Leadership and Industry Image

Abdul-Jaleel Al-Khalifa, 2007 SPE President • president@spe.org

Have you ever been confronted in public with contentious questions about the industry you work in, like

Are we running out of oil and gas?
When is the next wave of layoffs?
Why do your companies pollute the environment?
Is global warming bad enough to steer away from using fossil fuels?
Why does “big oil” only produce hydrocarbons from poor countries but never contribute to their development?

Did you answer with confidence and clarity, or did you freeze up?

Questions like these have been asked for many years. Are they grounded in incorrect perceptions or do they hold partial truths? Either way, such questions reflect a major disconnect between our industry and the public, one that continues to erode our image. What can we do to polish this impaired image? Is it only communication? I believe the industry needs to do a lot more than communication.

Our traditional training approach for management explains part of the industry’s reluctance to take on global issues. Most managers in the petroleum industry start as technical experts, but are then intensively trained to climb the management ladder. Management training is obtained in cross-industry classes that rarely focus on strategic issues specific to the petroleum industry. The presumption is that our industry’s challenges are well addressed within the company. To bridge this gap, senior management normally invites experts to address major issues such as market outlook and scenario planning. This training framework yields excellent operations managers. Unfortunately, it is not conducive to grooming industry-wide leaders who can articulate clear positions on critical industry issues.

Managers are also advised to avoid the media. Indeed, most corporations limit media interaction to public relations personnel who, most of the time, are not experts in the debated subject. This leaves a huge vacuum, with our industry lacking credible, well-informed spokespersons on its behalf. So our industry image continues to suffer because we are not offering persuasive rebuttals nor true solutions.

What is the way forward? It’s a matter of leadership. The distinction between leaders and managers is obvious. Leaders exhibit global awareness and magnetic appeal, and hold bold, visionary positions. They are very charismatic and persuasive communicators who can energize and mobilize widespread support for their goals. Leaders do not need to exert their position’s power, or take a command/control approach to run the business. Indeed, they motivate people, and multiply the power of their subordinates through a climate of respect, care, fairness, and integrity. To enrich our leadership pool, we should hold intensive leadership seminars that focus on contemporary strategic issues. These seminars will serve to polish the leadership skills of the participants and at the same time develop industry-wide positions that can be carefully articulated and then shared with the public. Action plans to help prepare our industry for the future can also be developed.

We also need to show the public that our industry is one that brings solutions. For example, we have taken a very active role in carbon management, especially through EOR projects. This expertise can position the petroleum industry as a solution provider. We need an industry-wide campaign to tell the public about our huge efforts in this area.

The cyclic nature of our industry is an even larger issue that affects both our ability to operate and public perceptions about our industry. The complex issue here goes beyond communication. Clearly, the benefits of solving the extreme market fluctuations in our industry are tremendous: there would be no excessive cost inflation, no cycles of hiring and firing, and no anxiety and fear in oil markets that causes unpredictable swings in oil prices. The end result is that the market outlook would be fairly predictable. How to solve this root issue cooperatively as an industry?

History provides two examples of industry cooperation that have had widespread influence on the world oil market. Let’s go back to 1960 when some producing countries established the Organization of Petroleum Exporting Countries (OPEC). Fourteen years later, during the 1973–74 era, consuming countries of the industrial nations established the International Energy Agency (IEA). Both organizations continue to play a dominant role in the energy arena. I strongly believe that to move forward as an industry, we need a body that brings together both consumers and producers to address the global need for more stable energy markets that will benefit all parties. This would be an organization of Energy Producing and Consuming Nations (EPCN). Instead of a “hydrocarbons for profits” mentality, EPCN can foster a new concept that encourages ex-changing hydrocarbons for industrial development. Producing countries would export oil and gas and in return get indus-trial development from the industrial consuming countries. This will help producing nations generate job opportunities and diversify their sources of revenue. At the same time, it will provide industrial nations with a secure and adequate supply of energy to run their growth engine.

Within this new context, international oil companies (IOCs) can broaden their mission, not only as hydrocarbon producers, but also as catalysts for community and industrial development. To accomplish this ambitious goal, IOCs can establish consortia with mega companies in other industries (power generation, the auto industry, etc.) to improve the lives of the local people and win their hearts as well as the goodwill of the public throughout the world. IOCs can take an active role in locally focused sustainable development projects to demonstrate that they are forces for good and to provide meaning to their own professionals.

With this kind of transformational vision and bold action plan, the petroleum industry can be seen as the stabilizing force in the global community. Such a vision may seem like an idealistic dream that can’t ever work in the “real” world. But visionary leaders know that only grand visions can result in grand outcomes. Let’s start by discussing such an idea within our industry. When we put the best minds in the world together working on a common goal, the action steps will surely follow.