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Today marks a milestone: my 250th Playing to Win/Practitioner Insights series post. Back on October 5, 2020, when I published the first piece in this strategy series, “The Role of Management Systems in Strategy,” I was simply responding to a client’s question and trying to provide practical advice on the often-ignored fifth box of the Strategy Choice Cascade. I had no idea that first post would be the launch of a series that reaches 263,000 people (at last count) on a weekly basis. It feels fitting for this 250th post to return to the original topic in Revisiting Management Systems: The Nervous System of Strategy. And as always, you can find all the previous Playing to Win/Practitioner Insights here. Im delighted to be joined in coauthoring this post by Steve Goldbach and Geoff Tuff. Both are former colleagues I mentored at Monitor Group and are now senior partners at Deloitte. They are the coauthors of three books, and their latest, Hone: How Purposeful Leaders Defy Drift, is dedicated entirely to the power of enabling management systems (EMS) as a leadership tool. This represents the combined view of the three of us. That original piece noted that many treat EMS as a lesser choicea mere implementation detail tacked on at the end. It argued the opposite: that your strategy is not truly complete until you have specified the distinctive management systems (processes, structures, rules, and protocols) that will build, maintain, and reinforce the must-have capabilities that make your where to play/how to win (WTP/HTW) choice a reality. The emphasis in that first piece was distinctiveness, noting that generic management systems that simply replicate so-called best practices are a route to mediocrity. {"blockType":"mv-promo-block","data":{"imageDesktopUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/martin.jpg","imageMobileUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/Untitled-design-1.png","eyebrow":"","headline":"Subscribe to Roger Martin\u0027s newsletter","dek":"Want to read more from Roger Martin? See his Substack at rogerlmartin.substack.com.","subhed":"","description":"","ctaText":"Sign Up","ctaUrl":"https:\/\/rogerlmartin.substack.com","theme":{"bg":"#00b3f0","text":"#000000","eyebrow":"#9aa2aa","subhed":"#ffffff","buttonBg":"#000000","buttonHoverBg":"#3b3f46","buttonText":"#ffffff"},"imageDesktopId":91412496,"imageMobileId":91412493,"shareable":false,"slug":""}} Hone offers a critical and complementary observation. While it is vital to have distinctive management systems to enable a distinctive strategy, all management systemswhether they are distinctive or notmotivate human behavior. Marshaling the right kind of human motivation is the critical underpinning of any successful strategy. Management systems frame what good looks like from a behavioral perspective in the organization. We believe nearly everyone shows up to work wanting to be successful; your systems should tell them how. In this way, if the WTP/HTW choice is the heart of strategy, then MHC are the muscles and EMS its nervous systemthe network of signals, incentives, and feedback loops that translate strategic intent into coherent, day-to-day action. In biology, the nervous system is the bodys command center, regulating essential functions, processing inputs, and sending signals to muscles, allowing the body to react and control its functions. This is precisely what management systems do for an organization. They are the intricate web of formal rules and cultural norms that shape how people work together inside organizations. Formal systems might include how performance is evaluated, how financial targets are set, or promotion and hiring criteria. Cultural norms are the subtle cues and “unwritten rules” that dictate behavior, such as decision rightswho gets to make what choice, or even who is asked for an opinion. When all the management systems inside an organization are combined, they can either powerfully reinforce behavior consistent with what is necessary to support the strategy choices, or, all too often, hinder it entirely. The Barnacle Problem: Drift Erodes Distinctiveness A very common problem, particularly in large organizations, is that management systems tend to accumulate over time like barnacles on the hull of a ship. Barnacles create drag and can cause a ship to gradually drift off course. Layers of competing management systems have the same effect on organizations. The accumulation of management systems can happen for at least two core reasons: Many designers, narrow designs. Management systems are rarely designed as a setthey usually crop up to address a specific problem. A well-intentioned functional leader in finance creates a new budgeting process. HR adds a new performance metric. IT implements a new security protocol. Each system feels like a “good idea” in isolation, but they accumulate and often unintentionally conflict, sending mixed signals throughout the organization. Layering over, not uninstalling. Even when a company launches a “new strategy,” leaders rarely go back and remove or reshape the old systems. They just layer new ones on top while the old systems are still busiy motivating the old behaviors. This accumulation erodes distinctiveness. Your carefully chosen, distinctive EMS are drowned out by the cacophony of the other systems, all pulling people in various directions. Drift is often imperceptible in the moment, and each subsequent deviation is similarly hard to see from the new direction of travel. It is only when a company is way off course that alarm bells start to soundand by that time, subtle course correction is ineffective. A classic example of legacy management systems holding a company back happened at Sears decades ago. In the 1990s and early 2000s, leadership correctly identified e-commerce as a strategic imperative. They even had a massive advantage: a world-class catalog and fulfillment business. But the companys formal management systems were barnacles. Its P&L structure and incentive plans were built entirely around the profitability of individual brick-and-mortar stores. When Sears.com was set up as a separate, competing P&L (the conventional wisdom at that time), store managers were inadvertently punished for behaviors that supported the new strategy. For example, if a customer wanted to return an online purchase to a local store (which was considerably easier at that time relative to today), the return would show up on the stores P&L, reducing its profitability. This motivated store managers to resist taking online returns, something that might have presumably given Sears a leg up in the new online world. Drift tends to end badly. Organizations wake up and discover they are miles away from where they need to be to achieve their goals. They have no choice but to engage in so-called transformationmassive change at a rapid pace. These transformations are costly in terms of dollars, time, and human energy, and have very high failure rates. We are not anti-transformation per se; we just believe that with a bit more attention to day-to-day steering of the ship, much of that waste could be avoided. The Antidote to Drift: Honing Hone uses the metaphor of a chefs knife. Good chefs don’t wait for their knives to become uselessly dull before fixing them. A dull knife is dangerous, so chefs hone it every single day before use. Honing is not sharpening. Sharpening grinds away metal to create a new edgea transformative, costly act. Honing is a gentle, daily maintenance that realigns the existing edge, keeping it fit for purpose. Honing, as one chef described, is a meditation and a maintenance both keeping the knife serviceable and an act that reminds the chef of whats needed in the forthcoming service. This is the antidote to drift. The external landscape any organization faces is constantly in motion: Customer preferences shift, competitors take new actions, technology advances, and regulation varies constantly. Leaders must respond by honing their organization with small changes to their EMS to steer behaviors consistent with the external shifts. Ideally this can happen by making small changes to existing management systems. But sometimes it might require creating a new distinctive system or uninstalling management systems that are no longer needed. The Four Seasons example from the first PTW/PI post impeccably illustrates honing. The “glitch reporting system”where any employee, at any level, is empowered and rewarded for identifying and reporting a service “glitch”is an EMS. But it’s not a static one. By its very design, it is a honing system, a feedback loop designed to identify and correct for small drifts (a slow room service order, a dirty light fixture, a slippery floor) in real time, long before they accumulate into a “bad service” barnacle. The Role: The CEO as Chief System Designer This leads to a final, critical point. If EMS are the nervous system of strategy, who is the brain? We have consistently argued that an organizations leadership must own its strategy, not outsource it. On this front, we believe that CEOs must own the overall design of their collection of EMS. The CEO must be the chief system designer because the CEO is the only person in the organization with both the authority and visibility to ensure coherence and congruence across all the organizational systems. While CEOs can (and should) delegate the detailed design of a sales incentive plan or a supply chain metric, they must own the theory of how all those systems interact to collectively motivate the desired behavior. Bel Groupe (maker of brands such as BabyBel, GoGo squeeZ, and the Laughing Cow) is a terrific example of its CEO, Cécile Béliot-Zind, acting as the chief systems designer. Bels ownership and management team believe they can create competitive advantage by promoting a more sustainable food system. Béliot-Zind is fond of saying that sustainability without profitability has no impact and profitability without sustainability has no future. Bel helps support farmers with whom it works to implement in necessary regenerative practices while enabling a better living. As a result, the company has access to a more resilient, long-term supply chain. To reinforce this commitment, Bel became a mission-led company by law (société mission) in France, formalizing this commitment in its company by-laws: a very strong management system creating consistency and a long-term commitment to this strategy. Béliot-Zind also knew there were other systems that needed to change to reduce the typical profit versus purpose friction that occurs in many organizations. Her solution was to redesign her finance department to fuse responsibility for both profit and societal impact into a single function. She created a chief impact officer role responsible simultaneously for profit and for societal impact, ensuring both are managed with the same rigor as a traditional P&L. That CEOs must be chief system designers doesn’t mean non-CEOs are powerless. On the contrary, all leaders can and should act as a chief system designer for their own team, honing the management systems within their control. And, just as important, they have a responsibility to identify and elevate the inconsistencies they see, making the case for why a particular system is causing drift. Practitioner Insights Here are four things you can do to put this into practice: Audit your management systems. At the start of every strategy process, we suggest uncovering your strategy-in-use, including identifying the key management systems that drive behavior today (whether they are distinctive or not). An easy way to find these is to ask why people behave the way they do inside the organization. Then ask: Do these systems, in their current form, support or conflict with our new WTP/HTW? Connect honing to your What Would Have to Be True (WWHTBT). Use the WWHTBT tool to assess your management systems. We are all fond of saying that strategy doesn’t come with an expiration date. It is good until one of its WWHTBTs is no longer true. This is your signal to hone. When a WWHTBT fails, or is being strained, identify the new behavior you need and then determine which management system must be adjusted (or created, or uninstalled) to motivate it. Stop Blaming Culture. Culture isnt some immutable bogeyman. As has been pointed out in this series, you can hone it to support your strategy through changes to leadership behavior and careful modification of management systems. Find the specific management systems that are rewarding the behavior that creates cultural defects and change them. Culture is, in the end, a strategy choice. Be aware of your “tells.” Leaders at all levels: Recognize that you are a powerful informal management system. Your attention, your questions, and your emotional reactions in meetings send the clearest signals of all about “what good looks like.” Make sure your personal cues are in alignment with your stated goals. A full 249 PTW/PI later, the core message remains consistent. EMS is a critical element of strategyits nervous system. Leverage it and hone it, and you will be generously rewarded. {"blockType":"mv-promo-block","data":{"imageDesktopUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/martin.jpg","imageMobileUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/Untitled-design-1.png","eyebrow":"","headline":"Subscribe to Roger Martin\u0027s newsletter","dek":"Want to read more from Roger Martin? See his Substack at rogerlmartin.substack.com.","subhed":"","description":"","ctaText":"Sign Up","ctaUrl":"https:\/\/rogerlmartin.substack.com","theme":{"bg":"#00b3f0","text":"#000000","eyebrow":"#9aa2aa","subhed":"#ffffff","buttonBg":"#000000","buttonHoverBg":"#3b3f46","buttonText":"#ffffff"},"imageDesktopId":91412496,"imageMobileId":91412493,"shareable":false,"slug":""}}
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On November 14, Defense Secretary Pete Hegseth, screwdriver in hand, helped Pentagon facilities personnel install two new signs that read “Department of War.” After affixing the sign to the outside of the building, he turned toward onlookers and said, “Here we go.” Hegseth’s handyman moment was more than a symbolic gesture: It was the first act of what he and the Trump administration hope will eventually be a wholesale rebrand of the Department of Defense to the Department of War. This rebrandwhich would require updating 700,000 buildings and facilities worldwide (not to mention all of the other places the DOD would become the DOW)could reportedly cost as much as $2 billion. Switching signage, letterhead, placards, and more President Donald Trump signed an executive order in September giving the DOD a secondary “War” name, but to make it official will require an act of Congress, and it won’t come cheap, according to figures shared by four senior congressional staffers and two others briefed on the cost to NBC News. The estimated price tag would cover switching signage and letterhead, which together could cost about $1 billion alone, along with placards, badges, software, and code. Rebrands can be tricky for any brand, but they’re especially hard when dealing with public agencies and taxpayer dollars. The public and lawmakers have taken issue with Trump’s plan to change the name of the Department of Defense to the Department of War, a name the U.S. used before its military agencies were consolidated following World War II. This isn’t just adding a few letters to a building, like Trump has done at the White House. The DOD, the executive-level federal agency that oversees the branches of the U.S. Armed Forces, has more than 3 million personnel and both inward-facing and outward-facing brand assets at facilities in the U.S. and 80 countries around the world. For comparison, Walmart counts 2.1 million associates and stores in 19 countries. Opposition to the rebrand Hegseth said on November 14 that the DOD sign at the Pentagon was replaced “because we want everybody who comes through this door to know that we are deadly serious about the name change of this organization,” according to a press release. But YouGov polling in September found a 58% majority of U.S. adults oppose renaming the DOD, and there’s bipartisan opposition to making the secondary name formal. In a letter to the Congressional Budget Office in October, Senate Democrats on the Budget Committee cited both brand and budget concerns, writing that the new name “risks confusion, redundancy, and unnecessary cost expenditure.” “Given the Trump administrations repeated emphasis on fiscal restraintparticularly its aggressive use of illegal impoundments and now, unconstitutional pocket rescissionsthis symbolic renaming is both wasteful and hypocritical,” Democrats wrote. “It appears to prioritize political theater over responsible governance, while diverting resources from core national security functions.” Senator Rand Paul, a Kentucky Republican, told CNN that he believes calling the DOD the Department of War “sends a bad signal to the world.” “In a world with nuclear weapons, I think glorifying war . . . is not something I’m in favor of,” Paul said. Republicans have introduced legislation in the House and Senate to rename the DOD, and Paul said he would “lead opposition” to it if it came before the Senate. Hidden costs Trump has sought to cast himself as a peacemaker this year, which a war-themed rebrand is at odds with. It’s also at odds with his campaign promises. Trump took office pledging to lower costs and rein in government spending, but coming up on a year back in office, persistent inflation and conspicuous government spending like his White House remodel project have taken a political toll. Trump’s net approval rating is sagging, and a pricey rebrand project viewed by many as vanity might not help. Rebranding the DOD could cost taxpayers as much as $2 billion. Its political costs for Trump could be even higher.
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AI has a writing style, or, at least, an alleged style. Tools like ChatGPT and Claude seem to communicate with a tendency toward formalism. The chatbots are earnest, sometimes too evenhanded or overly complimentary. Theres a noticeable lack of personal flair, and no deeply held opinions. According to Grammarly, AI language tends to evoke “repetitive phrasing and robotic tone. Now, there are even AI buzzwords and phrases like pivotal and delve into and underscore. Its the verbiage of instruction booklets for middle schoolers writing their first essays. In the age of AI, these helpful crutch words are now verbata non grata. Some people are now trying to avoid using these terms, because they sound like a lowly bot God forbid. But the problem is bigger than simply sounding like an AI. Human speech is a time-tested neologism supply chain; people have a natural inventiveness when talking and writing. But as we increasingly communicate with chatbots and rely on AI agents to dissect concepts, summarize research reports, and synthesize internet searches, we’re filtering a wide array of content through the stilted and bounded syntax of LLMs. Its even changing how we communicate. Researchers have suggested some AI-based writing assistance models can whittle away the overall diversity of human writing, shrinking the size of our collective vocabulary. AI may literally be putting words into our mouths, as repeated exposure leads people to internalize and reuse buzzwords they might not have chosen naturally, Tom Juzek, a professor at Florida State University, told Fast Company earlier this year. With colleagues, he recently identified a vocabulary list of AI-speak, including words like intricate, strategically, and garner. He also found that these words are now more likely to show up in unscripted podcasts, a strong sign of whats called lexical seepage. Can we plug the leak? AI companies are aware that off-the-self AI isnt always appealing. And theyre increasingly promising customization and tailoring that can bend these bots to our will and preference. You can tell ChatGPT the traits you want it to have, how you want it to talk to you, and any rules you want it to follow, OpenAI explained earlier this year upon the release of a new feature allowing users to choose preferred traits and personality features for their bots. If youre a scientist using ChatGPT to do research, youll want it to engage with you like a lab assistant. If youre caring for an elderly family member and need tips or companionship ideas, you might want ChatGPT to adopt a supportive tone. AI what I am In a perhaps-futile attempt to protect myself from AI speak, I told my ChatGPT agent to be more expansive with its vocabulary. Think widely-read, I told it. Also, try to use new words all the time! I want you to be varying up your vocabulary constantly. I banned the chatbot from ever using the phrases outlined by Juzeks research. Thus far, ChatGPT seems to have improved. I think, at least. Its avoiding the banned words, and seems to be making a good-faith effort to communicate less formulaically. Its reaching for verbs that reflect better understanding of what its actually talking about. But AI diction is a wormhole. The problem, Juzek explains, is that the nature of AI writing is about more than just our words, and extends to sentence structure and functional words like that, may, can, and should. “Asking your assistant to avoid buzzwords will probably make your writing look less AI-like to humans and reduce the chance that someone fires up a detector, he tells me. What it means for the bigger question of whether AI is homogenizing or flattening language, there — I think the jury is still out. The great homogening Some believe that a different approach could make AI a less rote communicator. Nathan Lambert writes in the newsletter Interconnects that the current LLMs arent trained to be good writers. These AIs are trying to be something for everyone, not platforms with voice and positionality, and are inclined to be succinct and neutral. The next step would be solving the problem of how models arent trained with a narrow enough experience. Specific points of view nurture voice, he writes. The target should be a model that can output tokens in any area or request that is clear, compelling, and entertaining. Well need to wait for that technology, though. In the meantime, we cannot AI our way out of this AI conundrum. These companies are advertising tools to make AI extensions of ourselves, and outsource chunks of our individuality into a machine designed by finding correlations and inputting meaning from the webs surfeit. The fear is that as we increasingly communicate with AI, well flatten human culture and speech in the process. Of course, this homogenization isnt new. Literature, radio, and television, and their linguistic evolutions, all had transnational reach. Social media created global slang. But AI is different. While it is a new technology, its not a new platform for our thoughts — its a new way of synthesizing them. This makes sense: Large language models are built by consolidating a vast trove of information into reasoning models that communicate like a digital common man. Meanwhile, we’re just here trying to be ourselves.
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E-Commerce
Pittsburgh International Airport (PIT) was never really meant to serve Pittsburgh. When the modern airport opened in 1992, it was built as a hub for U.S. Airways, primarily serving as a connection point for passengers heading elsewhere. Tens of millions of passengers used PIT annually, though only a small number of them were actually flying into or out of Greater Pittsburgh. Most stayed in the terminal, leaving one gate only to enter another, which was fineuntil it wasn’t. “In 2004, the hub went away. Passengers plummeted. All those connecting passengers left,” says Christina Cassotis, who came on as CEO of the Allegheny County Airport Authority in 2015. After years of waiting for the hub, or any hub, to return, the airport authority decided it was time to accept that what PIT had become is an airport meant for people flying into or out of Pittsburgh. “We needed the facility to match the business plan,” Cassotis says. [Photo: Ema Peter] This month, more than 20 years after the U.S. Airways hub left town, Pittsburgh is opening a new $12.7 billion airport terminal building that embraces its status as an origin-and-destination airport, and one that puts its local passengers first. Designed by Gensler and HDR in association with Luis Vidal + Architects, the new PIT landside terminal where passengers arrive and check in to their flights is a grand and welcoming entry hall with light flooding through from all sides. It’s essentially a canopy of a building, with a soaring and undulating roof overhead. Slits in its wavy top bring light in and offer views to the skies outside while subtly directing travelers through the security checkpoint and to their gates. [Photo: Ema Peter] Rooted to the region Pittsburgh’s airport design concept came from Luis Vidal + Architects, known for its work on airports including London’s Heathrow Airport Terminal 2 and Boston’s Logan Airport Terminal E. “It was very obvious the hub was never coming back and this was going to be a destination and origin or an origin and destination. That’s the first clue for this design,” Vidal says. “It’s going to be for the place. It’s going to be rooted to the region, to the city, to its people.” [Photo: Ema Peter] Vidal says the concept was intended to reflect what he calls Pittsburgh’s virtues: nature, technology, and community. This is most obvious in the roof, with a curvaceous form that was inspired by the region’s rolling and forested hills. The roof’s hilly forms roll alongside each other, creating space for light to pour down into the building. Vidal says the effect is akin to taking a walk in a forest. “You see pockets of light coming down through the trees and the trunks,” he says. [Photo: courtesy Allegheny County Airport Authority] In this case, the trunks are massive branching steel supports that hold up the roof, powder coated in bronze and poking through the pale wood ceiling. It’s not as fully organic as the recently completed mass timber terminal at Portland International Airport, but the effect is a much calmer setting than conventional terminals that are strong-armed with hard gray concrete and steel. The connection to nature in Pittsburgh’s airport design goes even deeper. Around the terminal building’s sides and in the negative space before it connects with the airport’s X-shaped concourse, large landscaped open spaces are available for travelers and airport staff alike. Two are positioned on the landside, and accessible to the public. [Photo: courtesy Allegheny County Airport Authority] Two others are on the airside, past security, and offer a rare space for airport travelers to access fresh air in an almost park-like setting. In contrast to other airports, where outdoor space is small, if it is available at all, PIT’s outdoor terraces make up more than two acres. It’s an amenity that had no small cost, and one that almost got abandoned in the evolution of the design from a concept in 2018 to a completed project in 2025. “We had actually value-engineered that out,” Cassotis admits. “We were like, we can’t do this.” But the pandemic changed minds at the airport, and there was a renewed recognition that access to the outdoors and fresh air would be a benefit to all airport users. “It really became clear to us that we needed to do this and we needed it to be available to everybody,” Cassotis says. The airport declined to disclose how much the terraces cost. The terraces are also designed to work around Pittsburgh’s sometimes volatile weather. Carolyn Sponza, a studio director in Gensler’s Pittsburgh office, says the architects worked to ensure that at least one of the terraces would be accessible year-round, no matter the weather. “Part of that design process was working with the maintenance staff to locate every single piece of equipment they needed to make sure that the walkways were clear, and laying it out in a maintenance room with the hose bed next door,” she says. [Photo: Ema Peter] It’s one of the side benefits of working on an airport like Pittsburgh’s as it transforms from a major hub to a more modest origin-and-destination airport. “A lot of the places that we work in the United States, we’re trying to fix the airports or bring them into this century, but they’re space constrained,” Sponza says. “One of the unique things that this airport had was the ability to dream big and set the vision, and not just try to incrementally fix what was there before.” As Pittsburgh’s airport design officially opens to the public, the redesign is about right-sizing a facility for its actual needs, but also about resetting the expectations of the locals who’ll be its primary users. Rather than brooding as many have for many years over the U.S. Airways hub leaving the airport, the new terminal is a chance to start again. [Photo: Ema Peter]
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E-Commerce
Two new data centers in Silicon Valley have been built but cant begin processing information: The equipment that would supply them with electricity isnt available. Its just one example of a crisis facing the U.S. power grid that cant be solved simply by building more power lines, approving new power generation, or changing out grid software. The equipment needed to keep the grid runningtransformers that regulate voltage, circuit breakers that protect against faults, high-voltage cables that carry power across regions, and steel poles that hold the network togetheris hard to make, and materials are limited. Supply-chain bottlenecks are taking years to clear, delaying projects, inflating costs, and threatening reliability. Meanwhile, U.S. electricity demand is surging from several sourceselectrification of home and business appliances and equipment, increased domestic manufacturing, and growth in AI data centers. Without the right equipment, these efforts may take years longer and cost vast sums more than planners expect. Not enough transformers to replace aging units Transformers are key to the electricity grid: They regulate voltage as power travels across the wires, increasing voltage for more efficient long-distance transmission, and decreasing it for medium-distance travel and again for delivery to buildings. The National Renewable Energy Laboratory estimates that the U.S. has about 60 million to 80 million high-voltage distribution transformers in service. More than half of them are 33-plus years oldapproaching or exceeding their expected lifespans. Replacing them has become costly and time-consuming, with utilities reporting that transformers cost four to six times what they cost before 2022, in addition to the multiyear wait times. To meet rising electricity demand, the country will need many more of themperhaps twice as many as already exist. The North American Electric Reliability Corp. says the lead time, the wait between placing an order and the product being delivered, hit roughly 120 weeks (more than two years) in 2024, with large power transformers taking as long as 210 weeks (up to four years). Even smaller transformers used to reduce voltage for distribution to homes and businesses are back-ordered as much as two years. Those delays have slowed both maintenance and new construction across much of the grid. Transformer production depends heavily on a handful of materials and suppliers. The cores of most U.S transformers use grain-oriented electrical steel, a special type of steel with particular magnetic properties, which is made domestically only by Cleveland-Cliffs at plants in Pennsylvania and Ohio. Imports have long filled the gap: Roughly 80% of large transformers have historically been imported from Mexico, China, and Thailand. But global demand has also surged, tightening access to steel, as well as copper, a soft metal that conducts electricity well and is crucial in wiring. In partial recognition of these shortages, in April 2024, the U.S. Department of Energy delayed the enforcement of new energy-efficiency rules for transformers, to avoid making the situation worse. Further slowing progress, these items cannot be mass-produced. They must be designed, tested, and certified individually. Even when units are built, getting them to where they are needed can be a feat. Large power transformers often weigh between 100 tons and 400 tons and require specialized transportsometimes needing one of only about 10 suitable super-heavy-load railcars in the country. Those logistics alone can add months to a replacement project, according to the Department of Energy. Enormous railcar like this one in Germany are often needed to transport high-voltage transformers from where theyre manufactured to where theyre used. [Photo: Raimond Spekking via Wikimedia Commons, CC BY-SA 4.0] Other key equipment Transformers are not the only grid machinery facing delays. A Duke University Nicholas Institute study, citing data from research and consulting firm Wood Mackenzie, shows that high-voltage circuit-breaker lead times reached about 151 weeks (nearly three years) by late 2023, roughly double pre-pandemic norms. Facing similar delays are a range of equipment types, such as transmission cables that can handle high voltages, switchgeara technical category that includes switches, circuit breakers, and fusesand insulators to keep electricity from going where it would be dangerous. For transmission projects, equipment delays can derail timelines. High-voltage direct-current cables now take more than 24 months to procure, and offshore wind projects are particularly strained: Orders for undersea cables can take more than a decade to fill. And fewer than 50 cable-laying vessels operate worldwide, limiting how quickly manufacturers can install them, even once they are manufactured. Supply-chain strains are hitting even the workhorse of the power grid: natural gas turbines. Manufacturers, including Siemens Energy and GE Vernova, have multiyear backlogs as new data centers, industrial electrification, and peaking-capacity projects flood the order books. Siemens recently reported a record $158 billion backlog, with some turbine frames sold out for as long as seven years. Alternate approaches As a result of these delays, utility companies are finding other ways to meet demand, such as battery storage, actively managing electricity demand, upgrading existing equipment to produce more power, or even reviving decommissioned generation sites. Some utilities are stockpiling materials for their own use or to sell to other companies, which can shrink delays from years to weeks. There have been various other efforts, too. In addition to delaying transformer efficiency requirements, the Biden administration awarded Cleveland-Cliffs $500 million to upgrade its electrical-steel plantsbut key elements of that grant were canceled by the Trump administration. Utilities and industry groups are exploring standardized designs and modular substations to cut lead timesbut acknowledge that those are medium-term fixes, not quick solutions. Large government incentives, including grants, loans, and guaranteed-purchase agreements, could help expand domestic production of these materials and supplies. But for now, the numbers remain stark: roughly 120 weeks for transformers, up to four years for large units, nearly three years for breakers, and more than two years for high-voltage cable manufacturing. Until the underlying supply-chain choke pointssteel, copper, insulation materials, and heavy transportexpand meaningfully, utilities are managing reliability not through construction but through choreography. Morgan Bazilian is a professor of public policy and director at the Payne Institute, Colorado School of Mines. Kyri Baker is an associate professor of civil, environmental, and architectural engineering at the University of Colorado Boulder. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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