Ten companies, ten top managers and their stories. A different way of describing the champions of Made in Italy, companies of excellence in industrial sectors that are very different from each other. It is the approach of the new book by Paola Pilati, a highly experienced journalist after having led the Economy pages of the weekly L'Espresso for a long time.
“The generalissimi – Strategies and secrets of the Italian top managers”, LUISS editions for the Bellissima series, directed by Nicoletta Picchio, narrates Made in Italy through the experience of the men and women who have the responsibility of leading companies, making strategic choices – this time including visionary ones – and at the same time preserving them history and identity, demonstrating that Italian capitalism is well integrated in the value chain. The "roundup" includes Enel and Eni, but also Snam and Fincantieri. There are the family businesses of pharmaceuticals such as Chiesi and chemical Coim passing through Brembo which supplies its brakes to the automotive industry all over the world, without neglecting Calzedonia and Sanlorenzo. Courtesy of the publisher and the author, we publish a short excerpt from chapter 9, dedicated to Enel CEO Francesco Starace, “The Knight of Green Energy”.
Enel Green Power becomes the second "revolving door" of his life, after the exit from the Nira. Renewables, solar, wind, geothermal are in their nascent stages, pioneer stuff. A flagship for the multi-utility designed by Tatò. Starace is the head of the commercial part in the Enel parent company: “I was the one who did the bills for everyone”. But from that position you have the opportunity to closely follow the take-off of the energy market, the electricity exchange, the liberalization of the retail market, a whole new system of rules under the supervision of an authority. In short, he is a first-line witness of the turning point introducing competition into the world of European utilities.
When the project to list Enel Green Power starts, he is in pole position for the post of managing director. “And yet I was the only one who didn't go and ask,” he recalls.
Today renewables have become mainstream. They will be the ones to make the economy grow in the future and we are relying on them to make green hydrogen take off. Oil, on the other hand, is destined to weigh less and less and all fossil fuels are on their way to sunset. “They have no economic future and not only due to the political and regulatory thrust of climate agreements to reduce CO2, but because they are too expensive and by now everyone has understood that it is better to do so” explains the managing director. Easy to say today, but did he really believe it then? “We were the first to theorize that alternative sources would become more convenient than traditional ones. But they thought we were crazy."
Perhaps he himself felt a little crazy when he assumed the position of CEO of Enel in 2014. His predecessor, Fulvio Conti, had launched the group in a very ambitious acquisition campaign: the conquest of Endesa, the Spanish energy giant. This had led the Italian group to be at the same time the most profitable energy giant in Europe, with 80 billion euros in revenues and a gross operating margin of 17 billion, but also the most indebted. That load of debts, 40 billion, weighed even more due to the fact that electricity production turned out to be double compared to the needs: the Italian economy showed no signs of recovering from the Great Financial Crisis, the price per kilowatt hour pointed downwards and dividends appeared to be in jeopardy. And everyone expected Starace to straighten the rudder quickly.
He does it with two decisive moves. He announces the closure of twenty-three thermoelectric plants, more than a third of the production capacity in Italy, and reorganizes the group from the roots. “At the time, Enel had a very complicated way of thinking. There was a holding company that managed Italy, while Endesa remained an organizational unit in its own right, so Spain and Latin America operated differently from ours. After spending forty billion to buy it, we had little leverage over the company." It happened, for example, that a purchase order for transformers for Endesa had no coordination with an order for the same product from Enel. Result: the negotiating power to obtain cheaper prices was not deployed. The grandeur of the conquest project remained at stake.
The reorganisation
“It was necessary to revive growth in a healthy way, to get investments back on track. Instead, the money ended up mainly in plant maintenance” recalls Starace. “If a company has resources only to defend the waterline and not to invest in the future, its fate is sealed.”
The restructuring is fast and profound, with an action plan based on a vision of the business that today appears self-evident but was then revolutionary. “Enel's business structure is made up of two universes: that of the customers we work for and that of the machines that allow us to provide our customers with services. While machines unite us, because the technologies of an electric line are the same in all parts of the world, from Europe to America, customers divide us. They have different laws, currencies, languages.” So what did he do? “I decided to give the group a structure that reflected these two worlds. In other words, to ensure that some of us deal only with machines, with an organization on a global level but along technological lines: those of energy production, which works in the same way everywhere, those of the electricity grid and so on. To manage customers, however, we have chosen the organization by geographical area. The mission of the first group was to invest, that of the second to deal with bills. And we left."
Stock market analysts, who up until then had not spared the stock the "sell" advice, considering Enel the lame duck among European utilities, soon had to change their minds. Together with the functional reorganization, which brings Endesa's subsidiaries in Latin America into the direct perimeter of Enel, an asset sales plan also starts: both a stake in Endesa itself and the stake held by Enel Produzione in the Slovak company are sold Slovenske Elektrarne. In addition, personnel reduction is implemented with an early retirement plan.
But the clearest message that Starace sends to the market is that it intends to decisively lead Enel in the renewable energy sector. Enel Green Power, which in the meantime has carried out its expansion in renewables abroad, from Brazil to Guatemala, from Spain to the USA, from South Africa to India, is withdrawn from the Stock Exchange. As a result, clean energy stops being a business stand-alone and becomes the center of the entire group's strategies, its compass for the years to come.
Source: "I generalissimi - Strategies and secrets of Italian top managers" by Paola Pilati
