Company Culture

Company culture

Five questions to ask to shape your corporate culture

to create competitive advantage in 2017.

By Steve Morse

The price volatility in the energy market over the past few years, coupled with technical and operational innovations, have created unique organizational dynamics in the sector. As a consequence, energy companies are increasingly looking to align their organizations’ culture and human capital to these market realities in order to create competitive advantages.

Following our discussions with senior leaders in the energy industry, we have articulated five questions that should top the agendas of energy executives in 2017:

1. How do we create a culture that fosters a strategic growth orientation?

2. How do we inculcate a culture that promotes better operating performance?

3. How do we institutionalize operational discipline?

4. How do we build an enhanced performance orientation into our culture?

5. How can relationships and collaboration build a sustainable cultural competitive advantage?

Executives must embrace organizational culture and values to enhance both their own effectiveness and the abilities of their teams. An effective culture starts at the top – with leaders who set a clear vision for the executive team and the entire organization – and extends beyond the organization and into the marketplace.

1. How do we create a culture that fosters a strategic growth orientation?

A culture that excels at strategic growth is one that is known for innovation and an emphasis on long-term planning and independent thinking. This is important today with the rise of new technologies, data analytics and next-generation digital, which have all impacted the energy operating environment. It will be critical for leadership to create a culture that encourages and rewards experimentation and the implementation of new ideas.

2. How do we instill a culture that promotes better operating performance?

Energy companies are moving away from large, complex, centralized organizational models towards more decentralized, agile structures. As a result, best-in-class company cultures are known for openness to different thoughts and ideas and alternative ways of fixing problems. Best-in-class organizations have hybrid and matrix structures and are known for their transparent communication and their flexibility in terms of thinking and ways of working.

3. How do we institutionalize operational discipline?

Due to commodity price volatility, changing operating and business models, and the impacts of technology innovation and cyber security, energy companies are under more pressure than ever to be disciplined in their cultures. The CEO and executive team members must create a culture that has a focus on detail, promptness and integrity, as well as a commitment to skill-building. Our research has shown that best-in-class CEOs have an ability to hire highly disciplined executives. A culture characterized by discipline correlates directly with better capital allocation and operating performance.

4. How do we build an enhanced performance orientation into our culture?

In an ongoing low commodity price environment, many weaker companies have been exposed due to their operational inefficiencies. Conversely, the strongest energy companies have used their operating capability as a competitive advantage against their lower-performing competitors. To succeed, it is critical to develop a culture that emphasizes urgency, speed and expertise.

5. How can relationships and collaboration build sustainable cultural competitive advantages?

Currently, there are four generations in the workforce, each one with a distinct set of values, expectations and motivations. With this demographic diversity, it is critical that the executive team establish a culture of teamwork and collaboration. Vertical communication is a must. It is therefore important that an organization understands the unique and complex communication needs within and across the business.

Today’s energy executives are operating in a market environment unlike any that the industry has ever seen. Key to their success is their ability to build an organizational culture that is aligned with these new market trends. Ultimately, a company can create sustainable competitive advantage through its culture and thrive as a result.

Steve Morse is a consultant at executive search firm Russell Reynolds Associates and leader of the firm’s Global Energy Practice, as well as a co-leader for the Industrial and Natural Resources Sector. He is based in Houston.

 

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