategy. ownership was to strengthen deci­ including the task of constructing When the process of change sion-making at lower levels of the activities to enhance the engage­ began, the means of communicat­ organisation. “Our basic assump­ ment of employees. Within the ing the new company’s vision to tion was that management respon­ Academy, the responsibilities of staff was far from ideal. The effec­ sibilities was not limited only to managers were defined precisely; tiveness of dialogues between the upper management team and line The shift of decision-making to the managers were sorely lacking – bottom of organisational structures typical one-way communication channels from the top-down were has led to the multiplication of people the only means of transferring who influence the company's development information. “At that time, the specific way from day to day. There are now 400 that PKP Energetyka functioned of such managers. was based on its hierarchical struc­ ture, typical of state-owned enter­ the plant managers but also in­ their role was not limited to just prises which had been running that cluded line managers who super­ assigning tasks to their subordi­ for many years,” admits Anna Hyży, vise the work of field workers. So, nates but, also, to motivate them, director of the Human Capital in order to utilise and develop their to listen to the workers’ insights Development Office. “It was clear leadership skills further, we gave on their daily work activities and that majority of key decisions were them much greater influence on to provide feedback. The lower made at the top levels of the com­ the company’s direction,” explains and mid-level managers have now pany’s hierarchy and this severely Beata Górniak, Director of the become an extremely important limited the possibility of building Human Resources Management link in bilateral communication: high employee engagement, in ad­ Department at PKP Energetyka. in addition to conveying informa­ dition to prolonging decision-mak­ tion from their superiors to subor­ ing in the most important matters 400 managers dinates, they are also willing and for the company.” This hierarchical The shift of decision-making to the able to hear and provide feedback and rigid structure was closely as­ bottom of the organisational struc­ in the opposite direction. sociated with the lack of constant ture has led to a rise in the number Within a short period of time, and consistent work on involving of people who exert influence on the core management team grew k owalczy both the company’s management the company’s growth and develop­ to 400 people and this proved to be and employees. It was not mere­ ment. At the same time, the board an invaluable source of knowledge ly about conducting surveys on was aware that it was not enough to for other top managers who later

Photo: mar ek k Photo: the levels of engagement, but also only inform its staff of this change. joined the company. The company’s

Managing change in the digital age 15 current strategy is, to a large them for the new role by giving To this end, it is the managers who extent, a result of the work of this them a common identity. The idea suggest issues which should be group of 400 managers who took was to explain that they belonged addressed during the meeting. on more responsibilities for their to a group of people with high po­ “Each meeting is a two-day event company and became a priceless tential who were valued by the which always follows the same source of information about the organisation. This message was format,” Górniak explains. “From company as well as the problems first conveyed to the managers the very beginning, we wanted and needs of the current staff of who would then pass it on to their communication to flow both ways 5,000 people. employees. This is how the idea at the Top 400. So, we encourage Yet, the process of getting the to refer to the extended manager them to go on stage and share their employees accustomed to having group now known as the Top 400 daily experiences of work, and to increased responsibility had to be was born. The slogan quickly be­ express their opinions on the tasks introduced gradually to them. “Be­ came very popular in the organisa­ given to them. They are always fore the acquisition, the lower and tion and employees with many divided into teams to work on the middle level mana­gers simply car­ years of experience regarded solutions to specific problems re­ ried out their daily tasks together a nomination to the group as a sign ported. When the proposals are with the line workers. This is why of recognition. It was clearly visi­ prepared, we then discuss them the Academy needed to work on ble that the existence of this group openly with all participants. As equipping them with basic skills, was effective in raising the moti­ of today, a lot of solutions imple­ for example, to clarify the role of vation levels of its members. mented in the company have been a leader and what he or she should A few weeks after the priva­ the result of this method.” do to communicate well with tisation of PKP Energetyka was “Why is this so important? Be­ a team,” said Anna Hyży. “As of to­ finalised, the first meetings of this cause the Top 400 managers are day, they are much more comfort­ group with the company’s manage­ people who know the company able in their roles supervising the ment board were arranged. They perfectly well, both its problems daily work of the line workers. took place in three stages in War­ and the risks that changes can And at the same time, there is an saw, Cracow and Poznań. Those bring. This means we can avoid increasing shift in focus towards meetings have now become a fix­ many kinds of risk when these including more management ture in the company’s calendar of people design solutions. It’s a good responsibilities in their roles. This events although they are no longer alternative to managing people signifies a radical change in their geographically separated; the com­ from just sitting at a desk.” In fact, way of thinking – to think more pany now books a single venue it was during one of the meetings like a boss, not an employee.” large enough to accommodate the of the Top 400 that the manage­ As the new managers were not entire Top 400 team. The agenda of rial staff developed and signed, initially accustomed to thinking meetings is currently arranged in together with the management about themselves as having close collaboration with the mana­ board, the Manager’s Respon­ significant influence on the com­ gers to strengthen their sense sibility Model or PKPE’s Leader pany’s operations, we prepared of influence on the organisation. Behaviour Catalogue.

Engagement study at PKP Energetyka

60% 60

40% 37 38 33

Engagement indicator 30 24 (Hay Group methodology) 20% 2015 2016 2017

Managers PKP Energetyka Employees

16 PKP Energetyka case study The Manager’s Responsibility Model signed by the management of PKP Energetyka in December 2017. As a leader,

I achieve my goals I care about the I have an influ- I am engaged when I implement client’s interests ence on, and and I inspire the group’s and a high care about, the others with my strategy. standard of safety of myself attitude. service. and others.

I set high bars I share my knowl- I communicate I give, accept for myself by edge and I improve in an honest, and appreciate working on both myself and my understandable feedback. ambitious goals employees. and respectful and projects. manner.

I follow the 9. I am coope­rative 10. I make decisions I take care of the company’s model and and am looking and I take responsi- make sure for solutions. bility for them. property as if it were that others my own. do so too.

The road to success organisation. Where did this fall their insights and fears about the is through its goals in engagement level come from? company’s transformation with Another tool used to raise employ­ As earlier mentioned by Górniak, us actually boosted their level of ee engagement levels was the in­ a few elements contributed to this engagement. There were fewer troduction of a new Management- effect, such as the managers’ lack questions asked along the lines of By-Objectives (MBO) process in the of confidence about their future in ‘What is going to happen to us?’ at company. In fact, this had already the new organisation. the meetings, and at the same time, been implemented at the begin­ However, this trend soon began we would hear more about innova­ ning of 2016, only three months to turn. Although the average level tive ideas and questions about new after the beginning of changes in of engagement fell (see the frame: challenges.” PKP Energetyka. The new MBO Manager’s Responsibility Model The decrease in the average system included managers from signed by the management of PKP engagement level of the group in the Top 400 group and its crucial Energetyka in December 2017), it December 2016 was unavoidable feature was to cascade objectives significantly rose among mana­ at that time but it was also impor­ down to the lower levels of the gerial staff who, at that time, con­ tant to us. With greater trust in the company structure. It was so effec­ sisted of ten times more people confidential way opinions were tive that the fruits of success than previously. “It is important to collected in the survey, employees were visible within the first year note that the next time the study were able to communicate their of implementation. was conducted was in December concerns about the transformation Efforts to transform the 2016 – after two sessions of Top and about the changes they played organisation were not without 400 team meetings with the com­ a part in more openly. Thus, the de­ its surprises. As early as Decem­ pany’s management board,” notes cline in general levels of employee ber 2015, even before the actual Anna Hyży. “The first meeting pro­ engagement was not too worrying creation of the Top 400 group, the vided an opportunity for the board given the increased participation first survey to determine existing to share the company’s most im­ in the survey; this showed us that levels of employee engagement portant objectives with them. The employees wanted to express was conducted throughout the second meeting was more about themselves and trusted that they company. Interestingly, the survey having the board listen to the Top could do so in a secure, confidential showed that the engagement level 400 people. This gave us the oppor­ manner. of the management team was tunity to observe that providing Another important manage­ lower than average for the entire them with the possibility to share ment tool for the company is

Managing change in the digital age 17 Employers’ brand attributes in PKP Energetyka

We live for challenges We are a good team We are a reliable employer Regardless of the structure or posi- We always work in a group and share We guarantee stable employment as tion, creativity and experience are our experiences. This allows us to we are one of the undisputed leaders intertwined in our daily duties. In our complete every challenge successfully. in the energy industry. We sign long- company, every day is different, and Without the contribution of one per- term employment contracts with our there is no place for routine or bore- son, the work of other workers does employees, we always pay salaries on dom at work. Our electricians are not make sense regardless of whether time and we provide a number of in- always ready for action even though they are direct hires or employees teresting fringe benefits. Our market their tasks and duties are not easy. in the headquarters. This attitude of position is strengthened by changes New challenges can crop up at every having boundless opportunities for related to growing revenue and new mile of the railway tracks but handling collaboration is also reflected in our investments, including those out- them effectively can bring much collaborations with external parties. side the country. We move with the satisfaction. The company’s head- We like one another so we strive to times and are always open to fresh quarters function in a similar way. build friendships during integration energy and ideas. At the same time, Office employees follow the change, events and trips. Out on the tracks, employees who are more senior are building the organisation anew, trusting our team members is a basic not written off in our company. Many transforming the existing processes work tenet. At work, we are respon- years of practice make them ideal and introducing innovative ideas, sible for one another and because of mentors for their younger colleagues. processes and tools. And it is their this, we feel safe and can eliminate The co-existence of the two genera- constructive ideas and promptness potential threats even more effectively. tions and the collaboration between of response to situations that allow This is a set of values which we have them make it even clearer that job us to grow dynamically. adopted and implemented in other security is an integral part of the areas of the organisation as well. By company’s operations. With us, career drawing strength from the team and development takes place in a friendly having genuine trust in its members, atmosphere and over an exchange all of that translates into better com- of experiences across different age munication in the administrative part groups. of the company, and in the broader perspective, leads to a greater motiva- tion to work and a better understand- ing of the business.

18 PKP Energetyka case study Employee Engagement research. implementation of those objec­ bonuses paid over and above A great deal of attention and effort tives, proved to be very helpful. regular monthly salaries. The basic is dedicated to it to ensure it is assumption was that this system conducted at the highest stan­ Culture of engagement would motivate employees to go dards. Each study on the level of HR processes provided a lot of beyond the scope of their daily employee engagement is accom­ support for the implementation duties. This system is constantly panied by a thorough review of effective company transforma­ monitored and improved ensure of the results and an analysis of tion. A sign of their effectiveness it is to coherent with best prac­ responses given by individual em­ was found in the raised engage­ tices in the market to support ployee groups. “We found that the ment level. However, after a period managers­ in their daily work with role of the manager is absolutely of intensive investment in the per­ their subordinates. “We are cur­ crucial to shoring up engagement sonal development of new profes­ rently at the stage of implementing in the ranks,” emphasises Beata sional managers, the company in­ changes that will link the incentive Górniak. “That is why, when the creasingly began to require them to system with the delivery of busi­ study was completed two years be jointly responsible for company ness indicators for field employ­ ago, we focused on implementing management. They were entrusted ees too. These changes are aimed at specific activities to boost work­ with the gradual implementation encouraging our workers to engage place engagement levels. These of incrementally ambitious mana­ in more actions and activities that were areas in which the manager gerial tasks, e.g. managing individ­ embody our company values that had the greatest impact. Based ual employee remuneration based were previously mentioned: quality, on twelve questions asked in the on yearly assessments, providing safety, employee engagement and study, we constructed our own employees with constructive feed­ efficiency.” added Beata Górniak. company’s Synthetic Engagement back, and planning employees’ ca­ Indicator (SWZ). As a result, it has reer or personal development. The Support for managers become easier to convey the right HR Department also encouraged New activities by HR were required messages to our employees and managers to develop HR process to raise employee engagement the way we have done it has be­ solutions and to find ways to com­ levels. In addition to specialised come more consistent throughout municate them effectively to their sections for remuneration and the organisation. The implementa­ subordinates. benefit management, as well as the tion of SWZ is one of the objectives “We are careful to convey personal and career development that appear in every manager’s a coherent message so that all of employees in the head office, an MBO sheet. And because of this, company employees have the same HR Business Partner function was we are able to monitor managerial understanding of our processes. created for individual field depart­ results in real time. And simulta­ When implementing a new remu­ ments. Their basic task was to con­ neously, we are able to communi­ neration system, bonus system or stantly encourage the development cate the results of the employee employee evaluation system, we of existing managers­ in a given engagement study to both the make sure that all managers and plant as well as to support the managers and their subordinates employees receive materials with Regional Directors in their daily so they can make the necessary identical guidelines regarding work. The latter, however, initially changes to raise those levels.” the processes being implement­ had a slightly different view of This change quickly proved to ed. They contain the same issues this matter. Directors who held be effective. The general level of that should be discussed in conver­ key roles in the organisation be­ employee engagement began to sation and the same elements that fore the company was privatised rise in 2017 – across all surveyed require their attention. Our focus treated Business Partners with groups of employees with the Top is to simplify – open and clear com­ a great deal of mistrust. 400 group sustaining a significant­ munication is the key to success,” The challenge then was to ly higher level of engagement than explains Beata Górniak. effectively communicate the the average in the PKP Energetyka Motivation is another crucial tasks and responsibilities of HR e rials ty k a mat group, and this level was even factor that plays a large role in the Business Partners in a company higher than other benchmarks in transformation process and rais­ where HR support was associated the market. The introduction of ing engagement levels. It is based almost exclusively with staff and MBO, as well as the introduction on a reward system for specific payroll processes. Changing this

e PKP En e rg Photo: of a bonus system linked to the actions in the form of quarterly attitude required time and for

Managing change in the digital age 19 developed to shape the percep­ tions potential employees had of PKP Energetyka. As a result of workshops and meetings held with a wide range of employees (from network employees to board members), as well as with pupils and students of technical univer­ sities, a new strategy was created. It focused on highlighting three employer attributes: the mission, teamwork and job security (see box ‘Employer Branding Attributes’). The gist of it is reflected in the slo­ gan: A Strong Team. What exactly does that mean? “We like challeng­ es; we create a harmonious team; we are a reliable employer. With us, everyone becomes part of a strong team. The lack of mundane activ­ ities coupled with daily challeng­ es in an interesting and growing industry provide opportunities Beata Górniak for stable career development. Regardless­ of whether we work on tracks, in a railway substation or people to become accustomed to implementing changes jointly with in an office, we try to exceed the the presence of a person within them. HR Business Partners were expectations of our clients by im­ the branch who asked numerous also co-authors of the career devel­ plementing changes to be the best questions about individual opment of managerial­ staff. at what we do,” says Beata Górniak, personnel processes. “From today’s perspective, we “Those are real statements collect­ “For us Plant Directors, the can say that we have successful­ ed from all over the company that centralisation of HR and pay­ ly managed to break the initial cogently describe what sort of an roll functions in one place was resistance. I think that the enterprise we are and the kind of a difficult process. We had the collaboration between the heads people we want to attract to come feeling that we were losing on­ of individual departments and HR work with us.” # going support, people who had Business Partners is progressing been on hand until then. We did very well,” assures Beata Górniak. Beata Górniak, is the Director of not know if people working from “The directors of our branches have the Human Resources Manage­ headquarters would provide us realised that they can expect to ment Department in PKP Ener­ with support. However, it turned receive help from us and that the getyka. She has many years of out that the role of HR Business presence of HR Business Partners experience in HR working for com­ Partners has worked really well – in many areas has led to synergy panies in the FMCG, energy and it makes us feel cared for and we in our business.” production sectors. She is an expert receive excellent support in our in change management processes roles and work,” admits Marek A strong team and enhancing work relationships Szumlewicz, the Director of plants Efforts to raise the level of with employees. She graduated in Dolnośląski and Zachodni. employee engagement did not with a degree in Law and Admin­ During this challenging period just stop at that point because it istration from the University of k owalczy in the transformation of HR ser­ also meant that it was crucial for Silesia as well as the Advanced vices, HR Business Partners were us to encourage and attract new Management­ Program at the ICAN able to provide support for mana­ people to work for the company. Institute, publisher of Harvard

gers by communicating and For this purpose, a strategy was Business Review Polska. mar ek k Photo:

20 PKP Energetyka case study Hubert Malinowski: Resistance to change is a natural phenomenon

The reluctance of employees to change is a common work quality, information exchange, phenomenon that is not easily prevented. These and management of people and equipment, meant greater stability unfavourable staff attitudes can be reduced or even for the company, and thus greater eliminated through consistent communication activities job security. And at this point, the leading to understanding the sense of transformation. transformation began to make sense for people, and they began to engage with it. An acceptance of change The basic condition for an effec- themselves fundamental ques- coupled with staff consent to the tive change implementation tions: will they work in the same proposed transformation solu- is involvement of all interested good conditions as before? Will tions should intuitively lead to employees in the process. Unfor- their earnings be better or worse? increased employee engagement. tunately, the first and natural Will they not have to work harder? Meanwhile, in the case of PKP reaction of people to change is And will they even lose their Energetyka, a year after the start resistance. It can manifest itself jobs? Next they wonder whether of activities communicating the in emotional actions and reac- they will be working with the changes, engagement decreased. tions of the opponents, and can same people, whether their com- Paradoxically, there was no need also take on a hidden form and petences will be sufficient after to draw negative conclusions result in e.g. a reduction in effi- the change, or will it be easy for from this. This phenomenon is ciency. Such a reaction of people them to learn new things or cope quite common in employee opin- to the new situation is, of course, with new responsibilities? And will ion research when it is conducted natural because it has its roots in they have the level of autonomy for the first time. At this point the prehistoric times. Then change they are used to? study does not have so-called was automatically associated Such fears of losing autonomy ‘cultural domestication’, it is a kind with an unnecessary need for an have certainly appeared among of novelty that people approach additional expenditure of energy, employees of PKP Energetyka, cautiously, so they give feed- which in a food shortage situation who received smartphones with back in a very balanced way. But was a waste, because it involved GPS systems, on which they had when they see that the organisa- an additional effort. to indicate the status of work. The tion responds positively to the Looking from the perspective concerns about continuous moni- information received from them, of leaders and managers who toring which resulted from the especially when it turns out that were entrusted with the obligation ability to pinpoint an employee’s the results of the research lead to to change, it can be very helpful location were natural. That is why the improvement of dysfunctional to be aware of the inevitability an essential element in this area areas, then at the next oppor- of this resistance and prepare for of company transformation was tunity they say what really hurts its occurrence. It is worth remem- assuring employers that safety them. In this case, a worse result is bering that this resistance is not remained a priority, and that the paradoxically a good phenomenon, an expression of people’s dislike Planer system was aimed at intro- because it shows that people have or malice, but it is a completely ducing better work organisation begun talking honestly and with- natural phenomenon. But when we and improving resource manage- out fear about what they think and realise that resistance will surely ment, rather than assaulting auton- feel – it shows that they trust their take place, we can plan actions in omy. It turned out that the best employer. And this is a good prog- advance, leading to its reduction. arguments to convince the most nosis for the future. One of the basic activities lead- reluctant people were efficiency ing to resistance reduction is improvement and guaranteeing transparent communication that safety, i.e. two of PKP Energetyka’s Hubert Malinowski, Ph.D., is a social psychologist, a coach and a con- will dispel any doubts held by company values. sultant. He specialises in people the opponents. People in a situa- The change leading to the management, team building and tion of upcoming change first ask improvement of employee safety, communication within organisations.

Managing change in the digital age 21 Investing in the future

PKP Energetyka’s investment program is a key component of a project to transform the Polish railways through the company’s participation in the Polish National Railway Program (Polish Acronym: KPK) as well as the program to modernise its power supply (MUZa) and to adapt the railway infrastructure so it can handle an increase in transport volumes and speeds. It was critical for this project to be completed efficiently and to adhere to a strict schedule set by the European Union as one of its conditions for financing the project.

Author: Mateusz Żurawik, editor HBRP Cooperation: Agnieszka Nosal and Stanisław Kubacki Before PKP Energetyka was lessons from the previous program. “In MUZa I, we implemented privatised, a broad governmental As a result, the biggest challenges a project approach through­ program valued at 1 billion PLN were found to lie in the improve­ out the organization and we was launched to modernise the ment of work efficiency on the learned a lot from that experi­ power supply (Polish acronym: railway tracks and to establish ence. We now wanted to apply MUZa I) . It was part of the largest a transparent process of separating the same approach to MUZa II”, venture to have happened in many individual business lines.” says Stanisław Kubacki. years to modernise the railways It became clear that in order The first stage of the new in Poland. The project lasted from to maintain the railway and pow­ project was to make comprehen­ 2012 to 2015 when the railways er grid infrastructure, the compa­ sive preparations for the invest­ were modernised and 86 railway ny would have to undergo a trans­ ment and the first step of this stage power supply installations were formation. To improve efficiency, involved consulting PKP PLK on constructed. This significantly­ a Value Creation Program that the technical conditions neces­ shortened railway journeys be­ covered 29 areas of company activ­ sary to connect about 200 facil­ tween the northern and southern ity was established. The program, ities to the grid. The process in­ parts of Poland. And even while known as The Diamond Project, cluded determining the location of CVC was in the process of acquir­ defined hundreds of initiatives that the facility, acquiring land, fulfill­ ing PKP Energetyka, it was already should be implemented to make ing technical conditions from the aware that the company was fac­ PKP Energetyka an efficient infra­ distribution system operator for ing an upcoming implementation structure operator. “The goal was power connections, obtaining all of another modernisation program to find a hidden diamond and to environmental and construction known as MUZa II. polish it gradually until it finally permits and then creating and exe­ Apart from the MUZa program, became a precious stone,” explains cuting technical concepts. This was the Polish railway system was Konrad Tyrajski, PKP Energetyka’s handled by a team of experienced given the opportunity to take part board member responsible for the engineers in the field of distribu­ in a project for the rapid moderni­ company’s investments. tion and execution who use modern sation of the National Railway Pro­ The company had many areas tools manage the project, its costs gramme (KPK) valued at 70 billion with huge potential and all we had and the teams of contractors. The PLN. This project alone would in­ to do was to invest in their devel­ construction and modernisation volve thousands of kilometres of opment, to systematically improve of each of the 200 facilities under modernised lines. Within the pro­ standards in quality, safety and MUZa II is now being carried out gram, PKP Energetyka, which had employee satisfaction to achieve as a separate investment project the greatest potential in Poland, a rise in efficiency and to also with its own budget, schedule, mile­ was the leader in the market in create a company which meets the stones, team and a set of Key Prog­ terms of the construction and mod­ world’s highest standards. An addi­ ress Indicators. ernisation of the railway tracks. tional challenge was to meet the Having learned lessons from the Before the investment pro­ expectations of the Energy Regu­ past, it was decided that an impor­ grams started, it was necessary lation Office (known in Polish as tant step in MUZa II was to divide to conduct a reliable analysis of Urząd Regulacji Energetyki) to individual investment tasks into the manner in which the previous optimise costs in the investment those that the company is able to stage had been implemented. program so as to minimise the bur­ implement on its own and those Stanisław Kubacki, President of den of increased costs of railway that require the involvement of ex­ PKP Energetyka Services (a part transport companies (reflected in ternal experts. The first category of the PKP Energetyka group), the distribution tariff). includes all tasks related to energy remarked that MUZa I, which infrastructure for direct current happened before the company was Learning from mistakes that is used by Polish railways (in privatised, had been implemented The MUZa II programme was creat­ contrast to the rest of the economy with a great deal of effort from the ed by capitalising on the organisa­ which uses alternating current). As e rials ty k a mat whole company and, frequently, at tional and technical experience Kubacki admits, PKP Energetyka the expense of current standards of the company as well as learning is practically the only specialised of infrastructure maintenance. from the mistakes the company had operator in Poland in this field, so “Before the new program was due committed during the first phase the company decided to mainly use

e PKP En e rg Photo: to start, we decided to draw some of the modernisation programme. its own competences and resources.

Managing change in the digital age 23 The construction of engineering fa­ as well as the deadline and what with leading suppliers of equip­ cilities proved to be another matter equipment will be needed. As a re­ ment and materials. altogether as it is outsourced to sult, they are able to give PKP Ener­ Another problem that surfaced specialised external companies. getyka a realistic financial offer during MUZa I was the fragmen­ The efficient implementation for investment. Another great tation of subcontractors cooperat­ of those tasks required a combi­ advantage of this approach is that ing with PKP Energetyka who nation of competences from both it provides them with the possi­ often failed to maintain coherent PKP Energetyka and enterprises bility to ensure standardisation of production standards. The lesson operating in other areas, plus constructed facilities which was learned was that it was necessary an efficient management of this a problem in MUZa I. to tidy up the investment process entire process. An example of such To date, the individual regional and to define the terms and con­ collaboration is the construction plants of PKP Energetyka have ditions necessary for partner­ of railroad substations where PKP used their own individual stan­ ship collaborations. Since then, Energetyka commissions the con­ dards of equipment and technolo­ the company has defined the struction of a building to operators gies necessary to implement MUZa, minimum parameters required who specialise in this field and then guided by their assessment of the of business partners and nego­ completes the power installation needs and solutions available on tiated framework agreements itself at a later stage. the market. Before this, the pro­ with a number of companies which Another lesson learned from cess was not coordinated between had competences to carry out the implementation of MUZa I was the individual branches; it was ex­ the PKP Energetyka investments. the importance of clearly separat­ ecuted as various needs appeared The signing of those contracts was ing the investment process into the and there were even significant the final result of holding dozens ‘design’ and ‘build’ stages. The big­ differences in the equipment pur­ of meetings with the representa­ gest threat to the budget and time­ chased between regions. This sit­ tives of individual companies to lines of tasks usually appears at uation was reflected not only in address issues of mutual expecta­ the beginning of each project and the high purchase costs incurred tions and fears. this is why the company minimises but also in later difficult situa­ This method was used to pre­ the implementation of tasks in the tions that arise regarding device pare a list of companies operating ‘design and build’ model popular in maintenance. on the Polish market (from me­ the railway industry. The winner of One of the elements of trans­ dium to large enterprises) which a tender for the implementation of formation carried out after 2015 would be invited to participate in such a task usually bears consider­ was the introduction of a unified tenders carried out by PKP Ener­ able risk because they do not know standard for devices used with getyka. In practice, it means to what they are going to build exactly specific quality parameters to create a model in which the frame­ at the time when the tender is con­ facilitate the investment process work agreement has already been cluded. So, the surprises that occur and later maintenance of these signed and only the execution of later on can significantly hinder devices. Thanks to the develop­ an individual installation or facil­ the timely execution of tasks. In ment and implementation of tech­ ity is the subject of a tender. Since addition, the inclusion of this risk nical standards, the company is the investment parameters have usually affects the contractors’ now able to place larger orders already been determined (the costs adversely and, in turn, the with manufacturers for essential ‘build’ procedure), the same tender­ project’s budget. equipment and materials. This im­ ing procedure can then work much In the model adopted by PKP mediately translates into measur­ faster than before – contractors Energetyka, the design of indi­ able benefits for PKP Energetyka need only to determine the price vidual investments remains the who benefits from lower prices as for which they are willing to take responsibility of the the respon­ a natural consequence of making on a particular investment. sibility of PKP Energetyka itself larger orders and also for the man­ An example of an investment company. Developing projects and ufacturers of individual devices implemented based on the above- obtaining all necessary administra­ who can prepare their production mentioned model is of 200 railway tive permits enables a significant plans well in advance. The pro­ substations that the company plans reduction of the risk borne by the cess of technical standardisation to build throughout Poland. A rail­ contractor who knows exactly culminated in the signing of over way substation is a basic element of what to build, its specifications a dozen framework agreements the power network supplying the

24 PKP Energetyka case study railroad where devices supplying direct current to the railway pow­ er network are located. This type of facility provides railroad power over a distance of about 6 – 12 miles. Depending on the size and location, some of these facilities require an expenditure of about 12 million PLN while some would cost up to three times as much. This is a result of various technical conditions, the location of individual land plots (e.g. a modern substation in the centre of Łódź or Cracow) and its proximity to existing energy infrastructure.

Operational excellence PKP Energetyka, on one hand, oper­ ates in a regulated environment subject to the supervision of the Energy Regulatory Office. On the other hand, it is the only enterprise that maintains the railway power network in Poland. Functioning in such a strategic industry requires full organisational and cost trans­ parency. This, along with autono­ Agnieszka Nosal my of individual business lines, was achieved by dividing the organisa­ It is impossible to manage tion into the following sections: • Distribution – as the owner a company without knowing the basic of the distribution assets parameters of its operation or without • Distribution network understanding its basic processes. management • Management of railroad power network maintenance the distribution network, the rail­ employee work time in the field • Development and construction way power network, and to imple­ which includes GPS positions. of the distribution network ment investments under the Na­ The next step was to introduce • Electricity trading tional Railway Programme (NRP). performance measurements (KPIs) • Fuel sales According to Agnieszka Nosal, to help employees quickly orien­ The central office is a separate the Director of PKP Energetyka’s tate themselves while performing organisation that provides support Distribution Branch, proper any task. At present, the measure­ services for individual business management of progress begins ments describe the most important units. This approach allows every by measuring results achieved. areas that are divided into smaller business unit to concentrate on It is impossible to manage a com­ sections of quality, safety, engage­ their own customer and, conse­ pany without knowing the basic ment and efficiency as a reflection quently, allows for a clear break­ parameters of its operation or of the four main values of PKP down of electricity distribution without understanding its basic Energetyka. After the introduction k owalczy costs. Its further benefit is the processes. This necessitated signi­ of KPIs, they became a part of de­ precise definition and outsourc­ ficant changes in the IT area and tailed planning for each manager­ ing of the separate and permanent software investments, including and business unit. An MBO system

Photo: mar ek k Photo: resources necessary to maintain Planer, a program used to manage that clearly defines individual or

Managing change in the digital age 25 group responsibilities for results performance and maintenance of and only those with the highest and supervises their execution the rail track and railway power priority that fit the budget are cho­ was introduced. It is impossible to distribution network. As a result, sen. “The four main objectives that manage a company without know­ there was a sudden improve­ we focus on in our investments are ing the basic parameters of its op­ ment in quality that manifested quality, safety, engagement, and eration or understanding its basic in a systematic fall of the distri­ then, results. We believe that it is processes. An indispensable ele­ bution network SAIDI (index de­ only when the first three objec­ ment of MBO is to utilise innova­ scribing average power outage in tives have been achieved that the tions and modern technologies in time) and a six-fold decrease in the fourth can be achieved as well,” ex­ areas such as conducting flight pa­ number of railway power network plained PKP Distribution director, trol network inspections with the breakdowns. All of this translated Agnieszka Nosal. use of laser and thermal imaging into a reduction of train delays by The company started to focus cameras, and a railway signal rec­ 30,000 minutes per year. on digitally mapping its entire ognition system, otherwise known network. Even before privatisa­ as the e-Tabor System, that is used Beyond MUZa tion occurred, the company’s data to manage rolling stock. Some of Although MUZa is currently the on infrastructure (such as tech­ these systems have become a basis most important modernisation nical documentation, maps, etc.) for the construction of an innova­ project run by PKP Energetyka, the was outdated and incomplete. tive Integrated Railroad Network list of such projects does not end For this reason, when a potential Maintenance System, a proprietary there. In distribution, the compa­ customer approached PKP Ener­ solution of PKP Energetyka which ny is required to present its budget getyka, the company had to first received the Eagle of Innovation for investments to get the approv­ send an employee to the custom­ Award in 2018. al of the Energy Regulatory Office er’s location to review the instal­ All these activities, implement­ on its investment plans every five lations and facilities there before ed in less than three years, had years. Open consultations are then any further step could be taken. a significant impact on customer held inside the company to dis­ The lack of documentation meant service quality, reliable operational cuss the most urgent projects that those potential customers sometimes had to wait up to sever­ al weeks before they could be con­ nected to electricity. The situation was unacceptable for a compa­ ny which was striving to be world- class. So PKP Energetyka became the first energy company in Poland to carry outa digital mapping of all its assets. This meant converting all relevant data into digital form so it could be stored and utilised more efficiently. All existing tech­ nical documentation had to be re­ viewed, the components of all its assets needed to be verified by field employees through the use of heli­ copter and drone flight patrols and complete photographic documen­ tation of the external and internal components of those properties had to be done. Digital mapping k owalczy became also the first step in imple­ menting the Network Asset Mana­ gement System – this was where Stanisław Kubacki

all information on modernisation mar ek k Photo:

26 PKP Energetyka case study planned for a given year was to to 2018 to grow the company and people in contrast to the 200 be found. digitize its data as well as raise its employees required for the same Today, the company has very customer service quality standard. purpose prior to privatisation. precise information on the location Further investment of 3.5 billion Equipped with the ability to and condition of all its installations PLN is planned to occur by 2025. now forecast orders in the long- and facilities. When all necessary term, this has led PKP Energetyka data is available in the company, A closer look at purchasing to build better relationships with the process of issuing terms for A separate but very important its suppliers as they are now able electrical connection is carried transformation element associat­ to match PKP Energetyka’s orders out almost immediately. And ed with investment is the purchas­ to their production capacities. In any changes made to the compa­ ing model. Before PKP Energetyka practice, this means that suppliers ny’s infrastructure is documented was privatised, its fragmented can now receive long-term orders clearly and quickly in its digital structure meant that various com­ from PKP Energetyka which can mapping. pany purchases for essential goods then be incorporated into their Another groundbreaking invest­ and services were carried out sep­ long-term production plans. # ment project was the implemen­ arately by individual branches. tation of smart electricity meters There were purchasing guidelines Stanisław Kubacki, President of also known as AMI (Advanced Me­ developed at the central level but PKP Energetyka (part of the PKP tering Infrastructure). As of the they were not fully implemented Energetyka Group), is primarily re­ time of this publication, the com­ by field offices. The multiplicity sponsible for investments. A quali­ pany is the first and only distribu­ of products and services ordered fied manager with over forty years tion network operator in Poland to hindered the proper coordination of work experience in energy com­ have 100% of its smart meters con­ of those orders and it meant that panies, he specialises in the imple­ nected to the central online system. the transparency of purchases mentation of modern technical As an example of how innovative throughout the company was quite systems, such as the automation this is, the company is now able to low. The challenge then was to con­ of MV, SCADA, AMI and ZMS net­ receive information immediately solidate the purchasing process works. He is a graduate from the about power outages even when it into one point or location. As a re­ Faculty of Electrical Engineering is for its individual clients. The in­ sult, the comprehensive overhaul of the University of Technology in formation passes directly from the of the purchasing process model Wrocław and has completed post- meter to the employee responsible in PKP Energetyka was completed graduate studies in Energy Distri­ for it in one of its 35 regions. This in just four months. bution and E-infrastructure. enables the company to respond So how does the entire purchas­ immediately, to focus on reducing ing process look like in practice to­ Agnieszka Nosal, Director of the interruptions in the electricity sup­ day? It is largely automated based Distribution Department in PKP ply, and has a direct impact on the on an ERP system provided by SAP. Energetyka, has many years of continuous improvement of SAIDI. Strategic buyers are now person­ experience in process manage­ The implementation of such com­ ally responsible for negotiating in­ ment and restructuring in the prehensive and advanced IT solu­ dividual contracts. Prices are then energy industry. She has success­ tions took place in tandem with entered into the SAP system where fully completed several dozen a comprehensive IT investment orders are placed. When the con­ implementation projects in the program. tracts have been negotiated, opera­ Polish and Eastern European Other investments concerned tional buyers then step in to handle markets. She was part of the team railway rolling stock which signif­ the next step of the process. They which led the implementation pro­ icantly reduced its failure rate and are in charge of responding to on­ gram for smart meters in Warsaw increased accessibility for works going company needs and order and has managed a portfolio of on the railway power network. goods and services from suppliers projects that focus on improving There was also a significant re­ through the SAP system according efficiency and information tech­ placement of its car fleet, including to the terms and conditions speci­ nology such as SCADA, MDM, GIS vehicles for Electrical Emergency fied in the framework contracts. In and network digitalisation. She Services. Taking all of the above total, the entire purchase process graduated from the University of into account, PKP Energetyka in­ in PKP Energetyka is currently Economics in Poznań and ESCP vested over 1 billion PLN from 2016 handled by approximately forty Europe in Berlin.

Managing change in the digital age 27 The drive for innovation

The storage of energy, modern railway infrastructure diagnostics, helicopters and drones to examine the power grid and a system that can predict the occurrence of failures – all these elements represent a culture of innovative thinking and actions which were introduced to PKP Energetyka from the very beginning of the transformation process. PKP Energetyka took a chance on innovation by systemically looking for new solutions from inside and outside the company. Three years later, the impact of this approach is now visible and the drive for innovation is only starting to gain momentum.

Author: Paweł Górecki, editor HBPR Cooperation: Piotr Obrycki

“We had an ambition to become in the company structure from the on the competence and experience one of the world’s top-league solu­ very beginning and this move was of people at every level of the orga­ tion providers in infrastructure. strongly support by the board. nisation. This is why all employees We couldn’t have achieved that A set of guidelines called the were engaged in the process of goal without making consider­ Innovation Strategy was estab­ creating innovative solutions. The able investments in innovation.” lished to facilitate decision- third step taken was to collaborate says Leszek Hołda, a member of -making and provide directions with both national research cen­ the management board of PKP for the implementation of innova­ tres and foreign companies to im­ Energetyka. tive tools and ideas in the compa­ plement best practices available From the very beginning, this ny. These guidelines assumed a lot on the market. strategic ambition was a guiding of flexibility and diversification in force for the company’s managers. the process of change that depend­ Ideas and inspiration The process of building an inno­ ed on the needs of its employees A reward program for ideas sub­ vative culture began with the for­ and custo­mers. One of the assump­ mitted by employees became an mation of the Department of Re­ tions of the strategy was that the internal generator of innovation. search and Development which company would evolve through It was called The Program to was responsible for initiating and gradual improvements. Real po­ Stimulate Innovation. All the em­ coordinating ideas for the entire tential for the company to develop ployees were, and still are, encour­ organisation. R&D was embedded and grow only comes from drawing aged to take part in it regardless

28 PKP Energetyka case study of their department or position in to it becoming a rule that is now the needs of customers and other the company’s hierarchy. In 2018 applied throughout the company. stakeholders. The main customer alone, more than 300 ideas were In turn, this has raised the level of PKP Energetyka is PKP PLK. submitted, out of which 25% were of safety in the workplace for The two companies work closely short-listed for the next stage of several thousand electrical fitters. together on many levels of the assessment. In total, nine ideas “The Program to Stimulate Inno­ organisation, resulting in having were selected for implementation vation is constantly evolving. We numerous good ideas implement­ while several others are pending keep adding new items and we ed across different departments. further recommendation. One ex­ want employees to submit design “We have introduced a certain stan­ ample of an idea that has been im­ initiatives along with improve­ dard of work that affects how we plemented is a system of seatbelts ments in the processes. We are hold meetings and brainstorming that were installed in maintenance open to suggestions that can sessions that allow us to to develop trains (i.e. technical railway vehi­ improve any part of the organi­ solutions for their needs together,” cles moving on the railways that sation,” says Piotr Obrycki. says Leszek Hołda. e rials ty k a mat are used to service overhead In addition to sourcing for inno­ The Innovation Committee, con­ cables). Although the idea to utilise vative solutions from within the sisting of eight scientists, almost seatbelts may initially seem trivi­ company, we also look for ideas all of them professors, also helps al, and even obvious, it was an from the outside. Thus, part of the PKP Energetyka understand their

e PKP En e rg Photo: employee’s suggestion that led strategy to innovate is to listen to clients better. “With this committee,

Managing change in the digital age 29 we are able to solve two problems Office for Rail Transport receives that was carried out in 2016, also at the same time. It allows us to dozens of reports annually about known as The digital mapping of its acquire relevant know-how for such situations from all carriers. grid, i.e. documenting the techni­ the company and, at the same time, In 2017 alone, 80 incidents were cal state of the entire railway pow­ to give the scientists opportuni­ reported, 30% more than in 2016. er infrastructure. The use of heli­ ties to test some innovative solu­ The Driver’s Warning System copters and drones for this purpose tions on the railway and energy (DWS) that is being currently test­ significantly shortened the entire networks which we have at our ed has cameras and laser sensors process; it would have taken a few disposal.” says Piotr Oborycki. that can scan and recognise all years for the workers to manually The search for innovative ideas signals and signs along the rail­ complete the work on foot. PKP from outside the company has way tracks. It warns the driver Energetyka was the first company led to a rise in excursions abroad. with light and sound signals, in Poland to establish a complete This was a result of wholehearted thereby reducing the risk that he sigital mapping grid inventory support from CVC who strongly might miss an important warning. of all its infrastructure elements believes that the company should: Advanced testing of this solution including a description of their (a) have access to know-how and is currently in progress. So far, the technical condition and the entire innovation available on the inter­ system has been able to recognise process happened within a matter national arena, and (b) be provided about 85% of signs. Once it can do of a few weeks. with opportunities to learn from so with 90% of the signs, it will be “The purpose of this project was global leaders in the industry. Such implemented in the locomotives to develop an algorithm, based on visits are intended to inspire con­ of PKP Energetyka and all other the collection of daily data that in­ crete actions and innovative solu­ carriers who are interested in this cluded extended meteorological tions which have since been imple­ solution. and geographical parameters to mented and have already yielded indicate points of infrastructure tangible results. PKP Energetyka Infrastructure reliability exposed to potential failure.” ex­ has sent its representatives to PKP Energetyka provides electri­ plains Leszek Hołda. One of the so­ places which are famous for their cal power to the Polish Railways. lutions of ‘predictive maintenance’, advancements in innovation, such This is done by ensuring the full jointly created with Polish scien­ as Israel and Silicon Valley, for in­ readiness and accessibility of the tists from Warsaw University of spiration. As a result, the company electrical infrastructure, includ­ Technology, is a system to protect has managed to establish relation­ ing catenaries (overhead cables). the railway power grid from icing ships with other entities from the The Integrated System of Railway which has been one of the most Netherlands, Finland and Japan. Power Grid Efficiency Management common reasons for train delays The Innovation Strategy has Program has resulted in a drop to in winter. The sensors installed been in place for three years now one-sixth of the number of power on various elements of the infra­ and it is always actively searching failures, also known as ‘preventive structure collect and transmit data for new solutions in six basic areas: maintenance’, an active response on air temperature and humidity the safety of employees and third to emerging issues on the railway to the management centre. When parties, the stability of infrastruc­ power grid. It reduces the risk of there is a risk of icing, the system ture as well as the construction unexpected incidences where automatically raises the tempera­ and maintenance of it, digitization, energy becomes inaccessible and ture of the wires which, in turn, e-mobility, environmental care and minimises the time required to car­ prevents the formation of a layer responsibility as well as boosting ry out the necessary service works. of ice on them. energy efficiency levels. The company is currently preparing to implement a predic­ Innovative ideas Employee safety tive maintenance system that an­ for the construction The idea to develop the Train ticipates the occurrence of defects and maintenance Driver’s Automatic Warning Sys­ or material consumption in ad­ of infrastructure tem (AWS) came about in response vance and allows it to make plans The maintenance of the railway to frequent incidences on the rail­ to replace potentially defective infrastructure is increasingly be­ way tracks where the driver did components before a failure actu­ coming a challenge that requires not notice the red signal to stop ally occurs. This is possible because an innovative approach both in and continued driving. In fact, the of an earlier technological change terms of its technological and

30 PKP Energetyka case study organisational aspects. The railway is subject to changing demands Innovative eco-system and expectations in its quality and in PKP Energetyka reliability. PKP Energetyka, with the support and participation of PKP PLK, its main customer for the maintenance of the traction grid, is Company strategy constantly developing systems that meet, and even anticipate, these expectations. An example of an innovative solution that connects both par­ Innovation strategy ties is the PKPE 24, an online sys­ tem for reporting defects. “The solution was created in close collaboration with the manage­ ment of the railway infrastruc­ ture. It involves a two-way com­ The Department munication between the notifier of Research and of failures (PKP PLK) and the ser­ Development vice provider (PKP Energetyka),” says Tomasz Besztak, Director of the Department of Contracts for Maintenance Agreements. Infor­ mation regarding the problem that The Program Innovation and Committee for is conveyed in the form of photo­ to Stimulate inspiration Innovation graphic documentation, followed Innovation from abroad by steps that are taken to resolve it, are automatically passed be­ tween the two parties. This signifi­ This enhancement, called PKPE for customer service and of an cantly reduces the time needed to 24+, will further speed up and im­ efficient scope of communica­ transfer information and resolve prove the transfer of knowledge tion. Digitization also assists the the issue. PKPE 24 is integrated and its accuracy. With this system, creation of efficient solutions used with Planer (to schedule work of failures will be dealt with more to develop and train employees. electrical fitters and technical re­ effectively, and the entire process E-learning solutions found in sources). PKPE 24 has been operat­ will be even shorter. And at the end, training programs include Virtual ing at full capacity throughout Po­ PKPE 24+ will be equipped with Reality (VR) that enable employees land (in all 23 Line Railway Works) a system to collect and evaluate to receive intensive training via since June 2017, or for 1½ years to customer satisfaction levels. systems and sensors for employees date. Before the system was imple­ As soon as each technical failure to learn at their own pace. For more mented, comprehensive tests were is resolved, the client’s representa­ on this topic, refer to ‘Time for conducted at the Line Railway tive will be able to assess the level digitization’. Works around Tarnowskie Góry. of service performance by select­ This solution is currently utilised ing an emoticon representing Electromobility by 384 people: 201 employees of a point on a scale from 1 to 5. This The ‘smart’ version of transport PKP Energetyka and 183 employ­ function will allow them to collect is one of the key axes of devel­ ees of PKP PLK. and analyse feedback and to work opment in modern cities. For PKPE 24 will soon include on raising the level of customer example, a passenger should be a smartphone application which satisfaction. able to arrive at a railway station will automatically send informa­ by bike or electric car, then tion about technical failures occur­ Digitization travel to the city centre on an ring in real time directly to the con­ Digitizing PKP Energetyka facil­ eco-friendly railway train, and nected systems of both parties. itates the creation of solutions then continue on to local public

Managing change in the digital age 31 transport. All of these elements created to allow the batteries of the to meet short-term spikes in must be integrated in one simple buses to be charged by means of energy demand for train journeys. system that centres on a modern, a pantograph while going on their This led to the creation of a large reliable and eco-friendly railway. daily routes. lithium-ion battery which returns There is also potential in the Modern electric buses are previously stored energy to the idea to build infrastructure that currently equipped with such railway power grid should there be enable the charging of electrical pantographs. This project is such a demand when a train passes vehicles at railway stations since planned for implementation in an by. The application of this technol­ PKP Energetyka has a distribution EU initiative called Horizon 2020. ogy has led to supplemental power network that runs throughout the demand at substations to drop to country. A report from the Jagiello­ Efficient energy use one-third of previous figures. The nian Institute on the development The main focus of actions taken by project started in January 2018 of electro-mobility highlighted PKP Energetyka that are related and by the end of 2019, the first the possibility to leverage on this to environmental protection is to energy storage pilot program will advantage by providing electric optimise and reduce energy con­ be launched as the target is to build vehicle chargers. To this end, PKP sumption. To manage energy distri­ this type of energy storage devices Energetyka has already come up bution efficiently, new modelling all across the country. The closing with specific and innovative pro­ capabilities and smart distribu­ date for the pilot implementation posals. For example, there is an tion energy grids are utilised. For is scheduled for the fourth quarter ongoing project to build infrastruc­ instance, the use of smart grid of 2020. ture which will allow electric buses technology applications simplify PKP Energetyka envisions that to charge their batteries while both the configuration of a station and by 2025, the company will gain stationary and in motion. In this thus reduce operating costs. recognition for its quality and case, traction lines covering 1½ One idea was to design a form efficiency. It will have reached mile bus route sections need to be of energy storage that it is able a leading position in the field of construction and maintenance of railway power grids and electri­ cal energy for railways in Poland. None of those expected achieve­ ments would be possible without the culture of innovation which the company has adopted. #

Piotr Obrycki is Director of the Research and Development Office at PKP Energetyka. For almost ten years he has been involved in stimulating, creating and incubat­ ing ideas, initiatives and innova­ tive projects both nationally and globally. He is an expert in collab­ orating across different sectors, transferring solutions from new technologies to the energy and railway sectors. He is experienced in applying for public financing for projects in Poland and other coun­ tries. He graduated as a Ph.D. stu­ dent from the Institute of Tele­ k owalczy communications, the Faculty of Electronics and Information Tech­ nology of Warsaw Technological Piotr Obrycki

University. mar ek k Photo:

32 PKP Energetyka case study Régis Lemmens: Co-creating as a mode of innovation

The best approach to innovation is the cooperation service. It advises clients on how to of a supplier of products or services with their future improve their office space. recipient or user. PKP Energetyka has been using As my experience shows, good this model with their main customer, PKP PLK. ideas do not usually come from one person, but they are the product of interaction between many people. The more contact with clients, the The principle is simple, if a com- was also extremely important dur- more conversation on a given topic, pany cannot find a client who ing subsequent stages, because this in turn creates more opportu- wants to get involved in its inno- it enabled the bank to internally nities to open a new perspective vative project, it is unlikely to find promote ideas for new products. and to hear valuable comments. a customer who wants to buy its To this day I have been constantly It is therefore key to interact with new product or service. It is a les- repeating this story to companies as many people as possible, and son that many entrepreneurs I have which I advise. I use it as an exam- to give customers an opportunity interviewed felt that they expe- ple of why they should not brain- to comment on the company’s rienced first-hand. It leads to an storm in isolation, but rather engage ideas, even critically. obvious conclusion: by including The problem is that conversa- a prospective client in the process tions with customer representa- of creating a new product at an tives on product innovation have early stage, the company is able The better the contact mixed results, some produce posi- to manage risk effectively. between representa- tive outcomes, while others do not. But the issue is much more com- My experience shows that the plex. A few years ago I was working tives of the producer better the contact between repre- on an innovative project with one and the customer, the sentatives of the producer and of the Norwegian banks. When more fruitful the con- the customer, the more fruitful the I visited their headquarters I was conversation, and the more ideas presented with a list of thirty new versation, and the for innovative solutions that can ideas for products. Their question more ideas for innova- be jointly worked out. I always put was, “How do we select which ones tive solutions that can emphasis on this aspect, because we should pursue?” My answer was: especially in B2B interactions, “I don’t know. Ask your customers be jointly worked out. traders try to stick to the facts at what they need.” So we asked the all costs. Meanwhile, to discover customer advisors to find out about something innovative, you have to the personal goals of their clients their customers at an early stage go beyond the bare facts to build concerning finances. We collected in the process of creating a new a more personal relationship. We over sixty surveys, and after reading product or service. are people, so we must understand them we identified five good ideas But when working on the creation that emotions are the main motiva- for new products, which the bank of a new product you should be tor of our actions. The better we started to implement. Of course, credible. You have to convince cus- understand what emotions our to do the bank justice, it has to tomers that you are an expert in customers experience, the easier be said that these five new ideas your field. Let’s take as an example it will be for us to create innovative were on the initial list of thirty. Only a company engaged in the inte- solutions. that at an earlier stage no-one had gration of information systems a key that would allow the five to be that has recently opened a new is a professor of unlocked. There was no customer office in Brussels. Representatives Régis Lemmens marketing and sales at Antwerp information that would justify why of many companies from all over Management School, a lecturer work- these five ideas for products had Europe have made pilgrimages ing with students at Belgian, Dutch the greatest chance of being imple- there to see how to organise office and British universities, and a busi- mented and becoming a market space in the digital era. Now the ness advisor and co-author of the success. This customer information company has prepared a special book From Selling to Co-creating.

Managing change in the digital age 33 Ongoing tasks: 1561646, UST: Railway power grid – emergency service / Exchange: Indicators and boards within construction of UST086, 37,78%]

Next station: Digitization

From back office process automation to AI support for the railroad grid network and distribution network monitoring, digitization has converted data dispersed throughout a company into an operationally and commercially meaningful information stream.

Author: Paweł Górecki, editor HBRP Cooperation: Ryszard Bryła

34 PKP Energetyka case study For the last three years, the company and a vision to auto­ engagement. At the same time, the PKP Energetyka has undergone mate various processes, devices digitization of infrastructure will a digital evolution based on a plan and work. At the moment, the com­ allow it to reconfigure itself in to transform it from Company 3.0 pany is about to complete its entire many areas. to Company 4.0 (with reference digitization process that transfers The coordination of all digital to Industry 4.0). The vision of PKP business strategy onto intelligent activities is handled by the IT De­ Energetyka 4.0 is based on a com­ IT systems that bring real benefits partment at PKP Energetyka that bination of the Internet of things like a rise in employee safety, ser­ is responsible for planning, devel­ (IoT), data analysis (BIG DATA), RPA vice quality standard and opera­ opment and maintenance of digi­ (Robotics and Process Automation) tional efficiency. tal solutions. It consists of the IT and Artificial Intelligence (AI). PKP Energetyka also has Architecture Office, Project Mana­ To take a qualitative leap to a vision to digitalise its work envi­ gement, Informatics and the newly become a level 4.0 company, both ronment by automating the next created Centre of Digital Com­ a database and a vision are needed. steps in its processes. This will petences (Centre of Excellence), This means to have a database in eliminate repetitive activities responsible for improvements in the form of a full digitization of that do not require intellectual processes using state-of-the-art

Change management in digital times 35 digital technologies such as Robot shorten the time taken to make awaiting the digitization process Process Automation (RPA). The de­ decisions, simplify operations, opti­ is technical documentation. About partment works closely with all mise resources, and introduce new­ 60% of documents throughout the business units and the department er and more efficient solutions for company have already been con­ of Research and Development. business,” says Richard Block, Di­ verted to digital form and by 2020 One of the biggest challeng­ rector of the Architecture, Design all paper documents will have been es faced by the department is, and Informatics Department. eliminated. apart from maintaining the high­ The digitisation of processes is est availability of solutions which Automation also progressing rapidly. In several have already been launched, to and robotization departments, support services for closely coordinate over 40 IT sys­ The first stage of digitization various processes have become tem implementation projects. This involved replacing paper docu­ fully computerised while work in coordination includes the synchro­ ments with their digital equiva­ the remaining departments are nisation of timeframes and cost op­ lents and mapping entire business well under way. The company deci­ timisation, as well as all of the im­ processes into IT systems. These ded that basic business processes plemented functionalities that lead changes have been taking place in would be digitised and automated towards the digitalization and auto- PKP Energetyka since 2016. The in various field systems. All of this mation of end-to-end processes. documents from financial account­ refers to SAP, the SAP ISU billing To this end, a suitable methodolo­ ing and HR were the first to under­ system, and iValua, a resource man­ gy has been prepared along with go this transformation and have, agement system for IBM Maximo. a platform to connect with other by now, become available in digital The PKP Energetyka 4.0 vision business units. “On one hand, all the form only. There are no paper ver­ assumes that we will only use elec­ departments focus on activities sions of invoices, requests, orders, tronic forms of documents and in­ that improve individual ongoing property documents or accounting formation exchange for all internal tasks. On the other hand, they focus notes. All paper folders with HR and external customers. on optimising all processes from documentation have been scanned In areas where the process of end to end and their standardi­ and converted to digital form. The digitization has been completed, sation across the organisation to next largest group of documents automation is under way. Work that was previously done manu­ ally in IT systems such as invoice recording, factoring settlements, invoice settlements, the manage­ IT projects within PKP Energetyka ment of sick leave and leave for medical check-ups are currently performed by robots designed on the the Blue Prism platform. Soft­ ware robots that can ‘read’ docu­ 42 ments, segregate and analyse the implementing IT data they contain and then take appropriate action. Thanks to the automation of such work with 5 documents, employees are now free to perform tasks that require organisational greater intellectual engagement such as planning or optimisation. In 8 the meantime, robots carry out the implementing safety IT innovative remaining operations and they are 4 able do it ten times faster on aver­ age and without making mistakes. Digital automation is also spreading within the second important area that comprise the servicing and maintenance

36 PKP Energetyka case study of the distribution network and railway power grid. Before digiti­ IT INFRASTRUCTURE zation started, PKP Energetyka had, at its disposal, a group of a few WITHIN PKP ENERGETYKA: thousand employees throughout Poland whose job was to super­ vise the nationwide infrastructure. 100 500 2 80 The supervision and management physical virtual matrices LAN of personnel responsible for the servers machines with 1.5 PB networks maintenance, repair and invest­ ment processes was done by using more than data collected on paper, even in 800 180 Excel sheets. There was no system active printers 40,000 that enabled the company to collect network included in GSM devices central print modems comprehensive data quickly, or to system standardize it and analyse it effi­ ciently. Employees had to fill in pa­ per forms, and the data contained From Company 3.0 to 4.0 in them was never aggregated. A decision was made to change Industrial revolution Industrial revolution all that by introducing Planer, DIGITIZATION NETWORK / a system to manage human THE INTERNET resources, and to carry out a digital mapping of the whole distribution network in GIS class system using ESRI technology. With these implementations, the company established a foun­ dation for real-time metering of • Computers and machines linked ver- • micro-controllers for machine its service processes. Data start­ tically and horizontally into a network control ed to be relayed directly to the with the use of internet standards. • growth of automation servers and it was soon possible to • traceable objects that can communi- achieve higher standards for spe­ • IT systems for production cate automatically with one another planning and supervising cific actions like troubleshooting, • self-improving objects resource planning and working time. This enabled the company to develop specific guidelines to car­ or tool that gives you the ability planned as well as measures taken ry out operations safely, correct­ to automate certain activities, to ensure the safety of 70 network ly and without delays. Work done collect data and convert it into servicing trains that carry out well and completed within an op­ reliable information. The essence jobs on the railway power grid. timal timeframe led to a fall in the of Planer and the transformation To supervise them and plan their number of complaints and greater that accompanied its introduction use more effectively, an applica­ satisfaction of PKP PLK customers brought about a change in the tion called e-Tabor (e-rolling stock) at all levels of co-operation with operating philosophy­ of the entire was created. In this application, PKP Energetyka. organisation as well as a different every train that is submitted for An additional advantage was approach to planning work for servicing has to undergo appropri­ the digitisation and automation network maintenance,”­ says ate testing and essential techni­

e rials ty k a mat of the process to record working Marek Mazierski, Deputy Direc­ cal inspections. The system auto­ time and settlements related to tor of Service Department at PKP mates the collection of data coming it. All necessary data was includ­ Energetyka. from these inspections, automates ed in the Planer system and it was Automation of the railway the production of reports and pro­ enough to integrate it with SAP HR. power grid service sector affected vides reminders about upcoming

e PKP En e rg Photos: “Planer is not just an IT system how the work of the teams was due dates.

Managing change in the digital age 37 In addition, the system also the state of the infrastructure, will be one of the first implemented monitors the licences of train similar to the sensors embedded in the country. drivers. Every person driving in energy devices that are part of The data coming from devices a locomotive has to have a driving the Internet of Things. The com­ found all over the country not only licence to drive a train and knowl­ pany has tens of thousands of such enables the company to quickly de­ edge of the routes they are given devices, including 40,000 energy termine where the failure occurred, to drive on. They cannot set off on meters. All of them constantly but may, in the future, be used to a route which they have not been collect data that is a source of predict faults. Such a system would given permission for. This is also valuable knowledge­ about the allow servicing to take place in ad­ a requirement for traffic safety functioning of the company’s infra­ vance and, thus, reduce the costs on the railway networks. The structure. This data forms the basis of infrastructure maintenance. e-Tabor system stores the data for the central SCADA system with A project to build such a system is on routes that are used by train ADMS which is currently being im­ being implemented by PKP Ener­ drivers and prevents them from plemented. It is a system of control getyka and is supported by EU driving a train in the absence of and supervision over the railway funding. The system will utilise valid permission for the specified power grid of PKP Energetyka that artificial intelligence technology to railway line. The system automati­ automates the network. predict possible failures and to de­ cally monitors the dates of licences One of the functionalities of termine the deterioration of indi­ and alerts the driver (and also HR) the new system, known as FDIR, is vidual infrastructure components. about upcoming expiry dates. The the ability to automatically detect automation of these processes was the location of technical failure and Clouds over the enabled as a result of the complex independently (without interfering railway power grid integration of the Planer, e-Tabor with the dispatcher) switch over PKP Energetyka is currently im­ and SAP HR systems. to restore power to as many de­ plementing 42 projects in its IT vices as possible. This significant­ systems. To be able to smoothly The Internet of Things ly reduces the time period of power implement such a number of Sensors which are connected failure for our customers in the deployments, a flexible, scalable to the network provide impor­ event of a breakdown. The imple­ IT infrastructure is required. So, tant sources of information on mentation of this functionality a hybrid cloud system was chosen:

SELECTED IT PROJECTS AT PKP ENERGETYKA October 2017 December 2016 July 2017 Service quality. Efficiency Team Efficiency Portal24. Safety. management system Transformation IT Portal ZPW. for 4,000 FTE SDDC & Hybrid Cloud October 2016 Paperless company. Digitization of more September 2017 than 600,000 Efficiency. pages of HR Sales force documentation in March 2017 SAP Fiori Portal. Data quality. GIS ESRI ‘passporting’ of 150,000 objects the Software Defined Data Centre digital technologies, this data can and Software Defined Network. now be converted into information The company started down this that is optimised to achieve higher path by using a classic, heteroge­ organisational efficiency and neous system in which various so­ better business results. # lutions were combined together. IT systems are used to work on Ryszard Bryła is the Director physical machines that are diffi­ of the Architecture, Design and cult to scale and have poor resis­ Informa­tics Department at PKP tance to failure. Within a year of Energetyka. He is an IT manager the project duration a solution with over 25 years of experience was formed based on the compa­ in the utilities industry. He initi­ ny’s own server room and the re­ ated and implemented a number sources available in Orange cloud. of breakthrough digital projects in The entire Data Centre environ­ the Polish energy industry, includ­ ment went virtual using the VM­ ing work on implementation proj­ ware system and all business sys­ ects of AMI, SCADA, Asset Mana­ tems operating at that time were Ryszard Bryła gement systems, billing systems migrated. Currently available re­ and tele-transmission systems. sources necessary for the imple­ in a smart manner, detailed He is a graduate and post-graduate mentation of projects have mostly knowledge is provided on almost from the Faculty of Electrical Engi­ been automated which means that all aspects of the company’s oper­ neering at the Częstochowa Uni­ only a smaller team is now needed ations. “Before the digital evolu­ versity of Technology.­ He combines to maintain the IT infrastructure. tion of PKP Energetyka, we had real industry knowledge about en­ The digitization of PKP Ener­ a lot of data with very limited use­ ergy with information technology, k owalczy getyka has led to a rise in opera­ ful information,” says Christopher as a result of which he was award­ tional efficiency in every area of Biedermann, a board member of ed the CIO Diamond Award for soft­ the company’s performance. As PKP Energetyka and an expert in ware digitization in the CIO 2018

Photo: mar ek k Photo: the information is now collected restructuring. Thanks to modern competition.

November 2017 February 2018 October 2018 Data quality. SAP Hana Efficiency. Flight patrols Safety. Railway over distribution network. signalling recognition MBO Self Service system.

December 2017 Quality and safety. Train December 2018 management system. Quality June 2018 Efficiency. Central distribution and safety. Train driver billing. Efficiency. Asset Service quality. Fleet simulator. Engagement. Management System. Employee self-service. management system. Efficiency. Central sale billing. Higher standards of organization

In the last two years, PKP Energetyka has raised its management process efficiency level to one that is above the market average. This achievement resulted from the active involvement of its own employees and external experts in transforming its processes and practices to meet the best global standards.

Author: Paweł Kubisiaj, deputy editor ‘Harvard Business Review Poland’ In 2015, when CVC acquired PKP effectiveness of management pro­ model was introduced to analyze Energetyka, analysts online pre­ cesses to a level way above market every customer based on its indi­ dicted a quick exit and severe average, as illustrated in the docu­ vidual energy use and the risk pro­ cost-cutting measures, a practice ment Efficiency improvement in file. This enables the company to that was once common for private managing practices at PKP Ener­ make an objective and guaranteed equity funds. Yet, the investor getyka 2016-2017. offer that is tailored to the recipi­ opted to apply a modern approach In accordance with best prac­ ent. At the same time, the compa­ on the portfolio company – this tices, a central market know­ ny decided to move away from re­ meant building its value through ledge base was been created for warding employees for the volume the improvement of its processes the commercial area. This knowl­ of contracts signed while intro­ and operations. They wanted to edge base contains information ducing a bonus for concluding con­ make PKP Energetyka become the about every tender that may be of tracts in line with the long-term role model for the successful trans­ interest to the company. This sys­ strategy of the department. formation of operations and its val­ tem allows managers to consid­ Far-reaching changes have ue had to be generated as a result er if they should participate in occurred in the field of purchasing of combining the world’s best stan­ those tenders based on game the­ and logistics. Equipment and mate­ dard management systems and ory. A modern sales management rials were standardized to reduce diligence in operational efficiency. system was introduced (Salesforce) the number of device types by over As a result of the involvement to enable the processing and auto­ 80%, thus freeing the purchasing of employees and external ex­ mation of many sales tasks. Spe­ scale effect. Framework agree­ perts, along with a rigorous com­ cific changes were made in the ments were introduced based on parison of its processes and prac­ sales of energy. Using the existing best practices, including a pricing tices to the best global standards, infrastructure, the database of re­ formula that enabled unit prices improvement was recorded in vir­ cipients was expanded to include to be reduced by up to 20%. The tually all areas of activity. Within new locations in the vicinity of rail­ delivery process itself was simpli­ two years, the company raised the way lines. An automated pricing fied, e.g. by introducing non-cash

Efficiency improvement in managing practices at PKP Energetyka 2016-2018 management area

below market best MANAGEMENT AREA basic advanced average average practice

Operational efficiency 1.8 4.4

Commercial efficiency 2.6 4.3

Finances, controlling and accounting 1.5 4.0

Purchases and logistics 1.8 4.2

Energy sales efficiency 1.2 3.9

IT systems 1.6 3.7

Project management 3.7 4.8

Human resource management 2.8 4.1

Internal communication 2.0 4.8

Distribution investment projects 3.7 4.3

source: McKinsey

Managing change in the digital age 41 transactions with selected whole­ grid. It was particularly difficult functions connected with, for ex­ salers or by facilitating direct de­ to implement those changes as ample, career path planning, were livery to the place of investment, the workers from the repair crews created or modified in the head­ thus, avoiding the need for a ware­ who were previously used to paper quarters. Additionally, in line house. documents were now given smart­ with the industry’s best practices, In the IT department, a large- phones equipped with GPS which virtually every operational area scale investment was made they had to use in their daily work. was identified with specific and through the extension of SAP and However, the smartphones measurable key performance indi­ the introduction of the mobile eventually gained favor with cators (KPIs) for functions that SAP Fiori. To communicate with more and more of the crew who had a decisive impact on the effi­ employees, kiosks that enabled decided to put away their pen and ciency of processes. For example, field employees to log on with paper. Since the implementation in the Finance and Controlling De­ a smart card and access intranet of Planer, every task has been co- partment, over twenty indicators information and personnel sys­ ordinated within a better planned were introduced on the manager’s tems without having a computer system which avoids wastage in desktop that enabled the monitor­ or account was introduced. The various ways such as the lack of ing of progress in implementing operational philosophy of the IT appropriate tools, unnecessary the company’s long-term financial department also evolved to focus trips made, repair activities can­ plans. For the needs of the Inter­ on providing services that were celled at the last minute and so on. nal Communication Department, competitive and transferred to Thanks to this, time dedicated to measures were developed to an SaaS system. the mobilization and demobiliza­ examine the effectiveness of com­ Many innovative solutions were tion of personnel was halved (time munication by taking into account implemented in the distribution from the commencement of change different customer groups in the of energy. PKP Energetyka is the to the team’s departure). The flexi­ company. The table ‘Summary of first company in Poland to have in­ bility of employees to become avail­ progress made in The Diamond troduced automatic analysis of the able whenever they are needed has Project’ illustrates the most indicator of power interruptions gone up. This means that train traf­ important areas that have under­ (SAIDI) at a massive scale. The sys­ fic can now be stopped for a few gone changes. tem is divided into regions and hours as and when there is a need The introduction of Planer soft­ this allows for the specification to repair the power grid. ware played a special role in the and analysis of the problematic re­ Inter-functional changes have process of change as it fixed defec­ gions or lines in real time. This was also occurred in the Finance and tive areas and improved those that accomplished by introducing an HR departments. In the Finance worked seemingly well but which AMI system (Advanced Metering Department, the controlling could work much better. Digitali­ Infrastructure) that automatically and accounting activities for all zation has provided the company registers online meter counts for actions related to long-term plan­ with better supervision of train in­ all the company’s clients. ning and business support were spections and has led to the adop­ Some of the changes have centralized in the company’s head­ tion of Kaizen, a Japanese busi­ affected more than one area of quarters while transaction depart­ ness concept for the continuous the company’s operations. One ments were moved to the Shared improvement of processes. Since example is the company’s digita­ Services Centre in Łódź – more its introduction, inspection time lization efforts to introduce Plan­ than 120 jobs were created here. has decreased from sixty days to er, a system for remote team man­ Previously, these features worked thirty and the availability of trains agement and long-term planning less effectively as many organi­ have increased from 80% to 100%. of tasks. The company opted for zational departments within the This better allocation of resources a simple-to-use and easy-to-im­ company were building their own has brought about a significant plement program which auto­ competences, while multiplying rise in productivity and the pace mates repetitive processes, such costs and duplicating assump­ of work. At the same time, there e rials ty k a mat as the daily schedule of 4,000 em­ tions at the same time. The HR has been a significant improve­ ployees who work on the network, department was also rearranged ment in quality. and management of rolling stock, in a similar manner – part of HR In three years of the transfor­ as well as specialized equipment payroll was moved to the Shared mation process, the number of

used to service the railway power Services Centre whereas HR railway power grid failures has e PKP En e rg Photos:

42 PKP Energetyka case study Summary of the ‘Diamond’ Progress Programme

Introduction of online Field Further improvement of the and Force management systems Improvement of quality quality of railway works for major clients communication with clients Operations across all sections for more of work (led to (17 initiatives including Situa- efficiency than 3,000 people (mobiliza- reduction of failures ). tion 24 – a tracking system tion time halved as a result). by 50% year-on-year for failures).

Formation of a central Introduction of Further work of process Commercial database on market know- a modern ledge (information on every sales management system optimization under the efficiency tender which may be of (Salesforce). ‘step-by-step’ program. interest to PKPE).

Finance, Con- Introduction of a data Introduction of a long-term Creation of a Shared warehouse containing trolling and financial plan. Services Centre in Łódź. Accounting a knowledge base. Equipment and materials Introduction of Lean were standardized (variation Framework agreements methodology for handling Purchasing by 80%), thereby were implemented based reduced that warehouses, e.g. the and Logistics reducing costs due to eco- on a pricing formula reduced prices by up to 20%. KanBan mechanism. nomies of scale.

An automated valuation Using the existing infrastruc- Energy sale model was introduced ture, the customer base was Introduction of special efficiency to calculate and analyze con- expanded to include new cheaper night tariffs. sumption and risk profiles. locations near railway lines. The philosophy of IT opera- Information kiosks were intro- Cooperation in creating tion changed into a service duced to access information innovative software such provider for business depart- IT systems directly from specific section as automatic recognition ments (SaaS – Software as areas. of lights and semaphores. a Service). Large-scale IT and project A standard project manage- Improved management of management investments Project ment process was introduced subcontractors (segmenta- were made (e.g. Mobile SAP management (regular progress reviews). tion of subcontractors). Fiori).

Introduction of the training Formation of the Top 400 Cooperation with schools HR system ‘Leader’s Academy’ group (key employees mana- and colleges to cover the management ging the company), creation and training for internal generation gap. of regular meetings with the coaches. management board and Based on a survey by ‘Puls’ to Extending knowledge on Internal regular discussions on the measure the effectiveness of communication efficiency communication development of the company. communication. to all employees. First company in Poland to Introducing an AMI Investment introduce large-scale auto- 50% reduction in total system – automatic matic analysis of power power interruptions projects in online meter readings – interruption indicators by 2022. distribution for all customers. (SAIDI).

Managing change in the digital age 43 44 when thesouthwest ofPoland was first day ofthecrisis,head­ had employees andtrains, what SOURCE: PKP Energetyka PKP Energetyka casestudy fallen six-foldandtheresponse the figure:PKPPLKrailway power teams androllingstock.Andall their status wasandhow long they couldtellexactly wherethey the plants.At any given moment, gency events orweather catastro­ gate peopleandequipmentamong it would take themtocarryout power gridefficiencyoccurred phes have halved, asillustrated in new integrated systemofrailway ravaged by cyclone Xavier. Onthe monitored itcloselyusingtheir red thedirectionofwindand nators were authorized todele­ resource management.Coordi­ and restoration timesforemer­ at thebeginningofOctober2017 grid failures innumbers PKP PLKrailway power a task.Thecoordinators monito­ quarters decidedtotake over grid failuresinnumbers. number of failures in group I The realbaptism offireforthe 300 200 350 250 100 150 50 0 306 290 2014 284 317 292 number of failures within the previous twelve months 290 311 2015 331 298 322 341 ‘change leaders’.Aspartofthe The maincauses offailure include Energetyka shouldbesplitinto PKP Energetyka),70%ofallcom­ factors liesinthecompany’s transformation, new managers (accounts for38%offailures) (which actively participated two categories. the factors responsibleforthe to operate them. to whereitwasneeded,accompa­ employee resistancetochanges equipment wasdelivered exactly in thetransformation processof behavioral factors resultingfrom pany efficiencyprograms fail. management (accountsfor33% necessary certificates andlicenses nied by peoplewhopossessedthe and insufficientsupportfrom successful transformation ofPKP of failures). Viewed inthislight, done by McKinsey &Company 334 2016 303 The firstofthesesuccess As shown intheresearch 341 319 282 264 2017 114 262 153 114 2018 58 44 six-fold drop in the number of failures vidual departmentsofanorgani­ were madeat theheadquarters was why changesintheworkforce who were motivated andexpe­ well aspromotingthemostambi­ was adopted.Thisinvolved many field workers. Inthiscase,instead PKP Energetykainvolved itstop leaders ofchangeat alllevels who fresh ideasfromothercompanies from HarvardBusinessSchool transformation tosucceed.This tion isagoodideaandwantthe tions were introducedtothecom­ tious employees. Secondly,acon­ ties, operational measuresand unleashed thefullpotentialof the formation of theTop 400 gement. First,thecompany group –fourhundredofthemost gers closertothemanagement zation liesintheappointment of ciliatory approach totrade unions clear definitionsofresponsibili­ elements at thislevel ofmana­ employees by bringing linemana­ cation channelswere created with compromises, jobvaluations and its employees by boostingtheir important managerswhohave pany intheheadoffice.Research board. Thiswascreated through pany optedtouseitsexisting pay rises.Thirdly,new communi ­ mation, know that transforma­ really seetheneedforatransfor­ rienced inconductingtransforma­ managers, middlemanagement mined thesuccessofchangesin roles andcompetencieswith resources andhumancapital. ment ofthecompany. rounds ofnegotiation, making and industries. as well asitslinemanagersand a directinfluenceonthedevelop­ of PKPEnergetykatointroduce successful transformation inindi­ shows that thekey toachieving soft skillstraining program as of makingquickchanges,thecom­ The secondfactor that deter­ There arethreeimportant # EVEN MORE KNOWLEDGE Join the group of world leaders

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