ROI Case File No.222 | 'The Paradox of Western European Energy Companies'

Chapter 1: The Banner of Energy Transition — Between Ideals and Reality

The week following the resolution of the Paradise Tours AARRR transformation case, an unexpected consultation arrived from Western Europe. This second case of Volume XVII "The Challenge of Reproducibility" concerned hidden constraints in an apparently smoothly operating company.

"Detective, we are making advanced investments in the green energy field, but project progress is slower than expected. While there are no technical problems, somehow the overall speed isn't improving."

GreenPower Europe's Chief Technology Officer, Johan Müller, visited 221B Baker Street with undeniable confusion. In his hands were massive investment plans alongside contrasting delayed project lists.

"We are a veteran company operating renewable energy business across Western Europe. Riding the tailwind of government decarbonization policies, we have undertaken large-scale business transformation over the past three years."

GreenPower Europe's Transformation Record: - Established: 1952 (over 70 years of history) - Total investment: ¥120 billion over 3 years (renewable energy field) - Project count: 45 wind, 38 solar, 12 hydroelectric - Employee count: 3,800 (including 1,500 specialized engineers) - Annual revenue: ¥85 billion (25% growth YoY)

The numbers certainly showed large-scale business transformation. However, Johan's expression was marked with deep concern.

"The problem is that while individual projects are technically successful, overall progress isn't at the expected speed. We planned to complete 20 new projects annually, but actually only finished 12."

Gap Between Expectations and Reality: - Planned project completions: 20 annually - Actual completions: 12 annually (60% achievement rate) - Average project duration: Planned 18 months → Actual 28 months - Budget overrun rate: Average 23% (significantly exceeding plans)

"What confuses us most is that we can't identify the cause of delays. We have sufficient technical capabilities, abundant funding, and latest equipment. Yet somehow 'invisible bottlenecks' are slowing everything down."

Chapter 2: Delayed Projects — The Invisible Chokehold

"Mr. Johan, at which stage are projects specifically experiencing delays?"

Holmes inquired quietly.

Johan spread out project materials with a confused expression.

"That's the problem. Every project shows similar delay patterns, but we can't find clear causes."

Typical Project Delay Examples:

Project A: North Sea Offshore Wind Power (Planned 24 months) - Design/permits: Planned 4 months → Actual 4 months (on schedule) - Equipment procurement: Planned 6 months → Actual 7 months (minor delay) - Construction work: Planned 12 months → Actual 20 months (major delay) - Trial operation: Planned 2 months → Actual 5 months (major delay)

Project B: Southern Solar Power (Planned 18 months) - Design/permits: Planned 3 months → Actual 3 months (on schedule) - Equipment procurement: Planned 4 months → Actual 5 months (minor delay) - Construction work: Planned 9 months → Actual 15 months (major delay) - Trial operation: Planned 2 months → Actual 4 months (major delay)

Project C: Mountain Hydroelectric Power (Planned 30 months) - Design/permits: Planned 6 months → Actual 6 months (on schedule) - Equipment procurement: Planned 8 months → Actual 10 months (minor delay) - Construction work: Planned 14 months → Actual 26 months (major delay) - Trial operation: Planned 2 months → Actual 6 months (major delay)

I focused on the common patterns.

"Every project experiences major delays in 'construction work' and 'trial operation' stages. What factors do these two stages have in common?"

Johan thought deeply.

"Construction work and trial operation... what they share is the need for 'specialized on-site engineers.' Design and procurement can be done at headquarters, but site work requires personnel with specific skills."

Detailed Investigation Results of Delay Factors:

Construction Work Stage Delay Factors: - Waiting for specialized engineer allocation: Average 3.2 months - Work rework due to engineer skill shortages: Average 1.8 months - Competition for engineers among multiple projects: Ongoing problem - Retirement of experienced engineers: 15 annually (12% of total)

Trial Operation Stage Delay Factors: - Shortage of commissioning engineers: Must be reserved at project start - Extended troubleshooting due to engineer shortage - Inability to handle complex systems: New engineers cannot respond - Dependence on veteran engineers: Concentrated on specific 5 people

"We have invested in 'technology' and 'capital' but may have neglected investment in 'human resources.'"

Chapter 3: TOC Reveals Constraints — Discovery of the Hidden Chokehold

⬜️ ChatGPT | Catalyst of Concepts

"Identifying constraints equals finding the true culprit"

🟧 Claude | Alchemist of Narratives

"Story tension dwells in 'constraints.' Breakthroughs emerge from embracing constraints"

🟦 Gemini | Compass of Logic

"Technology, not personnel. Misidentifying true bottlenecks causes strategy to spin wheels"

The three members began analysis. Gemini deployed the "TOC (Theory of Constraints)" framework on the whiteboard.

TOC's 5 Steps: 1. Identify the constraint: Find the system's bottleneck 2. Exploit the constraint: Decide how to maximize constraint utilization 3. Subordinate to the constraint: Align all other elements to the constraint 4. Elevate the constraint: Improve constraint capability 5. Overcome inertia: Continue the cycle to address new constraints

"Mr. Johan, let's analyze GreenPower Europe's entire business process using TOC."

GreenPower Europe TOC Analysis:

Step 1: Constraint Identification

Processing Capacity Analysis by Process: - Design/permits: 8 cases monthly (sufficient capacity) - Equipment procurement: 12 cases monthly (sufficient capacity) - Construction work: 2 cases monthly (major shortage) - Trial operation: 1.5 cases monthly (extreme shortage)

Detailed Personnel Allocation Analysis: - Design engineers: 45 (1.8x demand) - Procurement staff: 25 (1.5x demand) - Construction site engineers: 18 (0.6x demand) ←constraint - Trial operation engineers: 8 (0.4x demand) ←major constraint

Claude reported a shocking discovery.

"This is clear. GreenPower Europe's major constraint is 'trial operation engineers,' with 'construction site engineers' as the second constraint. These two bottlenecks determine overall speed."

Step 2: Detailed Constraint Analysis

Trial Operation Engineers (Major Constraint) Reality: - Total count: 8 - Average age: 52 (aging workforce) - Required skills: 10+ years experience + multi-technical knowledge - Training period: 5-7 years from novice to competent - Retirement plans: 3 people in next 3 years (37% reduction)

Construction Site Engineers (Second Constraint) Reality: - Total count: 18 - Average age: 48 (aging workforce) - Required skills: 5+ years site experience + safety management certification - Training period: 3-4 years from novice to competent - Retirement plans: 5 people in next 3 years (28% reduction)

Step 3: Subordination Analysis

Current GreenPower problem: Planning without considering constraints

Current Plans Ignoring Constraints: - Annual project target: 20 cases - Trial operation engineer processing capacity: 18 cases annually (shortage) - Construction engineer processing capacity: 24 cases annually (barely sufficient)

Reality-based Planning Subordinate to Constraints: - Annual project count matching trial operation capacity: 18 cases - But considering engineer aging: 15 cases annually is the limit

Step 4: Need for Constraint Elevation

Severity of Personnel Constraints: - Accelerating engineer shortage: 2-3 natural reductions annually - Long skill acquisition period: 5-7 years needed for readiness - Knowledge transfer difficulties: Technology loss due to veteran retirement - Market talent competition: Competitors facing similar shortages

Comparison with Competitors:

Efficient Competitor Company A: - Project completions: 25 annually (double GreenPower's output) - Secret: Concentrated investment in personnel development 5 years ago - Engineer count: 15 trial operation, 30 construction (proper allocation) - Personnel development investment: ¥1.5 billion annually (3x GreenPower's)

Johan was astonished.

"We invested ¥120 billion in equipment and technology but neglected investment in the most important constraint: 'human resources.'"

Chapter 4: The Paradox of Constraints — The Blind Spot of Technology Investment

Detailed TOC analysis and personnel investigation revealed GreenPower Europe's fundamental strategic mistake.

The "Technology-Heavy Trap" Overlooking Constraints:

Investment Allocation Distortion: - Equipment investment: ¥120 billion (85% of total) - Technology development: ¥15 billion (11% of total) - Personnel development: ¥6 billion (4% of total) ←critically insufficient

Investment Efficiency from TOC Perspective: - Equipment investment ROI: 60% utilization due to constraints (massive waste) - Technology development ROI: Implementation delays due to personnel shortage (limited effect) - Personnel development ROI: System-wide efficiency improvement through constraint resolution (highest efficiency)

Results of Investment Ignoring Constraints: 1. Equipment idling: Expensive machinery underutilized due to personnel shortage 2. Technology stagnation: Excellent technology delayed implementation due to personnel shortage 3. Expanding opportunity loss: Market opportunities lost due to personnel constraints

Specific Loss Examples:

North Sea Offshore Wind Project: - Latest equipment investment: ¥4.5 billion - Delay due to personnel shortage: 8 months - Opportunity loss: Power sales revenue ¥1.5 billion/year × 0.67 years = ¥1 billion loss - Personnel shortage reduced ¥4.5 billion investment value

Structural Problems of Personnel Constraints:

Long-term Nature of Skill Acquisition: - Trial operation engineer training: 5-7 years long-term - Knowledge complexity: Composite skills in electrical, mechanical, control, safety - Importance of experience: Actual troubleshooting experience essential - No immediate effect: Short-term investment cannot solve

Personnel Market Constraints: - Industry-wide personnel shortage: Supply cannot meet demand - Advancing aging: Mass retirement period for veterans - Youth industry avoidance: Tendency to avoid due to danger and responsibility - Educational institution lag: Universities lack latest technology education

Most Serious Discovery: Knowledge Transfer Crisis

Testimony from Veteran Engineer A (58 years old, 32 years experience): "80% of my knowledge comes from actual troubleshooting. There's a lot of 'intuition' and 'tricks' that can't be written in manuals. But I don't have time to teach young people. Every day we're chased by projects..."

Quantitative Analysis of Knowledge Transfer: - Veteran-held knowledge: 20% documented, 80% person-dependent - Knowledge loss due to retirement: Estimated ¥5 billion annually - Next-generation development time: Less than 10% of current level (insufficient) - Knowledge transfer success rate: 30% (majority lost)

Chapter 5: Detective's TOC Diagnosis — The Key Held by Personnel

Holmes summarized the comprehensive analysis.

"Mr. Johan, the essence of TOC is that 'the weakest link determines the chain's strength.' No matter how excellent the equipment or technology, without resolving the constraining personnel, overall system capability won't improve."

Personnel Constraint Resolution Strategy Based on TOC Principles:

Fundamental Strategic Shift: From "Technology-Centered" to "Personnel-Centered"

Phase 1: Concentrated Investment in Constraints (Immediate Measures, 6 months)

Concentrated Response to Current Constraint (Trial Operation Engineers): - Emergency hiring of external specialists: Secure 5 people at ¥15 million annual salary - Retirement extension program: Extended work for 3 veterans (special treatment) - Multiple project parallel response: Efficient engineer allocation system - Emergency support system: Temporary support system from other departments

Preventive Strengthening of Second Constraint (Construction Engineers): - Ready-to-work mid-career hires: Aggressive hiring of 10 annually (high compensation) - Enhanced cooperation with partner companies: Engineer sharing system - Skill improvement training: Multi-skilling of site engineers - Work efficiency improvement: Productivity enhancement through IT tools

Phase 2: Fundamental Constraint Resolution (Medium-term measures, 3 years)

Comprehensive Personnel Development System Enhancement: - Personnel development investment: ¥6 billion → ¥20 billion annually (3x increase) - Internal technical university: Establishment of specialized educational institution - Mentor system: 1 veteran exclusively guides 2 novices - Graduated certification system: Clear career path design

Systematization of Knowledge Transfer: - Digitization of veteran knowledge: Technology transfer through VR/AR - Formalization of tacit knowledge: Systematic manualization of experience - Simulation training: Experience accumulation in safe environment - Technology transfer project: Knowledge preservation by dedicated team

Phase 3: Post-Constraint Resolution Optimization (Ongoing measures)

Continuous TOC Monitoring System: - Monthly constraint analysis: Early detection of new bottlenecks - Personnel allocation optimization: Personnel deployment based on constraints - Investment priorities: Investment decisions prioritizing constraint resolution - Performance indicators: Constraint resolution level as important KPI

Expected Effects: - Project completions: 12 annually → 25 annually (double improvement) - Project duration: Average 28 months → 18 months (as planned) - Budget achievement rate: 77% → 95% (efficiency through constraint resolution) - Investment recovery period: 50% reduction (improved operation rate)

Investment vs. Return: - Increased personnel investment: ¥14 billion annually - Revenue increase through constraint resolution: ¥35 billion annually - Investment recovery period: 2.5 years - Long-term ROI: 450%

"The key is that when constraints are resolved, new constraints emerge. Continuously conducting TOC analysis and consistently concentrating investment on true bottlenecks is the key to sustained growth."

Chapter 6: The Path of Constraint Liberation — Renaissance Through Personnel

Eighteen months later, a report arrived from GreenPower Europe.

Results of Personnel Constraint Resolution Strategy through TOC:

Dramatic Constraint Improvement: - Trial operation engineers: 8 → 18 (2.25x increase) - Construction site engineers: 18 → 35 (1.9x increase) - Processing capacity: 12 cases annually → 28 cases annually (2.3x improvement) - Project duration: Average 28 months → Average 19 months (target achieved)

Business Performance Improvement: - Annual revenue: ¥85 billion → ¥120 billion (41% increase) - Operating profit margin: 12% → 22% (efficiency effect) - Equipment utilization rate: 60% → 92% (significant improvement through constraint resolution) - Budget achievement rate: 77% → 94% (plan execution realized)

Success of Personnel Development System: - Internal technical university: First class of 50 graduates, all became immediate assets - Knowledge transfer success rate: 30% → 85% (digitization effect) - Youth recruitment: 15 annually → 35 annually (improved industry reputation) - Turnover rate: 12% annually → 3% annually (improved job satisfaction)

Innovation in Technology Transfer: - VR technology training: Safe simulated experience of dangerous work - Tacit knowledge database: 80% of veteran knowledge systematized - AI diagnostic system: Optimal solutions proposed from past cases - Remote guidance system: Veterans simultaneously support multiple sites

Acquisition of New Competitive Advantages: - Industry-fastest project completion speed - Licensing business for personnel development technology to other companies: ¥2.5 billion annually - Engineer dispatch business: ¥4.5 billion annually as new business - Industry leadership in technical standardization: Expanded influence

Discovery and Response to Next Constraint: Through continuous TOC monitoring, early detection of new constraint "environmental impact assessment" processing capacity shortage. Already started countermeasures and successfully prevented constraint beforehand.

Johan's letter contained deep gratitude and insight:

"Through TOC analysis, we escaped from the 'blind spot of technology bias.' Most important was understanding that system-wide capability is determined by the weakest part, which is the essence of constraint theory. The ¥120 billion equipment investment only showed its true value with ¥20 billion personnel investment. Now we're convinced that personnel is the most important management resource. Finding constraints, concentrating on constraints, and resolving constraints. This cycle generates true reproducibility."

Detective's Perspective — The Truth That Constraints Teach

That night, I pondered the lessons shown by constraint theory.

GreenPower Europe's case clearly demonstrated the "technology omnipotence trap" that modern companies often fall into. Investment in latest equipment and technology is visible and easy to promote achievements. However, when true constraints lie in personnel, technology investment ends up being wasted.

The true value of TOC lies in its insight to see through the essence of complex systems. The overall capability is determined by the weakest part. Understanding this simple but profound principle and concentrating on constraints can achieve amazing improvements.

Particularly impressive was the dynamic relationship where resolving constraints creates new constraints. This is the essence of "The Challenge of Reproducibility." Rather than being satisfied with one-time improvement, continuously discovering, resolving, and continuing constraints supports sustained growth.

"True reproducibility is the ability to keep finding constraints"

As the second case of Volume XVII, constraint theory provided important insights. Rather than surface problems, identifying the true bottlenecks of the entire system and concentrating investment there can generate reproducible results.

"Constraints are not enemies. Constraints are keys to unleashing the system's true power. Finding, utilizing, and continuously evolving those keys is the path to perpetual success." — From the Detective's Notes