The Green Campus

Turning Energy Efficiency into

A Source of Competitive Advantage

McKinsey
Capability
Center

GREEN
CAMPUS

FOREWORD
Mads Lauritzen
McKinsey Green Campus Global Leader

Driven by rising energy costs and the pressing need to save

our environment, the energy efficiency agenda is making its
way into the Boardroom of many corporations.
Equally important, energy efficiency also offers a real opportunity to build a source of competitive advantage for
the corporations that master the capabilities, management
systems, and tools required to transform this area of "continuous energy improvements" into a part of the corporate
culture or DNA.
Seen from this angle, "Green is the next Lean" and can generate the next S-curve of value generation, while contributing
to brand building through environmental citizenship.
However, green transformations, like all other transformations, are easier said than done. The fact is that most transformations fail to sustain impact. In response to this, McKinsey
has launched the Green Campus in collaboration with the
Government of Singapore to help corporations build precious capabilities needed to drive substantial energy efficiency improvements that can be scaled and sustained across the
organization. This is achieved not by classroom training, but
through "learning by doing" in a unique experiential environment situated in a live refinery on Jurong Island - the Green
Campus.
McKinsey is truly excited to help corporations take advantage of "Green as the next Lean" wave and build a sustainable competitive advantage through the capability offerings
at the Green Campus.
1

ergy challenges are arising

World oil prices

$/barrel (real terms in 2009 $)

New energy challenges

are
120
100
arising
80

+2% p.a.

news that oil prices will continue

60
is no news that oil prices will continue to rise
World oil prices
amid the fastItamid
growing
demand
40$/barrel (real terms in 2009 $)
the fast growing demand from emerging
merging economies
andriskrisk
of supply, posing a 120
economies and
of unstable
20
significant
cost impact across many industries.
e supply, posing
a significant
100
0
80
pact across many industries.

+2% p.a.

1995
1996
1997
1998
1999
2000
2001
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2002
2003
2004
2005
2006
2007
2008
2009
60
40

um up the annual energy costs

worlds top 10 energy-intensive
es, it will beIfawebill
to
sumamounting
up the annual energy
8 trillion. costs of the worlds top 10 energy-

20
0
1995

2000

2005

2010

2015

2020

2025

intensive industries, it will be a bill

amounting to USD 1.8 trillion.

more than the GDP of India

This is more than the GDP of India
argest economy
in the world!
the 9th largest economy in the
world!

Failed
trans
65
formations

35

Successful
transfor mations 2

making energy efficiency a strategic

imperative in this decade

making energy efficiency a

strategic imperative in this decade

By implementing energy efficiency

improvements, companies can reduce
energy costs by at least 10-15%.

At the same time, the corresponding CO2

reductions can reach 1.8 gigatons, which
translates to a potential 4% reduction in global
greenhouse emissions.

Unit of measure

This makes energy efficiency a strategic

By implementing
energy
initiative
worth over USD
300efficiency
billion! improvements,
companies can reduce energy costs by at least 10-15%.

Text

This makes energy efficiency a strategic initiative worth

over USD 300 billion!
Industry
sector

Achieved energy savings in % of total energy costs with payback

of up to three years
0

10

20

30

40

50

Aluminum
Steel
Cement
Coal mining
Metal ores
mining
Chemicals
Pulp and
paper
Glass
Oil refining
Food and
beverage

* Footnote
Source: Source

At the same time, the corresponding CO2

reductions can reach 1.8 gigatons, which
translates to a potential 4% reduction in
global greenhouse emissions.

However, Green Transformations

are extremely difficult to sustain
However, most efforts fail, as companies underestimate what it takes
to realize this and maintain the improvement. Often at the heart of
the failure is an insufficient focus on the non-technical aspects of
transformation.
1. Not enough leadership capacity
2. Lacking capabilities and
knowledge
3. Poor accountability and
performance dialogues

Failed
transformations

90

10

Successful
transformations

4. Misalignment of aspirations
across organization

This leaves CEOs to wonder

How do I establish a
substantial,
scalable, and
sustainable
transformation approach?

McKinsey has developed an

integrated transformation model
Technical
system

Management
system

The technical
processes,
decision support
tools, systems
and resources
that create value

The formal
performance
management tools
and systems (e.g.,
metrics, meetings,
roles) supported by
the right
organization
structure to drive
results

People
system
The right people with the right
skills, mindsets, behaviors and
ownership, both individually and
collectively

As lasting Green capabilities are bestbuilt in an experiential environment

All empirical studies and research suggest
that adults will best build lasting capabilities
through learning by doing in a natural yet
risk-free environment.
Knowledge retained from different learning approaches

Books and
PowerPoint

Simulations
and games

32%
Knowledge by

Hearing

Pilot for a lean

transformation

65%

65%

McKinsey
Capability
Center

10%

Learning by

Shop floor
training

Seeing

GREEN
CAMPUS

Doing

Doing

the Green Campus uses a live

refinery setting to teach participants

A snapshot of what
you will see when
you visit McKinseys
Green Campus in
Singapore
The Green Campus leverages the
Chemical Process Technology
Centre, which is wholly managed
and operated by Petrofac Training
Services.
Package 2: Heat Exchangers
Create understanding of impact of
circuit design and maintenance on
heat transfer efficiency
Demonstrate impact on parameters
by changing flow

Package 3: Distillation
Understand requirements to
maximize profits by optimal
distillation
Understand operational costs &
tradeoffs required to achieve this

Package 1: Furnace
Create understanding of waste in
energy transfer in furnace
Demonstrate levers to improve
furnace efficiency
Conduct live, interactive changes to
realize impact

Package 4: Cooling Water System

Introduce elements of pumping
system design
Demonstrate levers to improve
pumping efficiency

Package 5: Air Compressors

Create understanding of waste in
compressed air production and
consumption
Conduct live tests, monitor impact on
power usage

Package 6: Fin Fans

Introduce concepts to optimize usage
of fin fans

The learning experience at Green

Campus is brought to life
Comprehensive toolbox with 21 training
management, and people systems

modules across technical,

Proprietary Resource Efficiency Deployment Engine (RedE) web-based system

with close to 100 energy saving levers

Real-life 2-year transformation

accelerated over the curriculum

Cross-functional role-plays of

business case

8 key organization appointments

to simulate real-life scenarios

2 custom-made iPad apps to provide interactive learning on

6 plant systems in the Green Campus
10

...through a suite of experiential

and interactive learning tools
Example: RedE database system

Proprietary database of
energy saving levers

s in 2009 $)

2005

+2% p.a.
Instant estimation of energy
and CO2 savings

Detailed explanation on
how to execute lever

2010

2015

2020

2025

End-to-end project
management of initiative

Industry
sector

Steel

Achieved energy savings

% of total energy costs0
0

10

20

Impact achieved
Min
Max

30

40

11

A typical day in Green Campus

10:00 am

09:00 am
Check-in with Omcos
CEO and track progress
against 30% energy
efficiency target

11:00 am

Participate in lecture to
learn how to identify
and quantify energy
losses on the shop floor

Practice concepts and

consolidate new knowledge with interactive
apps, polls, and quizzes

12

01:00 pm

03:00 pm

06:00 pm

Go and see concept

applying technical concepts at the plant to identify energy losses

Use role-plays to learn

communication & collaboration skills needed to
drive effective change
management

Syndicate plan of action,

launch corrective actions,
and drive performance
dialogues

08:00 pm

Pool together best p

tices, share key les
learnt, and build re
ships with colleagu
faculty

10:00 am

09:00 am
Check-in with Omcos
CEO and track progress
against 30% energy
efficiency target

11:00 am

Participate in lecture to
learn how to identify
and quantify energy
losses on the shop floor

Practice concepts and

consolidate new knowledge with interactive
apps, polls, and quizzes

is filled with interactive and

practical learning sessions

01:00 pm

03:00 pm

06:00 pm

Go and see concept

applying technical concepts at the plant to identify energy losses

Use role-plays to learn

communication & collaboration skills needed to
drive effective change
management

Syndicate plan of action,

launch corrective actions,
and drive performance
dialogues

08:00 pm
Pool together best practices, share key lessons
learnt, and build relationships with colleagues and
faculty

pm

her best pracre key lessons

d build relationh colleagues and
13

Accreditation of fieldwork
leads to lasting results
The Green Campus energy efficiency certification
system is a structured pathway to black belt level
that consolidates learning at every stage and
ensures lasting results of Green Transformations.

Green
Architect
Sr. Expert
Green
Expert
Green
Practitioner
0-6 months
Practicing
Learn by doing
following an
expert

14

6-18 months
Teaching
Coach others
without leading

18-36 months
Maintaining
Mentor larger
group of
experts and
maintain
knowledge

36+ months
Architecting
Design
integrated
people and
transformation
programs

Profiles of our expert faculty

Dr. Mads Lauritzen, Expert Principal, Bangkok
Mads has over the past 13 years led some of
McKinseys largest operations transformations
globally, and today heads McKinseys South East
Asia Operations practice. Mads is the Global Leader
of McKinseys Green Campus.

Dr. Pieter Hoek, Senior Expert, Singapore

Pieter brings deep expertise accumulated over 25
years with Shell, Thai Oil and Alliance Refining Co.
He was a founder of the energy efficiency program
at Thai Oil from 1999. He also led the Global
Business Process Standardization initiative for
Shells manufacturing supply distribution.

Thomas Koch Blank, Expert Associate Principal,

Stockholm
Thomas Koch Blank has helped multi-national
companies especially in the basic materials
and mining industries, to improve their energy
efficiency, both at a company level and through
industry wide effort.

Bryan Siow, Engagement Manager, Singapore

Bryan has over 12 years of refining and petrochemical
experience. He led many transformations for several
large downstream clients. He is part of McKinseys
global Oil and Gas practice. Prior to McKinsey, he
worked for ExxonMobil.

Dr. Ken Somers, Senior Expert, Antwerp

Ken has served clients across all industrial sectors,
including refineries, steel makers, and specialty
chemicals producers across Europe, Middle
East, North America and China. He leads Green
Transformation knowledge development within
McKinsey.

Khoon Tee Tan, Principal, Jakarta

Khoon Tee is one of the leaders of McKinseys Lean
Operations Practice in Asia. Over the past 9 years,
he has led a wide range of client engagements
across industries and throughout Asia and Europe
on topics of performance transformation, lean
operations improvement, and growth strategy.

Harsh Choudhry, Specialist, India

Harsh is a Specialist Consultant with McKinsey's
Energy Efficiency service line. Energy and
sustainability have been his focus for the last
5 years. During this time he has completed
several energy efficiency projects aimed at
plant improvements, company strategies and
government policy, across Asia, Europe and USA.

Markus Hammer, Senior Knowledge Expert, Lisbon

Markus is responsible for managing the global
Resource Productive (a.k.a. Green) Operations service
line. He has delivered distinctive solutions and
insights on operations topics such as lean, green and
capability building to clients world wide. He is one of
the top-authors on McKinseys Operations Extranet
and a member of McKinseys global Model Factory
management team.

15

The Green Campus draws on a wealth

of Green expertise and know-how...
McKinsey has a long track record in Green Transformations. In fact, Green
Transformations are our largest area of activity globally. Over the past 5
years, Green Transformations alone account for 28% of our activities or
more than 500 projects, a significant portion of which took place in Asia.

Research on transformational change

Experience with transformational change

4,000

Executives surveyed providing input on

transformational change attitudes and
practices

2,400

Transformational change engagements

reviewed to distil lessons learned in the
past two years

% of transformation programs by industry

100% = 2,400
Other
Auto and assembly
Energy
Travel and
logistics

300
20
2

16

Interviews conducted with clients and

experts, including people in learning,
human capital/HR, strategy, operations,
and sales/marketing
Tours of globally advanced learning
companies completed
Years dedicated to developing and
refining our understanding

Consumer
goods/retail

Financial
institutions

Technology
Pharma/
healthcare

...to meet the needs of various

industries

Our Green Campus can help companies of all sizes

across the process industry succeed in their Green
Transformation journeys.

Oil refining

Pharmaceuticals

Metals processing

Gas processing

Power generation

Petrochemicals

District cooling

Large scale
food processing

Waste treatment

Large scale beverage

producers
17

Curriculum offerings can be tailored

to different levels of participants
Did you know?
Multinationals / Asian
Tigers
CXO

Small & medium

enterprises (SME)

11 1-day Excite and Engage program

Change
Leaders/
Middle
Managers

5-day end-to-

22 end Kick-start
training

6-12 month Learn,

33 Connect &

Activate program

With energy transformation, a smallsized steel company with annual

revenues of SGD ~16 million can
expect annual potential energy
savings in the order of SGD 450,000
Energy savings vs. program cost
SGD thousands
450

CASE EXAMPLE

17x
Frontline Force
27
Potential
energy savings

Estimated
program cost 1

1 Per pax cost estimation is based on Learn, Connect, & Activate SME program; actual cost may vary with the size of transformation,
number of change agents sent for program, and total number of participants per class

18

starting from the top:

starting
from example
the top:
CxO training
CxO training example

11 CxO Green Ops Excite and Engage

09:00

Welcome address, agenda for the day, objectives and expectations

09:15

Safety briefing and ground orientation

09:30

Introduction to Green Campus: what is the imperative of energy efficiency?

10:15

Understanding how Technical Systems fit in the overall transformation

10:30

Load curve module - Theory

10:45

Green Campus plant walk and participant role-plays

11:15

Load curve module Synthesis, presentation, feedback

11:30

Performance dialogues module - Theory

11:45

Participant role-plays on performance dialogue and providing feedback

12:00

Performance dialogues module Synthesis, presentation, feedback

12:15

Lunch

13:00

Transformation design module - Theory

13:15

Real-life transformational business case

14:00

Transformation design module Synthesis, presentation, feedback

14:30

Wrap-up and next steps

15:00

Departure

19

19

20

Best practice toolkit on

technical systems...
Best practice toolkit on technical systems
T1

Energy value
chain

T1:Energy va luechain

Theenergyvaluechainisaframeworktohelptrackenergy
throughasysteminasystematicandexhaustivemanner
Howisenergy
Purchase

purchasedfromutilitycompa nies?

tra nsformedfromoneformtoanot here.g .,na tura l

ga stostea m?

tra nsporteda nddistributedf romsourcetoenduses?

consumedbyitsf inalendusers?

...whichiseithergeneratedorpur cha sedbyplant

sold/re soldoutside?

resultingfr omoneprocesssharedwithanot her

process?

Makeup

Map and quantify

energy as it flows
through system

Transportation

Consumption

Sales

Interaction

SOURCE: Mc Kinsey

Energy loss
framework

T4:Energy lossfra mework

Acrossthe3avenues,wemustthensearchforthe9distinct
cau sesofenergyloss
Lo s ses
IN

1. Sub o pti ma l
en ergy s ou rce

U sageof su bop tim altype o f en ergy for pr oces s e. g., die selu se d
i ns tead o fgas infur nace, ga swi thlo w he atco nte nt us ed

2. Sub o pti ma l
ra w mat eri al

U sageof raw m ateri al s wh ichla ckreq uired q ual iti es e.g. ,lo w
q ual ity or eu se din b las tfu rnac e , air com pres s or takinginho t air

3. Con ver si on
i neff ic ie ncy

I ne ffic ie nt conve rsi on fr omone e ner gyfor mt oa no ther . e. g,

i nef fic ien t furn aceo pe ration res ul ti ng in w ast in gfu el

4. Tran sfe rlos s

Identify energy losses

I ne ffic ie nt tran sfe rfr omon em edi um/ lo catio n toan oth ere .g. ,
h eatlo st in n on ins ul ated p ip e

6. Exce ss iv e
Sto rag e
7. Over p roces s in g
8. Re pr oces s in g

O UT

9. Lo w re co ver y

P roc es sing at hi gher level th anre quired e .g. , en ergyco ns ume d in

p roc es sing be yon dq ual it yre qu ire ment s

R epr oces si ng ofoffs pec mater ial s e. g. ,faul tyo per ati ons lead in g
to p ro ducts b ei ngfed bac k int o pro du ct io ncycle

L ow rec over yo fu nus ed en ergy e. g. , hot fl ue gas re lea sed i nto t he

at mos ph ere

1
D escribe

Map

3
Quantify

Describe wha t
? Tr aceenergy flow
happenswith
throught heva lue
energ ya teachstep cha intobuilda
ofthevaluec hain
visualguide

Createanenergy
balanceaccounting
f or e achstepinthe
energ yv aluecha in

Consolidate
qua ntifica tionfora ll
utilitiesint oasingle
structure

Createindividua lly
forea chpurcha se d
utility

Cr ea te individua lly
foreachpurchased
ut ility

Createindiv idually
f or e achpurchased
utilit y

Createacrossunitor
pla nt

Endproduct

Qualitat ive
descr ipt ion
descriptive
sta tements

Energyflow
? Energ yflow
diagram simila rto quantification
aprocessflow
wa terfallchar t
diag ra m,but
tra cking energ y
insteadofaprocess

Utilitymatrix
sprea dsheetbased
ca lcula tor

GreenCampus
module

Energy va luechain

Cur rentsta te
analysis

Currentstate
a na lysis

Curr entstat e
a na lysis

Load curve

T5:Loadcurv e

Loadcurvescanbeoftwotypesandeachservesdifferent
purposes
Throughputbasedloadcurveissuita blefor

Energy intensit y
tSRF/100tonfeed

Ener gy intensity
t SRF /1 00tonfeed

Sampledata point s
Theoreticalloadcurve

Apr1

Ma y1

J un1

Jul1

Aug1

Theoreticallimitistheminimumamountofenergy
requiredtheoreticallyforasystemtofunction

ILLUSTRA TIV E

Energyconsumptionpe ryear

? WhereamItoday?
? Whereshould Ibe?

Actu al Op erationalDesign limit

consu mption losses

Des ign
losses

0 100

110

120

130

140

150

Identify minimum level

of energy consumption

Th eoreticallimito fa
systemisits en ergy
consu mptionina
hyp oth etic alsituation
wh ereallth eenergy
in putistransferred to
an dus edbyits en d
objectivei.e.,no
energylosses

? H owfarcanIgo?

Th eoretical
limit

T6

Process parameter
analysis

Quantify operational
losses (distillation
column as example)

Quantify losses due to

sub-optimal control of
key para-meters
(furnace as example)

Date

deviationsr esulting f romspecificeventsintime :

Use dwhent hereisminima ldeviationint hroughput
overtime

Theoretical limit

T3:Theor etica llimit

SOURCE: Mc Kinsey

Time basedloadcurveisusefultospot

T3

? Whatarethedrivingforcesb ehindthegap ?
? HowdoIquantifyan dclosethisgap?

T5

0
Ma r1

Current state
analysis

Create energy
consumption baseline
along energy value
chain

Consolidate

U nnec e ss arylos s o fen ergydu rin gs to ragee.g., l on gd ur atio n of

s tor ageof heat edmate ria l inno n in su late d st orage tan ks

Task

5. Ener gyi nt en sive ? En ergy con su mption w hile p rod uc ti on is s to pp ede. g., air
do w nt ime
c om pre ss or ru nni ng even a ft erpl ant sh ut dow n

SYSTE M

T2:Currentstatea nalysis

Followastepbystepprocessalongtheenergyvaluechainto
createtheenergyconsumptionbaseline

SOURCE: Mc Kinsey

T4

T2

160
Feed
ton

dev iationsre sultingfr omsuboptimaloperation:

Usedwhenthereissubsta ntia ldeviationin
throug hputov ertime

Fo otnote: SRF referstoS ta ndRefining Fuel, au nit tome asure energ ytypically use d in the re finingindustry
SOURCE: Mc Kinsey

T7

Pinch analysis

T7:Pincha na lysis

Simplifiedexampleofpinchanalysis:Currentstate
A =Steam
Feed

?
?

Pro duc t

Reactor
200C

80C

90C

Steamis used toh eat up Feed tofrom80Cto20 0C

After thereaction inreactor, coolingw ateris us edto co ol
dow nProd uct fr om200C to 90C
Energyr equir edinth eheati ngs tepcanb etaken fromth e
coolings tep!

B =C ooli ng
water

F ee d

Temperatu re
C

Produ ct

A =Steamsys tem duty

2 50
2 00
1 50

1 00

50

0
100

200

300

400

500

600

700

Repres entingtheaboveon agraph:

X axisi s usedt os howthequantityofheat beingp utint o
orremovedfromp roces s
Y axis i sus edto sh owc hangei ntemperatureofprocess
s tream
TheFeed (green )isheatedfrom 80Cto 120C andreq uires
400kW ofheat
ThePr oduc t(orange)is cooled from200 Cto90Can d
requires200kWo fheatto betakenaw ayfr omit
Sinc enoheati sbe ingexchanged ,b othl inesarekept
ind ependento nthe x axis

T8

Network loss
analysis

Quantify losses due to

sub-optimal reuse of
heat (heating network
as example)

T9

Motor analysis
Quantify losses due to
inefficiencies in motors
and their applications

Quantify losses in
distribution networks
(compressed air
system as example)

80 0

Heatconten t
kW

B=Cool ingw aterduty

SOURCE: Mc Kinsey

11

T10

Cost curve

T11: Costcurve

Demandprofilesaremappedversuscostcurvesbyenergy
typetoidentifypotentialtoenergycost
Demandprofile

Costanalysis

175MWissufficie nt90%ofthet ime

st eamisrequired
MW
300
275
250
225
200
175
150
125
100
75
50
25
0

SOURCE: Mc Kinsey

Cost/Output
/MW
Maximum
demandof
250MW

Morethan175MWneed
only10%ofthetime

Boiler
3

Lessthan110MW
need50%ofthe
t ime

Boiler
4

Boiler7
Boiler6
Boiler
5

Boiler2
Boiler 1

50

Time,percent
100%=365da ys

50

100 150 200 250 300 350 400

Boilercapacity
MW

SOURCE: Mc Kinsey

Fourboilersare
suf ficientto
gene rate175MW
ofst eam;7boilers
inoperation

Comparing
utilitiesdemand
overtimewiththe
utilitiescostcurve
mak esitpossible
tore ducecost
(e.g.,shutting
downboilers)

Quantify losses due to

energy demand-supply
mismatch (cooling
systems as example)

T11
T10: Ener gysourcing

Minimizingunitpriceofenergyrequiresiterationacrossutility
mix,supplierchoiceandp ricingnegotiation
Cur rent sta te
Howmuchener gy
isrequir edand
whereisitused?

W hattouse?
W ha ttypeandqualit y?
D owebuyt heutilit yor
g enerateitourselves?
2

Approachto
reduceunitpriceof
ener gy
Howmuch
topa y? 3
Howmuchtopay?
Howtoopt imize
existingcont racts?
Howtonegotiate
newcontra cts?

Energy sourcing
Determine right
sourcing strategy

T12
T12: Contracts

Atypicalenergycontracthasfourimportantelements price,
duration,offtakecommitmentandsupplyguarantees
USD/MWh

Price

Wheretobuy
from?
Whatisthe
sourcing
model?
Whatar ethe
selection
criteria?

E le ctrici ty price
H SFO 18 0 price

Du ration

0. 52 years

25years

Short

Medium

Offtake
commitmen t

SOURCE: Mc Kinsey

Lo ng

De ma n d

15

SOURCE: Mc Kinsey

l d

e r

Supply
guaran te es

O
c

w
a

U
c

U
in

16

520+ year s

Vari ab lec omponent

Baseload takeorpay
P o w
M
W

Contracts
Structure and optimize
contracts

t ili t y t r i g g e r s
t e r r u p t io n c l a

n
p

t i
a

s
a

l i t y
a

p
i t

s
i t

T
u

im

s e

17

SOURCE: McKinsey

21

...management systems...

Best practice toolkit on management systems

M1
Throughthecurriculum,youwillexperienceacomplete,
M1:Transforma tiondesign

Transformation design

accelerated4by3 energyefficiencytransformation
Gre en camp uswilldem on st rate .
an en dt oen d Pr epa re
4 st ep en ergy
Bu ild bas el ine
e fficiency
t ran sfo rma tion

Diagno s e

De sign

Id ent ify los s es,

de fin el evers

Des ign
tr ans form atio n
ro ll ou t

alon g3 h olis tic T echn icals ys tem

t ran sfo rma tion
? Diagn os e e ner gylos se s
d im ens ion s
? Ide ntify and q uan tify
impr oveme nt leve rs

Understand overall
transformation framework:
technical, management and
people systems

Imp lemen t and

s u sta in
P ulseche ck
i mp leme ntat io n
p ro gres s
Man agem en ts ys tem

M an age with the

right KP Is
Su st ain t hro ugh
s tru ct ured
p erfor mance dial ogu es

Peo plesys tem

?
?

M2
Managementandpeoplesystemscanbediagnosedusingthe
M2:Energyperf orma ncerev iew

9dimensionsoftheEnergyPerformanceReview
ElementsoftheEnergyPerformanceReview

External
orientation

Coordination
andcontrol

Capabilities

20

M3
PerformancemonitoringcoversKPI metrics,targets
M3:Performancemonitoring

Focus of mo dule

andworkplacevisualizationinperformancemanagement

Motivation

Effective
performance
management

Performance monitoring

Action
plans

M4
Thewill andskillleveloftheorganization,andurgencyof
M4:Implementationroadmap

Implementation road map

changecaninfluenceimplementationstrategy
Rec omm it toexcellence

Oly mpictraining

O rg anizationi s capablebut does

nothav etheconvictionorrea l
pressure tore achthe nextle vel

Orga niza tionhasthe skill

and commi tme ntto drive
toward longtermsuccess

S kil l

Org ani zationisca pabl eto

improve nowbutla cksconv iction

Wha t isthe
level of
capa bil itya nd
performance
inthe
org anization?

S treng thentheteam
Orga niza ti onmustimprov e
and ha s conviction andtime
todo so

Rebuil d forthefuture
O rganizationmust
i mprove for futureg ood,
but lack s convic tion

Novice

Prioritize and sequence

initiatives to draw up
transformation workplan

T ak ethefield
O rg anization
is skille da nd
committed
a ndmust
e xec ute now

Getback inthe
ga me

Ca pa ble

Urgency

Long te rm
Turna round
Orga niza tionisin
immediate ne edofcha ng e

Ra lly the tea m

Orga niza tionhas
convic tion,butnee ds
he lp tochange quick ly

I mmediate
Resi sta nt

Wil ling

Wil l

Howali gnedisl ea dershi p, howon

boa rd ismiddle manag ementa ndhow
open wi llthefrontl inebe tochange?
22

SOURCE: McKinsey

M5
Performancedialoguesshouldbecascadedtoalllevels,
M5:Performancedia log ue

Performance dialog ue

Ca scading
performance di alogue

EXAMPLE

F requenc y
W ithinshift

S hift

D aily

W eekl y

O pe rations
M anag er

Lev el

3
S hi ftSupervi sor

2
1

Wi thinshift
dialog s

Shift Kic koff/

StartMeetings

Da ily line
ma na gement
rev iew

We ek ly
performance
review

M onthly
performa nce
review

M onthly
scoreboard

Wee kl y
sc ore board

Dai lyscore boa rd

O pe rator

1 O n theg o performance
dia logue

Within shif t
score board

Shif tsc oreboard

2 Shiftperforma ncedia logue

SOURCE: McKinsey

SOURCE: McKinsey

22

3 Dai ly/ week ly root cause

probl emsolv ingmeeting

Performance dialogues
Develop system and
practice coaching
employees

M onthly

4
Da ily meeting at
pla ntlevel

Area Ma nager

23

T rackingme chanism

tosupporttheachievementofKPIs

4 M onthlyperforma ncedia logue

withoperationsm anag er

24

Develop insights on
management and people
system diagnostics

21

Howurgently is
cha nge needed?

Performance
trackingand
visualization

Energy performance review

Renewal
Howdoestheorganization
understand,interact,respond,
andadapttoitssituationand
externalenvironment?

SOU RCE: McKinsey

Design effective KPIs,

targets and performance
dashboards

Improved
performance

Budget,KPIs,
andtargets

Performance
meetingsand
dialogues

Execution
Howdoestheorganization
executeinaccordancewithits
strateg y?Ca ntheorg anization
performessentialtaskswithits
currentca pabilitiesand
motivationlev el?

Innovation&
Learning

Leadership

Culture&
Climate

SOURCE: McKinsey

Corrective
actions,
rewards,
andcon
sequences

Alig nment
Arepeopleatalllevelsaligned
aroundtheorga nizationsvision,
strateg y,cult ureand values?

Direction
Account
ability

Infu s e co nti nu ous

impr oveme nt min ds ets
Tr ain righ te mpl oye e
b ehavi or s

Setdirection
andcontext

3clustersofhealth

...and people systems

Best practice toolkit on people systems

P1

P2

P1: Rootcauseproblemsolving

Thereare2bestpracticemethodsforidentifying
therootcause
2waystostructure

Description

Typicalapplication

Issuetree

Startwithproblemstatement
andbreakitdownintological
subcomponentsforanalysis

Encouragemorethoroughanalysisof
therootcause,startingfromablank
sheet

Synthesizefindingsfromeach
subcomponentsforfinal
solution

Suitablefornewproblem
whenrelativelylittleisknownaboutit

What

How

Root cause problem

solving
Diagnose key drivers
and develop solutions

P2: Conflictmanagement

5Whys

Startwithaproblem
definitionanddrilldownon
themostimportantissuesby
askingWhy,inorderto
recognizeandaddressroot
causes

High
ElementsoftheEnergyPerformanceReview
Passive

3clustersofhealth
Assertive

Idontreallymatter
Dontexpressneeds,opinionsorfeelings
Direction
Dontspeakupevenasothersviolate
theirrights
Account
Coordination
Avoidconflictevenatowndiscomfort
andcontrol

Alignment
Takecontrolofyourownlife
Arepeopleatalllevelsaligned
Respectneeds,opinions,andfeelingsof
aroundtheorganizationsvision,
others
strategy,cultureand values?
Maintainrightsofbothpartieswhenever
possible
Dealwithconflictinhealthyways
Execution
Howdoestheorganization

Mayturn
passiveaggressiveInnovation&
Leadership

DegreeofExternal
orientation

"5Whys"isthesimplestproblem
solvingtoolandcanbeused
immediatelyontheshopfloor

performessentialtaskswithits

Aggressive
currentcapabilitiesand
motivationlevel?
Youdontreallymatter
Dontrespectneeds,opinionsorfeelings
Renewal
ofothers
Howdoestheorganization
understand,interact,respond,
Havetendencyofviolatingothers
right
andadapttoitssituationand
Willingtoriskconflicttoaddress
externalenvironment?
personaldiscomfort

Covertconflict
Low

Importantto
recognizeand
preparefor
bothcovert
andovert
conflicts

Overtconflict

Low

SOU RCE:McKinsey

Positive
relationship,
noconflict

Constructive
executeinaccordancewithits
debate
strategy?Cantheorganization

Learning

cooperation
Passiveaggressive
byothers
Idontknowwhatmatters
Capabilities
Motivation
Dealwithneeds,opinionsandfeelingsby
notdealingwiththem
Respectrightsofothersbutdislikeit,
Culture&
oftensecretlysabotagingprocess
Climate
Avoidconflictbutquietlyresentsothers

21

High

Acknowledgeofconflictbyothers

SOURCE: McKinsey

30

P3

Practice resolving
conflicts

9dimensionsoftheEnergyPerformanceReview
Fourformsofinteraction:

ability

Conflict management

Inallinteractions,weneedtobecautiousoftwoformsof
M2:Energyperformancereview
potentialconflicts
overtandcovert
Managementandpeoplesystemscanbediagnosedusingthe

30

P4

P3:Communicationandinfluencingtechniques

Theinfluencemodelencouragesmindsetandbehaviorshift
byputtinginplacetheelementsanindividualneedforchange
M3:Performancemonitoring

Iwillchangemybehaviorif
PerformancemonitoringcoversKPI
metrics,targets

Focusofmodule

Rolemodeling
Fostering
andworkplacevisualizationinperformancemanagement

understandingand
conviction
Iknowwhatis

Iseesuperiors,peersand
subordinatesbehavinginthe
newway
Setdirection
andcontext

Corrective
actions,
rewards,
andcon
sequences

Developingtalentand
skills
Performance
Ihavetheskillsand
meetingsand
dialogues
competenciesto
behaveinthenew
way

Budget,KPIs,
andtargets

Improved
expectedofmeI
performance

agreewithit,anditis
meaningful

Mindsetand
EffectiveBehavior
performanceShifts
management

Performance
trackingand
visualization

Action
plans

P4:Continuousimprovement

Communication and
influencing techniques
Learn storytelling and
influence model to
motivate organization

Continuousimprovementelements
CIelements

? EmbedCIprinciplesinleadershiproles, suchasrigorousproblem
Thewill andskillleveloftheorganization,andurgencyof
solving,andreceptivenesstoimprovementideasfromalllevelsof
Develop
1
changecaninfluenceimplementationstrategy
the organization
leaders
Rec omm it toexcellence
? Trainleaderstobestrongcoaches
Organizationi s capablebut does
nothavetheconvictionorreal

Olympictraining
Organizationhastheskill
and commi tmentto drive

pressuretoreachthenextlevel
toward longtermsuccess
? Setupdefinedescalationpathways
toimplementnewimprovement

InstillCI
mindsets

Skil l

?
?

ideasfromwithintheorganization
Takethefield
Bringexternalinnovationandnewideas
intotheorganization
O rganization
is skilledand
EmbedimprovementandinnovationmindsetsinorganizationsDNA
committed

Getbackinthe
game

Capable

andmust

Organi zationiscapabl eto

improvenowbutlacksconv iction

exec ute now

? Setupacademytocodifyandsharebestpracticesthatareestablished

Sustain
isthe
capability
3 What
level of
building
capabil
ityand

performance
inthe
organization?

Reinforcingwithformal
mechanisms
Thestructures,
processesandsystems
reinforcethechangein
behaviorIambeing
askedtomake

Continuous
improvement
Learn best practices in
sustaining ongoing
transformation impact

Examplesofactivities

M4:Implementationroadmap

Reward
achievement
Novice

Howurgentlyis
change needed?

intheline,andbuildcapabilityintheorganization throughbothformal
andonthe jobtraining
Rebuil d forthefuture
Strengthentheteam
Provideonthejobcoachingandfeedback
Organizati onmustimprove
Organizationmust
i mprove for futuregood,
but lack s convic tion

and has conviction andtime

todo so

? Urgency
Linkfinancialrewards toimprovementtargets,orprovidecashprizes

forsolutionstoproblemsornewideasforimprovement
Rallytheteam
Celebrateandrecognizegoodideasthroughnonfinancialmeans,e.g.
Organizationhas
convic tion,butneeds
careerprogressionopportunities,awards,peerrecognition,networking
help tochangequick ly
opportunities,etc Wil l

Longterm
Turnaround
Organizationisin
immediateneedofchange

I mmediate
Resi stant

Wil ling

Next,welookatsomeofthestructuresyoucanputin
Howali gnedisl eadershi p, howon
placeinyourorganizationtoaccomplishtheseCIactivities
board ismiddle managementandhow
open wi llthefrontl inebe tochange?

SOURCE: McKinsey

SOURCE: McKinsey

22

23

30

SOURCE: McKinsey

33

22
SOURCE: McKinsey

23

McKinsey
Capability
Center

GREEN
CAMPUS

Supported by:

For questions and inquiries please visit our website www.greencampus.mckinsey.com

or contact:

NEA
Li Yen Tan,

Petrofac
Paul Jones,

Head of Energy
Efficiency Programme Office
TAN_Li_Yen@nea.gov.sg

Country Manager, Singapore

Paul.jones@petrofactraining.com

EDB
Kelvin Goh,
Assistant Head
Kelvin_Goh@edb.gov.sg

24

McKinsey & Company

Mads Lauritzen,
Partner
Mads_Lauritzen@mckinsey.com