Thursday, September 20, 2012

Global Leadership-Growth and Strategic Choices II

To be clear, I never intended this blog or series of entries to be about creating business strategy. The McKinseys and other large consultancies of the world are far better at analyzing markets, benchmarking, competitive position, one's portfolio of products and services, cost structures for services and general administration(SG&A), economies of scale opportunities and so forth.  I'll leave that to them.

I did intend to highlight how the growth imperative drives and in some ways defines the range of strategic options for a leader.  In the oil and gas business, it takes you to places(Nigeria, Equatorial Guinea, Chad, Iraq, Venezuela, Indonesia) that present challenges...serious challenges... to leaders.

Another dynamic in the oil and gas business that is a particular challenge is the life cycle of investments.  Exploration and production investments often involve billions of dollars and the returns are measured by the decade, not by the quarter or the year.  This requires the leaders in this business to anticipate....peer into the future.... very far in advance...10, 20, 30 years.

Two very interesting things emerge from Coll's book about anticipation.  One is that when Lee Raymond asked for a review of how well their strategic planners had been at predicting the future, two things emerged. One is that they were very good....a variance of < 1% predicting long term demand. Conversely they were not good at all at predicting price...just too may variables in global politics to make this work....Hence their strategy hinges on demand forecasts with a range of plausible price points.  The second really interesting thing is how thoughtful and deliberate ExxonMobil has been at anticipating disruptive technologies.  They looked at solar, wind, biofuels and hydrogen.  They ultimately concluded that biofuels and hydrogen posed the greatest plausible disruption to the liquids side of the oil and gas business. When I think about one of the things I consider to be one of the top three leadership "failures"...failure to is clear they have processes and the intellectual curiosity to challenge their own mental models and "anticipate" well into the future.

No comments:

Post a Comment