MBA - Energy Management

INTRODUCTION

Innovation and change are the most important concepts discuss in modern dynamic business environment. The development of technology and the increasing burning needs of the people have created a dynamic environment of which the corporations may not be able to survive unless they simultaneously change their strategies with those global environmental and technological changes.

This report intends to provide a detailed discussion of the management of change within 'Exxon Mobil Corporation (EMC)' which is one of the world's largest publicly traded international oil and gas company, providing energy that helps underpin growing economies and improve living standards around the world.

My discussion mainly covers three perspectives. First, I explain the factors influencing the EMC's innovation and change strategy and then, I evaluate the importance of change to EMC and the potential problems they face when EMC implementing the change. Finally, I evaluate the effectiveness of EMC's strategy for managing change within the organization.

OVERVIEW OF THE COMPANY

Exxon Mobil is the world's largest publicly traded international oil and gas company. They hold an industry-leading inventory of global oil and gas resources. They are the world's largest refiner and marketer of petroleum products. And their chemical company ranks among the world's largest. However they are also a technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs.

EMC's organizational structure is built on a concept of global businesses and is designed to allow Exxon Mobil to compete most effectively in the ever-changing and challenging worldwide energy industry.

EMC operates facilities or markets products in most of the world's countries and explore for oil and natural gas on six continents. Exxon Mobil uses innovation and technology to deliver energy to a growing world. They explore for, produce and sell crude oil, natural gas and petroleum products. They are committed to meeting the world's growing demand for energy in an economically, environmentally and socially responsible manner. Therefore innovation and change strategy of EMC would be the most significant factor for the future business expansion.

FACTORS INFLUENCING INNOVATION AND CHANGE

Factors influencing the innovation and change differ according to the business context of the organization. For example if a particular company is engaged in energy industry they may highly concern about environmental factors whatever the change they need. Because the environment has a major impact on all the product and services portfolio of EMC. Therefore it is more important to understand the context of business of which a particular corporation is engaged in before moving into a changing situation. In addition modern technological advances, cultural changes, structure of the corporation and regulatory requirements also can be identified as other factors to consider. However, there is also a need to understand the magnitude of challenge faced in trying to effect strategic change. To do this it is useful to consider the type of change required , the wider context in which the change is to occur and the specific to change that exists Following main factors can be considered as the influencing factors of change.

The context

There is no one right formula for management of change. The success of any attempt at managing change will be dependent on the wider context in which that change is taking place. For an example managing in a small, perhaps relatively new business where a motivated team are themselves driving change, would be quite different from trying to manage change in a major corporation, or perhaps a long established public sector organization, with establish routine, formal structures and perhaps great deal of resistance to change. The contexts are completely different and the approach to managing change therefore needs to be different.

Balogan and Hope Hailey build on this point to highlight a number of important contextual features that need to be taken into account in designing change programs. See above exhibit. It reflects few examples of contextual features and their influence on strategic change programs.

The time available for change could be dramatically different. When consider EMC for example there may be new enactments from the governments for usage of energy resources and exploring energy resources. Or there may be a new alternative for fuel such as water. Then EMC need to have a rapid change. So there is no more time to waste. However there may be corporate decision and management plans for change. The management of EMC may have targeted at a kind of a change with the future forces. That can be taken a along time arena to change.

No matter how significant the change, it may be that there is a need for the preservation of certain aspects of the organization, in particular those that are to do with the competences which changes need to be based. For EMC it is necessary to concern the environmental factors whatever the change they expect to see. And also there may be some competent employees and professionals to be retained in the corporation.

Change may be helped if there is a diversity of experience, views and opinions within an organization. EMC has expanded their operations in six continents. So the diversity is higher than any other organization. Therefore EMC has to consider different needs of the diversified stakeholders in all over the world.

The previous experience of change is also important. Therefore capability also plays an important role in change management process. EMC has demonstrated their capability in managing change with the current successful business portfolio.

Capacity of the organization is also important to survive with the available resources. If a corporation has problems of lack of required resources the change will cause for a business failure. EMC has sufficient resources in all over the world. The current stage of the business life cycle in EMC has paved the way for this.

The readiness of EMC is good. The management has understood the need for change. They have established them into their budgets. EMC has announced the expected change and the innovative expectation in there news article of ‘A view to 2030'.

The power to change in EMC also is in a good position. The board of director consists of 11 directors of which 10 of the 11 directors on board are independent. CEO has 4 vice presidents for the decision making. Therefore EMC should understand from where the resistance is effect i.e. from top level or lower level.

EMC is currently engaged in various activities such as production, exploration, refining, fuel marketing, natural gas and power marketing etc. And also it is global firm operates in six contingents with billions of employees around the world. Therefore when concern the business context of EMC it is much complex in nature. In addition the industry also is highly volatile with the development of the technology would also be significant to EMC.

Culture

As EMC operates in six continents this factor is highly an effect to the innovation and change strategy of EMC. EMC has to manage the stakeholders such as customers, suppliers and employees etc. in different contexts. Therefore there is a significant impact on the innovation and management strategy in order to create proper change management process. The cultural web provides a good basis of understanding the effects of cultural changes to any organization. It is a representation of the taken for granted assumptions or paradigm of an organization and the physical manifestations of organizational culture. (See below exhibit.)

[Gerry Johnson Managing the strategic Change]

Above all the factors are the parts of the organization culture. When consider the EMC the culture is the most significant factor as it operates in globally. Therefore it is necessary to consider the cultural changes and their effects to the modern business arena for EMC. The cultural web also can be used as a way of understanding current organizational culture and desired future culture for EMC.

Environment

The environment is the most significant factor influence to any corporation to their innovation and change strategy. The concepts such as environment protection, sustainable development etc. has created the concerns of various regulators to control the organizations. The nature of the business portfolio of EMC is highly linked with the environment. They explore in environment, mining and extracting from environment and finally the consumption of energy also releases the polluted air to the environment. Therefore EMC has to be highly concern about the environmental factors when they determine their changing strategies.

Technology

The technology is also a significant factor for the innovation and change strategy of EMC. The development of the modern technology has created a massive cost benefit opportunities to EMC. For example the mining machines can produce more efficiency than the laborers. In addition different technological developments have increasingly changed the research and development perspective of EMC.

THE IMPORTANCE OF CHANGE TO EXXON MOBIL

It is important to any organization to realize the need of change. The strategic change is considered at the initiation of the business portfolio and it should be evaluated by time to time ongoing basis. Change can be in any context. Therefore it is important to understand why EMC needs the change.

By nature EMC engaged in energy industry. The crude oil prices and the regulatory requirements of government in different countries and the authorities may change time to time. Those external forces of change can not be predicted and also effect to whole organization. As EMC operates in diversified cultures around the world the effects of the stakeholders in different arenas are also may be demanded for change.

Past experiences of change management in EMC has proved that the growth of the company depends on how quickly the company finds the innovative products. The technological advancement in modern world has changed the way of research and development. The technology has facilitated a lot for improving productivity in R & D sections. Therefore EMC should be highly concern regarding the future advancements to the industry and there effect on EMC. There may be alternative substitutes in future and also there may be newer technologies for exploration, mining and other activities in the industry. Therefore change is very important to EMC.

PROBLEMS OF IMPLEMENTING THE CHANGE

However, even though the change is the most important thing to EMC there are several potential problems they have to be faced when they implement the change.

The complexity of the geographical area is the major problem. In here EMC has to determine change strategy in order to line with the cultures, regulatory requirements and needs of the people in those countries. Some times there can be higher resistance from the above forces when we implement the change.

Managing the risks from increases in global greenhouse gas emissions is an important concern for EMC, industry and governments around the world.

Kurt Levin's forcefield analysis provides an initial view of change problem that need to be tackled, by identifying forces for and against change. It helps to identify the driving forces and restraining forces to a particular change situation.

EFFECTIVENESS OF MANAGING THE CHANGE WITHIN THE ORGANISATION

The effectiveness of managing the change is depending on how management, employees and finally the organization as a whole face to the change event. In here it is most important to understand the styles and roles of change in a particular organization.

Whoever is in the position of managing change needs to consider the style of management they adopt. According to the organizational context different styles are likely to be more or less appropriate.

Education and communication

This involves the explanation of the reasons for and means of strategic change. It might be appropriate if there is a problem in managing change based on misinformation or lack of information and if there is adequate time to invest in persuading people and give them the chance to assimilate the information. However there are problems here. Assuming that reasoned argument will overcome perhaps years of embedded assumptions about what really matters could be native specially if there is a lack of mutual trust and respect of between management and employees. Relying on processes of communication in a top down fashion may also be problematic. Change is likely to be more effective if those affected it are involved in its development and planning.

This is what EMC is doing. They give the opportunity to management and employees to contribute to the change event. EMC has long term focus on their change strategy. They have taken several measures to create educated environment within the organization. EMC has continued investing heavily in math and science education in the United States. They supported initiatives that encourage students to take an active interest in careers in the math and science fields, encourage the professional development of highly qualified teachers and promote involvement of women and minorities in these subjects. Exxon Mobil has a long history of supporting and improving educational programs as an important business priority. There is a separate teacher's academy for EMC to develop quality people. EMC communicates using news releases and gives the employees the opportunity to view them.

Collaboration

This is the method of participating in the change process is the involvement of those who will be affected by strategic change in the change agenda. For example the identification of strategic issues, the strategic decision making process, the setting of priorities and the implementing the changing event is done by the lower level. In EMC those all the parties are the contributors of the change. It's like a routine aspect but finally top level management can achieve the expected change event. Therefore the collaboration has become a way of building readiness, and capability for change. EMC has effectively collaborated with the people in order to create current expanded business portfolio in all over the world.

Intervention and Direction

Intervention is the coordination of and authority over processes of change by a change agent. Direction involves the use of personal managerial authority to establish a clear future strategy and how change will occur. It is essentially top down management of strategic change. It may be associated with a clear vision or strategic intent developed by someone seen as a leader in the organization. EMC has the motto of 'taking on the world's toughest energy challenges'. Therefore it can be understood the direction of the management for the strategic change.

Coercion

In its most extreme form, a directive style becomes coercion involving the imposition of change or the issuing of edicts about change. This is the explicit use of power and may be necessary if EMC is facing a crisis or a conflict of change.

However it should be noted that the management change in EMC by using above techniques may be effected by the factors such as capability, time and scope of change, power structure of EMC, capacity to change etc.

When it comes to consider strategic change, there is too often an overemphasis on individuals at the top of an organization. It is useful to think of change agency more broadly. Change agent is the individual or group that helps effect strategic change within an organization. When consider the top level management EMC has a number of change agent within the organization with massive experience.

There are highly qualified CEO and four vise presidents for the decision making. Rex w. Tellerson Chairman and Chief Executive Officer a native of Wichita Falls, Texas, Mr. Tillerson earned a Bachelor of Science in Civil Engineering at the University of Texas at Austin before joining Exxon Company, U.S.A. in 1975 as a Production Engineer. Senior Vice President Mr. Mark Alberts born in Calgary, Alberta, Canada, and raised in Texas, Mr. Albers joined the company in 1979 and holds a bachelor's degree in petroleum engineering from Texas A&M University.Mr. Michel J Dolan Senior Vice President joined Mobil Oil Corporation in 1980 at the Paulsboro, New Jersey, and research laboratory. Over the next 13 years, he worked in a variety of engineering and managerial positions supporting Mobil's worldwide refineries. Andrew P. Swiger is senior vice president of Exxon Mobil Corporation and a member of the corporation's Management Committee. Throughout his career, Mr. Swiger has held a variety of technical and managerial positions in production, operations, engineering, planning and gas and power marketing. He joined the company in 1978 as an operations engineer in Morgan City, La., eventually progressing through a series of upstream staff and managerial assignments in Africa, Europe and North America. Donald D Humpheyars Senior Vice President and Treasurer a native of Tulsa, Oklahoma, Mr. Humphreys earned a Bachelor of Science in Industrial Engineering and Management from Oklahoma State University in 1971. He served in the U.S. Army from 1972-1974. He obtained an M.B.A. from the Wharton School of the University of Pennsylvania before joining Exxon Chemical Company in 1976. In 1986, after several assignments in Houston, Baton Rouge and Baytown, he transferred to Exxon Corporation in New York as Senior Financial Advisor in the Controller's Department. In 1988, he moved to Exxon Company, International as Financial Reporting Manager and later served as General Auditor. In 1990, Humphreys became Upstream Controller of Exxon Company, U.S.A.

SUMMARY

Innovation and change are the most important concepts discuss in modern dynamic business environment. The development of technology and the increasing burning needs of the people have created a dynamic environment of which the corporations may not be able to survive unless they simultaneously change their strategies with those global environmental and technological changes.

Exxon Mobil is the world's largest publicly traded international oil and gas company. They hold an industry-leading inventory of global oil and gas resources. They are the world's largest refiner and marketer of petroleum products. And their chemical company ranks among the world's largest. However they are also a technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs.

Factors influencing the innovation and change differ according to the business context of the organization. Therefore it is more important to understand the context of business of which a particular corporation is engaged in before moving into a changing situation. In addition modern technological advances, cultural changes, structure of the corporation and regulatory requirements also can be identified as other factors to consider. However, there is also a need to understand the magnitude of challenge faced in trying to effect strategic change. To do this it is useful to consider the type of change required the wider context in which the change is to occur and the specific to change that exists. The factors such as context, culture, environment and technology are the most important.

It is important to any organization to realize the need of change. The strategic change is considered at the initiation of the business portfolio and it should be evaluated by time to time ongoing basis. Change can be in any context. Therefore it is important to understand why EMC needs the change. By nature EMC engaged in energy industry. The crude oil prices and the regulatory requirements of government in different countries and the authorities may change time to time. Those external forces of change can not be predicted and also effect to whole organization. As EMC operates in diversified cultures around the world the effects of the stakeholders in different arenas are also may be demanded for change.

Past experiences of change management in EMC has proved that the growth of the company depends on how quickly the company finds the innovative products. The technological advancement in modern world has changed the way of research and development. The technology has facilitated a lot for improving productivity in R & D sections.

The complexity of the geographical area is the major problem. Managing the risks from increase in global greenhouse gas emissions is a problem of EMC to consider. Forcefield analysis can be used as a good technique.

The effectiveness of managing the change is depending on how management, employees and finally the organization as a whole face to the change event. In here it is most important to understand the styles and roles of change in a particular organization. Education and communication, Collaboration, Intervention and Direction, Coercion can be considered as factors affecting the effectiveness of the change within the organization. It is useful to think of change agency more broadly. Change agent is the individual or group that helps effect strategic change within an organization. When consider the top level management EMC has a number of change agent within the organization with massive experience.

REFERENCES

  1. Gerry Johnson, (1998) Exploring Corporate Strategy - Managing the strategic Change, Pearson education
  2. D.C. MacCalland, (1961). The Achieving Society. Van Nostrand Reinhold.
  3. Hofstede, G., (1994). Uncommon sense about organizations: Case studies and field observations
  4. Measuring J. Jeans, (1997). The ugly duckling - putting people on speaking terms, Stocholm.
  5. McKelvey, M. Texier, (1997) The dynamics of high tech industry.

WEB LINKS

  1. http://www.exxonmobil.com/Corporate/default.aspxwww,exxonmobil.com.
  2. http://www.quickmba.com/strategy/generic.shtml.
  3. http://dictionary.bnet.com/definition/change+management.html.

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