Management strategies for electric cooperatives for the 1990s.

• Author: Shepherd, J. Scott, Jr.

Rural electric system are facing many challenges. The author has categorized some of these challenges as ones relating to board composition, leadership abilities of management, territorial challenges and the need to make mergers and consolidations work for the benefit of the consumer.

Introduction

It has become trite but no less true to say that the '90s will be characterized by unprecedented changes. Management guru Tom Peters, in his book Thriving on Chaos: Handbook for Management Revolution reports that futurists see the '90s as a period of "... stunning technological innovation, unprecedented economic activity, surprising political reform, and great cultural rebirth ... !The impending year 2000^ is amplifying emotions, accelerating change, heightening awareness, and compelling us to reexamine ourselves, our values, and our institutions" (Tattle, 1991).

Managers of electric cooperatives must face the challenges of this decade and beyond by reexamining everything about their organization and industry. This includes their mission statements, customer relationships, technological changes, employee relationships, and most of all, the management process itself. Old ways of doing things may have worked in the past but they are not likely to continue working through the 1990s and beyond.

Electric cooperatives have a rich heritage of providing electricity to those small out of the way places that no one else would serve. They have succeeded in their original mission to "electrify rural America?" but now that America is "electrified," is there a greater mission for electric cooperatives than simply fulfilling a legislative mandate?

In most small towns the rural electric co-op was viewed as a "savior." But now, those same people "just expect" electricity whenever they flip the light switch. Those same "expectations" clearly indicate a changing role for most rural electric cooperatives. Given time, population, and economic changes in rural America, most electric consumers are devoid of loyalty to any specific electric company. Service at a good price is the standard. If the local rural electric cooperative can't provide both service and a good price, consumers are prone to look elsewhere (Parker, 1990).

The tendency of so many rural electric systems to revel in their past successes, to rest on their laurels, and to position themselves as a quintessential part of the rural "establishment" makes a mockery of the rural electric's proud history as innovators and pioneers. It flies in the face of the changes that are remaking our nation and the world. The rural electric manager of the future will either embrace and lead these changes or be swept aside by them (Smith, 1990).

Many cooperative directors and managers have expressed concerns that perhaps too much of the early mentality which assumed, "Low REA loan rates will last forever," remains and obstructs the cooperatives' vision of the future. They fear such a mentality may lead some to procrastinate in adapting to current and future market conditions (Reddish, 1990).

Like the dinosaur, any business that refuses to adapt to change may well be hastening its own extinction. For example, John Naisbitt's Megatrends tells the story of the American railroads, who, at the turn of the century, assumed a rigid and arrogant attitude that trains were the only means of transportation. At the same time. Henry Ford was producing a new automobile every 93 seconds. Orville and Wilbur Wright, among others, were attempting to refine a seemingly ridiculous machine that wasted time flying] What happened to the railroads? They had defined themselves too narrowly. Had they envisioned their primary function boldly as transportation, rather than just trains and tracks, they might have continued as a major transportation business. They simply defined themselves too narrowly. Exit the railroads from the arena of major influence. Exit any business that falls prey to narrow thinking (Parker, 1990).

Now, you could challenge me and say that people will always need electrical power. You could smugly scoff at the railroad example. Surely, at least for the foreseeable future, people will need electrical power. But, you may be missing the point. You may be issuing the wrong challenge. The issue isn't a product question, it's a service question] In other words, electricity isn't the primary concern because someone will produce it. The real question is who will provide il to the customers? Thus, the 1990s fundamental issue for electric cooperatives may be service-oriented (Parker, 1990).

America's rural electric systems will find themselves squarely on the cutting edge of social change in this decade. Like it or not, rural electric management will be forced to deal with increasing demands from consumers, employees, and society-at-large to preserve and, wherever possible, to enhance the quality of life in the rural community. A complacent, business-as-usual philosophy...