Scenarios have a legendary status in Shell.
I was brought up in one monarchy, and live in a different one. Monarchies defy logic - they are like throwbacks to the days of autocracy. They perpetuate class difference and privilege and drive all sorts of bad behaviour. They even waste valuable space by focusing on Harry's drunken antics rather than what the country really is. Then there are the embarrassments. And what about the cost, with all those hangers on and boats and planes! Why on earth would any self-respecting nation want a monarchy?
And yet.
There is something intangible about pride and belonging. There is the opportunity to promote some values which override mere logic or governmental whim. It can define some boundary conditions of acceptability. It provides hours of slapstick fun and soap opera drama. And, reputedly, the revenue from tourism and memorabilia dwarfs the costs.
So, anachronistic, diverting from the main purpose, hard to quantify net value, irrelevant to everyday things, folklore. Yet somehow loved and bonding.
Just like scenarios for Shell!
Ever since I joined Shell we have had scenarios. Very brilliant people spend time and money locked away producing coherent future world views. They are liberal with the disclaimers - not forecasts, only possible views, no expression of likelihood, very long term. So how can they possibly be of any use in the real world?
Cynics would argue that they are of no real use. They can quote the apparent disconnect between the esoteric scenario discussion and the hard-nose business planning. They can reasonably point to a track record with few real ah ha's. And the overall risk that it feeds the mindset that Shell has a divine right to be here in the future, marching along in a stately manner at our own pace.
Just like the royal family, really.
And yet.
Shell can build credibility and open doors (geddit) with major resource holders and other big stakeholders through smartly sharing scenarios. They project a solid and responsible brand image. Some people might be minded to join the company or work with us because of what they signify. They can provide a healthy framing and external mindset to business decisions. And, one day, they might even drive strategy, if we have the discipline and courage to let them.
Just like the royal family.
So, scenarios driving strategy. As you must know by now, I'm not exactly close to the real corridors of power in this enterprise, so you have to take my personal observations for what they are, ie usually plain wrong. But I have never really seen a clear link between the scenarios and strategy in Shell. Sure, proposals have to be "robust" against all the scenarios. So people writing proposals have to include some bla bla. Big deal. At the end of the day, money and power seems to count, esoteric discussion loaded with caveats doesn't.
Which brings us to the new scenarios, just now being launched, Scramble and Blueprint. These appear, to me at least, to have some more immediacy and relevance than previous ones, so maybe, just maybe, they might make a difference.
Essentially, the scenarios plot different global reactions to the three hard truths:
- booming global energy demand
- supply struggling to keep up
- growing and serious environmental consequences forcing that dimension into the equation
In Scramble, a good model of what has been happening over the last 10 years or so, the hard truths are addressed in sequence. This is a classic example of the urgent outweighing the important, and of sub-optimisation through misaligned objectives of key actors.
In Blueprint, on the other hand, somehow coalitions form which enable more effective response to the third hard truth. Maybe driven by crisis, or consumer, or smart entrepreneurs, or altruistic governments, it happens. Slowly, haltingly, but it happens.
What is new is that for the first time in history, Shell has expressed a preference for one scenario over the other. We will be advocating a Blueprint world. We know we can't create it on our own, indeed we can only be a minor cog in the wheel, but we'll use our advocacy to try to help.
This is fascinating, because it begs all sorts of questions about strategy. And brand position. And core purpose. And employee value proposition. And relations with everyone else. Well, about everything really.
It is far from clear how this will play out. It is just about tenable to advocate Blueprint loudly yet act towards it only marginally, arguing that as an energy company our role is to respond to an industry and regulatory framework rather than to create it. But it is also feasible that the effect will be far more radical than that, and Shell will be a very different place in a few years time. Personally, I hope so, for a number of reasons:
- It would give me pride to be associated with a company leading global responsibility
- There is space for such a player in the world. ie it might actually work! Think of the EVP, think of the consumer, even think of the economics of getting ahead of a carbon pricing curve.
- It is hard to define a differentiated position, even a purpose, for IOC's apart from through such a bold positioning, and even harder otherwise to define a differentiated position among IOC's
So, will the Shell equivalent to the Royal Family finally have its day in the sun, proving all the doubters wrong? Or have we embarked on a dangerous course of trying to change a grand institution for the times, thereby discarding its essence? (A bit like letting Diana and Fergie into the royals...and we know where that led, or at least nearly led).
Place your bets.
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