Oil and gas companies are not only going to have to get accustomed to change-they are going to have to get darn good at it. This is largely due to the fact that in business nowadays, change has become the rule rather than the exception.
In addition, as new information technologies (IT) are developed and implemented, companies will need to make decisions about these tools-or even whether or not to outsource them entirely.
There is probably not a single major energy company that's not currently involved in some big change, according to Dutch Holland, founder and CEO of Holland & Davis LLC, Houston. His company instructs other firms on how to adjust to changes-such as the implementation of new IT-through various change-management strategies.
"Change management is both an attitude and a set of skills used to make change happen on target, on time, and on budget," Holland said. But also, Holland hopes to minimize some of the confusion within companies that can be caused by major changes, also called "red zones."
"Red zones are going on all the time," he noted. "And there's a tremendous number of full-time equivalent (FTE) jobs in every company tied up in confusion about the change that the company is going through." In fact, in some of the bigger companies today, 10-30% of the FTE jobs are tied up in the confusion, Holland said.
All of industry's a stage
Holland explained the importance of change management using the metaphor of a theater company putting on a play.
An employee (the actor) wakes up in the morning and puts on a costume. The worker drives to the company's site (the theater) and then walks into an office (the set), and acts out a particular role. Hopefully, some things are done during the day that cause some customer somewhere to applaud, Holland noted.
Using this metaphor, an organizational change is like a theater company that's been staging Romeo and Juliet for months, then-after starting to see some empty seats in the theater-deciding to change the play to a revival version of Oklahoma, Holland explained.
"In the theater, that transition from one play to another is absolutely no big deal," Holland said. This is because every one involved in a successful theater company-the director, the actors, the stagehands-all possess the same positive mindset: each play only lasts for a finite amount of time, and the next play is bound to be a bigger, better hit.
Some large energy companies, however, don't necessarily maintain that mindset, Holland said. Some even look upon every change-such as implementing, or possibly outsourcing, IT-as though it were a huge, traumatic, once-in-a-lifetime event. Holland concluded that this is because many oil and gas firms have yet to realize they are really supposed to act like a theater company when undergoing a change.
Clear intentions
Another obstacle that makes change management necessary for many companies, particularly with regard to IT, is that many industry leaders remain unclear about their intentions, Holland observed.
As an example, Holland cited a chemical company constructing a new plant, one that all of the company's workers witnessed being built. "It would not be necessary for the CEO of that company to pull all the employees together and say, 'It's my intention that we use this new plant,'" he said. Such a statement would be obvious.
But this wouldn't be as obvious with something less conspicuous, such as IT. According to Holland, leaders need to get better at telling their employees that they will need to use the new IT and that it isn't an optional piece of equipment.
A company may decide to outsource its IT department outright, which is becoming a part of a larger industry trend, noted Holland. Today's companies are starting to concentrate more on their core competences-such as finding and producing oil and gas-and worrying less about the noncore elements that support core activities, such as IT.
This, in turn, has led to the development and implementation of application service providers, or ASPs. ASPs are just one way that companies can outsource their IT requirements within a business-to-business environment, while allowing it to focus on its core competences.
Changes-like the migration to the use of ASPs-as well as managing those changes will be at the core of successful oil and gas companies' strategies for years to come.
Holland said, "It is not a lack of new technical solutions, and it is not a lack of new ways of looking at the world-what [industry is] lacking is a way of systematically and effectively managing the changes from one organizational configuration to another."
