The demise of strategic planning in the power sector.

Byline: Dr. Shahid Rahim

'When the world is predictable, you need smart people. When the world is unpredictable, you need adaptable people,' had commented Henry Mintzberg, a distinguished professor at Canada's McGill University, who has studied the formal and informal roles of managers in business success more than anyone else among his peers. His seminal book, 'The Rise and Fall of Strategic Planning' and a paper on the same theme in Harvard Business Review, both published in 1994, had sent jitters through the spines of business school faculties and corporate executives across the world. 'Strategic planning', met its coup de grace in the 90s, after enjoying zenith in the 70s and 80s, as industry after industry went through turmoil, upheavals, and reshuffling to survive the ruthless market forces.

The days of strategic planning in the power sector are also long over. As the sector undergoes an unprecedented transformation, unleashed by technology-driven disruptive forces during the past decade, almost all aspects of this 140-year old and one of the most stable businesses have come under critical re-evaluation-the physical infrastructure, institutional setup, business model, regulatory framework, pricing approaches, performance control, and you name it. A new approach seems to be sinking in the boardrooms of electric utilities that, in sharp contrast to this industry's history, their focus must now shift to the extreme end of its value chain, the consumers, if the industry is to remain profitable.

Infrastructure industries which were thought to be the exclusive domain of the state for their natural monopoly and public- service character also couldn't remain immune to the disruptive forces. First to fall was public transport, then the airline industry, and later the telephone industry. Due to their humongous size and complexity, electric utilities tried to act as the last bastion of this special category of businesses. And they did resist major changes until the last decade, except for a guided competition here and some choice allowed there. But, with the advent of smaller generators with cost and performance features beating those of their large-sized competitors, these utilities also couldn't survive the market's onslaught. The final death blow to this behemoth was, however, dealt by the recent availability of small, modular, and competitive renewable power generation technologies.

The industry is arguably at a crossroads. Some other...