Argenti Home

Case Studies

Zesco Zambia and The Argenti System of Strategic Planning (Group Version)

By Senior Argenti Planning Facilitators

Zesco is the national electricity company of Zambia responsible to the Government through the appropriate Minister of State. Its principal terms of reference are to contribute to the national social and economic development plans by developing and maintaining sustainable and cost effective electricity generation capacity and associated High and Low Voltage distribution networks.

Zesco had traditionally operated as a state run utility but recent changes in long term government financial strategy associated with international financial arrangements required Zesco to adopt a more commercial approach to the management of the Company. The implications of this move towards commercialisation were to be addressed in the form of a new Strategic Business Plan that was subject to review and acceptance by the Minister and the appropriate financial institutions.

The Company operates with a Board of Directors and an advisory management board whose members were appointed by the Minister. The Board of Directors was lead by a recently appointed MD and the company employed circa six thousand staff in the various operating divisions. The MD in conjunction with the Business Planning Manager was responsible for initiating the strategic review process. Previous planning had been internally driven but due to the importance and high profile nature of this review they believed that an external input to the process would bring greater credibility. Their first task was to identify and evaluate methods for conducting the strategic planning process and their system of choice was Argenti.

After purchasing the System the Board concluded that limited external facilitation would be beneficial to them and they agreed with Argenti Associates an initial one week support programme to launch the project and complete stages 1 and 2 of the Argenti Process.

Stage 1 (Form the Planning Team)

Our first task was to meet with each member of the Board to outline the Argenti approach. Additionally we explored the responsibilities for members of the planning team and discussed any issues raised by them. We also spent some time to explain the importance of the in house facilitator, who was the Business Planning Manager, emphasising the need for close co-operation if they were to meet their deadline for completing the project.

Following these sessions it was agreed that the Board of Directors and the Facilitators would form the planning team. Possibly an obvious selection but our initial discussions were helpful in convincing all Board members that they should commit to the process.

A second round of meetings was then held with each board member to prepare them for the Stage two meeting later that week and in particular the review and preparation of data for the gap analysis.
 
Stage 2, ‘Define Corporate Aims’

This element of the process was very challenging for the team and highlighted some fundamental issues that needed careful consideration. When asked to consider “for whose benefit did the Company exist and what do they expect “their first thoughts were to consider the question of what commercialisation means for them. The discussion of this issue and the selection of a beneficiary’s performance indicator (BPI) forced the team to challenge some longstanding issues that were enshrined in the current operating culture. It also opened their thinking to the dynamic and challenging environment they would face as the Company entered an era of intense rigorous commercial scrutiny.  After much debate they were unanimous in the selection of a performance indicator based upon a derivative of “Earnings”

The most startling moment for the team came when the MD produced the Gap Analysis. This uses the Argenti ‘Tmin’ (the minimum acceptable performance) and ‘Tsat (the satisfactory target) compared to the optimistic and pessimistic forecasts of the company with its current strategies. The Gaps indicated that the business would not meet the selected performance indicator ‘Tsat ‘and was in danger of failing to meet Tmin. The analysis was discussed in depth but the team was having difficulty in coming to terms with the outcome. It was decided to set up a series of task groups to further research the forecast figures and report back. These actions would take place over several weeks beyond our initial visit and it was agreed that Argenti should return after the detailed analysis work to help run the workshop session.

The substance of the original assessment was eventually verified as being accurate thus the scene was set for an interesting workshop as the Company had some real and unexpected challenges to face.

Stage 3 (‘The SWOTs’)

The Company made a significant investment of time and effort with a three day workshop attended by over thirty senior managers and middle mangers from across operating divisions. The format and content for the Workshop was agreed with the planning team and was facilitated by Argenti Associates. 

The workshop was opened by the M.D. giving an address outlining the Gap Analysis and the significant work done by the groups to verify the conclusions. He emphasized the problems facing the organisation and that nothing was off limits for the SWOT sessions. It was evident that major challenges needed to be tackled including inter alia, choices for investment in new generating capacity, efficiency of distribution systems and operations, rural electrification investment issues, the effects of HIV on staff continuity, developing a commercial culture.

It very quickly became evident that after the initial surprise over the Gap Analysis the workshop teams were enthusiastic, committed and delighted to have an opportunity to engage with the future of the business in a meaningful way. The workshop sessions were extremely lively with an eclectic mix of assessments, ideas and proposals. 

It is not practical to go into detail in this synopsis of events suffice it to say that after the SWOT sessions analysis and prioritisation process the Groups reached agreement on the main areas to concentrate on when tackling strategy formulation.

The final session provided a forum for the workshop groups to put forward their preferred outline strategies to tackle the identified issues and close the Gaps identified in the opening session. The Planning Team confirmed that these ideas would be studied and a final selection of not more than six would be made by the planning team. Following this, a feed back session would be held. It was agreed with the Planning Team that they were confident to complete the next phases in house with Argenti participation limited to a helpdesk facility for the Planning Manager.

Stage 4 (‘The Strategies’)

The complexity of the issues raised made evaluation of the options and selection of final strategies a time consuming process for Zesco.They created action teams to undertake detailed analysis and assessments and report back to the Planning Group. After several months they developed a range of strategies that were feedback to the Workshop Groups. From this emerged a selection of workable strategies that were identified as appropriate to reduce the Gaps.

Stage 5 (‘Completing the Plans’)

This aspect of the process proved to be difficult for The Planning Team. They were obligated to submit for verification by the Ministry and the World Bank detailed information relating to the strategic assessments together with robust implementation proposals. The initial draft plan was reviewed by the Ministry and the World Bank but was returned requesting significant clarification.

Argenti Associates were requested to help in resolving some of the issues raised and a further one week visit was arranged. During the course of the visit we worked with the Planning Manager and the planning team to produce a revised Plan addressing the issues raised by the Ministry and World Bank. This culminated in a meeting between the Bank, the Board of Directors and Argenti at which the revised plan was accepted by the World Bank as a working document on which future reviews would be based thus triggering the release of capital investment funds.

The Bank were very appreciative of the amount of work done by the Company and praised the contribution of the Argenti System.

Comment.

It is of interest that, even in these unusual conditions (a developing nation, an organization midway between being an NPO and a profit maker, and so forth) several of the phenomena that Argenti Planning Facilitators often observe were again in full evidence. This includes the startling effect that the Gap Analysis often has on Directors in Stage 2, the great surge in morale following the SWOT Workshop in Stage 3 - almost regardless of the extent of the bad news revealed, and the eventual emergence in Stage 4 of an agreed set of effective strategies.