“Leading Beyond Authority in Utilities: A Conversation with American Water Works CEO Susan Story”

Leadership Lyceum: A CEO's Virtual Mentor

Welcome to Episode 8 of the Leadership Lyceum: A CEO’s Virtual Mentor

“Leading Beyond Authority in Utilities: A Conversation with American Water Works CEO Susan Story”

American Water Works (Ticker: AWK) is the largest publicly-traded water utility in the country, serving one of the basic human needs of about 15 million customers across 47 states, and in Ontario, Canada. The company serves, and Susan leads, in a mission-critical infrastructure sector.

I have had the pleasure of hearing Susan Story, CEO of American Water, speak to industry groups on numerous occasions over the last several years. Her speeches are engaging and carry power that moves an audience to action.

I realized that the persuasive power of her public speaking and her approach to leadership demonstrates quintessential qualities for effective leadership beyond the boundaries of the corporation that she leads.

A key measure of success in the utility industry is continuously achieving safe, clean, reliable, affordable delivery of service. These objectives are dynamic and their parameters are often dependent on public policy, legislation, and regulatory relationships. Industry leaders, therefore, must advocate in these areas by leading and influencing beyond the boundaries of their corporations. They must lead beyond their authority.

There are three types of authority, according to the famed sociologist Max Weber.

There is authority based on legal rules. There is traditional authority, based on traditions, customs and historical precedents. Weber posited an additional authority structure called charismatic authority.

Charismatic authority is conferred on someone not by established norm or rule, but by an individual’s personal history, achievements and leadership qualities. Weber defines charisma as possessing exceptional qualities regarded as exemplary in the eyes of his or her followers.

A utility executive leads beyond the boundaries of the corporation with charismatic authority. Leadership effectiveness in this sphere of charismatic authority, above and beyond the corporation’s boundaries, requires unique characteristics and competencies often overlooked.

There are many descriptors for the general qualities of the effective leader. But there are very few specific frameworks for effective leadership with charismatic authority. In 1951, Northwestern University professor Franklyn Haiman established a list of qualities desirable for a leader engaged in democratic processes.

These qualities include social sensitivity, which includes a respect and concern for others, extroversion, and a belief in the value of the individual. This sincere interest in other people is the most important attribute of this type of leader. Other qualities include sensitivity to the basic trends and moods of the group; knowledge and expertise in the area where they are expected to lead; facility in verbalizing the ideas of a group; vitality; maturity and patience.

Susan Story has those qualities. I think you will hear evidence of the qualities throughout my interview with her. These attributes enable her to successfully lead and influence people beyond her corporate authority into the areas of corporate social responsibility and public policy.

Informative and Helpful Links

From the September 13, 2014 The New York Times: Adam Bryant’s Corner Office “Susan Story of American Water: A Job Description Is Just the Start” https://nyti.ms/2jGgWfX

The Bipartisan Policy Center: http://bipartisanpolicy.org The Bipartisan Policy Center is a non-profit organization that combines the best ideas from both parties to promote health, security, and opportunity for all Americans. BPC drives principled and politically viable policy solutions through the power of rigorous analysis, painstaking negotiation, and aggressive advocacy.

Program Guide

Susan Story Interview – “Leading Beyond Authority in Utilities”

0:30 Introduction to Susan Story, American Water and Policy Leadership

1:55 Strategic and public policy priorities for American Water

5:33 Introduction to the Bipartisan Policy Center (BPC)

7:06 BPC: Moving from white papers to practical legislation

7:58 BPC: Addressing aging infrastructure - Public Private Partnerships (P3s)

9:45 BPC solutions and implications on activities of American Water

11:50 Break 1

12:07 Ideal conditions state-by-state to support P3s. Fair market value, single tariffs.

15:20 Measures and approaches to addressing state-level policy matters.

16:40 Break 2

17:00 BPC: Other industries that benefit from the P3 construct

17:50 Barriers to P3s: Bonding capacity - tax-exempt bond defeasance enablers and barriers

19:45 Lyceum’s introduction to “Leading Beyond Authority” and definition of “charismatic authority”

21:06 Susan’s leadership approach to broad policy and regulatory environments.

25:32 Lyceum’s outline of effective leadership attributes for those with charismatic authority.

26:32 Susan’s approach to achieving forward progress on policy matters

28:10 Meaning and pride in our work: Herbie Sims, backhoe operator

30:45 Break 3

31:05 Susan’s vision for water and wastewater five years down the road.

34:14 End of episode and preview of Episode 9 with Pedro Pizarro, CEO of Edison International

Biography on Susan Story

Susan N. Story is president and chief executive officer (CEO) of American Water, the largest publicly traded U.S. water and wastewater utility company. In this role since May 9, 2014, Ms. Story leads a team of 6,700 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 47 states and Ontario, Canada. She is responsible for developing the overall strategy and vision of American Water and directing its key business development initiatives.

Ms. Story joined American Water in April 2013 as chief financial officer (CFO). In this role, she had responsibility for all financial functions, including directing and coordinating all company financial objectives and obligations; ensuring the integrity of financial statements; developing budgets for both annual and interim periods; developing cash management investment strategies; maintaining a financially solvent organization; leading Sarbanes-Oxley; and overseeing the shared services organization.

With more than 30 years of utility experience, Ms. Story is well-versed in overseeing complex financial systems, optimizing cost structures and strengthening internal controls. Prior to joining American Water in April 2013, Ms. Story served as executive vice president of Southern Company, one of America's largest generators of electricity serving both regulated and competitive markets across the southeastern United States. In this capacity, she was a member of the company’s management council and was president and CEO of Southern Company Services Inc., with responsibilities for functional support of all of Southern Company’s subsidiaries.

Previously, Ms. Story served as president and CEO of Gulf Power Company, a Florida subsidiary of Southern Company. She has also served as Southern Company’s executive vice president of Engineering and Construction Services, where she had oversight for budgets and schedules of numerous combined cycle power plants and large environmental retrofit projects. Ms. Story began her career at Southern Company as a nuclear power plant engineer and had increasing responsibilities in operations, human resources, customer service, corporate real estate and supply chain. She has also been an independent director of Raymond James Financial, a diversified financial services company, since 2008, and was named Independent Lead Director in February 2016.

Story has a history of active involvement in community, industry, education and economic development efforts. She currently serves on the board of directors for the Bipartisan Policy Center and as co-chair of its Executive Council on Infrastructure. She is also on the board of the Alliance to Save Energy (ASE), and is a member of the Electric Power Research Institute Advisory Council and the Moffitt Cancer Center Board of Advisors in Tampa, Fla. She was recently the national chairman for the Center for Energy Workforce Development (CEWD) and served on the board of the National Renewable Energy Laboratory (NREL). In her time in Florida, she was a member of the Florida Board of Education, appointed to the Federal Judicial Nominating Commission, appointed chair of the state's economic development public-private partnership, and was an appointee to the Tax and Budget Reform Commission, required every 20 years by the Florida Constitution.

Ms. Story attended executive education programs at Duke University and Oxford University in England, and completed international business studies at Cambridge University and leadership studies at Harvard. She earned a bachelor's degree in industrial engineering from Auburn University and an MBA from the University of Alabama in Birmingham. She completed additional post-graduate coursework in the Master of Finance program at the University of Alabama focusing on financial derivatives, and at the Birmingham School of Law focusing on torts and contracts.

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Your host Thomas B. Linquist is a Partner at a leading global executive search firm. Over his 15 years in management and leadership consulting he has served a wide array of industrial clients. This includes leadership assessment and search for chief executive officers, chief financial officers, chief operating officers and boards of directors. He holds an MBA from the University of Chicago and over his 25-year career has served in a variety of roles: as an engineer with Shell Oil Company, a banker with ABN AMRO Bank, and as treasurer was the youngest corporate officer in the 150+ year history at Peoples Energy Company in Chicago. He is an expert on hiring and promotion decisions and leadership development. Over the course of his search career, he has interviewed thousands of leaders.

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