"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat." – Sun Tzu
While both Chevron and Oxy’s strategy behind the acquisition is well-reported – mainly to establish a larger presence in West Texas – whoever buys Anadarko will need to develop and execute tactics to quickly and effectively integrate Anadarko into its current operations. This includes SOPs, safety culture, and other back-office tasks.
Although acquisitions are commonplace, the process is complex. Even if the supermajor or major overcomes its own internal silo problems, often the acquired company has not. The latter tends to favor the status quo, conducting business as usual. This phenomenon is a perpetual challenge for M&As in the commodities industry (and keeps consultants employed).
Anyone who has worked in the O&G industry and visits various business units knows just how much personalities shape operations at each location. Such departmental tunnel vision comes at a great cost to the company’s efficiency, profitability, and even safety. When you’re merging two big companies, the business cost is even greater.
Integrating and improving how work is done across locations
The first step to breaking down institutional barriers among locations – and therefore increase efficiency, profitability, and safety – is to integrate and improve the way people work across business units. When workers perform tasks according to vetted SOPs, production becomes safe and predictable.
For example, in recent years Chevron has spent considerable time and money instilling a safety culture, and these efforts have proven effective. However, the new challenge facing Chevron – if its acquisition is successful – is the efficient management of the company’s own SOP integration with Anadarko. Surely there is an opportunity to collaborate on procedures at various types of wells. The typical approach of “each region is different so let them continue” will prevent Chevron and their newly acquired employees from reaching their greatest operational potential. Consistent and transparent SOPs across business units will improve:
Verification of work – Operations are performed the right way, the first time
Safety culture – The right personalities and processes are merged
Human resource development – Employee retention is increased when employees know they can move throughout a company’s unified, global footprint, and gain seniority
People-first technology that can scale, purpose-built for O&G
Following its acquisition, Chevron or Oxy has a limited amount of time to bring its people together and integrate processes across Anadarko before the business cost begins to add up. To their benefit, technology solutions are available that can accelerate and add significant value to their efforts. For example, Parsable is already assisting some of the world’s largest O&G and industrial companies develop solutions to similar challenges by giving these organizations the connected worker tools to share ideas, iterate process improvement, deploy SOPs, and manage large decentralized workforces.
By leveraging technology purpose-built for the unique operational needs of enterprise O&G companies, whoever acquires Anadarko will:
Enable company leadership to monitor and enforce compliance with established task standards
Encourage collaboration between leadership, managers, and line workers to share lessons learned and incorporate best practices
Easily bring back-office expertise to employees in the field, via a form factor that field workers are already familiar with: smartphones and tablets
Allow veteran superintendents to manage more personnel and have greater insight to how work is performed; they can even custom-tailor the processes that fit their specific team’s needs to achieve the correct end state
Enable HSE teams to ensure safety as the way of life and mitigate stop-work incidents
There is no doubt that the industry will be closely monitoring the integration of Anadarko into Chevron’s or Oxy’s operations. All eyes will be on new capital investment and tracking increase in production. And with increased and proven demand of West Texas shale, Anadarko will most likely be only the first of many major acquisitions this year.