Empowerment*of*the*Energy*Transition**
a"case"study"on"strategic"management"of"traditional"
Dutch"energy"suppliers""
C.E.L.E."(Chantalle)"Grootscholten"
Student number: 10367160
1st Supervisor: prof. drs. J.G. de Wit 2nd Supervisor: drs. E. Dirksen
MSc in Business Studies, Strategy Track Master Thesis - final version
Table*of*Contents*
Abstract(...(3! 1.(The(Dutch(energy(sector(in(transition(...(4! 1.1(Energy(policy(...(4! Demand!stimulating!approaches!...!5! Supply!stimulating!approaches!...!7! Policy!performance!...!7! 1.2(Market(developments(...(8! 1.3(The(Energy(Agreement(...(9! 2.(Literature(Review(...(11! 2.1(Red(ocean(strategies(...(12! The!five!forces!framework!...!13! The!resource@based!view!...!14! The!dynamic!capabilities!view!...!16! 2.2(Towards(a(different(strategic(focus(...(20! 2.3(Blue(ocean(strategies(...(21! The!strategy!canvas!...!21! The!four!actions!framework!...!22! 2.4(Red(versus(blue(oceans(...(24! 3.(Conceptual(model(...(25! 4.(Research(methodology(...(27! 4.1(Sampling(...(27! 4.2(Data(collection(...(28! 4.3(Data(coding(and(analysis(...(29! 5.(Findings(...(30! 5.1(Market(opportunities(...(30! 5.2(Challenges(...(34! 6.(Discussion(and(future(research(...(37! 6.1(Structural(implications(...(37! 6.2(Managerial(implications(...(37! 7.(Conclusion(...(38! References(...(39! Appendices(...(48! Appendix(A(–(Participating(parties(Energy(Agreement(...(48! Appendix(B(–(Participants’(job(description(...(49! Appendix(C(–(Interview(design((dutch)(...(49!*
Abstract*
This exploratory study examined how Dutch energy suppliers position themselves in the dynamic market of the energy transition. The main focus was on identifying challenges and uncertainties in the market that influence motivation for using a specific strategy. A qualitative approach with semi-structured interviews was used to gather insight in the phenomena as described above. Even though the corporations still mainly operate in the current business, the results show that a mix of both red and blue ocean strategies is used. The necessity for developing a new value curve is clear, since the traditional business is marginalizing. But the focus on the traditional business is still high and creating a blue ocean is complicated and requires a dynamic organizational culture. The decision-making processes are too slow and complicated, specific skills are required, the firms are organized around bulky projects and the firms are risk averse. This provides opportunities for further research for how firms with a static culture can adopt a strategy that requires a dynamic approach.
1.*The*Dutch*energy*sector*in*transition*
There are four major global challenges that caused the energy transition: growing scarcity of fossil fuels, achieving energy security, combating environmental degradation and meeting the growing needs of the developing world (Dorian et al. 2005). These trends have led towards a growing demand for renewable energy solutions (Solomon and Krishna 2011). This requires innovation, and there is a significant role for governmental initiatives to put up with this growing demand (Dorian et al. 2005). This section discusses the Dutch energy sector in the transition. A description is given on the changing players and market forces, and its additional challenges. It is an industry heavily influenced by government interference, which is one of the structural problems of this sector until now.
1.1*Energy*policy*
The oil crisis in 1973 was cause for the first Dutch research programs regarding renewable energy sources (Junginger et al. 2004). The first Energy White Paper (1974) described environmental and scarcity issues, and formally increased the government’s influence in the electricity production regime by transferring the final say on fuel use in power stations and the development of nuclear plants to the minister of Economic Affairs (Verbong and Geels 2007). The support of the government was limited to research programs with a focus on how to reduce the increasing demand for energy (Agnolucci 2007). In the 1980s, sustainable energy generation was still seen as a long-term project (de Haas and Tabarki 2013).
First targets were set in the third energy white paper in 1996, because of the environmental issues and dependency on oil producing countries, which was too high (Junginger et al. 2004). The paper prescribed that the share of renewable energy
sources should increase from 1% to 3% in 2000 and should be 20% in 2020 (Junginger et al. 2004). In 2000 the European Parliament agreed on the guidelines of the European Commission for sustainable energy and the European Commission scaled the target of 20% renewable energy in 2020 down to 14% in 2020. The Dutch government has been trying to be supportive towards renewable energy from the moment these first real targets were set (Agnolucci 2007; Junginger et al. 2004; Kern and Smith 2008; Kwant 2003; Loorbach 2010). The government used several policy instruments (renewable quotas and fiscal incentives) to stimulate demand and supply of green energy, but has a reputation of continually revising them (Agonolucci 2007; Kwant 2003; van Rooijen and van Wees 2006).
Demand*stimulating*approaches**
The government started off with demand stimulating approaches, because demand was seen as the greatest bottleneck in the expansion of the Dutch green electricity market (Boots et al. 2001). Demand sided approaches are focused on controlling the consumption of green energy (Mohsenian-Rad et al. 2010). From 1996 green energy use was stimulated with subsidies and tax advantages to make renewable energy cheaper than grey energy (Mohsenian-Rad et al. 2010).
To stimulate demand for green energy even more, the green electricity market was liberalised in July 2001 (Reijnders 2002). It was the result of a larger liberalisation drive of the electricity market in the European Union (Espey 2001). Before the liberalisation the Dutch electricity market was characterized by regional monopolies (Agterbosch et al. 2004). Up to then, generation, transmission, distribution and supply of electricity were administratively integrated business processes provided by state-owned electricity companies (Slingerland 1997): consumers were restricted to the electricity company of their region, which is shown
in figure 1. The traditional electricity companies are Delta, Eneco, E.on, Essent, GWF and Nuon (Energie Gids 2011).
Figure 1. Infrastructure of the players in the energy sector before the market liberalisation.
The liberalisation was followed by the unbundling of the energy supplier and grid operator. The grid operators remained state-owned (Energie Gids 2011), but the energy suppliers were able to compete against each other. Because consumers had the freedom to choose their supplier, they became more critical. This stimulated competition among suppliers (Reijnders 2002). As a result, suppliers used green energy as a marketing tool to keep existing customers and attract new ones (van Rooijen and van Wees 2006), and prices for green energy got lower (Reijnders 2002). The infrastructure of players in the energy sector after the liberalisation is shown in figure 2.
Figure 2. Infrastructure of the players in the energy sector after the market liberalisation.
Demand for renewable energy increased and this growing demand could not be met by national production alone. As the fiscal incentives for consumers could also be applied to energy generated abroad, import of green energy increased rapidly (van Rooijen and van Wees 2006). A lot of criticism arose on the fact that tax money was spent on green electricity in other countries (van Rooijen and van Wees 2006). As a
!!!!!!!!!!State@owned!!!!!!! !!electricity! !!company! !!!!!!!!!!!!!!!Consumers! ! Consumer! ! Traditional!energy! supplier! ! Grid!operator!
response to the criticism, the government initiated new incentive schemes, with a supply stimulating focus (Kwant 2003).
Supply*stimulating*approaches**
From 2003 the government initiated supply stimulating approaches to control energy generation in the Netherlands (Kwant 2003; van Rooijen and van Wees 2006). Generation of renewable energy is supported with fiscal incentives, for example green funds and tax credits (Kwant 2003). Other policy instruments, such as quota-based tradable green certificates (quantity-driven) and feed-in tariffs (price-driven) have been experimented with as well to increase supply of renewable energy (Lensink et al. 2010).
Policy*performance**
Several studies have shown a positive effect of regulation on firm performance and the expansion of activities in renewable energy (Kern and Smith 2008; Kwant 2003; Lund 2009). Lund (2009) however did recognize the importance of investments and R&D supporting this positive effect. But compared to other European countries, the Netherlands is slow in the development of renewable energy sources (van Dril et al. 2012; Dinica and Arentsen 2001; Hisschemöller and Sioziou 2013; Kemp et al. 2007; Neeft et al. 2013; Meijer et al. 2007; van Rooijen and van Wees 2006): the actual share of renewable energy in the Netherlands was only 4.4% in 2012 (Neeft et al. 2013). This is mainly caused by the energy related policies of the government, that have been opaque, confusing and lacking long-term security due to the amount of instruments and changes in details of the policies (Agnolucci 2007; Kern and Smith 2008). Because the government has not introduced clear policies and has not been consistent in applying them in the long-term, there is uncertainty and a lack of
! New!market!
entrants!
confidence in the market (Junginger et al. 2004; Painuly 2001; van Rooijen and van Wees 2006). This lack of consistency and uncertainty for suppliers may have resulted in higher cost of projects (Painuly 2001) and reluctance in making investments (Meijer et al. 2007).
1.2*Market*developments*
The development of renewable energy technologies is responsible for a shift from centralised energy generation towards decentralised energy generation (Tselepis et al. 2003). The combination of the market liberalisation in 2001 and the ability to generate energy in a decentralised way have removed some entry barriers, and thereby provided opportunities for small energy suppliers to enter the market (Raskin et al. 2002). It didn’t take long after the first renewable energy technologies were developed before entrepreneurs started setting up wind- and solar projects under subsidy and tax incentives of the government (Agterbosch et al. 2004). They position themselves as a low-cost and green energy suppliers, and thereby gain a significant share in the renewable energy supply market (Agterbosch et al. 2004; Reijnders 2002). This new market infrastructure is shown in figure 3. Investments of these parties directly influence the market share of the traditional suppliers (Bosman et al. 2013).
Figure 3. Infrastructure of the players in the energy sector after market liberalisation and development
! Consumer! ! Traditional!energy! supplier! ! Grid!operator!
At the same time, there is an increasing role of the consumer in the market due to the growing trend of being self-supplying: societal organizations and individuals buy solar panels for self-usage (Bosman et al. 2013). The concept of Distributed Energy Resources allows self-supplying consumers to sell their overcapacity to the grid (Tselepis et al. 2003). As a result supply becomes unpredictable (de Haas and Tabarki 2013). Because the networks are not designed and built to interconnect large amount of distributed resources, it will also require redesign of planning strategies and tools, design methodologies, operations and control of electrical network (Tselepis et al. 2003). It complicates the process of compensating the difference between demand and supply (de Haas and Tabarki 2013). Furthermore, there is a lack of reliable storage options, which are necessary to provide a steady supply of electricity to meet the constantly varying demand (Lindley 2010).
1.3*The*Energy*Agreement*
The most recent energy policy is described in the Energy Agreement for sustainable growth in September 2013. The agreement contains a long-term perspective on arrangements for short- and middle term, and is initiated to create trust and decrease the uncertainty of investing for citizens and companies. This agreement provides actual guidelines on how to achieve the ambitious goal on the market share of 14% renewable energy in 2020. But it also strives to achieve the following other objectives: a further increase of that proportion to 16% in 2023, a saving in final energy consumption averaging 1.5% annually, and to create at least 15.000 full-time jobs, from which a large proportion will be created in the next few years. Over forty parties have signed this agreement with which they promise active contribution in achieving those objectives, (SER 2013). An overview of the participating parties - including central, regional and local government, employers’ organizations and
unions, nature conservation and environmental organizations, and other civil-society organizations and financial institutions - is given in appendix A.
The agreement is based on ten pillars. Energy saving is the first pillar. Energy saving will contribute to environmental objectives and should lead to a lower energy bill. The second pillar is renewable energy generation, which demands investing in renewable energy sources and must provide security for investors, stimulate innovation, decrease costs and improving the competitive position of Dutch companies. Decentralised energy generation is the third pillar. Decentralised generation will be stimulated with tax discounts. The fourth pillar is the energy infrastructure. This should be ready for a sustainable future with less predictable supply and demand. This pillar emphasizes on European collaboration. The fifth pillar is the EU Emissions Trading System (ETS). The ETS is a crucial factor in the long-term development towards a sustainable energy supply, and it is necessary that this system is functioning well. The sixth pillar is generation from fossil fuels and power plants. Even though it is assumed that fossil fuels have an important role in the energy generation until 2050, three power plants will be shut down in January 2016 and two more in July 2017. To get to a fully sustainable energy supply CO2 storage needs to be further developed. A long-term vision on this subject is not made yet. Transport and mobility should be more efficient and sustainable, which is the seventh pillar. The eighth pillar is the increasing opportunities for employment. The ambition is to generate 15.000 FTE from 2014 to 2020. These jobs will be mainly in the installation and construction sector. Energy innovation and export is the ninth pillar. It is the ambition to excel in smart energy solutions as a result of investments in new and existing CleanTech companies. The tenth and last concern is financing programs focused on the investments necessary for the energy transition (SER 2013).
All pillars are reinforcing, should strengthen the economical structure and increase investments in the transition towards a sustainable environment (SER 2013). However, it is questionable if this agreement does provide the long-term security as it promises; realization costs of the projects are high, the agreement lacks integral vision on the future of the energy system and it lacks supporting regulation instruments (Beckman 2013).
The competition of new market entrants and the trend of minimizing energy consumption marginalize the market for the traditional suppliers (Bosman et al. 2013; SER 2013). Bosman et al. (2013) question if there is still a role for traditional suppliers in the new energy environment, but there is agreement on the fact that the traditional suppliers have to reposition themselves in a market where the amount of intermediaries and suppliers is growing (Bosman et al. 2013; Tselepis et al. 2003). The next section describes theories on corporate strategy that could function as a framework for the energy-supplying corporations for strategic positioning in the market. Then the conceptual model is discussed. After that, a general discussion of the findings is made, and finally conclusions are drawn.
2.*Literature*Review*
Literature on corporate strategies has a history of focusing on outperforming competitors (Barney 1991; Nelson 1991; Penrose 1959; Peteraf 1993; Prahalad and Hamel 1990; Schumpeter 1934; Teece et al. 1997; Wernerfelt 1984). Competitive strategy (Porter 1980, 1985), competitive benchmarking (Boxwell 1984) and building competitive advantage (Barney 1991; Peteraf 1993; Prahalad and Hamel 1990) are concepts that cannot be eliminated from corporate strategy (Kim and Mauborgne 2005a; Burke et al. 2009). Theories on corporate strategy have changed from
relatively static (Barney 1986; Conner 1991; Dierickx and Cool 1989) towards more dynamic over time (Eisenhardt and Martin 2000; Teece et al. 1997).
However, Wernerfelt (1986) found that long-term firm profits are negatively related to the market share and the amount of competition. Making the competition irrelevant by creating new market space where there are no competitors is seen as an important new aspect of strategy. This new market space is called a blue ocean (Kim and Mauborgne 1997). Companies need to go beyond competing in established industries, the so-called red oceans, to seize new profit and growth opportunities (Kim and Mauborgne 2005b). The foundation of a blue ocean strategy is value innovation (Kim and Mauborgne 2005a). Blue ocean strategies are not without any risks, and therefore large enterprises need a mix of both red- and blue ocean strategies. There is the lower riskiness of red ocean strategies, and high potential of blue ones (Kim and Mauborgne 2005b). The next few paragraphs will provide an overview of the development of these corporate strategies in more detail.
2.1*Red*ocean*strategies*
A red ocean is characterized by industry boundaries that are well defined and accepted, and is about segmenting existing customers (Kim and Mauborgne 2005a). The focus of red ocean strategies is that a company should build competitive advantages, to avoid intense competition (Burke et al. 2009; Kim and Mauborgne 1997). These strategies stem from industrial organizational (IO) economics (Conner 1991). IO economics suggests a causal flow from market structure to conduct and performance, and explains the behaviour of firms in industries (Bain 1956). IO view argues that industries differ from each other in terms of their structure. Conner (1991) argues that these differences are relatively stable due to barriers to competition.
The*five*forces*framework*
Porter (1980) defines competitive advantage as something at the heart of a firm’s performance in competitive markets. He distinguishes three types of competitive advantage on the product side of the firm: cost leadership, differentiation and focus (Porter, 1980). Porter has developed the five forces framework, which consists of five forces that shape an industry; the threat of substitute products or services, the threat of established rivals, the threat of new entrants, the bargaining power of suppliers and the bargaining power of customers (Porter 1979b). It can be used to analyse the intensity of competition, and thereby the attractiveness of a certain industry (Porter 1985). It encompasses the competitiveness of the supply chain and the competitiveness on market share (Porter 1979b). But the five forces model has been criticised a lot over the years (Brandenburger and Nalebuff 1995; el Namaki 2012; Meyer and Volberda 1997; Speed 1989), because the model is based on the assumption that the forces are unrelated and do not interact and that there is only low uncertainty in the market. Speed (1989) argues that the forces work two ways, and there is always some level of uncertainty in the market. As a response on the criticism, Porter added the government, innovation and complementary products and services as factors that influence the five forces (Porter 1998). Brandenburger and Nalebuff (1995) also responded to the criticism on Porter’s model by introducing the game theoretical approach. This theory explains the interaction between competition and cooperation more thoroughly. This theory is about value creation and value appropriation. Value appropriation is explained by competitive position and bargaining skills (Brandenburger and Nalebuff 1995).
The*resourceFbased*view*
Wernerfelt (1984) studied the usefulness of analysing firms from the resource side rather than from the product side. He thereby introduced the resource-based view (RBV). This perspective focuses on the internal organization of firms, and is therefore complement to the traditional emphasis of strategy on industry structure and strategic positioning within that structure as the determinants of competitive advantage (Porter 1979a). The results of this study have shown that a resource perspective throws a different light on strategic options, mainly for diversified firms (Wernerfelt 1984). This is in line with Collins and Montgomery (2008) who argue that firms should do something with their resources to get a competitive advantage. The basic assumption of strategies based on the RBV is that there is heterogeneity among firms, because of the resources bundles that they own (Barney 1991; Peteraf 1993). The RBV is sufficient for understanding how competitive advantage within firms is achieved and how that advantage might be sustained over time (Barney 1991; Nelson 1991; Peteraf 1993; Prahalad and Hamel 1990; Teece et al. 1997).
The RBV combines internal analysis of phenomena within companies with the external analysis of the industry and the competitive environment (Collis and Montgomery 2008). The basic logic of the RBV explains the difference in resource endowments of firms and the resulting firm performance. Some resources are more valuable than others. Due to isolating mechanisms, such as inimitability and non-substitutability, these differences are relatively stable. The RBV is based on two key points. The first point is to identify the firm’s potential key resources. The second point is to evaluate whether these resources fulfil the VRIN criteria of Barney (1986); he argues that resources can be a competitive advantage when they are Valuable, Rare, Inimitable and Non-substitutable (VRIN). Even when a resource is rare, it has
potential value and is imperfectly imitable, an equally important aspect of this resource should be a lack of substitutability. If competitors are able to counter the firm’s value-creating strategy with a substitute, prices are driven down to the point that the price equals the discounted future rents, resulting in zero economic profits (Barney 1986).
Dierickx and Cool (1989) add the concept of imperfect factor markets to the RBV. It explains that not all resources can be bought, but some need to be accumulated over time, for instance reputation. Imperfect factor markets exist because firms have different knowledge and therefore act differently, and thereby explains resource heterogeneity between firms. Zollo and Winter (2002) and Kim and Mauborgne (2005c) emphasize the role of learning and managing innovation in the resource heterogeneity among firms.
According to the RBV a firm’s ability to attain and keep profitable market positions depends on its ability to gain and defend advantageous positions in underlying resources important to production and distribution (Conner 1991). Firms can attempt to develop better expectations about the future value of strategic resources by analysing their competitive environments or by analysing skills and capabilities they already control. Environmental analysis cannot be expected to improve the expectations of some firms better than others, and thus cannot be a source of more accurate expectations of the future value of a strategic resource. However, analysing a firm’s skills and capabilities can be a source of more accurate expectations (Barney 1986). In the RBV, obtaining above-normal returns requires either that the firm’s product is distinctive in the eyes of buyers, or that the firm selling an identical product in comparison to competitors must have a low-cost position (Barney 1986; Conner 1991).
Over time it becomes increasingly possible for other firms to replicate what once was a unique resource that matched up the VRIN criteria of Barney (1986), and thereby had led to a sustained competitive advantage in the past (Burke et al. 2009). Traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Market opportunities continuously change, unless a firm continues developing new unique resources and new sustainable competitive advantages, a greater number of firms should simultaneously increase competition while reducing profits (Burke et al. 2009).
The*dynamic*capabilities*view*
Teece et al. (1997) and Winter (2003) highlight the importance for firms to develop the dynamic capabilities necessary to continually create new unique resources facilitating new sustainable advantages over competitors thus aligning the firm to future profit opportunities (Burke et al. 2009). The dynamic capabilities view (DCV) of firms emphasises that resources and capabilities work together to gain sustainable competitive advantage (Teece 2007). Firms therefore should develop dynamic capabilities to continually create unique resources facilitating new sustainable advantages over competitors thus aligning the firm to future profit opportunities (Burke et al. 2009).
Dynamic capabilities consist of specific strategic and organizational processes that create value for firms within dynamic markets by manipulating resources into new value-creating strategies (Eisenhardt and Martin 2000). According to Teece et al. (1997) dynamic capabilities are the ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environment. Dynamic capabilities are identifiable and specific processes in organizations that help managers
to alter their resources into value creating strategies - for instance, product development where resources are combined to create a new product (Eisenhardt and Martin 2000). Such capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long-run business performance (Teece 2007).
Eisenhardt and Martin (2000) state that dynamic capabilities have similarities in their key features, but are idiosyncratic in details and they vary in market dynamism. In moderately dynamic markets, effective dynamic capabilities depend on existing knowledge and are detailed, complex analytical routines. In such markets dynamic capabilities are idiosyncratic on firm specific situations and are therefore difficult to imitate. In high velocity markets effective dynamic capabilities consist of simple routines that rely on experimental actions and new knowledge. These routines consist of rules that indicate priorities.
Dynamic capabilities cannot be bought, but rather have to be built over time. This emphasizes path dependency and learning mechanisms in the process of creation and evolution of dynamic capabilities. Teece et al. (1997) and Zollo and Winter (2002) emphasize on the role of learning mechanisms in the development of dynamic capabilities. Experience accumulation, knowledge articulation and knowledge codification are important processes in the evolution of dynamic and operational routines. Managers should also consider that dynamic capabilities could be found and developed at different levels: the individual, firm and network level (Rothaermel and Hess 2007). The network of a firm should not be underestimated because networks determine which new idea becomes a breakthrough (Uzzi and Dunlap 2005). To get a competitive advantage from dynamic capabilities is to be better and quicker than competitors (Eisenhardt and Martin 2000). Both Eisenhardt and Martin (2000) and
Teece (2007) emphasize that there is no sustainable competitive advantage, but a summation of temporary competitive advantages. They argue that concept of sustained competitive advantage doesn’t make much sense, because the market is changing fast. Therefore, continuous improvements are necessary at all times (Eisenhardt and Martin 2000; Teece 2007).
Teece (2007) has made a distinction between three types of functionalities of dynamic capabilities: sensing and shaping, seizing, and managing threats and reconfiguration. He introduced these types based on the incentive that managers can do more than just adapt to the environment – managers can shape the ecosystem when they have strong dynamic capabilities and are intensely entrepreneurial (Teece 2007).
Sensing'and'shaping'
In order to identify and shape opportunities, constant scanning, searching and exploring through technologies and markets, both ‘local’ and ‘distant’ is necessary (Nelson and Winter 1982). This requires investment in research and related activities, but also understanding latent demand, the structural evolution of industries and markets and likely the supplier and competitor responses. It is difficult and costly for management teams tied to established problem solving competences to overcome a narrow search horizon (Teece 2007). Companies need to open up technological opportunities while simultaneously learning about customer needs in order to generate a large variety of commercialization opportunities. When an opportunity is recognized, entrepreneurs and managers need to determine how the new events and developments need to be interpreted, which technologies need to be pursued and which market segments to target. Competitors may or may not see the opportunity and even if they do, they may interpret it differently due to differential access to existing information (Teece 2007).
It is mostly managers that sense and shape opportunities, but frontline employees can help them. It is difficult to filter the information, because it is heterogeneous. A lot of sensing happens in the R&D department, and requires investment for local and non-local search (Teece 2007). There is need for a supportive infrastructure with routines. !
Seizing'
When the opportunity is sensed, it must be seized. This means that it must be addressed through new products, processes, or services, which requires investments in development and commercialization activities. A business model is necessary to define its commercialization strategy and investment priorities, but often multiple investments paths are possible (Teece 2007).
Seizing consists of four main elements: integrate the business model within the whole organization, select the enterprise boundaries, select decision making protocols and build loyalty and commitment. Additionally, it is important to manage uncertainty and understand the market to reduce chances for bias, delusion, deception and hubris (Teece 2007). This involves customer research, filing patents and doing trials. Developing complementary assets can increase chances for success.
Managing'threats'and'reconfiguration''
Managing threats and reconfiguration is necessary to maintain evolutionary fitness, but also to avoid threats and path dependence. It is about recombining and reconfiguring the company’s assets for sustainable growth and firm survival. These types of dynamic capabilities help managers to direct their resources for the right purpose.
The first is achieving decentralization and near decomposability. Decentralization as open innovation and loosely structures are necessary as enterprises expand, because otherwise flexibility and responsiveness will erode. The second micro foundation is managing cospecialization, the development of tacit knowledge, which is important to both seizing and reconfiguration. At last learning, knowledge management and corporate governance are important because intangible assets are critical to enterprise success (Teece 2007).
2.2*Towards*a*different*strategic*focus*
The result of red ocean strategies has been a fairly good understanding of how to compete skillfully in established markets (Kim and Mauborgne 2005a). These strategies have the underlying assumption that they will generate temporary advantages that sooner or later will be imitated and improved upon by other firms (Burke et al. 2009). Porter (1980) argues that innovation can provide a short-term advantage, but imitation forces firms to engage in and win competitions with close rivals in the long-term. This results in high cost of competition and relatively low rewards (Kim and Mauborgne 2005a). Due to imitation, customers see less difference among competitors. They therefore select more on prices than products (Copernicus 2000). The resulting competition among firms results in a ‘bloody’ red ocean, where competitors fight of a shrinking profit pool (Hollensen 2013). Therefore, the focus of corporate strategy is shifting towards creating blue oceans and thereby on becoming irrelevant for competition (Burke et al. 2009; Kim and Mauborgne 1997, 2005a, b and c; Lindič et al. 2012).
2.3*Blue*ocean*strategies**
A blue ocean is characterised by untapped market space, creating demand, and the opportunity for highly profitable growth (Kim and Mauborgne 2005a). Through value innovation, firms will be able to find sufficient untapped markets thus creating consumer demand and ultimately growing while avoiding confrontation with competitors (Kim and Mauborgne 2005a, 2005b). Value innovation is a strategy that embraces the entire system of a company’s activities. It requires companies to orient the whole system to increase value for both buyers and themselves (Kim and Mauborgne 2005c).
The main issue of blue ocean strategy is how to break out of the red ocean strategy and how to create a blue ocean market (Kim and Mauborgne 2005a). Kim and Mauborgne (2005a) have developed some analytical frameworks and tools for practical application of the blue ocean theory: the strategy canvas and the four actions framework.
The*strategy*canvas*
The strategy canvas enables the firm to map its current value proposition and compare that to the industry average (Hollensen 2013). The canvas can also be used as an action framework for building a compelling blue ocean strategy (Kim and Mauborgne 2005a). This framework provides help in understanding where the competition is currently investing, the value factors the industry currently competes on in products and services, and what customers receive from the existing offerings on the market (Kim and Mauborgne 1997). The strategy canvas is shown in figure 4 below (Kim and Mauborgne 1997). On the horizontal axis the range of value factors the industry competes and invests in are shown, and the vertical axis displays the offering level for buyers across those factors. A higher score on the vertical axis means a higher offer to
the buyer (Kim and Mauborgne 2005a). The value curve, illustrated with the red line in figure 4, is the basic component of the strategy canvas. It illustrates the company’s relative performance across its industry’s factors of competition. A strong value curve has focus, divergence as well as a compelling tagline (Kim and Mauborgne 2005a).
Figure 4. The strategy canvas (Kim and Mauborgne 1997).
To develop a blue ocean strategic move from the strategy canvas, a company must begin by reorienting its strategic focus from competitors to alternatives, and from customers to noncustomers of the industry (Kim and Mauborgne 2005a). This will help gain insight in the problem the industry focuses on, and thereby on how to reconstruct buyer value elements that reside across industry boundaries. Conventional strategic logic, with a strategic focus on building competitive advantages, drives a company to offer better solutions than rivals to existing problems defined by an industry (Kim and Mauborgne 1997).
The*four*actions*framework*
To create a new value curve Kim and Mauborgne (1997) started off by asking four questions: Which of the factors that the industry takes for granted should be eliminated? Which factors should be reduced well below the industry’s standard?
Which factors should be raised well above the industry’s standard? And which factors should be created that the industry has never offered? These questions force managers to consider whether the factors that companies compete on actually deliver value to consumers (Kim and Mauborgne 1997). All high-performing companies studied by Kim and Mauborgne (1997) showed fundamentally new and superior value curves by eliminating features, creating features and reducing and raising features to levels unprecedented in their industries. Supplementary to the four actions framework is the eliminate-reduce-raise-create grid (ERRC grid). This grid is key to the creation of blue oceans, because it pushes companies further than the four actions framework. It stimulates them to act on the actors to create a new value curve (Kim and Mauborgne 2005a). The four questions and the ERRC-grid are merged in the four actions framework, which is shown in figure 5 below.
2.4*Red*versus*blue*oceans*
Kim and Mauborgne (2005a) emphasize that red oceans will always be important in business. But in industries where supply is larger than demand competing for a share of contracting markets will not be sufficient to sustain high performance, even though it is necessary (Kim and Mauborgne 2005a). Companies need to go beyond competing in established industries: to seize new profit and growth opportunities they also need to create blue oceans. Focusing too much on hanging on to market share, the company will fall into the trap of conventional strategic logic (Kim and Mauborgne 1997).
But creating blue oceans is not necessarily profitable: entering new market spaces is expensive and risky (Golder and Tellis 1993). Even though first mover advantages such as a large market share gain competitive advantage at first (Porter 1985; Zheng Zou 2006), some research showed that later entrants are able to seize market share from pioneers (Schnaars 1994). Golder and Tellis (1993) found remarks that market pioneers continue to be market share leaders in only 4 of 50 product categories in their study. The average market share of pioneers is only 10%, with a failure rate of 47%. Late market entrants have much lower failure rate of only 8%, and large average market shares of 28% (Golder and Tellis 1993). It could therefore be argued that it is better to enter a new market after the pioneers (Liebermann and Montgomery 1988).
Burke et al. (2009) compared competitive strategy with blue ocean strategy. The comparison is based on the assumption of Porter (1980, 1985): more firms in an industry lead to more competition and lower profits when competition is the dominant strategic focus (Burke et al. 2009). At the same time it also based on the assumption that more firms in an industry lead to higher profits when the creation of blue oceans
is the dominant strategic focus (Burke et al. 2009), which corresponds with the blue ocean focus of Kim and Mauborgne (1997). Based on these assumptions the main difference between blue and red ocean strategies is the belief that there are (blue ocean strategy), or are not (competitive/red ocean strategy) sufficient numbers of untapped markets that can be accessed through innovation to the extent that more firms means less competition (Burke et al. 2009). This implies that the strategies are market conditional specific instead of generic (Burke et al. 2009). A study by Zheng Zou (2006) showed that innovation strategy leads to better new product performance than imitation strategy. Both innovation (blue ocean) and imitation (red ocean) strategies have their own merits, and to decide which strategy is more effective both external and internal factors should be assessed (Burke et al. 2009).
3.*Conceptual*model*
The Dutch energy environment was well organized with only few large utility companies delivering energy to consumers in the past. In the energy transition the market has become more dynamic and complex with increased competition and self-supplying consumers (Bosman et al. 2013). Instead of providing trust by developing clear guidelines and regulation, the government has a history of bringing uncertainty to the market by introducing complex policies and by changing them a lot (Agnolucci 2007; Bosman et al. 2013; Reijnders, 2002). Next to the unclear governmental initiatives, the trend of decentralization of energy production affects the energy networks (Blokhuis et al. 2011; van Dril et al. 2012). Several municipalities have established local energy companies to initiate projects to achieve the energy ambitions (Blokhuis et al. 2012). Furthermore, small energy suppliers have entered the market and position themselves as a green- and/or a low-cost supplier (Blokhuis et al. 2011;
Reijnders 2002). Start-ups offer new knowledge and expertise to the market and enable customers to be self-supplying by offering solar panels for private use. These new players are threatening the traditional energy suppliers because they marginalize their market share (Raskin et al. 2002) and the traditional energy suppliers are forced to redefine their strategy to retain market share (Bosman et al. 2013).
Much research is done on corporate strategy. Early research focuses mainly on competitive strategies, such as the generic strategies of Porter (1980), the resource-based view (RBV) introduced by Wernerfelt (1984) and the dynamic capabilities view (DCV) of Teece et al. (1997). Such strategies attempt to explain how a firm can gain competitive advantage by the resource bundles (RBV) that they own, and the capabilities (DCV) that enable them to continually create new unique resources (Burke et al. 2009). More recent research about corporate strategy focuses on making the competitors irrelevant by creating new market space: the blue ocean strategy (Kim and Mauborgne 1997). Both types of strategies have pros and cons and they are specific for every industry. To better understand implications and motivation for strategic use in dynamic markets the research question of this study is:
To answer this question, the following conceptual model is used:
Figure 6. Conceptual model of this thesis.
Old!situation! • Marginalizing market!share! Corporate! strategy! • Strategies!for! re@positioning! in!the!market! Re@positioning! in!the!market! • Retaining/ gaining! market!share!
How do Dutch energy suppliers position themselves in the dynamic market of the transition towards a new energy infrastructure?
The old situation is characterised by marginalizing market share. The new situation is characterised by retaining and (preferably) gaining market share. To get to this new situation, a strategy is required. This research explores the reasoning behind use of a specific strategy. The methodology of this research will be described in more detail in the next section.
4.*Research*methodology*
The research is a case study that utilized a qualitative and exploring approach to gain a thorough understanding in the implications and underlying motivations on strategic positioning of firms in dynamic markets. Because strategies are market conditional specific (Burke et al. 2009), a case study design is chosen. The data is collected through semi-structured interviews. This qualitative approach is chosen because it allows gaining in-depth insight about a certain phenomenon (Gephart 2004), and has the ability to discover the underlying nature of a phenomenon where little is known about (Strauss and Corbin 1990).
4.1*Sampling*
The participants of the interviews have been selected using a purposive sampling method (Stone 1978). Certain criteria were required for participation in this study, and purposive sampling method allows choosing individuals for participation based on a sampling criterion (Stone 1978). Individuals were sought that meet the following criteria: working in upper management in a strategy, new business development and/or innovation business unit of a Dutch traditional energy-supplying corporation, with at least two years of experience. These criteria were chosen for several reasons. First, the expertise and knowledge required a certain level in a specific field.
Presumably, lower- and middle management, and employees that have less than two years of working experience have too little insight in the strategic decision-making processes on firm level. Therefore they were excluded from this study. There was no selection on age or gender because the research is about firm strategies, and not about individual behaviour in the firm.
The resulting sample consisted of six individuals, divided over three of the traditional energy corporations. All participants are active in their field of expertise for two to ten years. The participants’ job descriptions are broadly defined in appendix B. With respect to confidentiality, their names, the corresponding firm’s name and specific title of the position in the firm are not used in this thesis. In the remaining, the participant will be referred to as he or his. This could also be read as she or her respectively. In this thesis, the quotes cannot be traced back to the corresponding participant, due to confidentiality reasons also.
4.2*Data*collection*
The data is collected through semi-structured interviews with open-ended questions. Semi-structured interviews have a general structure, but allow adaptations during the interview (Leech 2002). Combined with open-ended questions this gives the participants the opportunity to talk about more than just the questions that are asked. This provides detail, depth and insiders’ perspective (Leech 2002). To maintain the exploratory nature of the research, participants were asked to identify challenges caused by the energy transition and energy policies. Furthermore, to explore the firms’ motivation for specific strategies, the participants were asked how and why certain processes around strategy come together. The questions have been derived from the theories as described in the literature review and were aimed at identifying emergent patterns of reasoning from the data. The interview questionnaire is provided
in its original language (Dutch) in appendix C. The first four questions and question eight and twelve have an exploratory nature, and are aimed at gaining insight the supplier’s view on the positioning problem. Questions five, six, seven and nine are based on the red ocean strategies. They are aimed at identifying specific resources (RBV) and routines (DCV) of the firm. Questions ten, eleven and thirteen to sixteen are based on blue ocean strategies and are aimed at identifying processes and motivation for blue ocean creation.
The interviews were recorded with a voice-recorder. This was necessary to transcribe the interviews, decode them and analyse the results. The interviews took approximately one hour each, depending on the elaborateness of the interviewee. The transcripts were sent to the participants to prevent misinterpretations: each interviewee checked the transcript on factual inaccuracies.
4.3*Data*coding*and*analysis*
To structure the data, coding process computer-assisted qualitative data analysis software ‘NVivo’ was used. Such software can help with coding and categorizing large amounts of narrative text (Yin 2009). It will lower the researcher bias, because even though data is always subjective, NVivo helps to look critically at data (Yin 2009).
The analysis was divided in three steps. During the first step, the data was organised with coding. In the second step, de data was displayed by organising the coded data into categories. And the third and last step was drawing conclusions, based on the relation between different themes and ideas (Miles and Huberman 1984). For organizing the data, a deductive approach has been used: because the research relies on theoretical propositions (Yin 2009), there was a set of starting codes derived from the theory. The codes are shown in table 1, 2 and 3 and are provided with examples.
Coding is useful because it will structure the large amount of information (Miles and Huberman 1984): during the coding process, meaningful parts of the transcripts were marked and assigned to one or more codes. The coded data was organised into three categories: 1) current activities, 2) market opportunities, and 3) challenges. The coding allowed patterns and interrelationships to be recognized, from which conclusions could be drawn for the final step of the analysis (Miles and Huberman 1984). The qualitative data is also analysed based on the frequency that the participants mention a specific code as an indicator for the importance of the code.
5.*Findings**
This section provides an analysis of the interview data. This analysis resulted in two main findings. One, the current business will marginalize, but market opportunities for creating new value arise. And two, there are several challenges that need to be overcome to actually create this value. The findings will be described in more detail in the following paragraphs.
5.1*Market*opportunities*
The energy suppliers have a variety of activities that they are currently involved in: operating in their traditional business, doing customer research, risk management, investing in R&D, cooperation and knowledge sharing, exploring technologies and markets for new opportunities, attracting new skills, development of new business units that focus on innovation, learning from others and building on reputation. The details of the activities are described in more detail in table 1.
One of the most important activities is the supply of energy, which is the traditional business of the energy corporations: all participants argue that this business
still has potential, although it will be marginalized. As one participant said, ‘there will always be consumers that are not interested in doing it themselves, and just want cheap energy’. To retain those as customers, corporations want to operate as cheap and efficient as possible. It is easy for the customers to switch to another supplier when they offer a lower price. This corresponds to the red ocean view (Kim and Mauborgne 1997): to avoid competition, a corporation tries to develop competitive advantages, e.g. by focusing on their core competences such as marketing and customer relations and thereby strengthen their brand image.
Table 1. Current activities of the corporations
Activity Frequency Examples and sample comments
Traditional business 6 Supply of energy
‘… our current business must perform as best as it can do. The most important thing is to operate as cheap and efficient as possible to survive in the long-term.’
Customer research 6 Doing market research for customers opinions and thoughts to improve products and services
‘ … it is mostly done in the implementation phase, we do however want to let them collaborate in an earlier stadium.’ Risk management 6 Using scenario planning and risk analyses on investments and
R&D
‘… they don’t give full assurance and it is better to spread the risk.’
Investing in R&D 6 Investing in a lot of different technologies, mainly in wind projects, and together with partners
Cooperation and knowledge sharing
6 Partnering with universities, knowledge institutions, and other companies.
‘… the partner develops new technologies, we have a monitoring role’, ‘… the main idea is to gather knowledge.’
Exploring through technologies
4 ‘…the R&D department scans the market on technological level.’
Exploring through markets
6 ‘…we are exploring new markets, and when opportunities are recognized they are shared within the company. But there is no one that really embraces the opportunity.’
Table 1. Current activities of the corporations (continued)
Activity Frequency Examples and sample comments
Attracting new skills 2 Retraining of employees and attracting entrepreneurial minded individuals.
New business units 4 Development of new business units organized for innovation/new business development.
Learning 2 Learning from others about why certain projects did or did not work out.
Reputation building 1 Brand positioning
‘…we not only say we do it, we do it, and I believe that is very important.’
Energy savings 4 Energy saving increases the amount of self supplying customers ‘… we try to let people use less energy for a long time already, but they only use more over time.’
Improving efficiency 6 Getting the firm more fit/leaner.
Notes. N=6. Frequencies reflect number of participants that reported the activity.
The corporations also engage with their customers to build and improve their relationship. But the customers are only involved in the implementation phase of new products or services. According to Teece (2007) it is necessary to understand user needs to recognize opportunities. It is not yet an activity of any of the corporations, but it was mentioned - three times - that customers need to be more involved with the business because they have high potential in helping to find a new business model.
Table 2 shows the reported market opportunities by the interviewees. Interesting is the statement of one of the participants: ‘go shape the transition’. This implies pursuing for a blue ocean strategy, which is about setting the firm’s boundaries (Kim and Mauborgne 1997). In order to identify and shape opportunities, constant scanning, searching and exploring through technologies and markets, both local and distant, is necessary (Nelson and Winter 1982). All participants search across markets and technologies for new opportunities. One participant mentioned that sensing happened throughout the whole organization and across every business
unit. Internal as well as external knowledge sharing is very important. Another explained that his firm did research in other firms that have been in a transition. He explains that they explored what other firms did and how they behaved in their transition. It has provided them with inspiration on how to deal with the transition, by developing ‘in-between models’. This is in resemblance to the views of both Nelson and Winter (1982) and Teece (2007), who say that it is very important to look outside the company’s boundaries for new opportunities. This will prevent a tunnel vision and provides new insights. A partnership is an opportunity that is recognized by all participants. It is thought to be a market condition to participate in the transition.
Table 2. Market opportunities
Opportunity Frequency Examples and sample comments
Changing the business model
6 Create new demand, and break out of the red ocean strategy. ‘…Go with the transition and shape the transition, because change is needed’, ‘… find out what the problem is for the customer, and find a solution for that. That could be a new product or business model’.
Cooperation 6 ‘It is not necessarily about having a large profitable business case. Cooperation is the first step to get a role in the new energy environment’, ‘We believe that we cannot compete on a large scale without a partnership, merger or acquisition’, ‘I don’t see small energy suppliers as competitors, I see them more as a potential partner’.
New technology development
2 ‘Do all the preparations now, so that you are ready to jump in the market when the subsidies are granted’.
Learning by doing 2 ‘It could be valuable to let other firms do the experimenting, and for us to learn to look around and recognize value’.
Notes. N=6. Frequencies reflect number of participants that reported the opportunity.
It is clear that there are market opportunities, but as one participant said: ‘There is no one that really embraces the opportunity’, and ‘The decision making
culture is pretty complex’. As the data concludes, there are many challenges in the market.
5.2*Challenges**
The participants reported market uncertainty, organizational challenges, growing competition, decentralized energy generation and changing consumer demands (e.g. more critical attitude towards suppliers), the government, path dependency, reputation, collaboration and technology development as challenges in the market. The most important challenges are market uncertainty and organizational challenges. The details of these challenges are shown in table 3.
The government has a history of developing and withdrawing policies for renewable energy sources quite often, which made investing quite unattractive. And also the market uncertainty has led to reluctant investors. As one participant argues: ‘There is just too much swabbing from the government. This makes the profitability of investments very uncertain, and investing is getting more unattractive’. It leads to a more hesitant attitude, which indicates that the corporations are quite risk averse.
A blue ocean strategy demands a risky approach (Kim and Mauborgne, 2005a); it is therefore unlikely that a blue ocean strategy will be adopted in this uncertain market. As already said by one participant ‘It could be valuable to let other firms do the experimenting, and for us to learn to look around and recognize value’: a more hesitant attitude is adopted. This however implies a situation where the energy corporations leave the role of a first mover to the new entrants in the market. Teece (1986) and Mitchell (1991) demonstrate that incumbents do not necessarily need to be the first movers but can invest later when technological risk has diminished. But then, they will enter another red ocean.
Table 3. Challenges for changing the market
Challenge Frequency Examples and sample comments
Market uncertainty and risk
6 It is uncertain how the market will develop. ‘There are many scenarios developed to cope with uncertainty, but it leads to restrained investors’, ‘It is painful when you decide to step into the transition and do a lot of investments that you will be out of the business much faster than when you take it slow and leave the transition to other parties’.
Internal challenges 6 There are internal challenges on different levels. ‘We need to get leaner, so that we can react more flexible’, ‘Decision making process takes a lot of time’, ‘we need more entrepreneurial skills’ Competition 6 ‘There is a lot of unknown competition. There are a lot of start-ups that have nice products, and we have no idea where that is going’, ‘I’m not surprised if a company like Google will jump into the market with an IT solution and conquers the market like a dark horse’.
Changing business model
6 ‘It is unclear what gaps will arise in the market, because consumers develop things as well’.
Government 6 The government is ‘unpredictable’, ‘contradicting’, ‘non-reliable’ but at the same time ‘they must make a business case for the renewable energy sources’.
Consumer preferences
6 Consumers like to be green, but only when the price for green energy is low.
Path dependency 3 ‘Investments done in the past are affecting todays business and strategy forming.’
Reputation 2 ‘It is important to keep our reputation’, ‘we already represent the ‘old thinking’, we are ‘not environmental friendly’, ‘too expensive’, ‘not modern’ and ‘not innovative’.
Cooperation 1 ‘There are contradicting stakes in the market – being sustainable versus making money’
Technology 3 ‘Better insight is needed in which technologies are promising’, ‘flexibility in technology is necessary to cope with changing demand’.
Notes. N=6. Frequencies reflect number of participants that reported the challenge.
The corporations face internal challenges that can be divided over four levels: 1) vision and strategy, 2) organizational structure, 3) processes and 4) skills and employees. The vision and strategy need to change. There is a vision built around the
‘old’ business model that is different from the vision for a ‘new’ model. The organizational structure needs to change as well. Collaboration plays a bigger role in the new structure, where compensation also has a role: losses in one business unit can be compensated for with profits in the other business unit because there is collaboration among units. Processes need to change: there are a lot of new players on the market that have a start-up mentality and are able to change quickly. Those are interesting players to cooperate with, but the processes must match with one another. At last there are internal challenges with the required skills and employees to implement a new strategy: a new business model and new strategy requires different skills. If it is not possible to acquire those skills internally, they should be acquired externally. Also, when employees are not able or willing to adopt the new vision and strategy of the firm, they could forestall a successful new strategy implementation. Changing such routines is costly, so change will not be embraced instantaneously (Teece 2007). As one of the participants says ‘My company is like a large tanker, it is not possible to turn it quickly around’.
Looking at the strategy canvas and the four actions framework of Kim and Mauborgne (2005c), it is complicated to use those frameworks in this case. Only three corporations were interviewed, but these corporations are too hesitant and it is plausible that the other traditional energy suppliers are hesitant in their behaviour as well. Even though one of the participants said that they could ‘shape’ the transition, those shaping activities are not used. It seems that the energy corporations are ‘stuck’ in the middle, between a marginalizing red ocean and an, for now, unreachable blue ocean because of internal challenges and too much uncertainty.
6.*Discussion*and*future*research**
6.1*Structural*implications*
In general, qualitative studies contribute to theoretical insights and thereby to science (Pansal and Corley 2012). The theoretical insights of this study are the implications of a blue oceans strategy for static corporations. This specific research design has its strength in the semi-structured interviews. This allowed in-depth, detailed information with individual arguments (Leech 2002) and therefore provides insights that cannot be produced with quantitative research (Gephart 2004). However, this leads to a low external validity of this research (Bryman 2008), mainly because the findings are different for other industries. The fear for violating the anonymity and confidentiality may have resulted in biased data (e.g. underreporting or describing phenomena better than in reality is the case).
The questionnaire could have been a bit more detailed, e.g. with questions about specific processes. However, the semi-structured interview approach allowed me to ask more in depth questions during the interview, based on the conversation.
6.2*Managerial*implications*
This study had identified implications on the blue ocean theory. Even though this is a single case study for the energy sector and therefore has low external validity, the internal challenges that were recognized could be non-specific for static corporations. That provides an interesting research field for how static corporations can adopt a blue ocean strategy that requires an adaptive and risky minded approach.
7.*Conclusion*
This study examined how traditional Dutch energy suppliers position themselves in the changing energy market. The literature on corporate strategy indicates that to decide which strategy is most effective in a certain industry, both external and internal factors should be assessed (Burke et al. 2009). Therefore a qualitative approach with semi-structured interviews was used. Given the findings, it can be implied that the energy corporations are in between a red and blue ocean strategy: there are internal challenges and market uncertainties that put a hold on the creation of a blue ocean. Decision-making processes are too slow and complicated, specific leadership styles are required, firms are organized around bulky projects and firms are risk averse. Partnerships with small, more dynamic suppliers or start-ups are seen as a requirement for having a role in the new energy market. It is suggested to do further research on how a static corporation as the energy corporation can change its culture to adapt to the dynamic environment of the energy transition.
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