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.
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 long-standing best practices that will ensure longevity regardless of future market fluctuations.
These were the leadership imperatives on the agenda at our sixth annual CEO Breakfast Panel at IHS CERAWeek this year, where we had candid discussions about disruption and digital transformation with CEOs and chairpersons from across the energy value chain.
It’s time to move past survival mode. Although it would be premature to prepare for a true market rebound, there has been enough momentum that leaders are rightly thinking about growth and innovation. Whether this comes in the form of technology adoption, new business models or refreshing boards to ensure effectiveness, forward-thinking leaders will seize this time of downturn and poise their companies for success as the industry continues to evolve.
This means thinking differently about how to invest incoming capital. Applying lessons from Silicon Valley and the VC community, leaders must invest in organization-wide innovation. The industry is ready to move beyond operational technology, to embrace software, Big Data, machine learning and predictive analytics.
Perhaps most importantly, new innovations mean new talent. Human capital is the linchpin to effectively leveraging innovation. In particular, there is a significant need for new data analytics skillsets within energy companies — leaders must consider how to effectively usher in this new work force to build the right foundation for executing against innovations. While preparing for the future, leaders must also consider how to reflect these work force shifts at the highest levels, including introducing Chief Digital and Strategy Officer roles onto energy C-suites, as well as board members with data analytics skillsets.
Full Story: Trent S. Aulbaugh and Steven V. Goodman and Carol SingletonSlade: "Leading in the New Energy Reality" in The Washington Times (May 1, 2017).