We know this is no ordinary downturn. It feels different. The Saudis see renewables, shale and oil sands as threats and are chasing market share. In Canada and across the globe, people question the environmental costs of fossil fuel development, transportation and consumption. Nationally, the language of major energy project approvals has become combative. Clearly, our energy industry is experiencing disruptive change, not just another temporary down-cycle.
Whatever “recovery” looks like, it will be different. With a different set of challenges we need a different way of thinking. One definition of insanity is “trying the same thing over and over again and expecting different outcomes.” In this case, the answer to a disruptive change in the oil patch may be disruptive thinking. As Marshal Goldsmith, a well-known leadership guru famously proclaimed, “What Got You Here Won’t Get You There!”
Occupants of Calgary’s boardrooms and C-suites face a stark reality: operations have to run leaner and smarter; at the same time, corporate leaders must communicate better, finding a meaningful, common purpose with a diverse group of digitally-savvy stakeholders to get energy developments approved.
Some companies will pass muster, while others will have to acknowledge that the individuals and teams that worked well at US$100 per barrel may not have the vision or skill sets required to survive today and thrive in the future.
After 12 months that saw hope transform to shock and pessimism, it is time to embrace the change, and begin a process of rethinking, rebuilding, and then re-engaging with leadership teams designed for what emerges from the disruption.
Rethink: Senior management & board talent
New thinking should start at the top with the board of directors. Board selection and renewal committees should question whether current board members have the expertise to meet the needs and challenges of the sector they are in. Board composition should include variables such as global and sector experience, analytical expertise and digital connectivity, in addition to gender, ethnicity, etc.
Boards of directors should then ask themselves if their executive teams can meet the demands of this new business reality. Leaders of change during economic uncertainty require non-homogeneous thinking, varied expertise and the determination to think differently.
After resetting the company’s business context and strategy, directors should work with the leadership team to determine whether to look externally for the talent required for effective rebuilding. This requires a frank and dispassionate assessment, including psychometric data on leadership style, values and interpersonal skills.
Rebuild: Teams and networks
Talented individuals do not always become an effective team, especially under stress, so organizations should invest in team building.
Many companies hire interim executives to take on full-time, short-term assignments to bring specialized experience and skills. A seasoned short-term executive brings fresh thinking and new blood to help navigate change, address critical issues, and provide unique insights.
Re-engage: Your best people
It is crucial to invest in individuals and teams to remove barriers and change behaviours that are holding the company back. This is difficult when in survival mode, but experience shows that firms who invest in people – even when they are tempted to conserve the cash – come out ahead, poised to capitalize on recovery.
One of the keys to retaining the best people and attracting new talent is creating a future vision that people want to share. This means more communication (not less), an engagement plan, and two-way conversations that promote learning, collaboration and adaptation.
Disruption is painful but can catalyze innovation and efficiency. Taking appropriate and timely action now will help leadership teams develop and acquire the talent required to position companies to be fully engaged when the recovery occurs, in whatever form it takes.
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By Paul Butterworth MNI, Global Head of the Maritime & Shipping Practice at Odgers Berndtson