The EFMD business magazine

The EFMD business magazine

From rational strategies to emotionally rich business journeys: The Gas Natural Fenosa case

Andrew Rutsch sheds light on the Spanish energy firm’s evolution to an international sector leader.

The shift from the industrial to the information age is on its way. After two world wars in the last century, people were longing for a calmer life and satisfying basic needs such as TVs, cars or holidays abroad. The economy was thriving, firms competed primarily within their industry boundaries, and change was rather incremental. In that environment, businesses were able to profitably grow by creating and exploiting knowledge-based assets – core competencies, intellectual property and functional expertise – that delivered rational value: computers with stronger CPUs and memory, TVs with better resolution and so forth.

The shift away from the rational industrial age

In today’s uncertain information age, doing business is shifting. Offers to choose from are abundant, capital and labour much more mobile, traditional businesses under attack by new entrants (think Amazon, Google, Apple, Airbnb, Uber) and saturated consumers seek both performance and meaning – altogether driving incremental and radical change. Factor in the advent of digital technology that accelerates the flow of information and fast-forward a few years: the convergence of knowledge is close. It becomes less exclusive and increasingly difficult to use as a differentiator.

Hence, creating a new knowledge-based advantage that delivers rational value may be a ticket to the game. To win the game, however, requires routinising and emotionalising such value creation. For example, Stengel (2011) in his ten-year growth study found 50 businesses that outperformed the S&P 500 index. In the case of Starbucks, one of the growth stars, he found that its revenues attributed to emotional connection grew from 26% in 2001 to 57% in 2010. In the same time period, FedEx, another star, lifted this same metric from 17% to 55%. While this influence is commonly accepted by B2C companies, B2B companies such as German growth leader Kuka, a robotics company, are proactively catching up.

The last EFMD CLIP Sharing Best Practice Workshop hosted by Spanish international energy firm Gas Natural Fenosa on 20 March 2015 in Barcelona, Spain, provided rich insights into this shift. The workshop theme was focused on developing middle management as the strategic lifeblood of enterprises but the exchange soon evolved into a discussion of how people and businesses should be led in today’s information age.

Gas Natural Fenosa – from national to international sector leader

The evolution of Gas Natural Fenosa provides an illustrative example. It can be grouped into four major steps:

  • 1843 – 1912: Beginnings
  • 1912 – 1987: Expansion in the Iberian Peninsula
  • 1987 – 1992: Consolidation in the gas sector
  • 1992 – 2015: International business expansion and diversification

From rational strategies to emotionally rich business journeys: The Gas Natural Fenosa case

See more articles from Vol.09 Issue 03 – ’15.

Andrew Rutsch is engaged in research and advisory on how enterprises and ventures become value creation champions. He received his Doctorate from the University of Pennsylvania, US, at the intersection of economic and neuro sciences. He is based in Zurich, Switzerland.

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