The document summarizes Essent's journey to turnaround its business between 2010-2016. It discusses how Essent implemented the House of Order (HiO) program to improve its end-to-end customer processes and operational excellence. The HiO program was launched in 2011 and rolled out in multiple waves. It reorganized customer service, reduced key performance indicators, and established regular performance reviews. While the program improved Essent's consumer business, its complex commercial business struggled due to IT issues and reliance on intermediaries. Essent later expanded the HiO program to commercial customers and took steps to standardize offerings and reduce costs.

1. Devyani
Tanya
Garvita
Sumedha
Date: 3-12-18MO

2. Topics Covered
• Introduction
• Energy Industry in Netherlands
• Essent Journey
• Setting the foundation
• Initiating the turnaround
• The Hi0 Program
• End-to-End Customer Journey Process Improvement
• Operation Excellence
• Managing Information System
2

3. Topics Covered
• Workforce motivation
• Transforming the commercial value proposition
• The HiO program in 2016
• Essent Today
• Essent’s B2B business
• Next Steps
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4. Introduction
• Essent ( Energy Company) headquartered in Den Bosch ,has faced a
turbulent environment in recent years .
• Energy market had been liberalized in 2004 but certain regulations
still affected the industry .
• Solar and wind power was subsidized relative to coal and gas fired
plant.
• Prices for gas and coal has fallen sharply due to the successful
exploitation of shale gas in US .
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5. Contd .
• Climate change which has lead to unpredictable warmer weather and
depressed the demand for energy.
• For improving their performance they performed improvements in
marketing and optimising the channel mix .
• Company improved operations by changes in its IT platform and
through a program called “House of Order”(HiO).
• Since 2010 Its B2C business had increased the number of consumers
by 13% , reduced the employees by 38% and the cost of serve also by
16% .
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6. • Earning before income tax for the business had gone from a loss of€
14 million to € 143 million in 2015 .
• Lammers was optimistic about Essent future but its complex B2B
business went from reporting Substantial profits in 2011, to losses in
2015 .
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7. Energy Industry in Netherlands
• It is the second largest gas producer after Norway and among the first
EU states to liberalize the energy market.
• Before liberalization Dutch energy market was occupied by four
vertically integrated players owned by local authorities .
• In 2004 liberalization was introduced allowing the customers to
choose independently .
• Several companies offered electricity and gas distribution contracts
and there were about 32 different brands from which customers
could choose .
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8. Essent Journey
• Created in 1999, by merging of two vertically integrated companies .
• In 2008, Essent was the third largest Dutch power producer .
• In 2009 as a consequence of unbundling request by Dutch govt., RWE
bought Essents electricity and gas distribution business for €9.3
billion .
• Erwin van Laethem, a senior Essent manager was appointed as the
CCO while Peter Terium, RWE senior manager ,Essent Chief executive
officer(CEO).
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9. Setting the foundation
• In 2010 Essent was loosing its customer base due to market changes
and its inability to react .For 2 years in a row it lost 5% to 10% of its
customer base .
• To cope up with problems Essent called professional marketing
managers .
• Essent developed a new branding and marketing strategy .
• Worked at distinguishing Essent from Energiedirect.nl .
• Launched new IT project ,Greenfield but it broke down many times
and caused backlogs.
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10. Initiating the Turnaround
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• In September 2010 ,Lammers became the head of the B2C business
and launched his plan to turnaround B2C .
• His aim was not just making short –term profits ,but building
commercial leaders .
• After analysing the situation for few weeks, they decided to tune
the business per value driver , the customer, and house in order to
proceed .
• Presented in 2010 ,HiO was launched in 2011

11. The Hi0 Program
• Launched in early 2011
• Coaches from McKinsey were hired by Essent to execute the plan
• McKinsey coaches gradually formed internal employees and an developed
an internal HiO team.
• The HiO plan had two sides:
a) end-to-end customer journeys process improvement
b) operational excellence
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12. End-to-End Customer Journey Process Improvement
• Customer service centres were reorganized into six end-to-end
customer journeys
• The six journeys were: “I join”, “I pay”, “I move”, “I have a service
request”, “I leave” and “I have a complaint”.
• The number of KPIs were also reduced keeping only those that could
directly impact the customer journeys or had a cost reduction
objective.
• Essent also adopted end-to-end journey Kaizen improvements, and in
particular, a root cause approach.
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13. • Under this program, the company began adopting different approaches to
change the mindset in the organization by appealing to the emotions of the
employees, rather than talking about profits and losses.
• More transparency was brought in the communication between employees
and customers.
• This change helped the company identify where the processes stalled.
• Ultimately, the consequences of bringing forth these changes were
increased customer satisfaction and reduced churn rates.
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14. Operational Excellence
• Adoption of Lean Management and Building the necessary
capabilities to achieve operational excellence
• Number of KPIs reduced from 150 to four, such as:
a) Productivity
b) Quality of first contact resolution
c) Availability
d) Cross-sell and Upsell
• It was made compulsory for all departments to have dashboards with
KPIs visible to the whole team
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15. • To achieve Operational Excellence, the company established at all levels of the
organizations regular performance meetings
• These team discussions focussed on KPIs, gaps to target, and root causes.
• The program required the employees to start the day with a performance dialog
session
• Leadership team meetings were held once a week.
• This initiative compelled employees to take action and drive performance
towards the target.
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16. • Managers were now required to set up set up granular value driver
trees for transparency.
• This process helped show how operational metrics like gross margins,
sales growth, and various costs affected financial metrics line return-
on-assets.
• Approaches like Lean Management and Kaizen were also adopted by
the company 16

17. Phases of Implementation
• The HiO program was rolled out in four waves and each wave consisted of
four phases.
• In the first phase, the HiO team assessed the situation
• In the second phase, the coaches identified aspects like the four main KPIs,
end-to-end customer processes, which teams would contribute to HiO, and
finally, the teams’ respective KPIs.
• The third phase was the implementation and coaching period to develop
capabilities.
• In the last phase, the HiO team sent a report to the management on the
achievements of the roll out phase. This phase focussed on the sustenance
of the abovementioned changes.
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18. Managing Information Technology
• Essent’s information system posed a significant challenge and
adversely affected its performance.
• Two main reasons for the IT failures were:
a) Lack of maintenance
b) Complexity of the system
• A special IT board was established which would regularly meet and
conduct performance dialogues on IT.
• A new Chief Information Officer was hired to restructure the IT
department.
• Due to the system derailment, the workforce was tired and
demotivated, and it was believed that the problem was “people and
processes” and not software. 18

19. • To change the mentality of the employees, they were explained the
gravity of the situation.
• The employees were asked to pay an “embarrassment fee” for every
backlog caused by them.
• 15 managers were fired and employees were asked to re-apply for
jobs.
• Four call centres were shut down.
• The objective behind making these changes was to increase
efficiency.
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20. Work force motivation
• Defined ways of working
• Dialy dashboard discussions
• Strict rules
• Democratic approach
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21. Transforming the commercial value proposition
• Linkage of marketing investments to business case with value.
• In addition, Essent widened the services provided developing Energy
Plus services, better differentiated Essent and Energiedirect.nl, and
pushed heavily the products to the market with campaigns focused
on the promise that Essent delivered more than just energy.
• Essent also built its sales footprint and developed new sales channels
such as the online platform, established customer lifetime value
management tools for cross selling, used data modeling to steer
actions, and improved transparency.
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23. From a Mechanical Approach to a Principle-Based
One
• Working model has been changed
• McKinsey five lenses approach
implemented.
• lean training programs.
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24. The HiO Program in 2016
• Team managers were helped in their daily starts by two team members
who had also been trained by the HiO team as coaches. In terms of training
programs,
• Essent had collaborations with the Dutch Kaizen institute to which they
sent some of their managers and also offered internal on-boarding
programs.
• The HiO team was also developing new programs for management which
were meant to help the departments embed HiO in their culture, the
objective set by Lammers for the following year.
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25. • project structure to implement HiO
through several waves in a unit.
• Each business partner was in charge
of one or two departments and
worked in close contact with the
department’s top management
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26. Essent today:
Location Netherlands Belgium
Electricity 2.2 million 1.9 million
Gas 355,000 234,000
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• EBIT was the key financial indicator
• The company has limited depreciation as they are asset light
• But, since RWE acquired Essent, they have annual purchase price allocation which has negative
impact on EBIT
• This makes performance comparison with the competitors difficult
• Essent mainly looked at the difference between gross margins and cost

27. • Essent has become the No. 1 preferred brand for consumers
• To get ideas on future services, they have a 3 year partnership with Dutch Missing Chapter
Foundation
• In 2013, Essent signed its first partnership with the electronic chain mediamarkt
• Essent worked at transforming energydirect.nl into a 100% online brand
• Business relied on 869 employees
• In order to motivate them, top used to have meetings two times a year for 45 minutes to discuss
results
• Rewards were given on the basis of performance
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28. Essent’s B2B business:
• Essent served about 1 lakh clients
• The SME segment had similar needs as that
of the B2C
Wanted same bandwidth
Want to be treated in one contract with one
bill and contact person
Have the tendency to stay loyal
• The complex clients had complex needs
Price sensitive
Needed larger amount of energy
Often needed contracts that covered several
unique connections
Contracts had usually 3 year life time
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29. • About 40% of the complex B2B and SME sales
were done through intermediaries
• As per Hans Verhoeven, the strategy was to
protect margin by offering products at cheap
prices
• There were 3 types of intermediaries:
1. Collective buyers (25% of their gross
margin, they offer volumes)
2. Consultants (paid instantly by the client)
3. Proactive sellers
• Some resellers being former employees of
Essent
• They know the margins and come up with
good deals
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30. Issues faced:
• Essent’s B2B reputation decreased to 3rd position
in 2015
• Customer lifetime dramatically decreased and
faced difficulty in attracting talents
• The main issue arised due to delay in launching the
new IT system
• When IT team pushed the data from the old
system to the new one, the whole contracts info
changed
• The company had to check for the documents to
find terms in the contract
• There was no control over the processes and the
data
• After the system went live, 25% of the EAN’s were
not being able to be billed due to system error
• It took several months to reduce the billing backlog
nearly 6% each week
• They had to break the system to get the invoices
out
• The new system was messed up and did not have
the capacity to serve efficiently
• Part of the invoice money was lost whereas, some
customers already left the company while some
were unsatisfied with the service
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31. • The reliance on intermediaries concluded that
the contracts have scraped the margins
• The prices and services offered were not
standardized due to which many customers
begun to leave the company
• Many new players began to serve the
competitors with cheaper prices and higher
volumes
• The problem existed, but nobody cared about
it for the time being
• Many companies began to refuse the Hio
program
• B2B lost 70% of its market share
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32. Post struggle:
• The Hio program rolled out in B2B in 2014
• The back office team well implemented the
program
• In 2016,
The company halved the operational cost
Increased customer satisfaction
• However, B2B did not come out with right
initaitives to reduce the churn
• Acquisitions costs were too high
• Cultural issue had not been tackled (like
transparency and proper reporting)
• Backlogs were radically diminished
• Cost of bad debt was reduced
• IT backbone became stable and the billing
time went from 90% to 99%
• From January 2016, the intermediaries were
allowed to deliver to both B2B and SME’s
• Received higher fee for the services
• The company created a team around the
SME’s
• They separated SME’s and B2B because SME’s
were more profitable
• They focussed on what they should’nt do and
standardized the offers
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