Many of our team at Rockflow have spent years working in the supermajors and later as consultants to the traditional energy industry. We know it carries many strengths into the energy transition – integrated thinking, strong assurance processes, 150 years of experience, and so on. But we’re also aware of where it stands to learn from the newer players on the scene.
The startups and young disruptors are moving faster towards the energy transition than incumbents might have predicted. And some decisions that take larger organisations a week to make, these startups are making in a minute.
In the energy transition, a few principles will remain the same as they always have – assessing readiness, competitiveness, and risks is important as ever. However new approaches to digital technologies and agile practices, placed in the blank-slate setting of startup culture, are making startups a force to be reckoned with.
Some members of our team, such as our Executive Adviser, Russell Smith, are working directly with startups in the energy transition, and they’re helping to shape new ways of progressing projects. Here we share some of their learnings.
There’s a place for faster and tighter project execution planning
The core tenets of project execution are the same for startups as incumbents – they still have a capital value process, they still need to do frontend engineering, and they still need to ask the three vital questions at each gate:
- Is it commercially competitive?
- What are the risks and have we mitigated them?
- Are we ready to move forward into execution?
Startups, though, often add an extra question to these three: “What do I need to find out now?”
We’ve seen that startups are very rigorous at not spending any time or money on questions that don’t need to be answered in the immediate future. This is partially dictated by necessity – they are working with limited funds. However, there’s a net benefit to the approach as a whole.
The result is a new kind of speed. For incumbents, funding mechanisms and the uncertainties involved can result in an overlong and complicated capital value process. One of the observations in our article on the energy transition, was that there’s an emergent different way of doing things.
Everything works to a tighter premise. “What are we actually trying to do?” is the guiding query – and any work that doesn’t align with the answer is trimmed away. As a result, the 100+ page, 21 heading execution plans that are typical of incumbents can be less than 20 pages in a startup.
Agility is possible if you don’t do it by the book
We’ve seen what happens when a supermajor works to take on agile practices, and we’ve seen how it can simply end up making everything more complicated than it needs to be in a company with tens of thousands of workers, most of whom need to be working on more than one project at once.
Agile philosophy is ultimately designed for a different scale, and we can see that in the startups we’ve worked with. They don’t implement agile practices by the book, they naturally work in an agile way due to the freedom, scale and ideals of the group.
Decision Quality is still vital, but decisions can take minutes rather than days. Key discussions can take place on a Whatsapp group. Because the teams are less structured, there’s fundamentally more integration, and everyone can see where the gaps are and where their work fits with the whole. And as we know first-hand from delivering technical quality under time pressure, integration can make all the difference.
Yes, we can’t really suggest that 70,000-person teams adopt the practices of 70-person teams. It’s an unfair comparison to make. That said, it would be dangerous to assume that these new ways of working are irrelevant to larger organisations.
Whether the exact principles can be lifted across or not, startups have succeeded in creating a way of working that’s three orders of magnitude faster paced than the rest of the energy industry. One in which everyone can quickly see the impact of their work as sprint after sprint closes. And the freedom and ease and enjoyment that comes with the loose structure means that everyone feels empowered and valued.
On a cultural level, this is something that incumbents will need to learn to compete with. Although they lack some of the stability and security of the traditional industry, startups have a lot to offer talent in terms of fulfilment and enjoyment – and their benefit schemes are usually very good too.
The agility of startups is one of the top things major incumbents should have on their risk register – not only because it will propel them further, faster. But also because it has the potential to lure the best talent away from the traditional industry.
Perhaps incumbents can’t adopt the processes of agile by the book, but they need to find a way to create the same outcomes.
You can’t always make digital technology work off the shelf
There’s a digital revolution happening in the energy sector, but as is the theme, it’s happening faster in the startups than it is in the incumbents.
This is partly because startup teams are typically composed of digital natives rather than digital immigrants. They’re young, and while this is a disadvantage in some ways, it’s an advantage technologically.
It’s not just the teambase that’s young, it’s the database too. Incumbent oil and gas majors have typically struggled to wrestle their legacy databases into a format that can be interrogated by AI and other tools.
Startups are creating their databases with AI and other new technologies in mind. This means they don’t suffer from the “garbage in, garbage out” issue that is every data scientist’s mantra and it once again means they can move faster. They’re adopting tools that can run a plethora of different technical-commercial concepts through a model that used to require far more arduous Excel work.
In some cases they’re even redefining the standard appraise, define, execute approach, progressing projects in a way that’s more naturally supported by technology and tighter project phases.
What road lies ahead for incumbents?
The energy sector as a whole is in transition, and as we said in our last article on the subject, it is those who are most capable of changing and adapting who will thrive and survive.
Incumbents may not be able to adopt agile by the book, or start their databases from scratch, but they must still find a way to keep pace with the startups.
Interestingly, we’ve noted that for many of these startups, achieving a high rate of return appears less important. They’re aware that money and a plan for profitability is a prerequisite to their work, but it’s how they’re going to make money that’s important to them.
Perhaps this is where incumbent energy companies can start — with culture. After all, this appears to be the guiding strength that is enabling these startups to attract the right talent and maintain a tight focus. If incumbents can put new foundations in place like this, it might give them the conditions they need to move faster and adopt agility and technology where it’ll be needed most.
If you need fresh thinking and advice you can trust for the energy transition, see our energy transition services or explore how an advisor can unblock a ‘stuck’ opportunity.
