Megaproject Leadership

To meet growing energy demand there has been a significant increase (400% in 10 years) in exploration and production (E&P) “megaprojects” i.e. those with budgets greater than one billion USD. “Megaprojects are pushing the frontier of knowledge in an environment that may be simultaneously ill-defined, uncertain and random … which will significantly expose companies to high levels of strategic, operational and financial risk” says Ghosh et al., in “Organisations and Leaders Make or Break projects” Energy Perspectives, Schlumberger Business Consulting (Summer 2012).

In the last 15 years, “the E&P industry has seen a tripling of the number of projects with budget overruns in excess of 50%”. The authors’ research led to an identification of six root causes related to issues on capital projects of which “organisation and people” was highlighted in a survey as the most important (even surpassing “technical challenges”). Accordingly, they suggest that there is a need for a “paradigm shift in organisational thinking” both in terms of organisation (external stakeholder focus, and agility inter alia) and in terms of leadership (development paths and leadership model).

Here’s a summary of their proposed leadership model for megaprojects followed by further considerations (“et alors”).

Megaproject Leadership

The authors state that “megaproject leaders are required to deal with external stakeholders who have the ability to significantly influence the project’s outcome without any direct control or influence.” In addition, the leaders need a sustainable development mind-set and “a positive attitude to keep teams motivated”. The combination of these factors “takes the leadership challenge to an entirely different level” for which they propose the use of the “3PI” leadership model.

The 3 Powers Influence Leadership model is as follows:

Intellect

This is the interface between “teamwork” and “judgement.”

Intellect relies on logic, reasoning power and knowledge that stems from experience. Note the emphasis on experience, being “teamwork” experience rather than education…

Intuition

This is the interface between “judgement” and “communication.”

Intuition manifests itself in judgement, endurance, resilience and integrity. It develops over time and note an emphasis on communication, (similar to learning agility).

Interconnectivity

This is the interface between “communication” and “teamwork.”

Interconnectivity is gained through relationships, networks and communication skills. Note that it requires a mastery of both communication and teamwork.

A full synchronisation of these three sources of power “raises an individual megaproject leader to a point where he or she is perfectly capable of dealing with adversity or sudden swings in the project environment with grace, dignity and a high degree of reflex and resiliency…” Such a leader will then be able to instil trust in stakeholders, “do the right thing” vis-à-vis the environment and lead teams.

Et alors?

The 3PI leadership model has been developed by Ghosh (of the Massachusetts Institute of Technology) and has been “successfully tested across several organisations”. Further, the authors state that the adoption of the 3PI model will “lead to a positive Kaizen [continuous improvement] culture that effectively deals with complexities in a safe and efficient manner.” So why aren’t all the E&P companies adopting such a model (or similar)? The risks are high but beyond “ordinary” resistance to change, there might be other forces at play in E&P companies.

In the E&P business, intellectus omnia vincit [intellect conquers all] might be a suitable motto for many an organisation; however the “intellect” leadership required is far from just “raw” intellect. It is actually collective learning, try-and-see progression and above all else, learning from experience rather than education. Similarly “intuition” is almost taboo in engineering companies; instead facts, figures and data are ordinarily required. Again, the leadership “intuition” is more than just “intuition” – it is a dynamic stemming from continual communication. Like the authors say, these types of leadership would require a paradigm shift for most E&P companies.

“Interconnectivity” is not something which comes easily to E&P companies. Concepts and designs are tackled in the “intellectual” space and then later “connected” to the real world. The conventional and ordinary projects have hitherto been organised in professional silos which has made even internal interconnectivity difficult let alone external connectivity. Again, the continual and incremental change which may be a benefit of adopting the 3PI leadership model might only happen after there has been a structural and/or transformational change in organisational thinking. Perhaps those 500 million dollar overruns might prompt such a rethink!