Targeting Carbon Conscious Corporations – Quartz+Co's approach to develop an emerging segment strategy Building a focused segment strategy – empower transparency, reveal preferences, enable communication Reaching an informed decision – from defining the market to a detailed global organisational design Executing the strategy – how the strategy was anchored in Vestas Creating results – new orders and leads were generated
Developing an emerging segment strategy Vestas CaCoCo case
This case describes the approach taken by Quartz+Co in developing an emerging segment strategy targeting Carbon Conscious Corporations (CaCoCos) for Vestas What was the situation?
What can be learnt from this?
Who is this relevant for?
• In early 2010, Vestas recognised the new, emerging segment of corporate buyers and investors of wind power, referred to as CaCoCos
• This case presents one approach taken to the non-trivial task of developing strategies to emerging customer segments
All executives and business practitioners …
• The approach adopted by Vestas and Quartz+Co focused on six components
… seeking inspiration regarding emerging segment strategies
• The CaCoCos comprised a set of untraditional customers with differing preferences compared to Vestas' existing customers • At this point, Vestas had already established a solid platform towards CaCoCos by co-founding WindMade, GCWS and CREX • Thus, to leverage existing efforts and to enable Vestas to capture the full CaCoCo potential, a segment-specific strategy had to be developed • Quartz+Co was engaged by Vestas to assist in the development of the strategy and this deck describes the approach taken
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1
Market definition
2
Deal and competition
3
Demand potential
4
Position and solution
5
Financial and investment
6
Organisational design
… across industries …
• All executives and business practitioners seeking inspiration on how to develop strategies for emerging segments and anchor the strategies in their organisations • Although this case is built on the wind turbine industry, it is conceptually relevant for all industries where new customer segments might emerge from time to time
The emergence of the CaCoCo customer segment challenged Vestas to build a targeted segment strategy: the CaCoCo strategy 2015 The emerging CaCoCo customer segment … A corporation whose core business is not power generation …
Corporate energy buyers
CaCoCo = Corporate energy investors
… but which pursues renewable energy investments in order to 1
Cut carbon emissions
2
Increase brand equity
3
Hedge cost of energy
4
Ensure energy supply
5
Increase return on capital
The underlying purpose is to reach various combinations of objectives Financial incentives
CSR objectives
… challenged Vestas to build a segment strategy leveraging existing efforts
CaCoCo strategy 2015
3
Empower transparency
Reveal preferences
Enable communication
Study of corporate renewable energy commitments conducted by Vestas in cooperation with Bloomberg
Study by Gallup and Vestas of consumer preferences on corporate commitments to renewable energy
Worldwide NGO promoting wind power through productlabelling. Founded by Vestas and partners
To inform the BoD decision to invest and set up organisational structures required to unlock the CaCoCo demand potential
From market definition to global organisational design – an informed decision to invest was made after answering six overall questions Market definition
1
Deal and competition
2
Demand potential
What are the drivers behind corporate wind energy investments?
How were exiting deals structured and who are the competitors?
Where should initial discussions be initiated and with whom?
• Market definition including decisions on terminology and language
• Study of installed and planned CaCoCo wind power deals
• Study of sector electricity footprint analysis including electricity use logics
• Study of corporate investment drivers within green energy
• Initiation of competitive intelligence surveillance of CaCoCo activity
• Interview campaign on potential qualification and target identification
• Stakeholder analysis regarding corporate RE commitments
• Competitor analysis including competitive offerings and G2M models
• Wave 1 CaCoCo target identification including discussion opening points
Position and solution
4
Financial and investment
5
Organisational design
3
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Which positions should be taken and what solutions should be brought to the market?
What are the investment requirements and upside potential?
What organisation should be designed to pursue the opportunity?
• Market segmentation including segment needs and preferences
• Detailed demand forecast including MW order intake targets
• Organisational assessment including anchoring of execution responsibility
• Identification of overall positions and solutions available in the market
• Solution-specific financial business case development
• Detailed global organisational design including partner needs and requirements
• Detailed solution specification and analysis of capability gaps to close
• Estimation of ramp-up costs and investment requirements
• Organisational blueprint for internal launch of decided organisation
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By BoD decision, the CaCoCo strategy was formally anchored in Vestas' strategic priorities and a separate unit, tasked with execution of the strategy, was established to ensure maximum attention • Defined CaCoCo terminology and language installed in Vestas 2011
CaCoCo strategy 2015
• CaCoCo strategy anchored among Vestas' global strategic priorities
…
Institutionalise a new growth segment in Vestas
2015
• Segment-specific strategy incorporated in global customer model
• Separate unit set up to ensure maximum attention on execution
Set up required organisational structures
• Organisational blueprint approved including recommended feasibility studies • Partnership strategy developed and wave 1 targets pursued
Allocate recommended ramp-up funds
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• Recommended ramp-up resources allocated, including funds to pursue required feasibility studies of solutions • Financial and MW order intake targets approved and incorporated in organisational year-one KPIs
A 90 MW order signed shortly after strategy approval, together with several developed leads, enforced Vestas' leadership position within the CaCoCo segment 90 MW order intake
• 90 MW order signed with IKEA less than a year after strategy approval • Order represented IKEA's largest investment in wind power to date • Order intake represented a total estimated value of EUR 100 million
Several developed leads
• Opportunities with leading CaCoCo’s developed across the world resulting in a solid pipeline of opportunities • Solution partner setup formalized and potential partnerships pursued on a global scale
Leading position enforced
• The CaCoCo strategy, CREX 2.0 and GCWS 2.0 created further awareness regarding Vestas' CaCoCo focus • Vestas maintained position as the preferred partner to the corporate wind energy community
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