Schizophrenia for fun and profit

Michael T. Burr,

An old friend called me on the phone recently to razz me about EL&P’s recent industry coverage. “You must be schizophrenic,” he said. “One month you’re saying ‘converge, integrate, diversify.’ The next month it’s ‘focus on your core.’ Get it straight, for pity’s sake.”

“First of all,” I said defensively, “you’ve got your psychoses mixed up. You mean multiple personality disorder, not schizophrenia.”

“Whatever,” he responded.

“Second, when did I ever tell anybody to converge and integrate, or focus on their core?”

“Well, you didn’t exactly say that. But every month you’re talking with CEOs and spotlighting their company strategies, and none of them seem to agree. How can both Tractebel and AES provide the model for the future? No two companies could be more dissimilar. And one month you’re patting NSTAR or Memphis Light on the back for stretching themselves into new markets, and the next month you’re holding up Entergy and Montana Power as shining examples of how everybody should be focusing on the core business. You can’t keep your story straight.”

I hated to admit it, but my friend had a point. Dennis Bakke and Jean-Pierre Hansen have such different outlooks, they probably couldn’t agree on where to have lunch-or even whether lunch was a worthwhile objective. And this month’s features on Entergy and Montana Power fly in the face of the integrated, global strategies that EL&P has been highlighting for the last couple of years.

So who’s right, Jekyll or Hyde?

“Look,” I said, “I’d be the last to say that any one company has a silver bullet strategy that will work for everyone. Would AES’ kinder, gentler energy company philosophy work for Tractebel or Duke? Heavens, no. And AES probably would be nowhere today if it pursued a carefully considered strategy for aggressive growth. Different strokes for different folks.”

“That sounds like a cop-out,” he said. “You’re just afraid to admit that you don’t know which strategy is the right one. You thought convergence was the answer, and economies of scale made sense. But now it looks like chasing umpteen different businesses might not be such a great idea. And the only thing economies of scale do is to institutionalize mediocrity and lure you into a false sense of efficiency.”

I was quiet for a few seconds, which my friend saw as a sign of weakness. He went for the jugular. “Admit it,” he said. “You’re just as confused as anyone by the changes going on in the industry.”

I swallowed hard and said, “Sure. I don’t have a crystal ball. I just pay attention to what’s going on in the industry and draw conclusions based on what I see. I don’t purport to be any smarter than anyone else. I just take a broader view.”

“What do you mean?” he asked.

“As a journalist, I’m paid to be an objective observer _”

He groaned. “Oh puh-leeze! That ‘objective observer’ spiel won’t work on me. You have preferences and opinions like everyone else, and you’re not afraid to make them known in the pages of EL&P. And that’s fine, but the problem is that you can’t agree with yourself from month to month.”

“As I was saying, _ my job is to observe events and decide which ones are most important based on my objective understanding of the industry at the time. The movement toward diversification into telecom and pipelines merits our attention just as much as the trend back to basics. AES’ un-strategy for organic growth is just as interesting as Duke’s carefully plotted roadmap of the future. Neither is necessarily right or wrong.”

“But you’re supposed to be the Bible of the industry,” he persisted. “Your readers expect you to be the arbiter of good and bad utility strategies. Now you’re saying the definitions of ‘good’ and ‘bad’ depend on your perspective.”

“That’s exactly what I’m saying,” I replied smugly. “If there were a simple recipe for success, everybody would be following it.”

“But you can’t even decide what success is!” I could tell he was becoming exasperated.

“Again, it depends on your perspective. Success for me isn’t necessarily the same thing as success for you.”

“Baloney. Everybody wants the same thing: health, wealth and happiness.”

“I agree, but everybody defines ‘health, wealth and happiness’ differently. Some people put the emphasis on the ‘wealth’ part. Others think health and happiness are enough, and wealth is just the icing on the cake.”

“What’s cake got to do with EL&P?” he asked.

“Everything,” I said. “And nothing. It depends on your perspective.”

“Bah,” he said. “I’m gonna go read T&D World.” He hung up.

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