Francesco Starace

Francesco Starace
CEO

Enel Green Power SpA

Born in Rome in 1955, Francesco Starace has been President of Enel Green Power since the company’s inception in 2008 and, subsequently, appointed as CEO in September 2010, leading EGP to its Initial Public Offering (IPO) in November 2010. In Enel since September 2000, he headed the Energy Management Business Area within the Generation & Energy Management Division since it was created, then he was named Managing Director of a new constituted Division (The Market Division, end of 2005).

Francesco graduated in Nuclear Engineering at the Milan Polytechnic. After a brief experience in the Italian nuclear sector, he started working in the area of engineering and construction management of power generation plants, with jobs of increasing responsibility, in the GE Group and, later on, in the ABB Group.

 

Watch interview highlights

 

A view from the top

In this short video, Francesco Starace shares his view on today's key business issues: risk, volatility, innovation, talent, and growth.

 

Quotes

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

We think government fiscal policies might become important criteria in choosing where companies invest and how they invest.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

I think it’s important that the rules of the games are not changed continuously. So from our standpoint, stability in regulation is fundamental.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

Are there only 16 countries in the world that fit these three criteria? No, there are others. And that is why we are growing our geographical footprint by one or two countries every year. We will add Turkey to our footprint. We will add South Africa to our footprint. And every year, we will keep adding countries so that we have more options in terms of where we invest.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

It’s pretty easy to understand a developing country’s renewable energy potential for wind or solar, for example. Likewise, it’s not difficult to assess the growth rate of electrical consumption and the associated return on investment. However, it is much more difficult to thoroughly assess the stability of a developing country’s regulatory and legal systems. That is the most difficult parameter to determine.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

We are putting people from many different cultures on the management team. We are doing that to the point that I think in a few years, the company will look very different than it does now.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

In terms of technical breakthroughs, the renewable energy industry generates an inordinate amount of innovation. So, we have stopped trying to be the company that generates all the ideas and instead we focus on the best ideas regardless of where they originate. Instead of always trying to be the inventor, Enel now wants to become the company that is best at commercialising innovations and bringing them to scale – whether those innovations are internal or external to our company.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

What we have done is to develop a system in which talent can be identified and connected with more senior personnel.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

We previously went through a phase in which we moved people out of the centre into the periphery of the company. Now we’re in a phase in which people are coming into the centre from the periphery. A third phase will begin during 2012 in which people are moved between different locations to fill talent gaps.

Francesco Starace

Francesco Starace

CEO, Enel Green Power SpA

We have some collaboration with universities that basically have two areas of focus. One is the technology aspect – and that is more or less R&D. We have people from university labs coming to work in our R&D centers and vice versa. And the other area of focus are university-run management and leadership development programs.

 

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What is the outlook for the global economy, as you see it?

All in all, our view is that we are going through a very painful final phase of the recession. But we are slowly climbing out. We see growth in Latin America and in the US. We don’t see same growth signals in Europe yet, but maybe we will see it by the end of 2012. Europe is a year behind, in our opinion. But there are parts of the world that are already in a growth cycle.

What risk to your company’s growth are you most concerned about?

Starting about a year ago, we began to diversify our growth plans from Europe to Latin America and North America. We think that was the right decision because it better positions the company for growth. What could happen is that we get carried away and forget about Europe - and that would be risky. But that is a risk that we are consciously trying to avoid.

How much does the fiscal position of governments worry you?

I would say it worries me quite a lot. We have seen European governments trying to take measures to address their fiscal crisis and so far, it has not been very encouraging. We think government fiscal policies might become important criteria in choosing where companies invest and how they invest. And in that context, we are watching very carefully what happens in Europe in 2012 because it might influence our future investment decisions.

What should governments in Europe and in others countries where you operate be doing?

With respect to the energy sector, I think they should stop trying to bias the regulatory framework in favour of renewables. We think it doesn’t really make sense to continue to subsidise that part of the energy sector. Over time, subsidisation should be withdrawn so that all players compete on an even playing field. I think it’s important that the rules of the games are not changed continuously. So from our standpoint, stability in regulation is fundamental.

Are there other actions governments could take that would be beneficial for your business?

An enhanced infrastructure would be extremely beneficial - better grid connections, improvement in connecting plants, stimulating demand by shifting from fuel to electrical vehicles. Anything that’s stimulates electrical demand is a positive.

Has your strategy changed over the past year?

Our strategy, unfortunately, fits the current economic situation very well. And I use the term “unfortunately” because, ideally, we would like to operate in a robust European economy. But since that is not the case, we are accelerating our strategy of moving to geographies that are less affected by the economic downturn. We are keeping our technology mix, but moving it from the European zone and into USA and Latin America, mainly.

What sorts of criteria do you use to rate the attractiveness of various countries or regions?

We have a presence in 16 countries. They are very different from one another, but they all have three things in common: A large stock of renewable natural resources; rising demand for electricity; and a stable and reliable regulatory and legal environment. That is why we are growing our geographical footprint by one or two countries every year. We will add Turkey to our footprint. We will add South Africa to our footprint. And every year, we will keep adding countries so that we have more options in terms of where we invest.

What difficulties do you find in operating in emerging economies?

From an operational standpoint, we’re quite comfortable in emerging economies. It’s pretty easy to understand a developing country’s renewable energy potential for wind or solar, for example. Likewise, it’s not difficult to assess the growth rate of electrical consumption and the associated return on investment. However, it is much more difficult to thoroughly assess the stability of a developing country’s regulatory and legal systems. That is the most difficult parameter to determine. And in developing countries it often remains difficult to determine even after you have established a presence there.

As Enel broadens its geographical scope, how has its system for managing talent been affected?

It’s precipitated a big transformation in the way we manage our people. Geographical expansion creates a lot of stress on management structures - and on the average employee - because it is not easy to cope with new cultures, new people, and new languages. So we have really worked hard on trying to get our people to understand the beneficial aspects of a culturally diverse workforce. New ideas and different perspective are a net positive for Enel Green Power. But it is not an easy task. We are putting people from many different cultures on the management team. We are doing that to the point that I think in a few years, the company will look very different than it does now.

How is your approach to managing enterprise-level risk changing?

With regards to renewable energy sources, it’s simply a fact of life that regulation keeps changing. But what matters most is the rate of change. Our strategy has always taken into account that as renewables becomes more and more competitive - as the wind turbines and solar panels we buy become less costly - it makes very little sense to keep government subsidies constant. The renewable energy industry is not going to require that level of subsidisation going forward. And that notion is embedded into our strategic plan and the way we develop our business. We are very competitive when it comes to sourcing capital, so we are not afraid of decreased subsidies. The fact is, we put a lot of emphasis on the growing regions of the world like Latin America, where subsidies are generally not available. That gives you an idea of our ultimate scenario - one in which growth occurs in the absence of subsidies.

In what ways have social and environmental concerns become an element of your business strategy?

For us, this issue of corporate social responsibility is a little bit peculiar, because Enel Green Power is by definition a sustainable enterprise. We are a company that has no carbon emission, emits very little in pollution in any of our operations, and, in fact, contributes to de-carbonising society.

Do you think that business has an obligation to raise the living conditions of people in a given community?

That is a bit of a complex question, because, historically, an improvement in living conditions meant giving a community something: money, a school, a hospital, whatever. And that’s fine. But I don’t think it’s the best way of improving living standards. We are about to start a very important program in Latin America that will improve living standards there by teaching people to do something on their own, without us providing ongoing economic support. If a village has no power, you have two choices: You can provide the village with some free electricity; or you can teach people in the village how to assemble and maintain a local renewable power plant , as a solar photovoltaic for example. In the second case, they are much more in charge of their own future and they also learn a valuable skill - which is not just a gift given to them. We’re starting a programme based on this second approach, which will support those communities that want to create and maintain their own sources of energy.

Has Enel Green Power’s approach to innovation changed in any way?

Yes - in two ways. In terms of technical breakthroughs, the renewable energy industry generates an inordinate amount of innovation. So, we have stopped trying to be the company that generates all the ideas and instead we focus on the best ideas regardless of where they originate. Instead of always trying to be the inventor, Enel Green Power now wants to become the company that is best at commercialising innovations and bringing them to scale - whether those innovations are internal or external to our company. And secondly, we’ve begun to recognise that innovation must play a role in all the activities we carry out - from our industrial processes and best practice sharing to the way we manage people. We’ve put a special team in place to promote innovation throughout our operations and capture innovative ideas from both inside and outside our business.

In what ways has talent become a strategic issue for you?

Talent management has always been an important priority for us. What we have done is to develop a system in which talent can be monitored, identified and connected with more senior personnel. This is a challenge when you consider that we are so geographically scattered. So, we have established a system in which high-potential people are screened not only by their direct manager, but by multiple managers and then a career development plan is established for them. We want to create a group of say 50 – 100 interesting and talented young people who are continuously developed and pushed upwards as new recruits come into this pool of high-potentials.

Does workforce management vary from country to country?

Cultures are different; and consequently, relationships among people in a corporate hierarchy reflect those differences. So typically, in Europe you have a more formal approach within the company organisation. In the US, it is much more direct. In Latin America you have different situations. Central America is very hierarchical, extremely structured. One must adjust to these different structures without trying to impose a single system everywhere, because that is simply impossible. One of the important skills that we look for in the talent we hire and develop is an ability to adapt their behavior to the environment in which they work. In general, that is a skill that helps in all aspects of life. And it’s one that certainly helps in managing companies like Enel Green Power.

Are you confident that you will have the talent needed to deliver your strategy?

Yes, I think we have our talents in house. The real questions are will talented people stay with us for the long-term; and will we have the capability to get the right talent to the right place at the right time?

Can one find talent from unexpected sources?

Yes. Take, for example, some of the acquisitions we’ve made. During the due diligence phase of an acquisition you value the target based on its assets and pipeline of projects. But once you’ve done the acquisition, you may also discover a collection of people who represent, in themselves, as much valuable as the assets and project pipeline that you bought. And that actually happens. We have an example in the US were we made an acquisition of a large development pipeline in California. And as a result of that acquisition, we inherited excellent people who fit very well within our organisation and are making a big contribution to the development of the whole of our operations in the US.

Are you finding that you increasingly need to move personnel across borders to fill talent gaps?

We previously went through a phase in which we moved people out of the centre into the periphery of the company. Now we’re in a phase in which people are coming into the centre from the periphery. A third phase will begin during 2012 in which people are moved between different locations to fill talent gaps. Among these people will be a minority who continue to relocate throughout their careers with Enel Green Power. But most will rotate back to their home countries after two or three years abroad.

Have you experienced difficulties combining different national cultures into your corporate culture?

The main challenge, I think, is to make the corporate culture a lot less about corporate and a lot more about culture.

Are you collaborating with educational institutions to develop a pipeline of future employees?

We have some collaboration with universities that basically have two areas of focus. One is the technology aspect - and that is more or less R&D. We have people from university labs coming to work in our R&D centers and vice versa. And the other area of focus are university-run management and leadership development programs.

In what ways have your allocation of time and attention changed over the past year?

Enel Green Power was listed on the stock exchange in 2010; so at the beginning of the year, most of my attention was dedicated to a dialogue with our investor community. And that took a lot of my time. Now most of my time is dedicated to organisational issues and on people management. So, I would say it’s been a total shift in focus.