Are oil and gas companies suffering from digital fatigue? Then it’s time to focus on cultural change
Digital transformation success is 30 percent technology and 70 percent people and culture. Sergey Sushentsev, Managing Director and Partner at BCG Digital Ventures, tells Axora about oil and gas experiences with change management.
Digital transformation is accelerating among oil and gas companies. According to the first annual Axora Innovation Forecast, 99 percent of operators surveyed said technology and innovation were critical to their organisation’s survival. However, most businesses were only spending one to five percent of annual revenues on transformation, and respondents expressed scepticism about the short-term cost savings technology could generate.
According to Sushentsev, digital fatigue is one reason behind that doubt. “Often, there isn’t a holistic approach to transformation. Digital initiatives are scattered across organisations, and different teams have different capabilities. In larger companies, this makes it harder for leaders to see the impact. This leads to digital fatigue because the time and effort invested don’t seem to be moving the needle.”
A whole new world
To overcome digital fatigue and get that needle moving, oil and gas companies need to give more focus to cultural change in their digital transformation programmes. After all, new technology requires new mindsets and new ways of working.
“The technology deployment is actually the easy bit. The process and mindset changes are more difficult because you’re often asking people to redefine their ways of working and embrace the changes,” says Sushentsev.
“To leverage new technologies, you need people to move from linear ways of working and sequential processes to agile, modular ones,” he adds. “You’re asking people to transcend their previous siloes and work in multidisciplinary teams, because the technology now makes that possible. Quite often this also involves changing how their performance is measured and how they’re compensated.”
So how can companies across the energy industry start drive that cultural change?
Focus on one area first, get receptive people involved, give them an exciting project to trial the new approach and create the right environment to achieve set goals.
First, they need to establish a top-level consensus on what they’re trying to achieve, set very clear aspirational – yet achievable – goals, and define what the new culture and approach should be. This sets out an overarching, strategic direction – and helps leaders champion and role model the change. Because people are used to established ways of working, executives need a vision that focuses on the benefits to individuals, not just the benefits to the company.
To achieve that mission, Sushentsev recommends starting small and scaling slowly. “Don’t try to boil the ocean. Your aim is to bring people with you, and in my experience, the best way to do that is by building on progressive success. Focus on one area first, get receptive people involved, give them an exciting project to trial the new approach and create the right environment to achieve set goals."
“This means not only giving people the necessary tools and systems to use in their work,” he continues, “but also shielding them from corporate bureaucracy, barriers and constraints that normally stifle innovation in large corporates. This also means creating safe environments, where people can take risks, fail, learn and move on, not being afraid of being punished. When you succeed, you then get the attention of others in the business – and have a lighthouse initiative easing barriers and speeding up change as you scale.”
Enabling the energy transition
One use case for this coordinated transformation of technology and culture is in the decarbonisation agenda. Oil and gas companies need vast amounts of new technology and a complete approach rethink to build capabilities in areas like wind, solar, geothermal, carbon capture and storage, hydrogen production and biofuels.
To fulfil their business strategy, oil and gas companies need to foster a culture that appeals to people with digital skills and experience, those who are eager to innovate and create impact.
As operators proceed down this route – driven by long-term market trends and regulatory requirements – they need a culture that fosters relevant skills and processes. In the past five years, energy companies have sought to hire completely new types of roles. In addition to the traditional contractors and technicians, they’re now building up internal capabilities in fields such as software development, remote asset management, technology innovation, quant research and advanced analytics.
“To fulfil their business strategy, oil and gas companies need to foster a culture that appeals to people with digital skills and experience, those who are eager to innovate and create impact,” explains Sushentsev. “A culture that encourages risk taking and supports people, rather than suppresses it and punishes for failures. Having a stream of lighthouse initiatives, promoted internally and externally will be key to recruiting and retaining that talent.”
By investing in change management alongside technology deployment, companies can not only move beyond digital fatigue – they can also improve their ability to compete in a rapidly changing landscape.
Read more about digital transformation trends among oil and gas companies in Axora’s new report, which surveyed 150 senior oil and gas decision makers. Get your copy here.
Learn more, explore our insights and reports
Artificial intelligence could transform oil and gas, but is the industry prepared?Digital technology expert Charles Lewis explains how companies may need to reorganise to take full advantage of artificial intelligence
What industry-specific challenges are you facing right now? Talk to us so we can find proven solution to help you.