Embracing Transformation in a Time of Uncertainty: CEO Perspectives from the Front Lines at CERA Week
Since 2012, Egon Zehnder has had the privilege of presenting the CEO Breakfast Panel at IHS CERAWeek, where energy leaders from around the world gather for candid discussions with distinguished panelists. For this year’s event, we are pleased to welcome as our panelists Clay Williams, President & CEO of National Oilwell Varco, Melody Meyer, Former President, Chevron Asia Pacific Exploration & Production and Dheeraj “D” Verma, President, Quantum Energy Partners, discussing the different ways in which energy companies have met and are facing the transformation and innovation challenge.
An impending market rebound has many feeling cautiously optimistic, but the extended cycle of the current downturn – now being characterized as “lower for longer” – has created a new reality that will change leadership imperatives for the foreseeable future. Energy leaders are realizing that lower prices, unpredictable market dynamics and hyper competition for talent, resources and capital are driving a need to rebuild and adapt businesses or risk being left behind. In this new reality, it’s critical to strike a balance between disruption and discipline – understanding how to best lead innovation while still adhering to longstanding best practices that will ensure longevity regardless of future market fluctuations.
Cyclical market volatility will continue to be standard in the energy industry. An impending market rebound has many feeling cautiously optimistic, but the extended cycle of the current downturn — now being characterized as “lower for longer” — has revealed a new reality in the energy sector that will change leadership imperatives for the foreseeable future.
The energy boom that ran for much of the first half of the decade generated both record revenues and ready access to capital that was often collateralized with oil marked at $90 or more per barrel. But the collapse of oil prices and the broader energy downturn has pushed hundreds of companies up against debt covenant restrictions and into subsequent bankruptcy.
In the current slump energy companies face a tough balancing act between preserving their balance sheets and protecting their talent pipeline, reports Rigzone “CEOs and boards are recognizing that even though there’s a significant downturn, there has to be a continued focus on development,” notes Egon Zehnder’s US Energy Practice Leader Steve Goodman. In his experience, energy firms are now focused on identifying high-potential leaders who can engage others and drive results. According to Goodman, energy firms, “need people who are engaged enough to come forward and say ‘I can innovate around processes and […] in the ideas that I bring forward to help us be more operationally efficient.”
Industry players want US presidential candidates to pay more attention to energy policy, reports EnergyWire covering this year’s CERAWeek in Houston. According to Egon Zehnder consultant Trent Aulbaugh, "The political process that we're going through now is just a microcosm of a broader issue that's been there for 20 or 30 years, which is we really don't have any agreed-to energy strategy." Aulbaugh admits that the industry itself is partly to blame. "I think the industry has done such a good job making energy so prevalent and so available that it's fallen off the radar screen a little bit," he explains. For Aulbaugh, "The problem is down the road […] if all the capex [capital expenditure] gets pulled out of the industry."
A number of energy specialist recruiters polled by Hunt Scanlon Media over the last several weeks said ‘economic uncertainty’ and ‘political volatility’ were having a significant impact on petroleum and natural gas companies, but new leadership requirements were surfacing as a result. According to Steve Goodman, who leads the North American energy search practice for Egon Zehnder, it is during difficult times when leadership and innovation are most in demand. Downturns, he said, are all about finding the right balance between positioning to survive and positioning for coming growth.
From exploration to distribution, the energy industry is confronting historic challenges and opportunities that are testing the ability of its leaders to navigate uncertainty; manage innovation in a time of cost cutting; and prevent a repeat of the “lost generation” that hampered growth a decade ago. To hear firsthand how industry leaders are confronting these issues, we convened our annual CEO Breakfast Panel discussion at CERAWeek 2016.
IHS Video Interview: Leadership During an Industry Downturn
Maintaining leadership development and talent management is essential for energy companies during the oil industry downturn. This is a key insight offered by Carol SingletonSlade, Global Head of the Energy Practice and Roger Aguirre, Global Head of the Oilfield Services Practice, in an interview with Atul Arya of IHS. The interview was taped on site at the 2016 CERAWeek conference in Houston.