dr. william h. glick

Dr. William H. GlickDean and H. Joe Nelson III Professor of Management at the Jesse H. Jones Graduate School of Business

Rice University

Dr. William H. GlickDean and H. Joe Nelson III Professor of Management at the Jesse H. Jones Graduate School of Business

Rice University

Thought Leadership onRisk and ChangeThought Leadership onRisk and Change

Plenary Session ThreePlenary Session Three

Perfect Storm

Is the current storm good or bad for your firm?

36%

64%

1. Good

2. Bad

Returning to Normal Profits

Are you trying to be the first in your sector to return to normal profitability?

73%

27%

1. Yes

2. No

Silver Lining in Storm Cloud

“Watch out for emergencies. They are your big chance.”

Fritz Reiner

Symphonic Conductor

Don’t waste a crisis

"Never let a serious crisis go to waste…it's an opportunity to do things you couldn't do before.”

Rahm Emmanuel

White House Chief of Staff

Crisis is an Asset

“When you have a crisis, the crisis itself becomes one of your biggest assets … Everyone gets very modest and humble and listens. If you need to do rough things, you do rough things.”

Carl-Henric SvanbergPresident and CEO of Ericsson Incoming Chairman of BP

Crises Force Us to Think

" Crises and deadlocks … have at least this advantage, that they force us to think.”

Jawaharlal Nehru

First Prime Minister of India

Academic Perspective

“There is no crisis to which academics will not respond with a seminar.”

Old saying

Crises Stimulate Change

Photocopies

Paperback Books

Jet Engine

Television

Great Depression

Crises Stimulate Change

Great Depression

Car Radio LSD

Dot.Bomb

iTunes 99¢ Solution

Crises Stimulate Change

Reinvention as Competency

•Seismic Exploration to Submarine Detection

•Cell Phones to Embedded Processors

Capacity to Change

Confronting Change

Mergers National Oil Companies

What happens to you?

Disrupted or Disruptive Innovator?

How can you survive and thrive as the change leader?

Unfreeze

Move

Refreeze

Simple Model of Change

Unfreeze

Challenge of Change

• Knowing when to change

•Challenging beliefs

Supply Chain Volatility Amplification:“The Bullwhip Effect”

Customer Retailer Distributor Factory Tier 1 Supplier

Information lagsDelivery lagsOver- and under orderingMisperceptions of feedbackLumpiness in orderingChain accumulations

SOLUTIONS:Countercyclical MarketsCountercyclical TechnologiesCollaborative channel mgmt. (Cincinnati Milacron & Boeing)

Equipment

Source: Fine, MIT

Feeling the Crack of the Whip

Are you on the wrong end of the bull whip?

48%

52%

1. Yes

2. No

Scapegoats

Is Scapegoating effective?

13%

87%

1. Yes

2. No

Unfreezing Beliefs

• Lead, follow, or get out of the way

• We have a winning team, but game has changed

• Compelling case for action/ burning platform

• Reframing context as opportunity rather than a threat

Opportunities for Change

Move

• Creative exploration

• Thriving on knowledge of others

• Crafting a vision

• Communicating a vision

Refreeze

Reinforcing Change

• Small wins

• Positive reinforcement

• Creating heroes

Unfreeze

Move

Refreeze

Simple Model of Change

Which Crisis?

Which crisis will give you the greatest opportunity?1. Access to reserves (4)

2. Uncertain energy policy (6)

3. Price volatility (new)

4. Cost containment (3)

5. Worsening fiscal terms (2)

6. Human capital deficit (1)

7. Climate & environmental concerns (8)

8. Competing services from IOCS & OFS (new)

9. Supply shocks (9)

10. Aging infrastructure (new)

2009 (2008) Ernst & Young Business Risk Report – Oil & Gas

Legacy of 1980’s

Lessons from the past• Dramatic down-sizing• Inability to predict long-term prices• Bullwhip effects on supply chain• Talent supply chain

Rebuilding Talent Supply

• Executive Education• Executive, Professional, and Full-time

MBAs• Undergraduates• K-12 focus on science and math

Energy at Rice

• Center for Energy Education & Leadership• Jones Graduate School of Business

• Rice MBA concentration in energy management• Fulbright & Jaworski Energy Director’s Conference• Energy Finance Forum

• Baker Institute for Public Policy• Richard E. Smalley Institute for Nanoscale Science

& Technology /AEC• Rice’s Energy & Environmental Systems Institute

Conclusion

• Strategic change starts with an idea

• The winner in the next decade will be the smartest investor, not the first to turn a profit