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innogy Consulting: in-house consultancy firm supporting the energy transition
16 January 2018 Consultancy.eu
Across Europe, businesses and governments are making a concerted effort to move toward sustainable energy. With targets set by the Paris climate agreement placing a greater impetus on countries minimising waste, France and the UK notably announced they would ban the sales of combustion engine vehicles by 2040 – while after the Fukushima disaster, the German government decided to close its nuclear power stations. Sustainable energy company innogy is seeking to capitalise on this, with its internal consulting wing innogy Consulting playing a key role in navigating the company and its subsidiaries through change.
In the wake of Japan's Fukushima crisis, which saw an earthquake cause a nuclear power-plant to contaminate coastal waters, the German government announced plans to close the European nation's own nuclear plants. In the landmark policy U-turn, Chancellor Angela Merkel's coalition announced in May 2011, that Germany's 17 nuclear power stations would close by 2022, which the country had previously relied on for 23% of its energy.
The decision marked a major turning point for German energy producers, not least the North Rhine-Westphalia-based electric utilities company RWE. In response to the change in direction of Germany's energy production market, the nation's largest electricity producer has increased renewable energy production in recent years – and in December 2015 RWE confirmed that it would separate its renewable energy generation, power grid and retail operations into a separate and independent company: innogy – in an effort to reduce the group's exposure to nuclear decommissioning costs, as well as to allow the new arm to begin life with a clean slate.
The new subsidiary currently serves 23 million customers in Europe – and despite already boasting an annual revenue of €44 billion, innogy is looking to find new avenues for expansion. While more standard techniques of growth have included merger talks, with British equivalent energy firm SSE reportedly being in the pipeline since November 2017, the group has also been chasing add-on revenues by expanding into new markets.
Evolving process
To execute its strategic change agenda from within, innogy years ago developed its own in-house consulting arm. Today, innogy Consulting, formerly known as RWE Consulting, has offices in Germany, the Netherlands, UK, Czech Republic, US, and Dubai. The firm of around 180 consultants offers consulting services to both its parent group innogy, and its subsidiaries, focusing on all of the facets of the classical strategy and management consulting segment. Offerings range from strategy development, digitisation and restructuring to change, internal benchmarking and process optimisation.
In the Netherlands, innogy Consulting works predominantly for Essent, the largest energy firm in the Netherlands which was acquired by RWE in 2009 for €7.3 billion. The management consulting outfit has over the years provided advisory services to the Dutch energy giant regarding, among others, a strategy overhaul, with an updated portfolio to be greener, or an M&A plan, also geared at diversifying and greening the business.
At the helm of innogy Consulting Netherlands stands Cornelius Huber, who last year relocated to the Netherlands. While it is common for a consultant to move on after four or five years at a firm, Huber has remained with RWE and its subsidiaries for over seven years now, having joined in 2010. While he attributes part of this longevity to cultural differences, stating "I'm German, and in Germany it's more common to stay longer," Huber is also keen to point out that the rapidly shifting ground in energy production has helped hold his interest.
The split of RWE into two companies, the greener innogy with the remainder consolidated into the old RWE, meant that a new tide of positivity was injected into the company and its teams. innogy's focus on sustainability landed well among the broader public, and allowed the rebranded company to look for new growth and accelerate its energy transition. Now Partner and Head of innogy Consulting's Netherlands Office, Huber confirmed that the internal consulting unit has seen a rapid transformation over the past 12 months, amid a spike in demand.
To accommodate for the growth, innogy Consulting's leadership team have embedded a number of changes to support professionalisation. Among other shifts, Partners now meet on a weekly basis in order to share best practice and assign staffing for new projects across Europe – and staff are divided up primarily by what is most applicable to their competency fields. Huber elaborated; "The sector is so rapidly changing, speed of alignment is key."
Meanwhile, in order to keep every member of the consulting team, both old and new, up to speed on the rapidly changing energy environment, each consultant is given at least 10 days of training a year. As the consulting wing of innogy bids to win further business, such a cultural change has been necessary, because the work they are ultimately attempting to obtain from the likes of Essent has previously been the preserve of major external consultancies such as McKinsey & Company, functional specialists such as Baringa Partners, or giants including Accenture and the Big Four.
When asked how innogy Consulting could compete with such high-profile consulting industry names, Huber responded that first and foremost the practice's core values were important when building for success. "When we recruit new staff, we pay a lot of attention to what drives candidates. If they are keen to learn, grow and help innogy to bring society a new and sustainable world, they will likely be a good fit," he explained.
The consulting outfit then look to couple this culture with industrial know-how, promoting their in-depth knowledge of the energy world, the company they propose working with, and their workforce, while also boasting a network of their own to help boost the implementation of advice.
innogy Consulting also pride themselves on a unique brand of honesty, with a willingness to admit that externals may be better placed to advise on fields such as IT implementation or asset management, if the consulting firm cannot convince its clients – internal managers – of their suitability over other firms on a particular tender. Huber said, "This is competition – sometimes you lose. Sometimes it is not right for the group. Other times we have said, 'Honestly, I think you can do this yourselves.'"
The consulting wing is not opposed to collaboration on projects, and are open to working with external consultants on the basis that the groups have parity throughout the process. This could involve market study boutiques or even big consulting firms – however should the client require that innogy Consulting were to follow the orders of such a consultancy, Huber asserted emphatically that, "We are out."
Now, as the group look to further up the ante and court new business, innogy Consulting's hiring practices are adapting to take in a wider cross section of staff. While the former Partner heading the practice focused on senior consultant recruitment, under Huber's tenure, this has expanded to include broader consultant-level hires. With a widened talent-pool, the management consulting firm, which last year was named Germany's top internal consulting club, hopes to better offer appropriate talent to certain projects – supplying clients with round pegs for round holes.
Commenting on where the firm is expected to head next, the Head of innogy's Dutch office was keen to aim big. According to Huber, there is a major need "for similar consulting firms in Dubai and the US [the world's largest consulting market]. We can take our European expertise to the market there."
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