Marilyn Radler
Economics Editor
Oil & Gas Journal
HOUSTON, Oct. 11 -- Calvin B. Cobb, vice-president of Cap Gemini Ernst & Young, Wednesday said new business models in the petroleum industry must address intangible elements as well as the shortage of human capital.
Cobb told the Houston chapter of the International Association for Energy Economics that there is tremendous opportunity for a petroleum company to distinguish itself by managing what he called the critical intangibles, or elements in a corporation that drive value.
He said some of these value-driving measures are strategy execution, management credibility, quality of strategy, the ability to attract talented people, and research leadership.
Looking at the "human capital" crunch, Cobb said that there are opportunities for companies to address holes in their talent pools by using virtual collaboration spaces, next generation human resources systems, and talent optimization.
While encouraging the use of new business models, Cobb warned against using radical models, saying the trouble with them is that they might be based on a great idea, but if the company cannot deliver on that idea, then the company cannot deliver for its shareholders.
Cobb cited the Kondratief Long-Wave Cycle, which has identified 50-year cycles in the capitalistic economy. This cycle tags the years from 1930 to 1980 as the automobile era, when 20 of the top 35 companies in the US were auto, steel, or oil companies.
By 1999 only one oil company was among the top 25 companies in the US as ranked by market capitalization, the economy clearly having moved into the information era.
Regarding this evolution Cobb said, "You're not going to see the oil business go away in our lifetimes. Consolidation will continue with the weaker companies falling off the bottom."
Citing ExxonMobil Corp. as an example of a company with an effective business model, Cobb said, "Even when Exxon's model was better than all the other companies', it stepped out and bought Mobil Oil Corp."