Recently I attended an industry conference for a cross section of people in the petrochemical and refining industry, which included a very diverse group of people in terms of backgrounds, roles and companies. However, everyone was a technical person (very few if any HR people) that had direct accountability for managing an asset base and driving business improvement. What struck me at this conference was how many of the presentations and one-on-one conversations focused on culture—culture of ownership, culture of continuous improvement, culture of safety and reliability. I found this interesting for a variety of reasons. First, as someone who works with companies in capital-intensive industries to leverage culture change as an engine for business improvement, it was exciting—wow! Second, it struck me that even just a few years ago, “culture” was not a thing that would be discussed at a conference like this—in fact many people would have politely disengaged at the mention of the word.
A number of years ago I was working with a client on major business transformation focused on achieving growth and reliability with little or no capital expenditure. The company’s strategy was to “sweat the assets” to maximize the return on capital, and in doing so, create compelling economics for future capital expansion. This company had the foresight to realize that this was fundamentally all about the people—how they led and interacted with each other and with the kit. As part of that program, we developed an “innovation turbine”—a catchy name for a system to generate, vet and execute ideas from across the enterprise on how to generate more value. It was rather amusing one day when someone asked (and not in jest) if we had developed a preventive maintenance schedule for the new turbine.
The company went on to achieve very significant improvements in reliability and organic growth in throughput, and did indeed provide significant returns for shareholders and justification for debottlenecking and further capital expansion. The culture shift we helped them achieve became the perpetual turbine powering their growth.
Is the oil, gas, petrochemical and refining segment now having its culture moment? Have people realized that capital will only get you so far (and there is limited capital)? Is there a frustration that we seem to be on a cycle of fix and drift? Do we feel we have the tools, but can’t seem to put them together consistently? Culture is the norms of behavior—how we do things around here. It is very difficult to change culture—it’s intended to be a constant. Furthermore, it is very difficult for individuals or teams to act outside of the culture for very long—culture stops that. You can work on culture and change culture to create an environment where people can flourish as they work more efficiently together to consistently “get better at getting better”, thereby creating significant strategic value as you reduce risk and increase the return on capital. Keys to achieve this include:
Vision. You need to engage people in something that they can relate to at a personal and emotional level. Why should I get excited about this?
Results. The change needs to be results-driven and deliver clear improvements of results along the way so that people can have the experience of working differently.
Explicit Behaviors. It is important to describe the desired behaviors in the new culture so that people can be clear about practicing them and giving feedback. It’s critical to keep the behaviors simple and minimal (4-5). It can be helpful to provide illustrative examples of what this behavior would look like in action—and also examples of what this behavior wouldn’t look like in action.
Working on the Business. You do not change culture directly, but by working on the systems and processes that deliver value. It is important, therefore, to work on enough things (work flow, decision making, information flow, roles and accountabilities) that a critical mass of people have the opportunity to practice working differently together.
Programmatic Approach. It is important to ensure the effort isn’t just a series of initiatives, but people can see how all the pieces fit together and it is managed programmatically.
Long Term. Sustainable culture change is a 3-to-5-year journey. Leadership needs to commit the organization to continually working on the culture change throughout the journey.