Companies in the Alberta oilsands environment have gone through a tumultuous year.
The ongoing oil price environment has driven most producers to make significant reductions in people, operational spending and capital commitments. The fires earlier this year compounded things further with significant displacement of people, property loss and operational disruption.
As we look forward to 2017 and beyond, we see an opportunity for what we describe as “the Big Reset” that has the following aspects:
- Reconnect people with vision and purpose and create an emotional connection to the journey. Many people will be traumatized by the disruptions of the past year and there may be a general uneasiness about what comes next and where the company is headed.
As much as we would like to believe it, “make the shareholders richer” isn’t necessarily a motivating force for people to come to work every day. There is a big opportunity to develop a vision for where we want to be 3-5 years from now in a way that people can get re-energized and committed to the future.
- Create a compelling case for change for oilsands to be globally competitive for capital. It is critical to engage the wider workforce in understanding how the return and risk of further oilsands investment stacks up against other global investment options, for example US shale.
There is a big opportunity to be clear about what the cost and return really needs to be and what the drivers of that are so that people can be engaged in progressing that agenda and understanding how they contribute to it.
- Change the way we work to deliver on that case by ensuring systems and processes fit the organization and deliver the case. As former Devon vice-president Cal Watson wrote in the June issue of Oilsands Review , companies may have made cuts but haven’t necessarily transformed how they work.
- Shape a new culture built around operational discipline, Lean and maximizing return on capital. In conjunction with their vision, companies can declare the enabling behaviours to support getting there. For example, how do you promote behaviours around proactive problem solving and Lean thinking, versus a common upstream malaise of opportunity cost and over-reliance on capital?
Working on the culture in an integrated way will create the engine for long term success, and help companies to avoid backsliding should there be a near term spike in prices.
For many people with direct accountability for managing an asset base and driving business improvement, the biggest conversation today seems to (surprisingly) be focused on culture: culture of ownership, culture of continuous improvement, culture of safety and reliability.
As someone who works with companies in capital-intensive industries to leverage culture change as an engine for business improvement, this is exciting. It strikes me that even just a few years ago, “culture” was not a thing that would be discussed in these types of companies.
A number of years ago I was working with a client on major business transformation focused on achieving growth and reliability with little or no capital expenditure. The company’s strategy was to “sweat the assets” to maximize the return on capital, and in doing so, create compelling economics for future capital expansion. This company had the foresight to realize that this was fundamentally all about the people — how they led and interacted with each other and with the kit.
Is the oilsands segment now having its culture moment? Have people realized that capital will only get you so far (and there is limited capital)? Is there a frustration that we seem to be on a cycle of fix and drift? Do we feel we have the tools, but can’t seem to put them together consistently?
Culture is the norms of behaviour—"how we do things around here." It is very difficult to change culture — it’s intended to be a constant. Furthermore, it is very difficult for individuals or teams to act outside of the culture for very long — culture prevents that.
You can work on culture and change culture to create an environment where people can flourish as they work more efficiently together to consistently “get better at getting better,” thereby creating significant strategic value as you reduce risk and increase the return on capital. Keys to achieve this include:
You need to engage people in something that they can relate to at a personal and emotional level. Why should I get excited about this?
The change needs to be results-driven and deliver clear improvements of results along the way so that people can have the experience of working differently.
It is important to describe the desired behaviours in the new culture so that people can be clear about practicing them and giving feedback. It’s critical to keep the behaviours simple and minimal (4-5). It can be helpful to provide illustrative examples of what this behavior would look like in action—and also examples of what this behaviour wouldn’t look like in action.
Working on the Business
You do not change culture directly, but by working on the systems and processes that deliver value. It is important, therefore, to work on enough things (work flow, decision making, information flow, roles and accountabilities) that a critical mass of people have the opportunity to practice working differently together.
It is important to ensure the effort isn’t just a series of initiatives, but people can see how all the pieces fit together and it is managed programmatically.
Sustainable culture change is a 3-to-5-year journey. Leadership needs to commit the organization to continually working on the culture change throughout the journey.
Seth Tyler is chief operating officer of Evolve Partners.