DECARBONISATION

beyond support services (general and administrative) to include operational synergies across revenue and production, operational costs, supply chain, technology, and capital efficiency. From our analysis, we have seen multiple energy mergers where success has come from focusing on value capture, operating-model design, talent selection, culture transformation, and technology blueprint. For example, a European diversified energy company, that set itself ambitious sustainability targets for which it needed to transform its current portfolio of businesses, started preparing for potential acquisitions and divestments before having clarity about the ultimate transaction outcomes. The company understood that there were few unique synergies between many of its businesses and that each part would be better positioned to respond to headwinds or accelerate to capture tailwinds if given more autonomy. They embarked on a company-view, portfolio-transformation journey, making legacy businesses more standalone and establishing new businesses, each with a fit-for-purpose operating model, which was supported by a redesigned and leaner corporate center.

FINDING A NEW SWEET SPOT FOR THE C-SUITE

The changing energy landscape demands a new style of leadership to secure value from existing assets, while finding and developing new value in emerging low-carbon and green markets. Successful companies have found ways to do this, including balancing old and new business models, risk profiles, and cultures; operating with substantially greater speed and en trepreneurialism, especially in the new energy sector; achieving new forms of intensive collaboration (both internally and externally in the emerging energy ecosystems); and meeting the challenge of attracting and retaining talent through more purpose-driven and emotionally engaging leadership styles. Leadership transformation has manifested in various ways across companies. Some have developed highly targeted leadership development programs that focus on unlocking “hard” skills (bolder strategic action, building profitable hydrogen and carbon capture, utilization, and storage value chains) and “soft” skills (fostering teamwork and collaboration, and building health and resilience into company leaders). In the face of more serious threats from competitors, various organizations have recognized the need to substantially upgrade their top 150-plus leaders to break away from old, more bureaucratic and conservative ways of operating into new ways of thinking. Companies that have already committed to more dramatic strategic pivots have undertaken ambitious, multi-year cultural transformation programs—usually combined with bringing in new non-traditional oil and gas talent and promoting greater empowerment and diversity throughout their organizations. For example, a leading oil-field service and equipment company has embarked on a two-year journey with its top leaders, followed by the next 150 senior staff, focusing on the leadership shake-ups needed to thrive in the new normal. All energy companies need to critically evaluate future leadership requirements in the light of their strategies, and then consciously implement programs to build growth-enhancing leadership assets. The coming years for the energy sector will not just be about technical innovation and adoption, nor scientific breakthroughs; people and organizational performance are also vital to adapting to the changing environment. Flexible models, leadership, talent strategies, and portfolio shifts are four key areas on which energy companies could focus to achieve success and be at the forefront of change, starting in 2023.

Source: mckinsey