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5 Steps That Will Help American Businesses Tackle the Energy Crisis

Jun 30, 2008
What may be even more alarming to Americans than the $4-a-gallon gas (and rising) sticker shock is the way our congressional leaders will attempt to handle the energy crisis, which is exactly what it is at this point.

While I am not suspicious by nature, I am realistic when it comes to politics. I'm willing to bet that Congress will sidestep this hot issue which will get even hotter as prices continue to soar (Europeans are now paying $9 a gallon, and Americans will follow suit) by finding a way to raise the cost of energy that is not as apparent as raising taxes on gas and oil products. What Congress is likely to do is push for a carbon tax or credit and then decide willy nilly who will be the beneficiaries and who will be the offenders. In other words, since Congress is more interested in keeping its perks and rewarding lobbyists than doing what is best for the American public, including American businesses, corporate executives will have no choice but to develop their own strategies NOW for offsetting the increasingly high energy costs that will certainly and dramatically affect their businesses (read: profits).

Whether you call it Enterprise Risk Management (ERM), long-range planning, or even crisis management, there's no time like the present to develop a building block approach that will help offset the potential impact of renewable energy on your business and industry. The five steps below will help you develop a framework that will help you first identify and plug up some profit leaks that may not have been on your radar screen.

Step 1. Research what areas of clean energy change are most likely to have an impact on your business. Include factors like (a) increased allocation of water resources, (b) increased allocation of rail and transportation, (c) higher consumption of debt and equity sources that will result in higher borrowing costs for your company, (d) higher utility costs, (e) the pressure of public perception to embrace the green movement, and (f) some level of governmental legislation and/or bureaucrat-prepared rules and regulations. This information is much easier to obtain than people new to this area believe.

Step 2. Create a mechanism to apply the information gleaned above to your particular company. It can be as simple as having top management empower a select team to work on the renewable energy issue. If you are unable to expand your staff's responsibilities, you may want to seek outside help or facilitation.

Step 3. Set an initial timeline for completion of the major steps of the project and require the project leader to personally discuss that approach with top management. Sponsorship is crucial and my experience has been that even these initial steps often unearth business decision issues that top management must make to keep this process on track with any likelihood of success.

Step 4. Use this information to create some likely scenarios ranging from optimistic to pessimistic. Just ask some "Rust Belt" survivors the kinds of things that happened to their businesses and profits when Japanese automobile competition swept across the United States. Those in the know saw this trend much sooner than those who hid their heads in the sand. Survivors can attest to the importance of planning more proactively and creating alternative scenarios much earlier in the game. The renewable energy conversion will be of a similar magnitude requiring forward thinking and projecting.

Step 5. Begin small by focusing on low-hanging fruit that your team has identified. Revise the approach as needed and keep moving. One unexpected benefit may be that you will plug profit leaks along the way that will pay for some, if not most, of the contingency planning process.

Managing the future of your organization requires consideration of how - not if or when - renewable energy will impact your company. If this is the case, what value are you willing to place on your company after the renewable energy tsunami rolls across America? Will you be a victim or a survivor? Why wait until your ship begins listing from leaks below the waterline? You can and should be doing something NOW!

(c) 2008 Gary W. Patterson. All rights reserved.
About the Author
Gary W. Patterson has helped companies improve their profitability, reengineer their business models, and strengthen or gain competitive advantage in the marketplace. You can reach Gary at www.FiscalDoctor.com or take the free Fiscal Test at http://fiscaldoctor.com/fiscaltest.html.
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