In this blog series, we’re showing how upstream oil and gas companies can look outside the energy industry for insights into overcoming traditional barriers to agility (see following figure). In our most recent blog, we described how Microsoft tackled the challenge of cultural change with leading practices aimed at enabling and empowering the workforce. Today, we are suggesting that companies can enable their workforces more easily and overcome their agility hurdles by rewiring themselves.
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Smaller companies (fewer than 100 employees)—or those that have only been around for a short time (within the past decade)—are typically cross-functional by nature. They’ve been built from the ground up to be customer-focused and streamlined for value delivery. Even if they need to reconfigure themselves, they’re likely to be agile enough to do so.
But in this blog, our focus is on upstream oil and gas companies. Most have been around for over a century, are capital-intensive and have typically morphed into behemoths with sprawling tentacles reaching ever further into functional silos. As they grow, so does their complexity. Hardly a formula for agility.
This is where rewiring the organization can help. We’re not talking about a complete upheaval or structural overhaul. Rather, we are referring to a concept called “organizational neuroplasticity,” which establishes new ways of working to reduce friction and enables a well-oiled machine of the future.
It’s well known that learning a new language can increase the grey matter in the frontal lobe and lead the brain to reconfigure itself by building new pathways. That’s organizational neuroplasticity in a nutshell—a company reconfiguring in response to market conditions, scanning the environment to assess changes in demand (opportunities or vulnerabilities), and pulling the right levers to shift focus on new product/customer value delivery where needed.
If a company is too large to feasibly overhaul, is it possible to “re-map its neural pathways” to respond to those environmental stimuli? Let’s look at a company that successfully did so in the early 2000s.
Driving agility at Ford Motor Company
With the global financial crisis of 2008 and the highly competitive/volatile nature of the auto industry, Ford Motor Company experienced a precipitous decline in its stock price. Ford’s CEO at the time knew that streamlining processes and cutting costs would only take the company so far. A different kind of transformation was needed.1
Specifically, Ford outlined a few focus (car fans may appreciate this unintended pun) items to get the company back on track:
- Aggressively restructure to operate profitably at the current demand and changing model mix
- Accelerate the development of new products that customers want and value
- Finance the plan and improve the balance sheet
- Work together effectively as one team, leveraging Ford's global assets
These four focus items were the inception of an incredible turnaround resulting in a market capitalization shift from $4.5 billion in 2009 to $87 billion in 2022.
Given Accenture’s experience working with clients in similar situations, we believe the two pivotal bullets above are restructuring and workforce enablement (the latter of which we tackled in our previous blog referenced above).
What makes or breaks this kind of strategy? Organizational neuroplasticity. Instead of overhauling the company’s structure and then making decisions to fuel growth, it’s key to first identify the key decisions that need to be made across the organization and then map those to the infrastructure required to address and execute them. In other words, start by understanding the need and then rewire the organization around it.
Out with the old; in with the new
So how does an upstream company begin to apply these concepts? The chart below shows old ways of working versus new, followed by examples for how the new way of working can be applied. Let’s take a look:
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We would challenge upstream companies to break their functional silos and attempt to scale horizontally. In other words, rather than “going deep” to enhance expertise, companies might want to “go broad” to map key decisions to the structural changes that need to be made across the value stream. We’ll tackle the technology side of enabling this sort of move in our next blog.
Remapping or rewiring the organization can help drive agility for any major initiative, such as migrating to the cloud, scaling analytics, or even establishing a new technology ventures division for the energy transition. As an oil and gas company considers its archetype to successfully navigate the energy transition, rewiring will be essential. Yet, rewiring may not mean a full overhaul. An approach based on organizational neuroplasticity can help companies understand—and activate—the value levers that make sense for the organization.
Special thanks to Yanet Borrego for her contributions to this blog.
Disclaimer: This content is provided for general information purposes and is not intended to be used in place of consultation with our professional advisors. This document refers to marks owned by third parties. All such third-party marks are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such marks is intended, expressed or implied.
Source: 1“Ford Statement on Transformation Plan”, PR Newswire, 11 June 2009, http://global.factiva.com