Exxon supertanker or Shell powerboats?

From October 2007
GS is Shell Global Solutions, a division of Shell for technology and services

We sometimes seem obsessed by Exxon.

There are some uncomfortable facts which feed the obsession and envy. Most of their financial indicators outshine ours year after year. The market believes their management will continue to add value whereas they value us (by some measures) at less than our breakup value. They are undoubtedly a hugely successful business for the current age.

Sometimes the envy colours into a belief that everything about Exxon is perfect. It isn't. From the inside Exxon can seem an ugly beast. Recently a few people have left Exxon and joined Shell. Most claim to be happier now. Also we should remind ourselves that everything looks worse from the inside - most GS customers have a very rosy view of Shell - and at high level rightly so! - yet we know that we have some failings. If we were to look at Exxon from the inside, we would see their failings too. Respect should not become blind adulation.

Sometimes in some parts of our business the obsession may translate into a strategy of "copy Exxon as much as possible". This is very dangerous, for three reasons.

(1) We won't do it as well as they do. They have a lead, by definition. They have competence to execute their strategy, by definition. They have a supportive culture, by definition. The best we can manage is a pale imitation, achieved slowly. Hardly a recipe for competitive success. Winners exploit their strengths and find distinctive ways to differentiate.

(2) We are better than them at lots of things. I happen to believe Shell are much stronger retailers than Exxon: our local customer focus is far stronger and as a result so is our empathy for customer needs. Exxon's retail offer is the best a centralised refiner can come up with. Ask Walmart whether that is good enough. I believe Shell is the nearest IOC to having a winning retail business. Global Solutions is a second example. We have the opportunity to attract talent, to build true customer partnerships, and to learn externally. We are starting to utilise that opportunity. Copying Exxon would take us backwards.

(3) Most important, the current age is not the same as the future age. We need to win in the world of tomorrow. It can be argued that Exxon's model will have two fundamental flaws to be ruthlessly exposed in the next 10 years. One is arrogance, internal focus, lack of pulse for public opinion and for peripheral stakeholder opinion. Consider the attitude to global warming. This could bring their business down - they would undoubtedly be the slowest to react to a tipping point, and could lose their license to operate as a result. The second is the way they handle people. Good rowers, prepared to comply and take instructions for a monetary reward. Works great in 2000 in the US. Will it work in Asia in 2015? With a workforce of high expectation, low compliance and an expectation of changing employer every few years? The warning signs are already there on this one for Exxon, and they will only get stronger.

I would never advocate that we did not try to learn from Exxon. There is much that they can teach us, where we can copy well, where they have better solutions, and solutions which will remain best for the future. The markets don't often lie, at least in the short term. But, please, let us not become an Exxon-lite!