Lean Oil and Gas?!

Since the summer of 2014 the international oil and gas industry has been experiencing it's deepest and most protracted downturn in a generation - with oil prices plunging from highs of over $120 a barrel to lows of just over $20 a barrel. Depending on which oil industry analyst you listen to, over $1 trillion of Eapex spend has been lost within the industry since that time, resulting in many hundreds of thousands of oil and gas jobs globally being lost.

During the early months of the oil price slide the perception in the industry was they didn't know what was happening or why it was happening. Unfortunately, during these near historic times the industry resorted to type and adopted it's classic 'slash and burn' approach to alleviate their immediate problems. Then just as the major savagery had been completed and the 'hackathons' had unveiled their results, the industry fell upon the idea that it needed to apply 'lean' approaches to its business.

So here we are in September 2016 and a multiplicity of operators are now extolling the virtues of being 'lean'. I would assert very strongly that these organisations are seriously deluding themselves. To become a truly lean organisation it doesn't take one year or even five years but will take between 15 to 20 years. To become a 'lean' organisation is not an 'initiative', it is a generational commitment to transform. It is in fact a true cultural shift of business ethos, practice and mentality. How can this possibly be done in a year?! If anybody has tried to institute cultural change in any organisation they will whole heartedly agree with this analysis.

Some industry leaders believe that to become 'lean' all they need to do is treat their organisations like a prime pork chop. They debone it, trim of the nice piece of fat that gives it it's distinctive taste and then try and pass it off as a piece of tenderloin.

What in reality have you achieved? Yes you have a much smaller organisation, highly distressed, almost paranoid, not knowing where the axe will fall next and this is the basis for a flourishing organisation? I suggest to you that this is madness and a recipe for disaster!

The final question to ask is can we become lean without impersonating Sweeny Todd?! The answer is unequivocally YES! but only if we want to. Global industry has proved that true 'lean' business methods can enable you to negotiate periods of economic "boom and bust" but unfortunately the Oil and Gas industry has historically believed that this is just the price of doing business.

Now with the oil price hovering around $40 a barrel and a new reality of longer term lower oil prices, we really need to make a paradigm shift in our business thinking. We just have to be brave enough to take those first steps and make those long term leadership commitments to long, enduring and sustainable change.

#oilandgas #business

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