Managing Strategic Change In the summer of 1998/99, CEO John Forfar looked back with pride on the achievements of Energize Limited.1 One of New Zealand’s smallest electricity companies, Energize had come a long way in five years. Despite being a comparative minnow in an industry where size mattered, Energize had succeeded in a period of ongoing uncertainty where other electricity companies continued to struggle. It hadn’t been a painless process and many decisions had been hard to make. However, the tough times had hardened Forfar’s team into a tight unit and had created an organization that industry and non-industry observers alike heralded as an exemplary model for change management. Stirring his coffee before his first meeting of the day, For far smiled as he looked around the open-plan facility, listening to chatter echoing from each of the team work stations. In less than five years Energize’s strategy of total quality management had transformed the organization. Organizational barriers, both psychological and physical, had been broken down to create a new organization from the old one. As he returned to his own team’s work station For far knew that they had all travelled so far and achieved so much that it was difficult to imagine this to be the same organization as it had been in years gone by. Energize of old Energize in the summer of 1998 was far removed from its predecessor, the Central Power Board (CPB). As was the case with all New Zealand electricity companies, Energize’s forebear had been only one of more than 40 administrative bodies called ‘power boards’ that had been created in the 1920s to develop and manage New Zealand’s electricity supply. The CPB and all other power boards in New Zealand had operated in close conjunction with local government authorities—either regional or city councils—and had been charged with overseeing the development of the electricity infrastructure to ensure that every household had access to electricity. As a national priority during this period in New Zealand’s history, the central government had helped power boards to meet this obligation by protecting them in two ways. First, substantial subsidies had been made available to power boards, thus ensuring that physical, labor and financial resources were both affordable and readily available, guaranteeing the sustainability of each organization. Second, legislation had been enacted to establish protected franchise boundaries around each board’s operating areas. With high entry barriers and the possibility of any form of competition eliminated by government protection, an extraordinarily stable environment had developed. Unimpeded by the restraints of commercial pressures, all power boards, including the CPB, had been able to concentrate solely on the construction and maintenance of local electricity networks, irrespective of the expense. As a result, by the late sixties, most New Zealanders had been connected to an electricity supply, placing the country among world leaders. For more than 65 years the CPB and power board system had maintained the supply of electricity to New Zealand households and businesses unchallenged. With such proven effectiveness in the implementation of the government’s development strategy there seemed to be little need or desire for change at either a national, regional or organizational level. Power boards and the industry’s operating environment were well established, and a sense of stability and permanence had developed. The old culture and structure Thinking about how some of Energize’s older employees had referred to that period as ‘the good old days’, Forfar remembered his first experiences in the CPB. They really had been the dark ages; a job-for-life mentality, the frustrations of bureaucracy, a formalized hierarchy, closed doors and whispers in corridors. How times had changed! In retrospect, he knew that these embedded characteristics were symptomatic of the monopolistic operating environment of the time—after all, every power board that he had dealt with had exhibited a structure and culture similar to that of the CPB. CPB’s structure was fundamentally identical to those of all New Zealand electricity power boards. Despite the apparently simplicity of the organization’s function—to distribute electricity—the monopolistic and protected environment had allowed power boards to develop structurally complex and highly bureaucratic organizations. Until the mid-eighties, the CPB had been top heavy with five levels of administration and 15 departments under the charge of six area heads, a chief engineer and a chief financial officer. This structure emphasized a strict command and control hierarchy with clearly bounded roles and responsibilities. With its engineering focus the CPB had structured itself around functional areas, placing value and emphasis on task specialization. Despite functional