Decarbonising? We need to talk about process
For giant energy and resources companies, 2020 has shown:
- There’s a need to do more with less
- Process — the way of working, from idea to finished product — is crucial to meeting ambitions
- The devil is in the details — making ambitious goals is great, but you must be able to translate them to meaningful actions
Where we’ve known for a while about the environment, the pandemic of 2020 ruthlessly targeted well-established energy and resource giants. Customers who needed fuel for movement and offices stopped buying.
You’d be forgiven for thinking fate had a grim smile.
Now, several supersized resources companies are moving toward a net-zero carbon working environment and diversifying their production of energy. I’m lucky to count current and former clients amongst them.
They face an existential question. Not the one of life on earth, but, as Bernard Looney put it, economics:
“This isn’t charity, this isn’t altruism — it has to be grounded in economic reality,”
– Bernard Looney, CEO, BP
Fortunately, finally, economic reality is now coupled to the environment.
The need to do more with less
At the end of 2020, resources and especially traditional energy companies find themselves with lower share values and a significant hit to revenue. Further, major investors such as BlackRock have deemed high carbon practice as uninvestable3 per their own fiduciary duties.
This creates a big window for investment in companies that started as zero or low carbon — green energy companies, which form a rapidly growing competitor to big oil. Big oil must now compete for investors, market share, and customers in a way it didn’t have to even five years ago.
Exacerbated by the pandemic, this is a perfect storm. Established companies must do more with less.
How? The way of working needs to change — and now it can.
Efficiency is the key word here. To do more with less demands a more efficient process.
“I boil our strategy down to four simple words: higher returns, lower carbon”
– Mike Wirth, CEO and Chairman, Chevron
When we talk about process, we’re not limited to execution. We need to include the process that decides what to execute and why, and connect that to execution in a consistent way. As such we’re looking for a model that is plastic enough to suit a variety of scenarios.
Fortunately, all the pieces are now on the table, and most resources or energy companies can access them easily. While several options exist, enterprise agility has emerged as the prevalent approach to analysing decisions and then actioning them.
This is because the processes associated with it:
- are simple enough to be introduced with minimal spend, and transformation efforts can be progressive
- are highly customizable and flexible — ignore ‘agile zealots’ who tell you what is/isn’t agile
- are infectious. When done right, people like them, work becomes about personal learning
- encourages being decisive through radical transparency, autonomy and communications
- can be applied at any level of business, be it operational, experimental or strategic
I’m delighted to see that industry giants are thinking about their projects and structures in new ways, meaning the above can yield benefit across the enterprise. A few notable enterprises have taken pioneering steps in bringing agile approaches to their traditional businesses4.
Events have ensured that responsiveness and efficiency must be the default mindset for success as we enter the post-2020 world.
The devil is in the details
The decarbonisation and transformation goals set out by these megacorporations are timely. In order to unlock benefits, processes (like those highlighted above) need to align the executive suite with those at the coalface, literally.
This is where detail has a key role to play.
After setting an ambitious goal, the goal needs to be broken down into tangible actions — and this isn’t a one-step thing. For a major goal, there will be several levels of breakdown before actions emerge. The fewer the better, but practicality means there’ll be more than one. It’s best that aligned actions are tiny.
These tiny actions are where an organization can make significant efficiencies. That’s because when you look at the value that will come of an action at a detailed level, you can decide the worthiness of that action.
Some actions — perhaps a surprising number — won’t be worth doing.
Use detail to help decide what work not to do
And that’s where you make huge efficiencies.
In capital projects, we’ve seen efficiencies cut time by 85% and cut spend by $600m in a $4bn project.
That sort of efficiency buys a lot of options.
Processes connect detail with ambitious goals
2020 and the environment have pushed more than ever the requirement of big industry to become more responsive. By applying simple processes, companies can deliver significant wins: they can do more with less.
By using those processes to connect detail with big, perhaps existential goals, we can achieve them with surprising efficiency.
