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Power to the people: Energy’s decentralized future

15 November 2022 in Videos

Jean-Pascal Tricoire, CEO and chairman of Schneider Electric, tells IMD President Jean-François Manzoni how decentralization drives his corporate thinking....

Jean-Pascal Tricoire, CEO and chairman of Schneider Electric, tells IMD President Jean-François Manzoni how decentralization drives his corporate thinking.

After 16 years in charge of Schneider Electric – seven as CEO and a further nine as Chairman – Jean-Pascal Tricoire has clear views on what keeps him motivated. “You have to be very stubborn strategically and very agile tactically,” he said. “If you have your goal post in place, always pulling you some years ahead, then what’s important is to have your mindset on the next two steps – because that’s what keeps you really excited and busy.”

Belief in himself also helps. “I’ve been with my company a long time, and I think I know its business really well. I also believe, whatever people say, that competency is still really important – because with that knowledge you can really innovate. You understand those micro points and micro settings where you can find the spot that makes a difference.”

For Schneider Electric, making a difference centers on bringing technology and expertise to best manage energy – specifically sustainably produced electricity. “From the beginning, our specialty is wanting to be the partner of our customers in making them more efficient and more sustainable – to achieve more while using far less resources,” he explained.

Competency
“Whatever people say, competency is still really important, because with that knowledge you can really innovate.”
- Jean-Pascal Tricoire

Making this possible now are two great disruptors. “First, the one arising from that combination of having everything connected via the Internet of Things and the huge lakes of data to deploy software and artificial intelligence to connect and optimize everything. And second, the emergence of decentralized, decarbonized energy – very expensive at the beginning, but soon to be very cheap.”

The outcome will be world changing. “Once you have reduced consumption and everything is connected, you can also become a producer [of electricity],” he said. “You can have a micro grid, you can have solar panels, you can have storage. So your home, your building, your manufacturing facility can become to a large extent independent.”

Unshackled from power grids means you don’t have to do it the old way, which was all centralized. Instead, everything can be done at the point of demand. “Thanks to the Internet of Things, thanks to software, thanks to [digital] control [systems], everything could be made infinitely more efficient so that you save a lot,” he added.

And the outcome? A very different future. Not just one where the two billion people still without access to reliable electricity will finally get the power they need to transform their lives, but one where everyone can play a role in tackling the world’s biggest problem. 

When you decentralize energy like this, you empower everybody to participate in the resolution of climate change.

Hubs out of Hong Kong

Tricoire explains his outlook in terms of a lifelong interest in taking a different path. “I chose unconventional jobs for the first 15 years of my career. Jobs that nobody wanted to have; outside of the mainstream, doing things that were very risky, very uncertain. That drove me to work with small and medium companies in Italy, then to a Schneider team in China in the 1990s – when nobody wanted to go there – and then to Africa, at a time when it was difficult to go to Africa.”

Those experiences taught Tricoire about the benefits that a company such as Schneider Electric could bring to the world. “Such places are where you realize that energy is an absolutely fundamental right for everybody on the earth; it’s access to a decent life.”

They also suggested a new direction for Schneider, a company which at that time was far smaller than its main competitors. “The only way for us to get to critical size was to go to places which were less comfortable, but which would become the center of gravity of the reorganization of industrialization and digitization – which, of course, meant going very quickly to emerging countries.”

Tricoire could have done that while keeping Schneider Electric’s headquarters in France, but he opted for a more radical solution.

“The more complex the situation, the more companies tend to centralize to gain more control,” he explained. “In my view, that’s an illusion. As more systems become complex, the more you have to decentralize – because people can then manage in a much more agile way as they adapt to those complex situations”.

I don’t believe in big. I believe in fast. To go faster, what is important is to have teams completely in sync with their language, culture, and people within their ecosystem.

In 2011, Tricoire relocated himself and some members of his  team to Hong Kong to put in place a multi-hub structure built around regional markets.

“That was started by one simple thing – me moving. But not just me: it took family sacrifices by many people in my leadership team. But we wanted this project, so we had to show by example,” he said.

“I believe that the world will be global, but as more and more countries exit to prosperity the difference in cultures will reappear in a very strong manner. So it was important to define a model that would benefit from being global, but at the same time would put decisions where the difference is made – which is by region.”

The gamble paid off. Today, Asia is Schneider Electric’s largest region, accounting for more than 30% of its business, ahead of North America (just under 30%) and Europe (25%). Overall, emerging markets, from being just 10-15% of the company’s revenues two decades ago, now account for around 40-45%.

“Because we had to learn a new base, a new speed, and a new capacity of adaptation to different terrains, that really changed our thinking,” he recalled.

SDG guidance

If completely aligning purpose and sustainability is the target of Schneider Electric’s strategy, and distributed responsibility for implementation is its means for realizing its goals, how best to align its people? “What remained was to find a behavior for our people [that aligned with this],” said Tricoire.

Schneider Electric’s answer was to become one of the first adopters of the UN’s Global Compact, the 2000 declaration aimed at encouraging businesses to adopt sustainable and socially responsible policies. “That defined what we are: it aligned us on sustainability.”

The Compact’s augmentation with the Sustainable Development Goals in 2015 allowed Schneider Electric to refine this approach further. Not only does the company draw up its plans every three years using criteria drawn from the SDGs, but they are also used to determine the bonus of employees – from the lowest level to the very top.

Schneider Electric’s progress towards integrating sustainability into its operations led in 2021 to it being placed top of the Corporate Knights’ Global 100 Most Sustainable Corporations, a ranking of more than 8,000 companies with revenues of $1 billion or more.

 

Watch the full dialogue to find out more about Jean-Pascal Tricoire’s views on recruitment, simultaneously holding the posts of Chairman and CEO, the political responsibilities of corporate executives, and the role of luck.

Expert

Jean-François Manzoni

Jean-François Manzoni

IMD President

Jean-François Manzoni is the President of IMD, where he also serves as the Nestlé Professor. His research, teaching, and consulting activities are focused on leadership, the development of high-performance organizations and corporate governance.

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