Who should lead oil and gas companies?

Many folk coming on WBC education programmes have aspirations in leadership and management. But what does Leadership mean to people in an industry driven by science and technology?

At a recent lecture by Sir Mark Alport (The UK Government’s Chief Scientific Advisor) at Brunel University London the following question came up:

“Why are so few government ministers trained scientists?”

3 Day MBA in Oil and Gas - HoustonHis response was that deeply embedded in British educational culture is the idea that when you do a science degree, you are training to be a scientist. If you ‘fail’ at being a scientist you have let everybody down. On the other hand, very few who read Philosophy or History at Cambridge would say ‘I am training to be a Philosopher’ or ‘I am training to be a Historian’. They go on to take business degrees. In big corporations and most definitely in Government, a large proportion of the senior leadership have non-technical degrees and yet run very technically based enterprises. Is this the right approach for leadership in oil and gas?

From my own experience (43 years in upstream oil and gas exploration), if I had £100 for every time I have been told sub-surface guys say of their oil and gas leadership “but they don’t know the exploration business” and the finance teams dismiss the exploration guys as ‘the techos’ ….., I would be a rich man. But this divide is common across all companies: almost every function tends to think it is misunderstood and underestimated by the rest of the business. The ‘techos’ famously think that their knowledge is the purest and most relevant to business success in oil and gas, while the accountants – the “beancounters” – know the business would collapse without their commercial discipline; and of course marketing or HR – seen as the “fluffy functions” – will point out that without their careful nurturing of customers and staff, there’d be no buyers of the product, no revenue to manage and no colleagues to do the work….

But folks making these comments miss the critical aspect of leadership, which is particularlyOil and gas - Warren Business Consulting true in oil and gas. The fact is that all functions have a crucial role to play in the success of an organisation and a great leader will understand this and also acknowledge it publicly. To do so, he or she needs to understand how all the different functions work: in oil and gas that means a combination of technical expertise, commercial knowledge and management skills. Leadership requires working with a variety of stakeholders, understanding their challenges and needs; it means taking decisions amidst uncertainty and high risk – but above all, it’s about communicating a vision that sits above the detail of this or that function.

North-Sea-UK-1The Dean of the College of Business, Arts and Social Sciences at Brunel (Professor Zahir Irani), said in a recent article that “to be a good leader, you need the confidence to drop the detail and be comfortable about your own identity”. I believe his idea applies to the oil and gas industry, “Leadership is largely based on making the most of your management experiences. Your reputation in the business matters. It’s the stories that are told about you as a leader, as a battle-hardened achiever, that make the most difference – that show you’ve delivered through the whole value chain of the business”.

So Leaders in oil and gas should have a good grasp of the risks and uncertainties that arise in a business that has to:
• bring people together to find the hydrocarbons through applications of state of the art science and technology,
• persuade the molecules to come to the surface by yet more high end technology
• get them to distant markets years from the date of discovery
• manage eye watering amounts of cash in the endeavour
• engage at all times with diverse and often challenging stakeholders

As a technical or commercial professional working in the business you too need to have a basic grasp of the interaction of all aspects of the value chain. There is too much at stake for the views of one ‘boffin’ to dominate a decision making process.

Comments

  1. Charles Tan says:

    I think company boards would definitely hire candidates that not only has the technical grasp of operations in the business, but that can also have the breadth of a commercial savviness in the industry.. what’s missing is perhaps the experience of having to manage a whole board of directors. Not all head of company positions are equal.. CEOs in IOCs would probably have the attributes the discussed elements, but not too sure about some infant NOCs.

    • David Finlayson says:

      Charles

      Good point about the different kinds on entities in Oil and Gas-eg large integrated IOC, or NOCs. Different leadership challenges in all organisations. Then we can talk about E and P Directors reporting to Group CEOs who have multiple businesses to run let alone multiple functions to lead. That said, it is perhaps a risk when a company grows so big with so many competing businesses, that some of the businesses find it difficult to be heard at Board level.

  2. Ronnie Losier says:

    Angus,
    The qualities required from a leader can be quite different than those of a manager. The Oil & Gas business is complex but at the core – it’s about bringing those molecules to the consumer ( market ) – in an ever changing business environment. A big part of success is understanding and managing risks.
    Whatever aspect is not identified and understood cannot be communicated nor managed. An effective leader will use and improve the competitive advantages of an organisation, in terms of the reservoir characteristics / geology, the facilities, the access to market, and the geopolitics. I would agree that business success is closely link to technical expertise. Furthermore, good decision-making comes from profound understanding. The opposite is just ” Luck ” – But we need that Too …!

    As an approach to making a choice for a leader, … It may be easier to identify, who is less likely to acquire – the profound understanding required – to lead an Oil and Gas company. Such guidelines may well narrow down the pool of candidates – to just a few. After this screening, you might look at personal qualities, motivation, negotiation skills and creativity, … but only after.

  3. Jay Smith says:

    I guess I am old school in that I believe the leader needs a combination of cross functional knowledge and an ability to articulate a strategy and then build quantitative business plans that take everyone in the right direction. Most technical people in the business are highly focused on their particular area, but it falls on the leader to make sure appropriate integration of ideas and information take place routinely. For instance, for the drilling engineer to build the best drilling plan he needs to spend a lot of time with the geoscientists understanding the prospect and the regional picture. He must then use this knowledge to identify all relevant offset wells to assemble the data that backs up his plan. The leader needs to ask just enough questions to make sure this process is taking place and that it is thorough. The leader also needs to make sure that everyone has the training, data, staff, computers and software to do their jobs in a fit for purpose way. The leader also needs to model the kind of behaviors he believes will serve the process best, but make sure they are firmly grounded in the endorsement and support of the staff. And, lastly every leader has the responsibility to identify the future leaders and see that they are developed to their fullest potential. If people feel that you are fully supporting them to deliver the best possible work product, they will follow you anywhere.

    As an aside, I have had bosses from time to time who were not technical people, but very, very sharp. It made progress slow as people this smart want to know everything about what is going on and will ask many irrelevant questions. They also take much longer to reach decisions because they can bring very little inherent knowledge to the table and must rely extensively on the interrogations of the staff to ever feel comfortable. They are a lot like lawyers.

    Anyway, this is my quick take on O&G leadership.

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