“The Creation of Adam, painted by the brilliant Italian Renaissance artist, Michelangelo Buonarroti, on the ceiling of the Sistine Chapel, has long been recognized as one of the world’s great art treasures. What millions overlooked for centuries, was that Michelangelo had painted an anatomically accurate image of the human brain behind God.
“The borders in the painting correlate with the inner and outer surface of the brain, the brain stem, the basilar artery, the pituitary gland, and the optic chiasm. God’s hand does not touch Adam, yet Adam is already alive as if the spark of life is being transmitted across a synaptic cleft. God is superimposed over the limbic system, the emotional center of the brain, and possibly the anatomical counterpart of the human soul.
“Michelangelo painted this masterpiece from 1508 to 1512.” Dr. Frank Lynn Meshberger and Tony Rich, Explaining the Hidden Meaning of Michelangelo’s Creation of Adam (1990).
When man built the first oil and gas companies, fossil fuels were scare, difficult-to-find, and hard-to-develop. He needed a large, complex organization, supported by strong, centralized functions he could tightly control. That model developed different brain functions – to tackle enormous technical challenges, manage great political risks, and deploy scare talent around the globe as needed.
According to the self-described ‘world’s smartest consultants,’ McKinsey & Company, this worked well during a decade of high growth and high prices but created complexity that added costs, stifled innovation, and slowed down decision-making. “As these central teams expanded, general and administrative costs grew five-fold, hitting nearly $5/bbl in 2014, with the biggest increases coming from technical functions such as engineering, geosciences, and environment, health, and safety.”
The old “organizational blueprint is no longer sustainable. While companies have cut their support functions since 2014, the overall organizations sustained by these functions are smaller. This suggests further reductions in corporate will be needed, as well as new organizational models.”
Organizational Agility
The first idea is the ability to rapidly form cross-functional teams and reprioritize tasks underpinned by “core value-adding processes and cultural norms that provide resilience, reliability, and relentless efficiency” and involves:
• Fluid teams – groups of employees form and dissolve to achieve quick success as opposed to the old model that assigned workers into teams that lasted until the next reorganization;
• Loose hierarchies – the company will be built around tasks and projects, rather than rigid hierarchies, and “may have no formal leader, instead leave decision-making to whoever has the relevant expertise;”
• Rapid prototyping – teams develop prototypes of new designs with a rapid, iterative “test and learn” mind-set, rather than going through escalating layers of review; and
• Instant feedback – crowdsource performance management in real time and ditch the annual review with a single manager.
Digital Organization
The second idea involves the Internet of Things, including artificial intelligence and machine learning, supported by human-machine interaction and how that will transform upstream operations:
• Safety – McKinsey predicts that 60-90% of routine manual labour will be automated, as technical and non-technical work is digitized. “This means better safety both because fewer people will be at risk and because automation is reducing the risk of human error;”
• Productivity – McKinsey believes digital is a key enabler for organizational agility, by giving instantaneous access to data operators and frontline decision-makers need. It also “allows and real-time deployment of maintenance teams linked to predictive-maintenance algorithms;”
• New job classes and capability profiles will rise – McKinsey expects companies to start hiring scientists, statisticians, and machine-learning specialists and automation of repetitive technical decisions should free up engineers to concentrate on tougher analyses; and
• New ways to manage people and performance – McKinsey foresees the traditional human resources department morphing into using “advanced analytics to mine large data sets about their workforce.”
Millennial Managed
• More flexible employment structures – technology-enable remote working, flexible working hours, on-demand sabbaticals, and more promotions;
• New work environment and culture – companies will use more social media tools like Facebook, Slack, and Yammer replacing the traditional intranet and file-sharing tools; and
• Positive external footprint – companies will be expected to make a positive contribution to society and not just by writing cheques.
Decentralized Company
The fourth idea is that companies will again decentralize to push decision-making out to front-line operators. McKinsey predicts this will be hard for traditional producers. “We expect some to reverse the 15-year trend by creating a corporate core that is radically smaller than today’s with highly autonomous assets teams. Others who produce higher-risk, more capital-intensive assets will choose to have a much stronger centre with deep functional capability and a strong emphasis on risk management.”
Redefine Core Business
The fifth and last idea involves the ongoing debate about what upstream producers define as core functions versus what activities they can better manage through joint ventures, partnerships, or supply-chain relationships. McKinsey reports, “We believe the future oil and gas company will more closely resemble today’s industrial manufacturers, with a move away from tactical contractual arrangements and toward long-term strategic partnerships with a network of tier-one and tier-two suppliers.”
As men and women build the next generation of oil and gas companies, fossil fuels are plentiful, easier-to-find, and less-complicated-to-develop. They need agile organizations, supported by nimble decentralized functions, and digitally managed by tech-savvy millennials. This model quite possibly supports the human soul.
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