Professores da FGV – Fundação Getúlio Vargas - publicam estudo no congresso “2011 ACMP Global Conference on Best Practices in Change Management”, apontando as oportunidades e desafios para as MPMEs - Médias, Pequenas e Micro Empresas da cadeia do petróleo. O Congresso Mundial, que acontecerá no início de maio deste ano, reunindo os maiores especialistas do mundo na área de “Gestão da Mudança”, contará com a presença de dois professores da FGV.
Transcript
Professores da FGV – Fundação Getúlio Vargas - publicam estudo no congresso
“2011 ACMP Global Conference on Best Practices in Change Management”,
apontando as oportunidades e desafios para as MPMEs - Médias, Pequenas e
Micro Empresas da cadeia do petróleo.
O Congresso Mundial, que acontecerá no início de maio deste ano,
reunindo os maiores especialistas do mundo na área de “Gestão da
Mudança”, contará com a presença de dois professores da FGV.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 1 of 8
Change To Go 'Deeper'
The Business Transformation
in the Brazilian Oil & Gas Production Chain
by
Lucio Chaves
Fernando Jefferson
Fundação Getulio Vargas
ABSTRACT
Brazil may become one of the largest oil producing countries in the world considering the
discovery of extensive reserves on offshore fields and US$ 400 billion investments of over
the next five years. Tens of thousands businesses will benefit in a robust production
chain. However, the Brazilian industry is prepared to meet only 40% of the projected
demand. This scenario may bring the so-called "Curse of Oil", faced by other countries. To
avoid this, many changes will be required both at governmental and at business level,
some of which are already underway. Based on the analysis of a successful case that
occurred at the beginning of the last decade, this paper discuss the usefulness of
implementing formal methodologies in Business Management, and presents a survival
framework that relies on a special education program focused in Change Management for
business executives of medium and small companies of the petroleum production chain.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 2 of 8
Executive Overview
Since the discovery of large oil reserves in offshore
very deep waters (Pre-Salt), Petrobras, one of the
world's largest companies nowadays, plans to invest
US$ 224 billion in their exploration over the next five
years. Taking into account the other big players
investments, this figure could reach US$ 400 billion,
becoming one of the biggest investment programs in
the world, benefiting tens of thousands of large,
medium and small companies, which are likely to
integrate a robust supply chain.
The Brazilian industry, however, is currently
prepared to meet only 40% of the expected demand.
Brazil is going, then, to be an excellent country for
expansion of activities of companies from other
regions such as the North Sea, where production
begins to decline, and for rising powers like South
Korea or China. They are mature companies, well
structured (in Norway and Korea, for example) or
other ones with small tax economies, low wages and
little unionization, such as China.
This situation, if not changed in the near future, can
cause the so-called "Curse of Oil" as occurred in many
countries, with the destruction of the base industry
besides an increasing dependency from other
countries in the supply of basic consumer goods to
the people.
Brazil is making a huge effort to prevent this. For
example, several Brazilian organizations, including
Petrobras and BNDES (Brazilian Development
Bank), worked throughout the year of 2010 to
assemble the "Network for the Improvement of
Business Management of Petrobras Supply Chain
Companies" . This initiative should invest over US$
260 million over the next five years and may cause
profound changes not only in the production chain of
petroleum, but in the economy and the Brazilian
society itself.
According to the document "Strategic Plan 2011-
2020" [2], the Network aims "to improve
management that combines competition with
cooperation, integrate initiatives, promote an
increase on scale and on the Brazilian
competitiveness, promote sustainable development,
social and environmental responsibility,
entrepreneurship and innovation”. This could be one
of the greatest change management cases in the
world.
Other important initiatives are:
PROMINP (Program for Modernization of the
National Oil Industry), that provides the
support from Federal Government and the
entities of the sector for a set of integrated
actions, prioritizing the participation of
national industry of assets and services in
businesses of oil and natural gas, creating jobs
and skills.
Petrobras and SEBRAE (Brazilian Agency for
Small and Medium Companies) 2004
agreement, that has trained more than 3000
organizations, promoting the integration of
these companies in the petroleum supply
chain.
In parallel to these activities of development and
support organizations, the companies in this
sector are organizing themselves into networks,
creating entities known as RedePetro (PetroNet).
Currently there are seventeen of these successful
Local Productive Arrangements (APLs), which
now aggregates thousands of companies.
Based in this context, this paper aims to point out
the main areas where problems might occur and
develop considerations about the importance of
application of methodologies such as Change
Management, both at government and at company
level, in order to take advantage of the
opportunities and to minimize the impact on the
companies and their employees.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 3 of 8
The Initial Case
In the late 1990s, the industrial sector of a southern
state in Brazil (Rio Grande do Sul), articulated a
common program to take advantage of the
opportunities that surfaced on an emergent sector on
the Brazilian economy: the oil and natural gas
industry.
With the help of public organizations and other
development entities, like SEBRAE, these
entrepreneurs organized themselves into an entity, the
RedePetro-RS, aggregating not only organizations that
already worked in the oil market, but other ones that
used to develop entirely different products, such as
agriculture machinery and components.
The experience of this enterprise network "consists in
good example of integration and reconfiguration of
internal and external organizational capabilities,
using functional competences and resources to fulfill
the requirements of an evolving industry environment,
associated to an inter-organizational strategy, focused
in technological improvement and process and
products innovation" [3].
In this case, the changes have occurred at various
levels:
In governmental structure and in the entities to
support development.
In business networks.
In companies themselves.
In business owners and employees.
Big challenges were faced by all involved in the
process, but the results have been rewarding and can
serve as an example for all the national industry to
adapt to new demand generated by the oil sector.
This is particularly true in the most developed
industrial region (São Paulo), where thousands of
businesses, which have existed for many years linked
to the automobile industry, are now facing a relative
stagnation in their activities and need to find out
alternatives to survive.
Oil Production Supply Chain
Figure 1 shows the participants involved in the
Brazilian oil supply chain. From one side,
Petrobras and other big players, and from then on
the following levels, are incorporating smaller
companies, down to "micro" companies.
Figure 1 - Oil Production Supply Chain
The oil market is extremely demanding, requiring
organizational standards and certifications that
extend beyond Quality Management to EHS
Guidelines (Environmental, Health and Security).
Companies need to review and update their
operational procedures so they can be included in
the qualified suppliers' databases, and to
participate in this market.
Based on the analysis of the strategic positioning of
Supply Chain companies, we developed the
following SWOT Analysis:
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 4 of 8
Oil Sector SWOT Analysis
Strengths
Brazil has already a good base of industry,
universities and research centers.
Brazilian Government and Petrobras are ready
and willing to defend the national content by
supporting local initiatives.
Brazilian people's creativity and innovative
characteristics; more adaptive to changes than other
people.
Capability to joint into Local Productive
Agreements (APLs).
Weaknesses
Brazilian companies have shortcomings in
management and / or are not prepared for the high
demands of the oil market.
Lack of qualified human resources in sufficient
quantity for the demand of projects.
Opportunities
Investments of US$ 400 billion to be made in the
production chain, generating business
opportunities.
Brazilian companies may expand business to the
global market that Petrobras will certainly try to
participate.
Threats
International Competition coming from well
structured and aggressive companies, eager to
compete in our market.
High level of requirements for the contractors.
The Study Proposal
The concerns with issues related to Change
Management were witnessed by the Brazilian Society
of Knowledge Management - SBGC, one of the
organizations involved on the design [1] of the
"Network for the Improvement of Business
Management" [2], since its beginning, such as:
"As a simple gathering of vendors, Petrobras’ goals
will not be achieved”.
“The formation of the network will involve a huge
cultural transformation for people representing the
organizations that comprise the network and for
people who work for the companies in the supply
chain".
The Network development involves twelve
programs that should be developed throughout
2011 to 2014, with a budget in excess of US$ 260
million.
Many of the 278 actions involved in their 67
strategic projects were linked, in a certain way,
to those Change Management issues.
The real challenge starts now: make real what
has been planned and programmed, bringing the
benefits to supply chain companies, actually the
target audience for all this work.
The strategic initiatives required can now be
seen clearly enough at first sight. This will
require, however, a true re-engineering in
companies which, in turn, depend on complex
projects of internal and external changes
regarding, for example:
Business Model redesign, including changing
management styles, specially for the many
family businesses that are
shifting ownership from the
older generation to the younger one.
Ability to participate in pools of companies in
order to develop sub-projects under larger
Petrobras' projects.
Use of formal techniques and methodologies to
manage the business process, such as
Strategic Planning, Project Management,
Quality Management, Customer Relationship
Management, among others.
Implementation of processes and culture of
Innovation and Knowledge Management.
Development of technological and managerial
skills.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 5 of 8
The Survival Framework
Based on the previous findings, our study wants to
present a Survival Framework that can be used by
the Oil Supply Chain companies, in their direction to
take advantage of their business opportunities.
Figure 4 - The Survival Framework
Externally, from the point of view of demand, the
creation and maintenance of competitiveness will
strongly depend on the effort of Innovation which is, in
turn, heavily connected to the existence of strong
technological and managerial qualification.
Two processes will directly serve as keystones to
support this goal: Knowledge Management and
Change Management. Additionally, other methods
should be used to favor this process such as Strategic
Planning, Project Management, BI (Business
Intelligence) and BPM (Business Process
Management).
Knowledge Management and Innovation
In the competition with local or foreign firms, there is
a very important issue: competition will reveal not
only in the race for contracts of suppliers, but mainly
in the dispute for talents. There will be an increased
competition for intellectual capital and knowledge
needed for conducting business in all its phases:
proposal, negotiation, planning, execution, billing and
final documentation.
To compete in this scenario, companies need to apply
techniques of Knowledge Management and Innovation,
whether to create new products/services and work
opportunities, or to hold the intellectual capital
(knowledge of business) to keep the current level
of customer service.
Business and Competitive Intelligence
Another area of special attention is related to the
Business and Competitive intelligence , which
involves business support, monitoring of markets
and competition, management of competitive
advantage, marketing, customer relations,
suppliers and partners. These activities can be
integrated into the proposed framework, with
additional gain for the companies.
Project Management
We are mainly considering, here, companies with
business in engineering areas that might be using
Project Management best practices in their
technological projects. However they should learn
also how to use these tools in projects for many
other areas of business process such as marketing,
finance, training, costs and risks, QHES
management and customers and suppliers
relationship [4].
The Change Management Education
Issue
The current country situation is much more
challenging than was found in the RS Pole. At
least other 7 regional industrial poles should
develop big transformation programs that imply a
complex change management process. This new
scenario comes from an increase on the demand of
Oil & Gas, either in volume, quality and
technological complexity that should be fulfilled.
The requirements have to be accomplish in a short
time frame and, at the same time, face several
threats from foreign competitors.
What has to be done is fairly clear. How to do it is
another matter. In other words, we mean that
good intentions are not enough to generate
concrete results and to get into this game requires
changes far more complex than we imagine for the
sustainability in this environment. Recent
research on this matter [5], revealed that there is
a high risk of not performing most of these
transformations, if, in the level of each company,
there is no use of an effective Change
Management.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 6 of 8
This process will have to withstand the challenge to
support the internal stakeholders, in their various
levels, enabling their transition to new business
profile, posture and skill in conducting their day-to-
day operations. The lead sponsor to this process will
need to obtain sustainable commitment of those
involved for this goal to be realized.
In the sector of small and medium companies, the
largest one in this chain, the expected resistance to
change might be caused mainly by barriers such as:
Business with family base and origin.
Fear of innovation due to the conservatism.
Lack of information due to regional isolation.
Limited technological stage.
The lack of an effective sponsorship, due to the
leadership style and the deficiency of proper
education and of awareness of one´s role in the
process, can also be factor to make the needed
changes more difficult. The management profile in
this industry sector of engineering companies is, by
obvious reasons, based on technical skills and usually
not very familiar with cultural and people behavior
issues. If we examine the curriculum of most
management training programs already available in
the area we will not find further discussion of these
human aspects. Even our most recognized HR
(Human Resources) magazines are mostly focused in
personnel management process issues such as
selection, career, motivation, training, and team-
working best practices.
FGV Proposal for Executive Education
Fundação Getulio Vargas, a non-profit institution,
known as FGV and created in 1944, is the leading
Business School in Brazil, and develops, in its
complex educational organization, a series of
Graduation, MBA and Doctoral programs and is
either responsible for the economic researches used
in the official national economic indexes.
FGV launched the Project Management MBA
Program in the year of 2000 and from that time on,
Change Management has being included in the
course curriculum in order to create the awareness of
its importance for project implementation. More than
14,000 students have participated in this program
that is recognized by the PMI (Project Management
Institute) as the world's largest Post-Graduated
Project Management initiative.
FGV has been responsible, also, since 2004, for
the Project Management MBA Program of
PROMINP, focused on forming and recycling
Large Contract Managers for the Oil & Gas
Brazilian supply chain companies.
We consider that FGV, to keep its leading role as
an education provider for the Oil & Gas business
environment, now has to reach the strategic
management level (CEO's and senior
management). With this purpose we have been
working on a team to develop and offer a special
executive education program, to be launched in
2011, to fulfill the sponsorship education gap
mentioned above. The program, named
"Leadership Development for Oil & Gas Supply
Chain focused in Change Management" could be
included in the PROMINP "umbrella". This
course, with a projected demand of up to 3.000
participants, aim to develop the essential
leadership skills required to face and sponsor the
radical transformation process that implies in an
effective participation on the Oil & Gas Supply
Chain.
Inspired in Prosci's research framework Project
Change Triangle (PCT) [6], we define the
following objectives for this program:
To develop the awareness of the strategic
challenges involved in the Oil & Gas new
business environment.
To discuss the Business Process initiatives, the
tools and capabilities to be acquired for their
implementation such as:
Project Management and Change
Management best practices (conducted by
trained and dedicated professionals).
Quality, Environmental, Health and Safety
certified processes.
Knowledge Management, Innovation and
Business Intelligence capabilities.
To justify the importance of a structured
approach for Change Management.
To understand the sponsorship role that has to
be performed by top management.
Lucio Chaves & Fernando Jefferson, Fundação Getulio Vargas
ACMP Global Conference, May 1, 2011, Orlando, Florida. page 7 of 8
Conclusions
From surveys conducted, it looks that a large
number of small and medium Brazilian companies
have serious deficiencies in relation to the matters
mentioned above, requiring a strong
organizational change in the short term.
They will need to comply with a Survival
Framework to improve their management
processes, including applying methodologies such
as strategic planning, project management,
knowledge management and innovation.
The expression "Change To Go 'Deeper'" has to be
considered in three dimensions: one for Petrobras,
one for the national supply chain industry and
another for the country, as follows:
For the first participant, the national oil
company, it means to continue facing the
technological challenge to explore oil in deeper
and deeper layers, where it has already
achieved a leading position worldwide.
For the much smaller supply companies, it is a
metaphor that means to implement profound
internal changes in order to survive in this
arena and be globally competitive.
For the country it means, as much as it can, to
continue facilitating the national companies
and enabling them to fulfill the Oil & Gas
production requirements in order to achieve a
self sufficiency in this industry.
Considering the number of companies and entities
involved, this could be one of the greatest change
management cases in the world, and if
successfully implemented, it would be a
benchmark for similar initiatives in other
countries
An important "education gap" still has to be
fulfilled in a short time frame, either at project
