What is the future of big oil? Recent geo-political, economic and sociological events have cast a spotlight on the industry. With a destructive attack on Saudi Aramco’s largest facility, Exxon Mobil dropping out of S&P 500’s top 10 stocks for the first time in nine decades, and the growth of the extinction rebellion movement across the globe, it’s been a turbulent time for big oil.
We’ve recently seen the price of oil halve from over USD$100/barrel to just above $50. Does this mean oil and gas is a boom-and-bust sector? The S&P 500 rating for the sector has not been this low in over four decades, suggesting that investors have lost faith in the big oil companies. But is this a permanent change bought on by increasing advances in renewables or a temporary reluctance to invest caused by low oil prices?
Are we beginning to see the end of big oil as a sound investment, regardless of what’s still sitting in the underground reserves around the world?
John Carey has built an impressive career within oil and gas and has recently led the first IPO in the Middle East at ADNOC Distribution (Abu-Dhabi National Oil Company). He talks change and transformation with Interim Partners’ Christopher Arbid.
Christopher Arbid (CA): What is holding back innovation within big oil? Why are major players avoiding proactive transformation?
John Carey JC: We need to move away from the issue of continually chasing quarter end results at the expense of longer-term actions, big oil and particularly downstream must be better at the balance, culturally we also need to have a much higher tolerance for failure as we innovate.
CA: What have been your biggest challenges when driving change and transformation as a senior leader within large organisations such as ADNOC, BP & Castrol?
JC: The strategy piece is often where people spend their time and effort - this is a mistake. It is about people and inspiring an organisation. You cannot tolerate people who are not on board and the passengers are much more detrimental than the ones who argue and fight. To drive culture, you need a strong balance of EQ with IQ .
CA: How do you feel the challenges you have experienced with ADNOCs IPO will affect the success of Saudi Aramco’s IPO?
JC: Governance and transparency are key areas which will be a big challenge. Leadership must spend time listening to investors and staff members, which ultimately means Aramco must find equilibrium between their customers and strategy. In addition, Aramco must consider their approach when regulating the on-boarding for internal staff to deliver the implementation.
CA: How can corporations from a HR and leadership point of view support innovation?
JC: Businesses need to ask themselves how they encourage people to be themselves, and how do you trust them to deliver upon the strategy? I had a great boss and mentor early in my career who encouraged me to be comfortable enough to have my own opinion.
CA: Where do you see opportunities for change?
JC: Everywhere - if you get people on side and maximise their input there is no company that cannot double its returns.
CA: What role do interim managers and independent strategy consultants play in change & transformation?
JC: A huge part – and most good leaders and consultants make their biggest impact in the first year.
Sound leadership and high calibre human capital plays a huge role in reinventing industry. If an organisation lacks the culture to transform, it will be outgrown by new technology and innovative competition.
Thanks to John Carey for providing his thoughts on this topic.