14 March | Agilium Worldwide
March 2023 – “The energy sector needs a new kind of leader” written by Tuomos Leinonen from Johto Advisors – Agilium Worldwide’s executive search firm in Finland
The expanding energy sector needs multidisciplinary expertise!
Traditionally, the energy industry was the domain of “technical people”. Typically, CEOs had a technical academic background and worked in the energy sector all their working lives. In recent years, however, major changes in the energy sector have been having an impact on the classic CEO profile. What used to be a concentrated and regulated industry has become more fragmented, and business has become two-way. Energy is not just being produced, sold, and distributed to consumers, but now consumers themselves can be energy producers.
A result of this transition is that technically oriented leaders are being accompanied by economists and environmental leaders, as energy production is often linked to the economic, environmental and climate change debate. In fact, the energy industry is likely to gradually transform into a software world, where customer behavior and energy flows are managed and controlled by smart technology. Needless to say, the profile of the future CEO will comprise more and different skills and qualifications. And so, professionals from the business, marketing, service, and IT sectors will also be able to compete for executive positions in the energy sector.
A new type of CEO handles the networks
The broad-based and diversified energy sector has become an exciting workplace for various kinds of talents, and there is a huge need for different educational backgrounds and work experience. What was previously a highly regulated industry is now starting to resemble “ordinary” business consisting of value chains and networks.
Considering the industry’s current and future revolution, the CEO profile needs to be built on versatile work experience. Of course, candidates for executive positions should be familiar with some aspects of the energy sector, but it is also useful to have experience in other sectors. For example, an energy sales company benefits from strong B2C and brand expertise, a service company from excellent technology, software, and commercialization expertise, and a production company from a broad understanding of the utilization of renewable energy. Most importantly though, is that the candidate recognizes the analogies between different fields, and is familiar with the network-like business consisting of multiple partners at different levels.
The collaboration between the board and the CEO determines success!
The selection of the CEO of a company in the energy sector is mainly the responsibility of the corporate board. Up to now, the energy sector doesn’t seem to have had the courage to select the new type of CEOs on a large scale. Many boards are frozen in old traditions and don’t dare to update the CEO profile with a view to the future.
As seasoned executive search consultants we frequently conduct searches for the energy sector’s top management, and we actually seek diverse candidates for the board interviews. In this way, the board can consider contrasting candidates and their added value. At the time of decision-making, however, boards still often play it safe. But, the era of the new type of leader is imminent. The decision-makers just need to have enough courage to select differently.
The most important thing for every top executive is the collaboration between the board and the CEO. If the board doesn’t fully support the choice, it will be difficult for the CEO to succeed. The best results can be achieved when boards in the energy sector become stronger and take on a more active role, like in the export industry. In this way, the CEO will receive the right amount of support and leverage to implement the company’s strategy, and positively impact the company’s success in the changing market situation.
Tuomos Leinonen, Senior Partner at Johto Advisors (https://johtoadvisors.fi/en/)
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