Paddy's writing on Business, Brand and Reputation

This blog contains some of my writing on Brand and Reputation, including those on Shell - the corporation that I worked for for 37 years. Some of the articles have previously been published - others are seen here for the first time. The purpose of the website is to contribute to discussions on the role of brand and reputation management in today's business world. Please also see: http://www.roadsideretail.com/search?q=Paddy Comments welcome to me at: paddy_briggs@yahoo.co.uk

Sunday, January 20, 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