Reykjavik Energy GroupCASE STUDY
CASE STUDY
Near two-thirds of Iceland’s population depends
on Reykjavik Energy Group (REG) to provide
electricity, geothermal water for heating and cold
water for consumption and firefighting as well
as wastewater systems and fiber-optic network.
So, in 2014, when legislative changes forced the
public utility company to reorganize into a parent
company with three separate subsidiaries, many
questioned how these disparate entities would
be able to “work as a whole towards a common
vision,” says Gudrun Erla Jónsdóttir, strategy
officer at REG.
As it was, REG was one of many companies
emerging from a period of economic depression
in Iceland, brought on by the country’s systemic
banking collapse. Responsible for serving 20
municipalities that covered 67% of the Icelandic
population, the utilities company couldn’t afford
to stray from its mandate.
That mandate is outlined in REG’s Ownership
Strategy. Designed in 2012, the Ownership
Strategy is a common set of goals, principles,
values, and policies that address everything from
HR management practices and safety policies to
procurement procedures.
As a single unit, REG found it relatively easy to
ensure compliance with this strategy. But that
was only until REG’s restructuring created three
independent boards of directors and managing
directors—one for each subsidiary. As a result,
Jónsdóttir says, “compliance with the Ownership
Strategy became much more complicated.”
Reykjavik Energy Group: How An Icelandic Energy And Utility Company Realized Its Strategic Vision
There are a few things that are standardized. One of these things is that we make projects and performance as transparent as we can.Gudrun Erla JónsdóttirStrategy Officer, REG
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Photo: inSiDE onE oF REg‘S MAin WATER DiSTRiBUTion CEnTERS in THE oUTSkiRTS oF REYkjAvik. CREDIT: REYKJAVIK ENERGY GROUP
Photo©: REYkjAvik EnERgY gRoUp
Hellisheidi Geothermal Powerplant is one of the largest of its kind in the world, with a capacity of around 300 MW and also producing district heating water for a large part of the Greater-Reykjavik area.
6 CASE STUDY
Strategy delivery is as important as strategy designTo ensure enterprise-wide compliance with its
Ownership Strategy, REG designed a Strategy
Governance Structure. A key element of this
lean and powerful structure is a regular review
process that helps reinforce accountability and
ownership based on agreed-upon metrics and
milestones.
Senior-level managers from each subsidiary meet
to “share their strategic plan, their objectives,
and why those objectives are important,” says
Jónsdóttir. Representatives from the parent
company are present at these meetings, which
helps drive accountability among the various
stakeholders. Strategy council meetings are
also held throughout the year where strategies
and policies are carefully examined and revised
based on changes in the internal and external
environment. This not only prevents stagnation
but also minimizes the likelihood of a policy
becoming ineffective.
Govern through transparency for greater trust and consistencyAnother tenet of REG’s Strategy Governance
Structure: a commitment to governing through
transparency to engender trust and cooperation.
While subsidiaries have some autonomy over the
tools they use to implement and monitor projects,
Jónsdóttir says, “There are a few things that are
standardized. One of these things is that we make
projects and performance as transparent as we
can.”
This is accomplished with a strategic
implementation tool that provides standardized
templates for managers to inform teams of
the prioritization of and progress on strategic
initiatives based on common key performance
metrics—such as employee satisfaction—and
predetermined milestones.
Even the language managers use is standardized
for greater transparency and a shared
commitment to strategy-delivery priorities.
For example, there is no word for “policy” in
the Icelandic language, which makes it difficult
to differentiate from the term “strategy.” In
response, the company created its own term to
use in the system: studningsstefna.
Motivate those who do the workBut while a focus on strategy delivery is critical,
REG also needed to motive those who uphold
the company’s Ownership Strategy. “We
use all kinds of ways and media to motivate
our employees and talk to them about what
7REYkjAvik EnERgY gRoUp
corporate governance means and what strategic
management means,” says Jónsdóttir. “There are
more than 500 people working here, and they
come from every direction. Not everybody is
thinking about strategy every day.”
An employee handbook and easily accessible
videos provide detailed information on the
company, its mandate and its long-term
objectives. And small wins are celebrated with
public acknowledgments so employees remain
excited about demonstrating the leadership
behaviors and program delivery capabilities that
help strategies succeed.
Nevertheless, strategic initiative management
discipline—essential for effective strategy
delivery—requires regular assessment, support
and course correction. For this reason, REG
requires that stakeholders provide deadlines for all
initiatives.
“Establishing the strategic initiative in the central
strategic governance system means that you also
have to define the end time of the initiative,” says
Jónsdóttir. “The system alerts people when the
initiatives are stalled or haven’t reached progress
in line with the end date.”
Once this occurs, stakeholders may choose to
redefine the initiative’s scope, extend its deadline
or reevaluate it as a priority.
Make culture part of the equationIn addition to REG’s Strategy Governance
Structure, Jónsdóttir says a robust strategy-
execution culture is critical to reinforcing a
common set of strategic principles across multiple
entities. After all, she says, “the whirlwind of day-
to-day operations is a stumbling block in delivering
strategic initiatives.” Fortunately, she adds, “culture
resilience can keep processes on track.”
One way REG actively shapes a winning culture is
by engaging the people responsible for delivering
strategic change programs. For example, in 2017,
REG CEO Bjarni Bjarnason made a point of having
a conversation with every single employee in
the entire organization, 20 people at a time, to
discuss where the company was heading as a
whole. In fact, REG’s Ownership Strategy—and Mr.
Bjarnason’s support of it—has helped increase the
company’s employee net promoter score 19%,
from 53 in 2017 to 63 in 2018.
Jónsdóttir says that overtures like these
“strengthen our execution culture—a culture that
walks the talk, a culture that prioritizes initiatives,
and allocates the right time and people” so that
all entities take “ownership” for executing the
company’s Ownership Strategy.•
Photo: CoMMUniCATing THE CoRpoRATE STRATEgY To ALL EMpLoYEES iS An iMpoRTAnT AnD ConTinUoUS TASk FoR REg. CREDIT: REYKJAVIK ENERGY GROUP
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