The origins of Shell's "Greenwash" were back in 1997

In this article former Shell executive Paddy Briggs explains the background to the oil company's predilection for "Greenwash

Greenwash is in the news again as the oil companies are pilloried for the disingenuous corporate advertising they propagate in a naïve effort to boost their reputations. Shell has been twice criticised by the Advertising Standards Authority and BP and others have also outraged the environmental lobby by the sheer effrontery of many of their claims. But where did it all begin? Take a look first at this video on YouTube, and then I will explain!

The purpose of advertising is to persuade – usually to convince a consumer to favour your branded goods or services over those of your competitors. And a perfectly honourable profession it is as well – or I wouldn’t have spent quite a bit of my Shell career commissioning advertising campaigns! In essence the task was to find a way of differentiating Shell products in such a way that the motorist (in particular) went to our petrol stations rather than those of Esso or Caltex or Mobil. We always tried to find a genuine edge – perhaps in respect of the product quality, or the levels of service or the range of goods or the location and extent of our network. We were required, as every advertiser is required, to ensure that what we said in our ads was legal, decent, honest and truthful. Of course there was an element of selectivity in our message. If, for example, Shell did not have the largest network in a particular country or area then we might try and ensure that we gave the best service. This is the famous Avis pitch – we might not be number one but we are trying harder because we are number two! But if you do this you better deliver - the public is not a fool and if you try and bullshit them they will soon learn to ignore or discount your future messages! So the task was to persuade by telling the truth about what we offered – not the whole truth, perhaps, but the truth nevertheless. Verifiable, defendable messages that worked.

Corporate advertising is another game. Here you are not trying to sell a product or a service but you are still trying to persuade – usually the persuasion task is to raise your profile or enhance your reputation. It’s a different game – but the same rules and principles apply. The perception of your advertising must be a perception that you are telling the truth and also, and vitally, that the message is credible and relevant to the receiver. Whereas in product advertising you are seeking a purchase following exposure to the advertising in corporate advertising you are generally seeking not a direct response but an altered attitude. “Before I was exposed to the advertising I thought that Shell was only an OIL company but now I know that they are a big GAS company as well” (for example). Consequently there is often a greater degree of information dissemination in Corporate Advertising.

The oil companies have received a lot of bad press from environmental groups and others because the plethora of corporate advertising they have been indulging in for some time seems inaccurate, nuanced and highly selective in its content and themes. The term “Greenwash” was invented to describe this advertising. Having worked for over five years on corporate communications for Shell in my last assignment in the Middle East (and off and on in other locations before this) I think that nearly all of the criticism and the charge of greenwash is justified. All too often Shell’s advertising tells highly selective stories and half truths and makes bizarre and indefensible claims about aspects of Shell’s business. There are many examples but the concentration on Shell’s Renewables business (Solar, Forestry, Wind etc) was a particular case in point. Clearly the intention of this advertising was to try and persuade that Shell is not only active in renewable energy but is a serious player. Do you remember the “Forestry ad” where a Boris Becker lookalike “Shell project engineer” “has a thing about trees” and believes that in the future “half of our energy can come from renewable sources like…sustainable forests”. The tagline of the ad was that “Damian Miller works for Shell Renewables. What was once just a small research project is now a major business. One day it could be our biggest business.” That was in 2004 - but the business featured in the ad (Forestry) was disposed of by Shell in 2005 – so it didn’t become Shell’s biggest business – or even remain a Shell business at all!

When corporate advertising is as disingenuous as the Forestry ad it brings the whole genre into disrepute. But notwithstanding this debacle Shell has continued to make claims in its corporate advertising which are at best narrowly and deceptively selective and at worst just plain lies. That is why Shell has been wrapped over the knuckles twice in recent times by the Advertising Standards Authority for it misleading claims. But what was the original stimulus for this style of advertising and why has Shell persisted with it despite the tumult of “Greenwash” criticism? To find the answer to this question we need to go back to 1997 when Shell management was battered and battle-weary from the criticism that had been thrown at them after a series of events which had seriously dented their and Shell’s reputation. There had been, in particular, the debacle over the disposal of the offshore oil production platform “Brent Spar” and the almost simultaneous crisis resultant from Shell’s activities in Nigeria. In this benighted country a corrupt and despotic government had brutally judicially murdered the Ogoni activist Ken Saro-Wiwa, and Shell was accused of indirect complicity in this repulsive act of vengeance.

As a result of Brent Spar and Nigeria Shell’s probity, and the integrity and judgment of its senior staff, were brought into question. By coincidence the new leader of the corporation at the time was a man, Cor Herkströter, who was something of an outsider (he was not an oilman at all but an accountant inherited with the takeover of Billiton). Whereas the hard-headed oilmen who had traditionally run Shell might have weathered the storm Herkströter was cut to the quick by the criticism – much of which was personal. He launched an exercise which was designed to restore Shell’s reputation – an exercise which had the ambitious task of making Shell the “World’s Most Admired Company” (this even carried the acronym “WOMAC”). Extensive research was carried out amongst “key decision makers” and one of the conclusions was that Shell needed to present its image to the outside world in a more positive light.

One day Herkströter was introduced to one of the doyennes of British advertising and the man credited with the successful marketing of Margaret Thatcher – (Lord) Maurice Saatchi. Saatchi was always one for the main chance and bypassing all the usual brand and reputation management processes and people in Shell he persuaded Herkströter that Shell need to reposition itself as a company that was indisputably a force for good in the world. The Saatchi message was that progress in the twentieth century had been attributable to the global spread of the capitalist and free enterprise system - and because Shell had been a major player in this system then Shell must have been partly, even substantially, responsible for this progress.

So when Herkströter came to a meeting of senior executives of Shell in the summer of 1997 it was the Saatchi inspired message that he was selling to them. The brief video clip posted on YouTube culminates in a three-minute film, made by Saatchi, which presented the message about progress and Shell in an emotional way. It also introduced the idea that Shell’s core purpose (no less) was to “…help build a better world”. And that its corporate identity was that “The future is a better place”. There were many in Shell, particularly those of us who had had a long career in the Group and who specialised in brand and communications, who thought that Herkströter had lost his marbles. That most of his colleagues lined up to support him in this bizarre endeavour worried us as well. In the event some of the brand and reputation management advisers in Shell were able to tone down the worst excesses of the planned campaign but much of it went ahead anyway and the effects of it still linger.

What we witnessed back in 1997 was a commercial company trying to justify its existence not by pointing to the genuine fact that it was a world leader in the perfectly respectable activities of oil and gas production (etc.) for which it was famous. Instead we were exposed to a pitch that Shell was somehow a sort of a quasi benevolent organisation whose core purpose was not to make a return for shareholders over time (the real core purpose, of course) but to “help build a better world."

The communications proposed by Saatchi, and bought lock, stock and barrel by Herkströter were toned down somewhat and as a result at the time excessive ridicule was avoided. But the vestiges of this ill-thought-through campaign remain and can still be seen in the continued attempts to present the beneficial by-products of some of Shell’s activities as the reasons for them rather than as what they really are - indirect consequences. The speech-writers, the advertisers and the other corporate advisers need to reflect in the light of this history (which if they don't know it, they should study) that if you try to present yourself as something that you are not then you will be found out. Shell has been rumbled - and they need seriously to reflect on how they present themselves to the world in the future. The time of lies and obfuscation is over.

It pays to advertise - so why doesn't Shell hard sell V-Power?

Wally Olins, one of the most knowledgeable writers and thinkers on brand management in modern times, wrote back in 1989 in his seminal book on “Corporate Identity”, that “…oil companies are poor retailers.” The irony was that then, as now, the brand identities of Shell, BP or Esso were amongst the most ubiquitous in the market-place. Today with over 40,000 petrol stations in around 100 countries Shell is by some distance the most visible retail brand in the world. Other great and international retail brands like McDonalds or Starbucks or HSBC have recognised the power inherent in their brands and have ensured not only that their brand image is constantly renewed to be fit for purpose but also that it is extensively promoted in mass media advertising and other communications activity. Meanwhile Shell and the rest in the oily world only occasionally burst onto the media at all – and then with ever more questionable and disingenuous “corporate” advertising self-praising their green credentials or their capability for innovation and lateral thinking. Sadly such innovations never seem to be directed at their motoring customers despite the fact that there are countless millions of them visiting their myriad of retail outlets every day.

So what then should we make of the trackside advertising for “Shell V-Power” that you will see on television at the Hungarian Grand Prix and throughout this year’s F1 season? You may not know what “V-Power” is; it would be fairly surprising if you do. The brand is a brand of petrol that Shell would like you to buy and pay a premium for. Yes, that’s right, in a time when petrol prices are at a record high Shell would like you voluntarily to actually pay even more for your fuel every time you fill up your tank. At the time of writing you can buy standard unleaded petrol here for around 122p per litre or, if you wish, you can buy “V-Power” for around 131p per litre – a premium of around £5 per tank full. If you follow this link you will see Shell’s argument as to why you should do this.

Now I am not going to try and argue the merits of premium fuels - suffice it to say, that although my car will go perfectly well on standard fuel (as will all modern cars) I do pay the premium myself. This is because in my long Shell career I was impressed by the technological skills of our fuel development people and I do believe that V-Power is better for my car and that it provides performance advantages. Silly me? Maybe, but that’s my choice.

But back to marketing and to Wally Olins charge that oil companies are lousy retailers - which they are. What other branded retailer would have a premium offer at their outlets and not advertise or promote it? Shell has sorted the technology, the manufacturing and the distribution logistics to make V-Power available at their outlets in the UK and elsewhere in the world - but they hardly spends a cent in creating a “reason to believe” about the brand. Sure they will get some brand name recognition from their trackside advertising and from their point of sale displays on site. That is a necessary condition for the promotion of a differentiated product brand such as V-Power – but it is not a sufficient condition. If you want the punter to stump up nearly 10p per litre more for the premium in these difficult times then you absolutely must give them a reason to do so. You do this by presenting the benefits not on websites (helpful support though that can be) but with mass media advertising. The fact that you, gentle reader, may at best be vaguely aware of the V-Power brand is because Shell has never tried very hard to make you aware of it - and not at all to create brand preference for it.

Shell meanders on with its appeal to what it calls its “special publics” with its highly questionable and, I suspect, largely ineffective corporate advertising. Full page ads in The Economist don’t come cheap but every week it seems Shell is there promoting its green credentials. Meanwhile when it has, as I believe it has, a product in V-Power that many might choose to try if they knew about it they comprehensibly fail to give these people a reason to do so. No doubt V-Power sells a bit to folk like me who are either deluded or in the know. Meanwhile the rest of the petrol market sits low in the public’s esteem and it is simply a commodity that most people try and get for the lowest price whenever they can. And if they see Lewis Hamilton whizzing past a hoarding at the Hungaroring which carries the “V-Power” brand logo they might wonder what it is. If they do wonder then Shell won’t be telling them – which is why Shell and the rest of the oil industry have such deservedly low reputations as marketers.

The day we demolished a childrens' playground...

I’ve told this story before – but ten years on it may be due a retelling! Back in 1998 Shell was going through a top down generated change management process. This one was called “BFI” but I can’t for the life of me remember what the initials stood for. It had two main elements. The first was about measuring the business and trying to improve performance. The idea was that you “drilled” down to examine the business in minute detail to try and find your business strengths and weaknesses. Where did the money come from – or where did it go. It was a bit dull and a bit accountant led and rather micro in scale - but it wasn’t totally daft. The totally daft bit came from the other part of BFI.

We were supposed to bond better by revealing our feelings and aspirations as individuals - one member of one of the groups I was in was a Managing Director of Shell (he is now Chairman of a very big company). He removed his tie (the first time anyone had been him without neckwear in an office) and shared with is how his marriage had been in difficulties when he was GM of a Shell company years ago. Curious stuff and rather embarrassing. Anyway to bond us all better as a unit we had to go into the community to do “good works” one afternoon. The good works in our case involved the demolition of a perfectly good childrens’ playground in a small town in Holland. The playground had recently failed an HSE Test (although it looked pretty good to most of us). So it had to go. Quite why a group of middle and senior Shell executives had to demolish it I to this day have no idea.

It was a dreadful day – pouring with rain throughout and the playground resisted our efforts to reduce it to rubble. The swings and roundabouts were cemented hard into the ground as were the slides and the other play things. One of my colleagues, who was from Nicaragua, said that if the playground had been in Managua it would have been by far the best playground in the city. But here in Holland it had to go – and we had to send it on its way. It was an utterly pointless even offensive thing to do. Most of us were not in the first flush of youth and certainly unused to too much physical effort (away from a golf course bunker that is!). And the pouring rain drenched us all and turned us from puzzled to angry – as well as wet. Did this farrago achieve its objective – did we bond better as a result. I very much doubt it. Did our opinion of senior management increase at the end of this utterly senseless day – what do you think?

Shell walks away from its drivers - and from its customers as well

One of the modern shibboleths that businesses seem to worship is that of "contracting out" wherever possible - hire an outside contractor when you need to rather than managing that activity yourselves, especially when that activity is problematic in some way. But what if that activity is pretty crucial to your business and what, even more importantly, if it is crucial to your reputation?

Here in the UK the tanker drivers who deliver to Shell gas stations are striking but Shell, which walked away from involvement in oil product distribution years ago when they sacked their drivers and "contracted out", is powerless to help resolve the problem. The drivers work for independent contractors and neither these contractors nor the drivers owe any loyalty at all to Shell. In the past the drivers were Shell employees. Sure there were industrial disputes but in my experience the drivers and other blue-collar workers were part of the Shell family in the UK and essentially loyal. Within Shell there was an expert team working on Industrial Relations whose task was to understand the needs and aspirations or unionised staff and to dialogue with their representatives. I'm not saying that it was a golden age, but at least there was a forum for debate and discussion and at least we were all in receipt of a Shell pay cheque at the end of the month. That all went when Shell stopped employing drivers and the basis of a dialogue just does not exist any more. Shell may be talking with the contractors' bosses - but I doubt that they are talking with the drivers or their representatives.

So why has Shell walked away from employing drivers and abrogated responsibility for managing the product distribution process? Why has this supremely rich and immensely powerful multinational decided that its customers, motorists and others, can be abandoned and that it can walk away from the responsibility of ensuring that the products that Shell sells them will actually be delivered? Why has the great God of "contracting out" been worshiped whereas the principle ("Business Principle" indeed!) of the need to look after your customers been abandoned? When I was a Sales Representative more than thirty years ago my wise boss told me that a sale has never been made "Until the product has been delivered and it has been paid for." Shell seems to have decided that delivery can safely be left to someone else.
To understand the dogma that is driving this management imperative in Shell I have told the story about how it applied some years ago I was working for Shell in Dubai. In Dubai there was a small but successful downstream (marketing) operation. This was a fairly conventional business involving the marketing of a wide range of petroleum products to a variety of different customers across the United Arab Emirates. A key element of this business was, and always had been, the operation of a product distribution/transportation activity involving oil depots, vehicles and drivers. For more than thirty years this business had been built up as a professional, cost-effective and customer focused operation. It also had an admirable safety record (in a high-risk area) and the staff of thirty or so tanker drivers were a loyal, skilled and motivated team.

In the late 1990s Shell’s Central offices sent a new Distribution man to the region and, operating out of Oman, he visited Dubai charged with the responsibility of "outsourcing" the transportation operation. When challenged by me and others in the management team in Dubai as to why this was necessary he said that it was now "company policy" to outsource this business (i.e. to sack the drivers and sell the vehicles). A number of us were incensed by the insensitivity of this and we demonstrated that not only would no cost savings occur but that we would be needlessly disposing of the services of a team of loyal and skilled drivers each of whom was proud of his personal safe driving record and a motivated member of the local Shell family.
Well the battle raged on for a while with the argument that to go arms-length in an area as safety sensitive as dangerous fluids distribution was bad practice – especially as no possible cost savings would result. Furthermore to dispense with the services of the drivers many of whom had up to thirty years service hardly sat well with "Corporate Social Responsibility"! But this was ideology at its most sinister. The man from Oman had on his "scorecard" the target of outsourcing in Dubai. If he succeeded his remuneration would benefit – as well, of course, as showing that he was a loyal implementer of the new edict. He didn’t care one jot about the employees or their futures – all he cared about was showing himself off in a good light. Well we did fight on but in the end we lost. The drivers were sacked and the operation was outsourced. The irony of this story is that there was no financial benefit to Shell at all from the decision. Outsourcing (in this instance) wasn’t cheaper – it was simply the application of a dogma!

The ideology that Shell follows in its ignorant obsession with contracting out is, of course, the fantasy that such a practice will always reduce costs. The requirements of the customer stakeholder (who would wish to see no interruption in the supply of the products he buys) or the employee stakeholder (who would wish to offer his labour for adequate rewards and security of employment) are subordinated to the ambitions of the management apparatchik who wants to show his "skills" and loyalties to the new ideology by sacking staff (reducing costs) and contracting out. But the more arms-length an activity becomes the less control that you have over it. In negotiating contracts far and away the most important component will be how much it will cost - standards are inevitably secondary. So how a contractor treats his drivers (especially how much he pays them) is, of course, a matter for him not for Shell. And the contractor knows that the less he pays his drivers the more chance he has of getting or retaining the Shell contract. And drivers are two a penny aren't they - and who needs loyalty as long as the driver has a licence and can do the job?

© Paddy Briggs

June 2008

Shell's non-executive director's failure of his duty of care

The British Institute of Directors says that "…the non-executive director's role is to provide a creative contribution to the board by providing objective criticism." Well "objective criticism" was distinctly absent from the non-executive directors who appeared at the Annual General Meeting of Royal Dutch Shell plc this week. To be fair Jorma Ollila, Shell's Chairman, handled the meeting skilfully, although he rarely ventured into comments about the business. But the others were either almost completely silent or, in the case of Sir Peter Job (right), seriously inept in what they said.

Maarten van den Bergh, a former Managing Director of Shell of course, must have struggled at times to hold his tongue as his erstwhile colleagues sometimes floundered or were particularly 'economical with the actualité' And Lawrence Ricciardi might wonder about his one contribution, which was to say, as I recall, that he "hadn't foggiest idea" to the one question referred to him. Wim Kok could also have enlightened us rather more about his views on Shell in Nigeria instead of just referring us to the answer he gave at last year's AGM. And what is the point of having people like Christine Morin-Postel and Nina Henderson at the meeting if you don't actually ask them to say something? Presumably they were just passing go to collect their £200.

But it was Sir Peter Job who was the Non executive "star" of the meeting (I use the word "star" ironically). Job is on the Shell board with a primary role for overseeing the integrity of senior executive remuneration. Quite what qualifies Sir Peter for this onerous, but well remunerated, role is unclear but shareholders at the Annual General Meeting of Royal Dutch Shell had a good chance to see him at work on this subject. He bluffed and blundered to little effect and showed precious little understanding of the issues. There was absolutely no justification given for the scandalous "retention bonuses" and a series of oxymoronic non-sequiturs from the well-upholstered Job did not lead to one. The bonuses are designed to keep the three executives (Malcolm Brinded, Linda Cook and Peter Voser) in the company, but, Job assured us, they are all uber-loyal to Shell and have no intention of leaving. Hmmm! Work that one out!

And Job's justification for the fat cat gravy train was interesting (and ignorant) as well. He frequently mentioned Shell's record profits as a reason to reward the Board so handsomely. But, as any fule knows, oil company profits in the short and medium term are almost wholly dependent on the movement of the oil price - a factor over which no oil company CEO or Director has any control at all. Finally the revelation that the high-priced help got a substantial bonus despite not reaching their target to be number 3 in the multinational oil performance tables (Shell was fourth out of five) showed what a farce the whole thing is.

Sir Peter Job is the conscience of the shareholders as a non-executive Director in respect of the matter of remuneration. A huge number of shareholders have rapped him and Shell hard over the knuckles and many will now call for him to walk the plank.

The Tragedy of Corrib

The Tragedy of Corrib

by

Paddy Briggs

“The Tragedy of Corrib” is a twenty page personal analysis of the main issues surrounding the controversial Corrib natural gas project in County Mayo, Ireland. The analysis is not a technical one but revolves around the management of the external and community relations aspects of the project from its inception to 2008. The report is a frank assessment of the mismanagement of some aspects of the project by Shell and others, which led to the infamous jailing of the “Rossport 5” in 2005. The report makes some recommendations as to how a resolution of the difficulties of the project might be achieved. Paddy Briggs draws on his long experience as an executive with Shell (37 years) and his specialist knowledge and professional understanding as a commentator on reputation and issues management.

To find out more and/or buy the book click on the button below:

Shell pulls out of Wind Farm project

Sometimes Shell’s actions are so extraordinary that you wonder if the announcements that they make are a wind up – thrown into the ether just to see what might happen. The withdrawal from the “London Array” wind farm project is just such a decision. I know nothing about the business plan for this project except that I doubt that there were any “unknowns” which have suddenly become “knowns”. Indeed Shell’s statement that the decision is a consequence of an "ongoing review of projects and investment choices" suggests that they just went off the idea – as they have with so many other non traditional business ventures over the years. Shell’s definition of their “core business” becomes narrower and narrower over the years – step-outs into Renewables being walked away from with the same disregard for their reputation for veracity as many of the previous wimp outs.

As an ex-employee, pensioner and small shareholder I have consistently argued that unless Shell is really prepared to diversify into alternative energy wholeheartedly then they really shouldn’t bother at all. The track record of management success at anything but the oil and gas business is deplorable – so why bother? But as a commentator on brand and reputation management I find Shell’s mismatch between rhetoric and reality a continuing and monstrous disgrace. Remember the “Say No to no” ad shown here? I thought when it was launched a few months ago that it was deceitful, self congratulatory and facile. The wind farm decision is sadly not the only example which proves my point – what is Shell doing but saying “Yes to no” with this walk away from wind energy? But it gets worse.

The latest so-called “Shell brand campaign” featuring the disingenuous “Clearing the Air” campaign about which I have written before on this Blog is apparently a new initiative designed to communicate “What Shell stands for” - the campaign material states what this is:

SO WHAT DOES SHELL STAND FOR?

We are positive about energy
We are anti-complacent
We are creative, persistent problem solvers

So let’s take a look at the withdrawal from the wind farm project about which Shell UK Chairman James Smith boasted less than eighteen months ago: "The London Array offshore wind farm will make a crucial contribution to the UK's renewable energy targets. " Is this withdrawal being “Positive about energy”? Isn’t the abandonment of the project so precipitously extremely “complacent”? Can’t Shell be seen not as “creative, persistent problem solvers” but as mendacious knee-jerkers who when they encounter the unknown or the uncertain they run like hell for cover?

As I have said before I don’t really mind what Shell does as long as it is legal and in the interests of their stakeholders. What I vehemently object to is when they fail to walk the talk. When they promulgate bullshit in their brand campaigns about innovation and creativity when the reality of their business decision-making is anything but creative, original or innovative. It’s not the most elegant phrase to use but it seems appropriate – come on Shell “Cut the crap”.


© Paddy Briggs
May 2008

Shell's Brand shame

Shell’s Brand shame
By
Paddy Briggs

Take a good look at the photograph. What do you see? It’s a Shell petrol station, of course, and easily recognisable as such but when do you think that the photo was taken? If you said sometime in the 1970s or 1980s you would be logically correct. The visual style of the site is certainly that of an era some twenty or so years ago. Indeed professionals in the area of petrol station design, Shell brand management specialists and quite a few customers as well will recognise an identity from the past - one that was superseded by a new more modern identity more than a decade ago. But this is not an archive photograph – I took it a few days ago (April 2008) in New Zealand as I was driving to Auckland on the main East Coast road in a small town called Paeroa. Now you may think that it is a bit peculiar, even rather tragic, for an ex Shell executive, retired nearly six years, to want to photo petrol stations whilst on holiday in New Zealand. Let me explain.

For five years from 1990 to 1995 I was the project manager for the largest brand repositioning project ever undertaken in the oil industry. It involved the development of a new visual design system for implementation on all of the more than 40,000 Shell petrol stations in 120 countries. Research had shown that the then current design (known as VM2) was outdated and uncompetitive and that a radical redesign was necessary. This new design (called RVI) was introduced in 1993 and gradually implemented around the world over the next few years. Key elements of the new design included the representation of the Shell emblem (known as the “Pecten”) on a white background, the introduction of new colours, including a brighter and fresher red and yellow, and the replacement of the old logotype (the way that the Shell name is written on the canopy) with a much more modern font style. There was also a completely new signage and visual system which included a curved canopy edge and extensive new elements across the site. If you go to a Shell petrol station anywhere in the world today it is this new “RVI” design that you can mostly expect to see – it became the “new” standard fifteen years ago and was a significant success winning accolades in the design industry as well as boosting Shell’s competitive position significantly.

Back to New Zealand. As I drove around the country recently I realised that not only had RVI been implemented poorly with non standard design elements having been used (including a completely non standard “Prime sign” – the sign you see from the road) but that in many cases it had not been implemented at all – including the photographed site in Paeroa! What you see in this photograph is a site which conforms well to a design system (VM2) which was withdrawn fifteen years ago. The canopy, the way the “Pecten” is presented, the logotype are all from the 1970 – outdated, uncompetitive and long since not current as Shell’s brand identity. And this petrol station in Paeroa was not the only site of its type I saw in New Zealand – there are many others which sit firmly in the past. And it is not some sort of “heritage site” either – a deliberate and considered decision to keep a site in its old identity for nostalgic reasons. So what is going on? Shell might like to comment but I think that I can easily get to the heart of the problem without their help, but first why does it matter?

There are two inseparable aspects of the design/visual identity elements of a brand – they must be fit for purpose and they must be consistently applied. It doesn’t matter whether we are talking about a Coca Cola can or the livery on British Airways planes or the “Starbucks” brand name and colour system (or that of almost any other global brand) you have to get in right and you have to apply it with rigourous consistency. And when you change a design you have to apply the new design as quickly as possible and with a non-negotiable adherence to the agreed standard. In a company like Starbucks or Coke which are customer driven this happens without question – these great corporations wouldn’t be successful if the customer was not in the minds of everyone from the CEO downwards. But in the oil industry, and sadly particularly in Shell, this just doesn’t apply. Despite Shell being a huge branded retailer (there are more Shell petrol stations in more countries than there are Starbucks or even McDonalds outlets) Shell is today quite hopeless at brand management – scandalously so.

The Shell business imperatives are, as we know, not customer driven at all but are overwhelmingly concerned with exploration and production of oil and gas (the “upstream”). The board of Shell is rarely concerned with marketing matters and the customer barely gets considered at all at the top. Wade through Shell’s most recent Annual Report and see now much of the focus in it is on the customer or the Shell brand. Not a lot. Combine this with an almost complete absence of marketing experience and capability amongst Shell’s most senior management and an obsessive cost control mindset and you perhaps begin to understand how brand neglect of the type on view in New Zealand can happen. Join this to cost driven organisational changes which mean that key marketing decisions in respect of the New Zealand market are no longer taken locally but outside the country (in Australia and elsewhere) and you see that there is really no place in today’s Shell to apply the “All markets are local” imperative which all good marketers know to be true.

Branded marketing has always to be placed in a competitive context and it is important to record that in New Zealand Shell’s main Retail competitors (Caltex, BP, Mobil and local companies like Gull) look far better than Shell and certainly have more consistently applied visual identity systems. Shell’s appearance is shambolic and shameful – a disgrace for which there is no excuse and an insult to those of us who strived to give the Shell brand a global competitive edge all those years ago.

Finally let me say that whilst Shell New Zealand’s Retail network is a dire example of how a corporation that increasingly seems to have lost its way can utterly neglect some of its stakeholders (whilst, of course, proclaiming otherwise in its PR output) it is of course not the only one. I am aware that there are other countries where Shell operates in Retail where the implementation of RVI has been scrappy and incomplete and where the maintenance of good brand standards on site has been the victim of the application of cost minimisation mantras. I have argued in the past that the only solution is entirely to split marketing away from the rest of the Shell businesses and set up a completely separate Shell Marketing company which would be led by marketers, who know what they are doing, and within which there would be a culture which puts the brand and the customer first. Shell in New Zealand is a living example of why this is so necessary and what happens when the brand and the customer is forgotten.


© Paddy Briggs
April 2008

An extended version of this article will be published in April 2008. For details please visit the http://www.brandaware.co.uk/ website.

Happy Birthday "SITME"

One of the more satisfying initiatives that I was involved with in the latter part of my Shell career was the launch and management of the magazine “Shell in the Middle East”, popularly known internally as “SITME”. The intention of the magazine was to promote Shell in the Middle East and we put together a substantial mailing list of recipients across the region including not just the top decision makers but also those in influential executive positions in the public and private sector. The magazine was published in separate English and Arabic editions and it had a clear editorial philosophy. This philosophy was to let our partners, customers and other external stakeholders speak for us in the articles of the magazine – not to use it as just as an opportunity to boast about ourselves! The logic was that in an increasingly “Show me” world we would be more believable if we ensured that it was those who knew us who spoke about us. This seemed to work well and the magazine, under the skilled editorship of Bobby Schuck and his wife Sue (both highly experienced and skilled journalists) the magazine went from strength to strength – it has just celebrated its tenth anniversary and 40th edition.

SITME was deliberately different not only from other more overtly PR style magazines elsewhere in Shell but also from anything that the Middle East region had ever seen before (or since). The dead hand of corporatism was kept away from SITME and I and later Managing Editors were able to pursue a style and agenda that was distinctive and appropriately designed for its task. I hope that SITME will continue to flourish in a Shell world that is increasingly dirigiste and centralised and that its uniqueness will continue to be valued. Happy Birthday SITME!

More on "Clearing the Air"

“Clearing the Air”

Further thoughts on Shell’s misleading advertising

My recent article criticising Shells’ “Clearing the Air” GTL advertising campaign has generated a (mostly) healthy debate here and there. I hope that those who have criticised my piece are now satisfied (a) That there are no inaccuracies in it (b) That I am certainly not anti GTL or anti any other development which will mean improvements to our well-being and to the environment in the future. But as someone who has been active in the world of advertising and communications for more than twenty years I believe that it is legitimate that I pass judgment on advertising which is as ill-thought-through and as misleading as this campaign.

To add to what I have already said about “Clearing the Air” let me quote and comment on the copy of the TV commercial (TVC) currently running in the UK. The copy runs as follows:

“As the air in the world’s cities becomes more polluted are we running out of options? To help solve problems like these we need creative thinkers with different ideas. Like starting with cleaner Natural Gas not Oil to create a gas to liquids fuel. Find out how one company [Shell] is helping to reduce city emissions by up to 40% on diesel vehicles.”

There is also an on screen caption at the end of the TVC which says:

In cars tested to May 2007 the typical range was 26% to 40%.

Let us just dissect this copy and how why it is misleading. The intention is to suggest strongly that the reason for the development of GTL technology by Shell was to “…help solve problems” like the fact that “the air in the world’s cities becomes more polluted”. The reason for the development of GTL technology was to produce middle distillate products from Gas in those (very) special situations where it was felt that conventional Gas reserves exploitation could be augmented by the conversion of some of the Gas to liquids – and where such conversion could be economic. The only commercial scale plant in operation at present is the 14,700 barrels per day facility in Bintulu Malaysia – this is equivalent to less than 3% of Malaysia’s total oil consumption. Whilst it is true that if the GTL product is consumed in Malaysia then it could perhaps have a miniscule effect on air pollution - but 97% of Malaysia’s growing oil consumption will be of conventional oil products from oil refineries. Malaysia’s annual growth in oil consumption far exceeds the annual production of the Bintulu plant.

In a few years time the much larger Qatar GTL plant will come on stream and this will produce 140,000 barrels per day. This will be roughly equivalent to Qatar’s total oil consumption in 2010 so it is reasonable to assume that much of the product will be consumed in Qatar – although some will have to be traded (no gasoline will come from the GTL plant so this local demand will continue to have to be ex-oil refinery). The traders will no doubt try to secure a price premium for the environmentally friendlier NGL middle distillate compared with conventional gas oil. If we look at this at a Middle East level then in 2010 the region is expected to consume 12.2 million barrels per day of oil in that year so the Qatar plant, if it is on stream by then, could provide just 1% of regional oil consumption if it is all sold in the region (including in Qatar). 99% of the Middle East regions’ oil consumption will be of ex-refinery products.

I mention these figures just to illustrate how misleading Shell’s advertising is. The claim is that Shell’s GTL “…is helping to reduce city emissions by up to 40% on diesel vehicles.” At a micro level this is no doubt true. Any one vehicle does perhaps indeed produce 26% to 40% less emissions on GTL compared with conventional diesel. The point is that there are hardly any vehicles on the roads anywhere in the world doing this and this will remain the case for the very long term indeed! Even in Qatar the beneficial effect will be small and across the Middle East region as a whole (if that is where the product is sold) it will be negligible.

GTL is a good thing and it would be churlish to deny that over the very long term it will have a place in the world’s oil consumption mix. But the “Clearing the Air” advertising wishes to suggest that Shell is at present “helping to reduce city emissions by up to 40%” with GTL - this is simply not true! Even in Malaysia where the only producing plant is operating the production is so small as to have no measurable effect.

Advertising has to be “Legal, decent, honest and truthful”. “Clearing the Air” fails this test – Shell should withdraw the campaign.


© Paddy Briggs February 2008

"Clearing the Air" Who is Shell kidding?

If corporations, especially energy giants like Shell and BP, ever wonder why they are vilified by environmentalists and accused of “Greenwash” one objective viewing of the latest Shell film “Cleaning the Air” should tell them why. This highly professionally made paean to the virtues and responsibility of Shell shows the company seemingly single-handedly trying to solve the problem of city air pollution is a misleading farrago of half-truths and lies. Let’s get out of the way first the overtly “romantic” undertone of the film as handsome young twenty-something male Shell scientist Theo eyes up and then chats up a gorgeous young sceptical female colleague whom he eventually convinces (business-wise anyway) by delivering synthetic diesel fuel for some taxis at the 2004 Athens Olympics. I suppose that the intention here was to show that Shell employs human-beings with all the foibles and fantasises that we all have. The misty images and stolen glances of this embryonic romance, brought to earth (or maybe not) by the revelation that the young woman has a daughter, is as facile as it is irrelevant. If I want romantic escapism I’ll watch a Richard Curtis film thanks.

But it is the false premise of the film, not its soppy story line, which most offends. Theo we are told has a job which requires him to “tackle the problem of city air pollution”. What nonsense! Nobody in Shell has such a job – it’s not what a multinational energy company is for. Tackling cities air pollution is the responsibility of city political leaders or national governments - even supra national bodies like the EU, but not oil corporations whose sole raison d’être is to deliver value to their shareholders. If a consequence of developing Gas To Liquids (GTL) programmes is that gradually the air in cities will become cleaner than that’s good news for all. But Shell’s driver in its GTL programme is not environmental it is commercial. If there is money to be made in GTL then Shell will be in it – if not, not. Period!

The mendacity of the film “Cleaning the Air” is the clever proposition of the premise that Shell is in the GTL business because it cares about pollution. Aside from the convoluted logic which allows any anonymous corporation to have feelings at all there is no evidence that Shell has ever or will ever take a major business decisions for purely environmental reasons – and it is preposterous to imply that the main driver of the GTL business is environmental. The stakes are too high and the costs too massive for there to be anything other than a cool business driver behind Shell’s GTL programmes. That’s how it is and that’s how it should be - for GTL to fly there has to be a hard-nosed evaluation of costs against benefits. So in the Qatar project (140,000 barrels per day of GTL products) the project planners will have satisfied themselves that it makes economic sense to convert a small proportion of the State’s huge gas resources into middle-distillate – principally, I suspect, for local consumption as gas oil and diesel fuel. Little if any of this synthetic distillate will find its way outside of Qatar and there will be no measurable benefit on city air pollution. I don’t recall the small city of Doha being particularly polluted anyway - although the fact that a by-product of the plant’s production of GTL fuel is that it will be a bit less so is to be commended – I suppose!

The facts are that GTL is only an option where there are massive gas resources and where the conventional uses of gas are limited or non existent. Gas is mainly used for electricity generation or space heating in the developed and (mainly) northern hemisphere world. It makes no commercial sense to convert any or Europe’s gas to liquids, for example, when there is a growing conventional demand for all the gas that Europe produces. The same applies in North America. It is true, I guess, that is possible that a Government in a European country could offer subsidies to encourage automotive GTL use rather than refinery fuel. But it’s not very likely is it – certainly in the short to medium term?

The 2004 Athens Olympics “GTL in taxis” exercise was no doubt useful to show some people that it is possible to covert gas to synthetic diesel and to run diesel cars on the liquid. But it was not a commercial venture it was a PR stunt. How many cars in the Greek capital today run on GTL fuel I wonder?

Of course much of advertising is designed to accentuate the positives and eliminate the negatives in products, services or businesses. Most of us have a fairly sceptical reaction to advertisers’ messages and a live filter to stop us being fooled. But “Cleaning the Air” is a pretty mucky example of the corporate communications advertising genre. It suggests, implies, and hints at things that are simply not true. There is no likelihood of GTL being a significant factor in any of the world’s most polluted cities for the foreseeable future. That Shell has the technology to produce GTL is commendable and there are some very clever people involved. That Shell has solved the horrific problems it encountered in its small Malaysian plant is excellent as well. But as one authorative source, “Chemlink”[1], has said

“It is clear that the commercial success of GTL technology has not yet been fully established, and returns from GTL projects will depend on projections of market prices for petroleum products and presumed price premiums for the environmental advantages of GTL-produced fuels.”

Price premiums will come only if governments specifically offer consumers and businesses advantages if they choose synthetic fuel over normal refinery fuel. Such a development is a long way away and except in very special circumstances it may never happen. So for Shell to develop a whole advertising campaign around something that is at best tiny in its impact for the foreseeable future is disingenuous in the extreme.

© Paddy Briggs February 2008



[1] http://www.chemlink.com.au/

Response to article in The Guardian by Jeremy Leggett

Response to article in The Guardian

http://www.guardian.co.uk/commentisfree/story/0,,2252581,00.html


Jeremy Leggett makes some excellent points in this article and he is quite right to draw attention to the continual failure of Shell and other oil multinationals to invest in exploration and production. Shell’s continued affection for buybacks and BP’s recent massive hike in dividend payments show that it is the stockholder stakeholder who is the most favoured recipient of largesse. Cash “given back” to shareholders is, of course, cash denied to capital investment or to other potential beneficiaries such as employees, pensioners or the community at large.

This is not a temporary phenomenon - there has been a strategic shift in the industry that is irreversible. The power which was once in the hands of Exxon, Shell, BP and the others has shifted almost entirely to the National Oil Companies (NOCs). Remember that the growth of the oil industry was characterised by a corporation like Shell having skills and resources that the countries with the hydrocarbon resources lacked. So Aramco, Nigerian National Petroleum Corporation (NNPC), Petroleum Development Oman and the rest were established on the basis that the western oil company brought the technical expertise and the funding and the NOC partner was essentially a sleeping partner who simply banked their share of the income streams. Those days are long gone and whilst there will still be some areas where the multinational is the prime mover the shift to the NOC is almost complete everywhere. In Nigeria Shell is expected to lend NNPC the funds to cover the State's share of the budget of SPDC, the joint venture E&P company and this may shore up Shell’s position in that country in the short term. But Nigeria is the exception and with oil prices at $90 a barrel most NOCs have income galore to make them largely independent of the multinational giants.

So the model for the future is the oil-poor world continuing to grow economically but needing oil and gas imports to fund that growth – the United States the largest and most obvious example. The western oil companies will continue to exploit resources in their western homelands – increasingly non-conventional resources such as the Canadian oil sands. But their traditional role as explorers and producers in the rest of the world will swiftly decline (as it already has substantially) because the NOCs frankly don’t need their help any more. In many cases the NOCs already have as much expertise as the multinational companies that they used to rely on. Where that expertise in a particular technical area is missing then the NOC can buy it in from (for example) a Schlumberger rather than being forced into a partnership with an oil company. Existing partnerships, such as PDO, may well continue for a while but once the new generation of leaders in Oman begins to take power it is not conceivable that they will continue to tolerate a situation under which a substantial proportion of their revenue streams from oil and gas go not to their own people but to western companies - primarily Shell.

Jeremy Leggett is one of the pessimists who argue that oil production is close to peaking and that as a result the western world’s over-dominance on hydrocarbons will imperil their economic future. However when he says that the National “…oil and gas producers are going to start keeping what remains for themselves in an effort to feed their own economies” he is being disingenuous. Whilst some of the major resource holders do indeed have large populations and large economies (North America and Russia in particular) in the main reserves are concentrated in countries with small populations relative to their hydrocarbon wealth - Saudi Arabia, Kuwait, the United Arab Emirates, Libya, and Qatar in particular (these five countries have 40% of the world’s proven oil reserves between them). In addition other major resource holders such as Iran, Iraq, Venezuela and Nigeria are likely to remain substantial net exporters for a very long time as their economies are comparatively undeveloped and not very energy intense.
I would draw rather different conclusions than Mr Leggett from his analysis. I agree that the multinational oil companies’ days are numbered and suggest that they will have to institute further consolidations and mergers to survive at all. They are also highly vulnerable to the more sophisticated of the NOCs who might envy the multinationals’ downstream strengths and try and acquire these refining and marketing assets. There are also political attractions for (in particular) Russia to use their financial muscle to swoop on Shell or BP – what pleasure that would give Mr Putin! However the main changes in the next couple of decades are likely to be a growing strength of the OPEC producers and their diversification (using oil revenues) into other business areas around the globe. The most entrepreneurial of the oil rich states (with the UAE in the lead) are well underway with their strategy of using their financial (oil driven) strength to acquire a range of non oil assets in the west.

There is a case to be made that the principal challenge for the west for the foreseeable future will not be how to cope with “peak oil” but how to cope with the shift in control from the old world in which the multinational oil companies played a significant part to the new world where both the control of hydrocarbon assets and, increasingly, other core businesses is in the hands of a small number of increasingly powerful new players – especially in the Middle East and North Africa. That will be a political challenge for the nest US President – perhaps his (or her) principal one.


© Paddy Briggs February 2008

The perils of mediocrity

“Thrusting mediocrity rises to the surface in almost every sphere”

This is a quote from Tariq Ali who was writing about characters in Anthony Powell’s “Dance to the Music of Time” - but it struck me immediately as being very true of Shell today.

When I left Shell after 37 years back in 2002 there were a number of colleagues much younger than me who I rated and respected and who I thought were the future of the oil giant. Almost without exception they have left the corporation over the last few years. To illustrate the point I will pick out two of them but, to spare their blushes, I will keep their names anonymous!

Michael

Michael is twelve years younger than me but before he was fifty he had already run four big Shell businesses – three as Chief Executive overseas and one global business. Michael is seriously bright, well-educated (MBA etc.) and creative and original. He performed exceptionally well – all of the businesses he ran delivered good results. He left because of his growing contempt for Shell’s senior management who he saw as greedy, short-sighted, conniving, unprincipled and not very competent. Michael now runs a FTSE 100 level company in the UK. In a few years he could have been running Shell – but he isn’t mediocre enough!

Charles

Charles is almost a generation younger than Michael but, like him, very clever and ambitious. When I first got to know him he was in his twenties and already MD of a Shell subsidiary in the Middle East. I worked with him when he was in this job and admired his originality, hard work, loyalty to his staff and superb relations with stakeholders in a difficult environment. He was pitched in at the deep end in this job and did exceptionally well. I thought Charles to be one of the highest potential young people I had seen in my time in Shell. But, like Michael, Charles become disillusioned, and for largely the same reasons. In addition he did not feel that his career was being thoughtfully managed and as a high flyer, and still only in his thirties, he felt that the prospects outside were better and he too left. Like Michael he was not mediocre enough to stay.

The point about both these stories is that Shell should have bent over backwards to look after two very able people and they didn’t. And they should have realised that the changing culture of the company, which so alienated Michael and Charles, would be likely to alienate others as well. I hear that it has - and I know of at least ten other examples of good people who have left prematurely because they couldn’t stand it any more. Very sad.


© Paddy Briggs February 2008

Running out of oil ?

We'll begin to run out of oil in 7 years, says Shell

See: http://www.express.co.uk/posts/view/32789/We-ll-begin-to-run-out-of-oil-within-7-years

Plus ça change! When I was in The Netherlands in the early 1980s I sat on the Energy commission of the Ministry of Economics as Shell’s representative. There was much debate at the time over the high levels of profits that Shell was making from its (part) ownership of the Groningen gas reserves. Part of Shell’s defence of these profits was that the reserves were finite, that much investment had been made upfront, and that, therefore, it was legitimate for the company to get a good level of financial return. The key variable in this argument was the extent of the reserves. Obviously Shell’s argument to be allowed to secure high levels of return on capital was boosted if the reserves were estimated at a lower level - the higher the actual reserves then the longer they would last and the longer that Shell’s profit streams would last as well. Shell’s reservoir engineers and others assessed the Groningen reserves at a particular level and published their estimates. Shortly after this the then Professor of Energy Studies at Erasmus University in Rotterdam, Peter Odell, went public saying that Shell and other oil majors consistently underestimated hydrocarbon reserves. His argument, as I recall it, was that insufficient attention was given by Shell to future scientific and technology advances that would allow difficult reserves to be tapped or would turn uneconomic reserves into viable ones.

Given Shell’s more recent propensity to over-estimate rather than under-estimate reserves the Groningen story is somewhat ironic! However the substantive point of Odell’s argument remains valid and he was certainly proved right over Groningen where Shell’s estimates of the early 1980s have proved to be huge under-estimates. Odell knew that it was in Shell’s interests to preach a pessimistic credo about Groningen – and it is in Shell’s interests to continue to be pessimistic about reserves at a global level. Why? The main reason is the same as it was back in the 1980s – the wish on the part of the Oil majors to avoid the imposition of windfall profits taxes. The three largest oil companies (Exxon, Shell and BP) made nearly $60billion in profits over the last year between them (Shell $18.2billion). With oil continuing to be priced at around $90 these levels of profits are pretty much assured for the foreseeable future. Shell argues that it is up to governments to support diversification away from traditional energy and is looking for subsidies to develop its Renewables activities - again this argument is reinforced with a doom and gloom scenario over reserves in relation to increased demand. Similarly Shell has a huge potential profit stream from the development of its oil sands projects – especially in Canada. These projects are controversial for environmental reasons but permissions to proceed can be expected to be easier to obtain if legislators are worried about future energy supply security.

History teaches us that man has an almost infinite capacity to innovate – not least where hydrocarbon production is concerned. High oil prices are a driver of innovation and this, when combined with the certainty of increased global oil demand and the near-certainty that energy use throughout the 21st century will continue to be dominated by hydrocarbons means that we can expect the spur for innovation to be high and the technology effects on production to be considerable, if unpredictable. But to suggest that “We’ll begin to run out of oil within 7 years” as the Shell-inspired Daily Express headline suggests is nonsense and alarmist. Calculated self-interest is at play here and nobody should be fooled by it.

© Paddy Briggs January 2008

Making it green and keep them clean

Comment on article in The Guardian:

http://www.guardian.co.uk/media/2008/jan/21/marketingandpr


This is a timely article, and of course the ASA was right to castigate Shell for its particular lie about CO2 and flowers. But really this was just a trivial little porky pie in the context of the mendacity of much of the oil giant’s corporate adverting in recent times. Shell is not alone in this of course, but there is a special offence given when the facts of the company’s business – facts which are open for all to see – are glossed over and instead we are subject to a barrage of greenwash on a daily basis.

Having worked for Shell for 37 years I know what the business imperatives are – and I wouldn’t have stayed so long if I didn’t think that these imperatives were perfectly honourable. It shouldn’t need saying but here is a précis of what those imperatives are. Around 99% of Shell’s efforts are focused on the search for, and the discovery, harvesting, transporting, processing and marketing of oil and gas - hydrocarbons from that diminishing stock of geological formations under the ground. That’s what Shell does, what drives their profits and what they are, in the main, very good at. It is fantasy to suggest that that there is any other strategy than the continuation of this business – this is the business! Now Shell likes to operate cost-effectively so there is a bias to ensure that waste is reduced as much as possible – but only if it makes economic sense – not because there is a spurious corporate conscience. So flaring (for example) is reduced primarily because it is waste of assets. But where the costs of reducing flaring exceed the benefits then it doesn’t happen – unless legislation says that it must. Technically Shell could have eliminated flaring in Nigeria years ago – but the cost/benefit analysis didn’t give the right numbers. So they dragged their feet.

Let’s look at processing – for example in refineries. The imperative to reduce waste is an economic one – efficient refineries are those which do not waste fuel. So reducing the amount of energy needed to refine a tonne of crude oil is primarily an economic issue. Shell does avoid waste because it believes that it is environmentally irresponsible not to do so. It does so because the bottom line benefits.

Finally the old chestnut of “Renewables”. I and others have argued for a while that Shell is only in non-traditional energy such as solar and wind for the PR benefits that accrue. There is some simplistic communications strategy going on that says that if your advertising focuses (say) 80% on something that is in reality less than 1% of your business the public will be fooled. But as David Ogilvy once said the public is not a fool – she is your wife!

Not all bad news

Whilst much of Shell’s advertising is like the CO2 flower example direly misleading there is hope. The “Eureka campaign” (see: http://www.shell.com/home/PlainPageServlet?FC=/aboutshell-en/html/iwgen/shell_real/shell_solutions/films/app_view_film.html) I thought was excellent because it told the truth.

Shell should stop posing as some sort of environmentally virtuous benefactor to the world and concentrate (as it did in “Eureka”) in telling the truth about what it does. Then it might be more believed on other things as well.

© Paddy Briggs January 2008

The phoney hype from Shell on Scenarios

The phoney hype from Shell on Scenarios

And so another Shell CEO is to be feted at Davos as he presents the oil giant’s latest “scenarios” – the hype being , of course, that these scenarios shows the company’s intellectual edge in planning and decision-making. Having been involved in Scenario planning from time to time during my Shell career I can see this phoney exercise for what it is – pompous and self-aggrandising PR which has little or no benefit to any of Shell stakeholders.

Here is what the Wikipedia entry on Shell’s use of Scenario planning says:

“Observers of Shell's use of scenario planning have suggested that few if any significant long term business advantages accrued to Shell from the use of scenario methodology. Whilst the intellectual robustness of Shell's long term scenarios was seldom in doubt their actual practical use was seen as being minimal by many senior Shell executives. A Shell insider has commented "The scenario team were bright and their work was of a very high intellectual level. However neither the high level "Group scenarios" nor the country level scenarios produced with operating companies really made much difference when key decisions were being taken". The use of scenarios was audited … in the early 1980s and they found that the decision making processes following the scenarios were the primary cause of the lack of strategic implementation, rather than the scenarios themselves.”

In my experience this is a very accurate description of what really went on and I have no reason to assume that it is any different today. I worked as part of a small team in Rotterdam on long term scenarios for The Netherlands in the early 1980s. It was very interesting work, intellectually stimulating and directed by very clever people. Over a year or so we created three scenarios (internally consistent possible futures) for The Netherlands each of which addressed economic, social and energy developments over 20 years. The scenarios were launched with much panache, placed firmly in the public domain – and then quietly forgotten. The principle that when considering a major strategic decision you test that decision against possible futures was as far as I know never followed. Later in the decade I was in Hong Kong and contributed to a similar scenario process for China. Grappling with uncertainty (and the future of China was very uncertain at that time) scenarios were supposed to give us the edge – especially when it came to strategic investments. But once again although the scenario work was robust and intellectually meretricious there was no actual use made of the scenarios at all.

One clear illustration of how decision making in Shell was and is always expedient, self-interested and often hugely over-cautious (as the Wikipedia entry rightly says) is with regard to Russia. Scenarios for Russia in its post USSR mode were certainly under preparation in the late 1980s/early 1990s and although I was not involved I would be surprised if one of the scenarios was not a “Resurgent Russia” story. Under this scenario Russia would pick itself up from its low ebb in 1990/1991 and, driven by high oil prices, recover economically, socially and politically. Under “Resurgent Russia” there would be a strong and popular leader, some watering down of the commitment to parliamentary democracy and a more dirigiste and nationalist approach to financial planning and management. Let’s assume that such a scenario existed at the time of the original Sakhalin negotiations – carried out at a time of extreme weakness on the Russian side in the early 1990s. Had scenario planning meant anything then surely the possibility of the resurgence of Russia would have been taken account of in the negotiations? Surely in those circumstances a deal with Russia which was more equitable to them would have been struck – rather than the unequal contract that so strongly favoured Shell and which President Putin later tore into pieces as Russia became stronger and more confident?

The invitation to Jeroen van der Veer to speak to world leaders at Davos will no doubt give him a warm glow that he, and Shell, are legitimate movers in the refined air of the “World Economic Forum”. And there will no doubt be approval of the new scenarios as I am sure that they will be as intellectually solid and stimulating as ever. But if pressed (as he should be) to give one example of how these scenarios are actually to be used in Shell strategic decision-making he will struggle. Because there is no evidence at all that Scenario planning has made a hapeworth of difference to Shell’s actions or performance over the years. Like so much of the public face of Shell the rhetoric is a long way from the reality.

© Paddy Briggs January 2008

Employees as valuable assets in building your brand

I attended the memorial service today of David - an old colleague and boss of mine who joined Shell way back in 1952 and who had been retired a couple of decades. He was a wonderful man - individualistic, cantankerous, intelligent, rude, caring, creative, trusting and above all humane. The church was full and there were many of his old colleagues present to pay their tributes. As I watched them, and thought about David, I wondered what he and they would make of the spiteful, greedy, selfish, ignorant bunch that run the show today. Perhaps David would have shrugged his shoulders and said something about bygones…and maybe he would have been right! But he would certainly have been disillusioned and disappointed by the Shell hypocrisy that on one hand says that it will:

“respect the human rights of our employees and provide them with good and safe working conditions, and competitive terms and conditions of employment...promote the development and best use of [their] talents …create an inclusive work environment where every employee has an equal opportunity to develop his or her skills and talents… encourage the involvement of employees in the planning and direction of their work… provide them with channels to report concerns.” (Shell Group Business Principles or SGBP)

whilst on the other hand laying them off in vast numbers in homage to the great God of “outsourcing”.

I have told a personal “outsourcing” story from my last years in Shell elsewhere before - but it is worth repeating again to throw light on the current imperatives.

Seven years ago I was working for Shell in Dubai where there was a small and successful downstream (marketing) operation. This was a fairly conventional business involving the marketing of a wide range of petroleum products to a variety of different customers across the United Arab Emirates. A key element of this business was, and always had been, the operation of a product distribution/transportation activity involving oil depots, vehicles and drivers. For more than thirty years this business had been built up as a professional, cost-effective and customer focused operation. It also had an admirable safety record (in a high risk area) and the staff of thirty or so tanker drivers were a loyal, skilled and motivated team. In the late 1990s Shell’s Central offices sent a new Distribution man to the region and, operating out of Oman, he visited Dubai charged with the responsibility of “outsourcing” the transportation operation. When challenged by me and others in the management team in Dubai as to why this was necessary he said that it was now “company policy” to outsource this business (i.e. to sack the drivers and sell the vehicles). A number of us were incensed by the insensitivity of this and we demonstrated that not only would no cost savings occur but that we would be needlessly disposing of the services of a team of loyal and skilled drivers each of whom was proud of his personal safe driving record and a motivated member of the local Shell family.

Well the battle raged on for a while with the argument that to go arm lengths in an area as safety sensitive as dangerous fluids distribution was bad practice – especially as no possible cost savings would result. Furthermore to dispense with the services of the drivers many of whom had up to thirty years service hardly sat well with the SGBP! But this was ideology at its most sinister. The man from Oman had on his “scorecard” the target of outsourcing in Dubai. If he succeeded his remuneration would benefit – as well, of course, as showing that he was a loyal implementer of the new edict. He didn’t care one jot about the employees or their futures – all he cared about was showing himself off in a good light. Well we did fight on but in the end we lost. The drivers were sacked and the operation was outsourced. The irony of this story is that there was no financial benefit to Shell at all from the decision. Outsourcing (in this instance) wasn’t cheaper – it was simply the application of a dogma!

Back to my late friend David. He worked in Shell in an era (as did I mostly) when the commitment to employees wasn’t just words but reality. That was why so many of us, including David, were “one company” men and women. It wasn’t perfect and it had its frustrations and disappointments – but it was rarely if ever malign or uncaring. A business like Shell is about people – and when people are treated as disposable commodities then the values of the corporation disappear and the rot sets in. And today, sadly, Shell is rotten at the core.