Op-ed: Why Oil and Gas Must Rethink Organizational Strategy

Here are key indicators that will inhibit an organization’s ability to respond and adapt amid the energy transition and how companies in the oil and gas industry can overcome them.

Alan Henson, Pariveda
Op-ed: Why Oil and Gas Must Rethink Organizational Strategy

Oil and gas companies aren’t seeing the energy transition as an infinite game but rather as a zero-sum game with clear winners and losers. As such, they’re managing risk and destroying innovation, writes Alan Henson, vice president at Pariveda. (Source: Hart Energy; Shutterstock.com)

The energy transition is gaining momentum, forcing established oil and gas companies to ponder their collective role in the global economy of the future. There’s no doubt that the world will continue to rely on products from the oil and gas industry for decades to come, but if industry organizations hope to retain their spots among the world’s most valuable companies in a zero-carbon future and fulfill their mission, they must be prepared to change at the organizational level.

Renowned 20th-century economist Joseph Schumpeter was perhaps the first to observe the manner in which groundbreaking ideas percolated throughout the mainstream economy; namely, in a series of gradually shortening cycles, dubbed innovation cycles. In the past, transformative inventions—things like the steam engine, internal combustion engines, electricity and aviation, for example—would take half a century or more to reach mass adoption. Thanks to ongoing technological advancement, today’s innovation cycles might run their course in less than 25 years.

Innovation is now the prevailing currency of commerce, especially in the energy industry. As the world rallies around clean energy technologies, oil and gas companies are under constant attack from competing energy providers. Wind and solar power aren’t exactly new developments, and perhaps it’s naïve to think we’re just 25 years away from the widespread adoption of technology that renders oil and gas products obsolete, but industry leaders know that they must find ways to compete in this new energy world to meet the promise of the future. If they hope to succeed in that endeavor, they must rebuild their organizations around completely new objectives.

Already have an account? Log In

Sign up for FREE access to view this article now!

Unlock Free Access