Having an eye on ‘management culture’ and in particular French leadership styles, it would be impossible to write anything this week other than to pay homage to the former CEO and Chairman of Total who died in a plane crash on 21 October. The global reaction to his tragic and untimely death was testament enough to a leader who evidently touched the lives of many people. In the French corporate environment, which tends to lean towards ‘management’ rather than ‘leadership’, he stood out as a leader first and foremost. He formulated clear visions of where the group needed to go and spent time communicating those; he engaged people with his energy and determination; he was empathetic and could relate to each counterparty individually; he established a truly global and senior network; and above all, was a very good communicator. He will be missed.
With all the news agencies covering the story this week, most also focused on the challenges ahead for the energy group. The most succinct of these was penned by the WSJ (“5 Challenges for Oil Group Total”, 21 October 2014). Here they are along with further considerations (“et alors”):
Five Challenges for Total
Verbatim from WSJ 21.10.14:
European oil major is a French institution
Managing Total is no easy task. The company is invariably in the political, media, and environmental spotlight. It is France’s biggest energy group by market capitalization, equivalent to nearly $130 billion, making it the second largest on the Paris bourse, and second only to Royal Dutch Shell among European oil and gas companies. Boasting nearly 100,000 staff working in more than 130 countries, Total is as admired by investment analysts for its growth potential as it is under scrutiny by environmentally-sensitive politicians and lobbyists.
Go where the oil is
Under Christophe de Margerie, Total has proved anything but risk averse. The company placed a big bet on Russia, which indirectly contributed 9% of its oil output last year—up from less than 1% a decade ago—but now has to contend with the sanctions western countries have imposed. Total’s recent investments include projects in Kazakhstan and Uganda.
A mega project turned sour
Total—along with Shell, Exxon and others—has invested heavily in one of the world’s biggest oil fields, Kazakhstan’s Kashagan, which remains unproductive after tens of billions of dollars of investment and years of delays.
Making the most of an African oil champion
Total is one of the oil and gas companies with the most experience of operating in Africa. The continent has large untapped hydrocarbon reserves but also a reputation among its governments for frittering away oil wealth, leaving many countries with large energy deficits amid robust economic growth, rapidly increasing populations and sometimes unstable politics. Africa contributed more than 28% of Total’s oil and gas output in 2013, ahead of the Middle East and Europe.
Re-inventing Total as an energy group
Under Mr. de Margerie, Total has put more effort into diversifying from oil and gas into new sources of energy. Total has chosen solar power and biomass as its preferred sectors while eschewing the big bets that rivals have made on unconventional sources of oil and gas. Total has a 65% stake in Silicon Valley-based SunPower Corp. Total’s New Energies division broke-even in 2013.
Christophe de Margerie leaves some very big shoes to fill and to meet these 5 challenges, effective leadership will be necessary to helm this ‘French institution’ going forward. The analysts appear to be pleased with the nomination of Patrick Pouyanne as CEO. In any succession, success is rarely achieved by replicating the predecessor’s leadership style; however, for the new CEO, there is a ‘sixth’ challenge, namely which ‘leadership style’ to adopt? Without imitating his predecessor exactly, there are potentially some points for the new CEO to carry forward from the late Mr de Margerie: vision, engagement and communication.