How E.ON deals with a volatile energy market

Published on
October 18, 2022
René Aernoudts
René Aernoudts
René Aernoudts is director/owner of LMI
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Prior to his presentation at Lean Global Connection, Huibert-Jan den Hartog, Vice-President and Transformational Leader at E.ON, shares his thoughts on the current energy crisis and discusses how lean is helping E.ON weather it.

Everyone is talking about energy these days and consumers are facing skyrocketing costs. How does that happen at a big energy company like E.ON?

There are two main challenges. First, a big push toward renewable energy, which we have been experiencing for a while, and the adoption of new technologies in the consumer market. This means we need to redesign our grids and transform the energy system from a top-down, centralized model to a flat field. Secondly, as a result of the war in Ukraine, we are obviously going through an energy crisis, with consumers becoming more and more mindful of their energy consumption and bad debts rising sharply. The situation is rapidly changing and no one really knows what the energy market will look like in the future.

E.ON has been around for about 15 years Lean. What are you focusing on now?

We've been at it for a long time, it's true. But I would say that Lean has gained new momentum at E.ON over the past year, under the umbrella of the so-called E.ON Business System. We see this as an important decision, especially after completing our merger with Innogy two years ago (making us one of Europe's largest energy networks and infrastructure operators, with 50 million customers and 75,000 employees). We are now resuming our transformation as one integrated organization.

The E.ON Business System framework, which stems from our commitment to continuous learning and improvement, provides our businesses with tools and techniques to improve performance. In addition, we have the Performance Heartbeat, a set of metrics that we believe are important to the business and that we continuously track and improve.

Digital technologies are another major focus for us right now (as they are for many other companies), as we try to figure out how they can support our lean-improvements. We are also exploring the interface between Lean and Agile, and we are finding many great synergies between the two.

With a diverse portfolio of 1,500 companies, Lean should be a pretty useful tool for bringing consistency to your operations and culture. Do you agree?

Yes! Even though our framework has changed somewhat over time, many of our people are already trained in the basic principles of Lean Thinking. We have many practitioners, which means that we have a strong foundation on which to build our improvement efforts. The Business System is agnostic to any type of environment in which it is used and brings a common language that people understand - whether they work in electric vehicle charging, solar panels or any other area of the business.

How is E.ON using Lean to support its strategy?

It is said that culture eats strategy for breakfast, and without the right mindset, there is no chance that you can bring your plans to fruition. I believe Lean is a powerful framework available to us to change our culture in order to execute our strategy.

Do you think Lean makes E.ON more flexible in the face of changes in the outside world?

Indeed. It comes down to being in control of your business and knowing the parameters that drive it. Lean gives us that (in our case, for example, with our Performance Heartbeat), allowing us to better adapt to adverse market conditions. Thanks to Lean , given a given situation or problem, we know what to do and who to mobilize. The current situation naturally affects us and presents us with surprises almost daily, but Lean allows us to manage it and maintain a certain degree of momentum.

What is an example of an improvement you have made?

One of our projects focused on smart meters, which are to be rolled out to all consumers in Germany. We have technicians in the field to install them in people's homes. As part of this Lean project, we track the successful installation of meters. At one point, the rate suddenly dropped from 80-90% to less than 30%. The team didn't know what to do. So we took a deep dive into the problem, involving all parties involved in the process. Within a few weeks, the numbers were back up where they were before (which is important because we get fined by the regulator if we don't meet our target). It turned out that the main problems were related to variation in our software (because we have different vendors) and knowledge sharing (more experienced installers knew tricks to ensure a successful installation that third-party vendors or younger installers did not).

You are presenting at this year's Lean Global Connection. What can attendees hope to take away from your presentation?

During my presentation, I will give details about our model and share what we are doing in the area of Lean improvement. Our approach to business change is completely holistic and not exclusive to an energy company, so I'm sure everyone can learn from it.

Huibert-Jan will share more details about the transformation at E.ON at next month's Lean Global Connection. Register for FREE today!

Lean Global Connection 2022

Huibert-Jan den Hartog
With thanks to Huibert-Jan den Hartog. Huibert-Jan is Vice-President and Transformational Leader at E.ON

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