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The Critical Nature of Leadership and Culture in Creating and Sustaining Change João R. Lafraia, CMRP, CFAM PETROBRAS / ABRAMAN EFMNS Helsinki 2014
The Critical Nature of
Leadership and Culture
in Creating and Sustaining Change
João R. Lafraia, CMRP, CFAMPETROBRAS / ABRAMAN
EFMNS Helsinki 2014
Agenda
1.Abstract and Curriculum
2. Introduction
2. Asset Management
3. Principles of AM
4. Why Focus on Culture
5. Understanding Culture & Behaviour
6. Leadership
7. Asset Management Culture
8. Operational Excellence
Abstract
Since transitioning from engineering into management roles, Mr
Lafraia has been studying the role of culture in managing
change to a degree not taken by most, going so far as to hire
anthropologists to help him understand the latest theories of
culture. He applies what he has learned daily as he works
with his team to build a culture of Operational Efficiency (OE)
into the working environment at Brazilian refineries.
Who I am ..
• Lafraia is the General Manager of Operational Efficiency in refining at Petrobras,
the Brazilian national oil company. He is also President of ABRAMAN.
• He has written the following books available in Portuguese:
“Handbook of Reliability, Maitainability and Availability (2001)”,
“Leadership in Safety, Health and Environment (2011)”,
• And Lafraia was also co-author of
“Value based Leadership (2010)”,
“Strategic Management and Reliability (2009)”,
“Creating the Habit of Excellence (2006)”.
• His latest book in English called
“Living Asset Management (2013)”
written with John Hardwick.
Introduction Brazil’ Refining Infrastructure
Original Upgraded %
Paulínia - Replan (SP) 252 396 57%
Duque de Caxias -Reduc (RJ) 191 347 81%
Landulpho Alves - Rlam (BA) 218 279 28%
Henrique Lage - Revap (SP) 189 252 33%
Pres. Getúlio Vargas - Repar (PR) 126 195 55%
Alberto Pasqualini - Refap (RS) 142 189 33%
Pres. Bernardes - RPBC (SP) 139 170 22%
Gabriel Passos - Regap (MG) 110 151 37%
Capuava - Recap (SP) 20 53 165%
Manaus - Reman (AM) 37 46 24%
Clara Camarão - RPCC (RN) 25 31 24%
Fortaleza - Lubnor (CE) 3 7 133%
Total Brazil 1,452 2,008 38%
United States 100
Argentina 81
Okinawa 100
Total Petrobras 2,289
Refineries
Capacity (Mbpd)
RLAM
REGAP
REDUC
REVAP
REPLAN
RECAPRPBCREPAR REFAP
LUBNORREMAN RPCC
6
With limited investment over the last 20 years,
Petrobras will increase capacity to meet the
needs of a growing domestic market.
Domestic Refining Greenfields Capacity
Diesel (64%), LPG (3%), Naphtha (6%),
Bunker (16%), Coke (11%)
Diesel (53%), LPG (6%), Naphtha
(1%), Jet (28%),OC (4%), Coke (8%)
(230 kbpd)
(600 kbpd) (300 kbpd)
(330 kbpd)
(Premium I & II)
Diesel 10 ppm (60%), LPG (4%),
Naphtha (14%), Jet (12%), OC +
Bunker (10%)
Numbers in kbpd are capacities
Existing pipelines
Refineries
Onshore Terminals
Offshore Terminals
Terminals and Pipelines
Operated by Transpetro
(100% Brazilian Company)
“If we want things to stay as they are,
things will have to change”
Giuseppe Tomasi di Lampedusa
The Leopard
Asset Management
• A new paradigm now framed by ISO 55000
• Focused on delivering the organizations objectives (value)
• Make informed decisions based on risk
• Integrated and interrelated effort of the various functions of the organization
• Managing the functions of assets considering life cycleimplications
• Assists maintenance and operations to communicate with accountants and senior leaders
• Enabling stakeholders to understand options available
Asset Management - Principles
• Value
• Alignment
• Assurance
• Leadership & Culture
Total Yield
EO Creation
Value - Refinaries Total Production
1ºQ USA
Value - Operational Availability
Value - %Losses per Equipment
% L
oss
es
pe
r e
qu
ipm
en
t
14
FUT
Refining Feedstock and Utilization Factor 2014-2018
Our plan to the future…
Asset Management - Principles
• Value
• Alignment
• Assurance
• Leadership & Culture
Assurance - Success Factors
Governance
Process
Stability
Operations
Visibility
Technology
- Reliability Governance
- Operational Management Practices
- Compliance - Standardization
- Knowledge Management
MANAGEMENT SYSTEMS
PEOPLE LEADERSHIP
PHISICAL ASSETS
OPERATIONAL
EXCELENCE
Assurance - Success Factors
Asset Management - Principles
• Value
• Alignment
• Assurance
• Leadership & Culture
Reliability -RAMS
The Source of Defects - Basic Asset Life Cycle
J. Lafraia, J.Hardwick, Abraman, AMCouncil @ Copyright
Safety Model Reliability Model
Lost Day Case Break
Minor injury Failure
Incident Defect
Deviation Error
People Equipment
BehaviorBehavior
Defect and Incident Management
Mindfulness x Complacency
Operational Discipline means completing every task, the
right way, every time.
Organisational Elements:
BUSINESS
ASSETS - VALUE
J. Lafraia, J.Hardwick, Abraman, AMCouncil @ Copyright
Asset Management - Principles
• Value
• Alignment
• Assurance
• Leadership & Culture
Hard Side – Tangible activities we implement to improve
assets performance...
Planning & scheduling, operator care, preventive
maintenance, predictive maintenance, and others
AM
“Hard Side” Tools
“Hard Side” AM
“Soft Side” AM
Soft Side – Intangible behaviours and activities that support
hard side change...
Leadership, Work Process, Structure, Group Learning,
Technology, Communication, Relationships and Rewards
“Soft Side” Foundations
AM
“Hard Side” Tools
Below the Foundation???
Invisible – “Culture”
Beyond the Foundation???
Invisible –
“Leadership and Mental
Maps”
J. Lafraia, J.Hardwick, Abraman, AMCouncil @ Copyright
In the end......
Outcome
OutcomeOutcome
Outcome
People
CULTURE and MENTAL MAPS
Leadership
Management System
Physical Asset
“Outcomes”
Outcome
J. Lafraia, J.Hardwick, Abraman,
AMCouncil @ Copyright
Organisational Elements & Fundamentals
J. Lafraia, J.Hardwick, Abraman, AMCouncil @ Copyright
What culture is?
Culture is an extremely complex phenomena, which can be understood from several different angles.
In general, it’s everything that separates human beings from animals in terms of our capacity to understand the world and transform it.
You do not manage culture!
You manage through culture!
Culture, rules and symbols
Organizations are symbolic entities, which behave according to the mental map of it’s members. Those models are culturally determined.
� Cow in India� Cow in Brazil
Communication – Text and Context
Hot !!!
Communication – Text and Context
Hot !!!
Communication – Text and Context
Hot !!!
Meaning depends on context
Communication – See and Perceive
Communication – See and Perceive
See � Hardware
Perceive � Sofware
The power of expectations
The power of expectations
Expectations influence perceptions
Different is not wrong. It is just different !
Which objects can you perceive?
The meaning is in the software
Hardware Software
Brain Culture and Mind
The meaning is in the Culture
The ABC Model
Antecedents
What DRIVES and preceeds
Behaviour
• Organisational Culture
• Risk Perception
• Values & beliefs
• Knowledge
• Experience
• Procedures
• Thoughts
• Examples
• Rules, Systems
Behaviour
A visible action
• Not using PPE
• Violations
• Following rules, laws and procedures
• Not to follow rules, laws and procedures
Consequence
What is directly originated from
the Behaviour
• Injuries
• Death
• Productivity
• Comfort / discomfort
• Disciplinary actions
• Reward / Penality
• Satisfaction (risks)
Feedback
Leadership and The ABC Model
LEADERSHIP IS THE KEY FOR CHANGING BEHAVIOUR
ESTABLISHING ANTECEDENTS
ESTABLISHING CONSEQUENCES
Mental Maps
Antecedents
Behaviour
Consequences
Intention
Expectation
Values
Role Models
Rites / Rituals
Rewards
Leadership
Leadership and The ABC Model
Culture, Power and Leadership
Power: Nobody is, so to speak, it’ owner; and, however, it always goes in some way, with some groups in either side; it is not clear who holds it, but it is clear who doesn’t.
Individuality is a result of the exercise of power. (MF)
• Leadership = the exercise of power to influence otherstoward an objective, through team work and examples.
• Leadership = leader + led. The leadership does not belong onlyto the leader. Leadership does not exist if adhesion to the leaderdoes not exist.
• The leadership is a function/process.
• Leadership = to get results + through relationships.
• The leader is a person.
• A person cannot be responsable for the success of the wholeorganization.
• Leadership requires to give up the notion of the heroic leader -the person who has all the answers.
Leadership
The Dual Role of Leadership
CHAOS
Command & Control
Planning Management
System
DIFFICULT TO CHANGE
Communication
Vision
Strategies
Innovations
Culture
NOT SUSTAINABLE
CHNAGES
PERMANENT
CHANGES AND
SUSTAINABLE
LEA
DE
RS
HIP
MANAGEMENT
YE
SN
O
YESNO
The Leadership Model
Lack of visiable leadership
Mixed & unclear messages
Short Term vs Long Term
Poor support for the line
No continous improvement
Reward / Recognition Values
Role Model Rites/Rituals
Acts as one team with the same
Vision & Values
Leadership is the magnet that aligns
the driving force for developing the
reliability culture
Increased profitability
Decreased risk taking
How to change the Culture????
• Culture is the last thing to change …
• The first one to change is Leadership
AM Culture Journey
Individual commitment
Commitment of
leadership
Effective physical assets
Commitment of
management
Culture
Mental Model
Communication
Perceptions
Expectations
Consequences
Mindfulness
Taking of cautious and
rigorous action
Partnership
Good installations and
equipment
Defences against accidents
and failures
Explicit management
systems
Management structures
Resources / delegations
Conclusion
www.livingassetmanagement.com
www.qualitymark.com.br
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