In schools, F is a negative letter. All students and instructors know that it stands for failure. However, in business the letter F is a positive. It stands for two things that are essential to success in today’s volatile, uncertain, complex and ambiguous energy industry environment: fundamentals and flexibility.

Business fundamentals include these basics that support operational efficiency and effectiveness:

  • Accounting and finance: scorekeeping that enables a company to understand its costs, know it is providing value, keep track of its cash and serve its stakeholders;
  • Customer service: operational excellence to deliver what customers want when and how they want it;
  • Brand: knowledge of the brand and its promises to guide decisions about what to do and what not to do;
  • Leadership: interpersonal and organizational communication skills to motivate, coach and empower others; form effective teams; create alignment throughout the organization; and lead change;
  • Human capital: the strategic selection, development, retention and exit of employees to achieve business results;
  • Strategic thinking: understanding how day-to-day decisions and operating results advance or retard the firm’s strategic intent; and
  • External focus: recognizing the interests of multiple stakeholders, representing the organization and its values in the community, scanning the external environment for relevant trends and operating with a global perspective.

When times are challenging, as in today’s declining oil price marketplace, it’s essential to stick to the fundamentals. Companies need to manage costs but not starve appropriate revenue-generating opportunities, provide outstanding service to retain existing customers, stay connected to their brand promises, handle staff reductions strategically and with sensitivity, and over-communicate. You can’t shrink your way to greatness.

Flexibility is simpler to describe but harder to achieve. It is the organization’s capability to behave like a ballet dancer and move in response to a flow of music, emotion and narrative. It is also the organization’s capability to be like a basketball player and pivot and shift with agility from point to point according to the demands of the game. Firms that achieve these capabilities demonstrate:

  • Financial agility: Some energy firms have accumulated cash and avoided debt so they are able to scoop up bargains;
  • Asset leanness: Some energy firms are able to drill but wait to frack. Others can produce but send production to storage rather than to market;
  • Engaged customers and suppliers: Some energy firms have engaged suppliers in managing operations, thereby spreading risk; and
  • Continued investment: Some energy firms have cut investment from planned levels but are able to maintain it at year-over-year increases.

Those oil and gas firms that have achieved flexibility have stockpiled a range of organizational capabilities that can meet various contingent scenarios. They have cultivated a diverse mindset within leadership and among employees. They encourage participation in the large and growing array of information exchanges, both online and face-to-face, inside and outside the organization. They create an environment that promotes learning from failure, and they support employees in pursuit of a lifetime of learning.

Sustained success will belong to energy organizations that embed business fundamentals needed to make money, engage and motivate their people, and grow strategically—and the organizational capability to act like ballet dancers and basketball players. They will be able to move flexibly and with agility, rebound quickly from failures and pivot in different directions as the market demands. Such firms will expand and maintain their commitments to education. They will upgrade their internal learning and development functions. They will maintain their education and development programs rather than cut them because they see their value in securing a steady flow of talent grounded in business fundamentals and empowered to behave flexibly. Their investments in education will stand for fundamentals and flexibility rather than failure.

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