UK: HOW AN OIL MAJOR REFINED ITS ORGANISING PRINCIPLES - RESHAPING SHELL.

UK: HOW AN OIL MAJOR REFINED ITS ORGANISING PRINCIPLES - RESHAPING SHELL. - Shell planners have long grappled with the issue of learning as a means of guiding evolutions over the long term. 'Decision-making is learning,' notes Arie de Geus, former Shell

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Last Updated: 31 Aug 2010

Shell planners have long grappled with the issue of learning as a means of guiding evolutions over the long term. 'Decision-making is learning,' notes Arie de Geus, former Shell planning group co-ordinator and now a member of the international think tank, Global Business Network (GBN).

The planning group's most significant innovation in this area is 'scenario planning'. Scenario planning is not prediction, but, in the words of Peter Schwartz, another ex-Shell planner and president of GBN, 'Scenarios are vehicles for helping people to learn.'

Scenarios are largely credited with preparing Shell for the oil shock of 1973. By responding quickly to conditions which were literally inconceivable to its rivals, Shell rapidly graduated from also-ran among the 'Seven Sisters' to second largest and probably the most profitable.

One lesson of life cycles, however, is that nothing endangers continued learning like success. In recent years, Shell has lost ground in market rating and operational terms against the other oil majors. This is the background to April's radical reshaping of Shell's corporate HQs in London and The Hague. Out go the geographical units which form the organising principle of the present company; in come separate global business units for the main business areas. In addition, 1,200 of Shell's 3,900 HQ jobs will go. Will the streamlining do the trick of stripping out bureaucracy without compromising the cherished autonomy of the operating companies? Says chairman Cor Herkstroter: 'I am confident the new organisation will give us as good a platform as possible to achieve the sustainable performance we require.'

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