While much has been written about high performance organizations (HPOs), there is not a universal definition for what constitutes an HPO. Most definitions customarily stress superior achievement (operating or financial performance) relative to a specific set of metrics that can be benchmarked against a competitor peer group. Many of the key metrics are focused around near term financial and operating results (either in absolute terms or efficiency measures). This approach is certainly an important component in assessing company performance (strengths and weaknesses) relative to its business sector and can provide some light on future performance expectations and long term viability. The focus of this discussion will be directed towards less explicit HPO performance measures, but just as important and arguably more important as the more conventional measures, pertaining to continuous improvement and sustainability. By prioritizing these aspects, organizations can target and track capabilities ensuring long term sustainability and excellence.
High performing organizations are never satisfied with the status quo, and understand how continuous improvement serves as a critical life line for future success and a necessity in the pursuit of excellence. The benefits of continuous improvement on performance are considerable and can be transformative through (but not limited to) improved efficiencies, better market competitiveness, stronger company robustness (withstand down turns), bolstered morale while breeding camaraderie, alignment, energy and creativity. Key components in fostering continuous improvement, the HOW in this objective, stems from foundational management ideals and corporate culture. Identification of areas for improvement require management focus and discipline through proper lookbacks with emphasis on learning and experimentation as opposed to blame and criticism. Attention is placed on collective knowledge and diverse perspectives as opposed to individual or siloed input. Clarity and alignment on performance improvement objectives and the monitoring process are essential components. In the end, management’s commitment to performance improvement is essential, not only in providing implementation direction, but in ultimately realizing organizational change.
The evolution of business sustainability as a critical management principle is noteworthy given the increasing levels of scrutiny of business impacts, real or potential, on its employees, stakeholders, communities and the environment. ESG (Environmental, Social and Governance) programs and measures occupy a significant portion of management time and attention while also garnering much attention within the investment company. Recognizing the purpose of ESG and the specificity placed on individual companies, my discussion here focuses more on internal means of nurturing and ensuring operational sustainability. Operational sustainability in oil and gas has been driven in large part by the volatile nature of this business. This is not intended to undermine the value adding changes from continuous improvement or those at the forefront of industry R&D efforts – their contributions are real and valuable.
Company management has traditionally relied on risk mitigation programs, and extensive strategic planning and scenario modeling exercises to navigate and manage through turbulent and uncertain times. Urgency has always been an effective motivator, but proactive management actions can deliver more compelling and comprehensive sustainability plans, as well as mitigate some of the organization and management stress uncertainty brings. Planning processes utilizing greater employee involvement (ie soliciting line or operations input to assumptions and potential actions) improves predictive accuracy, provides deeper management understanding, and generates greater organization buy-in and confidence. There is also an “investment” component to operational sustainability – not to be viewed as an expense. Technological advances, from drilling and completion tools and methods, to data capture and management, and automation have been instrumental in sustaining and advancing industry. Every critical operational function and business process should be continuously assessed for technological applications (again, highlighting the need for a more organizational inclusive approach). Another investment component rests in addressing organization capability and capacity identified as critical to future success and sustainability. This will no doubt cause some tension between near term performance targets and long term sustainability. In the end, it’s incumbent on management to address and manage the tension, not avoid it.
This dual focus of this discussion on continuous improvement and sustainability, allows organizations to thrive, adapt, and remain resilient in a changing landscape. Ultimately, fostering a culture of collaboration and shared responsibility will enhance both performance metrics and sustainability initiatives, leading to enduring success.
