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.
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.”
Strategy delivery is as important as strategy design
To 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.
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