The energy sector is a cornerstone of the Nordic economy and a pillar of the region’s industrial competitiveness. Energy accounts for approximately 10% of the Nordics’ gross value added (
Moreover, because the energy sector delivers some of the lowest-cost and lowest-emission power in Europe, the region’s energy-intensive sectors, from aluminum production in Norway to steel manufacturing in Sweden, are highly competitive on the global stage.
Given the industry’s positive economic influence, it’s a paradox that the ROCE of energy companies has trailed industrial peers.
To improve ROCE and profitability, and position themselves for long-term success, energy companies need to address three key trends: stagnating productivity (over the past decade, labor productivity at utilities has improved by only 2%), increasing complexity (for example, the shift toward a more decentralized and variable generation mix), and uncertain demand (the Nordic power system is entering its most dynamic demand shift in decades).
There is no one size transformation path to tackling these three challenges. Each segment of the energy sector—asset-based utilities, molecule-based suppliers, retailers and traders, and asset developers —faces distinct starting points and future pressures that will dictate how they proceed.
But in our experience, successful transformations share several common traits.
- Strong top-down leadership, with a CEO putting the transformation at the center of the agenda.
- Credible targets and reporting, with the CEO and Board held accountable to external stakeholders for delivering tangible results.
- Keeping the entire company in scope to enable dynamic prioritization according to value, with the impact hitting the P&L.
- Leading with action and consistent messaging to drive toward a more performance-oriented culture, with a laser-focus on P&L impact.
- Delivery discipline with a clear commitment to targets, consistent follow-up, and drive to deliver value.
