Communications and marketing case study: consolidated electric.

• Author: Severson, Jody

NRECA's first annual CEO Communication Leadership award went to a CEO/ President who emphasizes communication and does not hesitate to use unconventional approaches. Given the situation at Consolidated Electric Cooperative of Mt. Gilead, Ohio, these past few years, there may have been little choice but to be very good at communicating.

Editor's Note: Brian Newton was selected as the first winner of the CEO Communication Leadership award. This case study by Jody Severson examines the changes to the communication and marketing programs at Consolidated Electric Cooperative. Following the case study is Brian Newton's first hand account of why changes needed to be made.

When Brian Newton became CEO in 1998 CEC was, in attitude and practice, four largely separate organizations under the same roof-two cooperative offices and two subsidiary companies. "Us versus them" was the name of the game--if they even knew each other's names.

How Newton led his co-op employees, directors, and constituencies to a more unified organization both internally and externally is an instructive case for any cooperative trying to manage diverse employee groups and services while coping with major structural change like the merger.

Two years before Newton arrived, Consolidated had been created by the merger of Delaware Electric Cooperative, which lay in metropolitan Columbus' path of growth, and Morrow Electric in the next county north. The Delaware service territory was growing fast, perhaps beyond the co-op's means. Although Morrow served a less affluent, more rural area with a static economy, the system was in better shape fiscally and physically. It seemed a good fit; the merger was amicable.

When Newton arrived, the board was in transition. Seventeen directors from the combined board had not yet been winnowed to nine. The board may have been in the same room, so to speak, but employees were not. With the co-op's headquarters now located at Morrow, Delaware employees felt that they were not first class citizens in the organization. There were separate employee meetings, separate operations, and the usual "two sets of everything" that accompany a merger, especially two separate mindsets.

The merger brought with it a subsidiary that had begun as a C-band satellite venture with about 6,000 customers and that in turn had branched into an Internet service provider business that was having trouble keeping up with the demand. "People kept getting busy signals. We couldn't add new capacity fast enough," said Newton. Called Bright Choice, the communications subsidiary was yet another unique character on the Consolidated stage with its own customs, culture, marketing, communication, and employee mindset.

As if things were not already sufficiently challenging, the co-op had tacked on yet another subsidiary, Bright Energy, the year before Newton's arrival. At the time it was largely an economic development move to put natural gas distribution lines in a few key places. It counted just a few hundred customers, but offered the potential to help encourage development in the northern portion of the service territory where the economy was not as robust. A year after Newton's arrival, another subsidiary was added. It was a local HVAC firm with approximately 20 employees. The firm was going to close down upon the retirement of its owners, which would have been an economic blow to the area and its development prospects. The marriage of the co-op and the HVAC company offered needed trenching services to the cooperative and maintained jobs and valuable services in the economically down-turned community. In 2001, still another subsidiary was added to the mix. Metered propane service was added in response to member frustration about poor service and limited price options provided by national chain propane distributors. "We were new to the gas business, but that didn't stop us.," said Newton. "Metered propane made this service more affordable to more people because they pay monthly for only the propane they use that month, thus eliminating the need to pay a large bill for having a tank filled. Metered propane wasn't available from any other propane company in the area. It made sense to begin offering this service to a portion of our service territory where money was tighter, and expanding to the entire membership in a couple of years."

Together the cooperative and its subsidiaries had a long laundry list of products and services. They are listed in the sidebar, "A Big Menu."

Newton could hear grumbling among his employees. They thought that they were in the electric business and wanted as little involvement with the subsidiaries as possible. They didn't want to help market the subsidiaries. They didn't want to talk about them. They...