Post on 22-Apr-2015
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What We Can Learn from Scenario Planning at Shell Oil
Leslie Martel BaerPresident, Energy Intersections, LLC
Herb RubensteinExecutive Director, The LEEEGH
ASP 2012
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Global Energy Management (GEM) Program Business School University of Colorado, Denver
Peter SnowdonHead of CommunicationsShell Chemicals
Cintia GavaySenior Research AnalystGlobal Energy ModelingIHS
Acknowledgements
2ASP 2012 Conference Presentation Scenario Planning at Shell Oil Rubenstein, Baer 5/1/2012
Today’s PresentersLeslie Martel Baer
President, Energy Intersections Research, analysis, strategic
planning
Energy Intersections blog Strategy Cross-sector collaboration
Experience business management,
communications, and project management
renewable energy, socially responsible investing and materials recovery industries.
Education MS, Global Energy Management,
CU Denver, Business School MA, English, University of
Michigan. BA, biochemistry, CU Boulder
Herb Rubenstein Executive Director, THE LEEEGH,
Non-profit “Leadership in education, energy,
environment, governance and health” President, Sustainable Business Group
consulting firm to businesses Adjunct professor of strategic
management, Global Energy Management, CU Denver
Founder of the Colorado Chapter, Association for Strategic Planning
Member of the national board of directors of ASP
Author Breakthrough, Inc.: High Growth
Strategies for Entrepreneurial Organizations,
Leadership Development for Educators Leadership for Lawyers Over 100 articles and over 80 videos on
business strategy, entrepreneurship, leadership, and improving organizations
3ASP 2012 Conference Presentation Scenario Planning at Shell Oil Rubenstein, Baer 5/1/2012
What are Scenarios? Scenarios are not
Projections Forecasts Predictions A preference (usually)
Scenarios are stories Plausible Recognizable Challenging Call for debate and
vision
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Allow an organization to answer “What If?”Creates awareness of future possibilitiesAllows for response preparation
Encourages engagement and discussionDiverse viewpoints are gatheredBest ideas, practices are identified
Permits deeper assessment of riskEconomicPoliticalResource (energy)
Why Develop Scenarios?
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Shell’s Approach to Scenarios
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Three “Known Knowns” Energy demand
will accelerate.
Supply will fall behind.
Environmental stressors will continue to increase.
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How will we respond to environmental changes?
What energy technologies will be deployed?
Do the molecules exist to meet supply without worsening environmental stressors?
Are they technologically accessible?
Are there political barriers to them?
Identify “Known Unknowns”
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Scenarios show multiple paths to multiple possible outcomes (more than one story is required).Corollary: production of a scenarios does
not imply a probability of or preference for that scenario (usually).
Scenarios do not constitute mandates.Scenario planning does not tell you what to
do. It tells you what the world around you might
do.You can prepare and respond accordingly.
Two Keys to Scenario Development
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The Core Scenario Team Starts with
leadership
Represents all levels
Represents all departments/ divisions
“Out-of-the-box” thinkers
~50 internal staff
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Workshops held around the globe U.S., Europe Australia Qatar and Kuwait Singapore
In industry and out of industry
Thought leaders; strong networkers
Participate for first 18 months
“Golden Ticket” Stops “That hasn’t happened before” thinking
Additional Invitees
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Ask, “What are we together to answer?”
Create a replicable workshop process
Gather existing data
Workshop participants tell stories on data
Fact check draft stories against data, models
Identify the most consistent stories
Brand final scenarios to aid assimilation
Build strategies in response to the stories
The Process
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Plausible, recognizable,challenging scenarios
Tested against data andassumptions (e.g., about energy portfolios) are realistic
Clear brand; instant recognition of “stories”
Can be applied to strategic decisions
Challenges status quo
Outcomes
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Shell’s Current Scenarios
Blueprints and Scramble
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Blueprints Scramble
See the three known knowns as a challenge
Short term: overwhelmed by known knowns
Focus: develop solution suites
Focus: keep the lights on today
Leaders—starting local, mayors—share best
Governments—due to supply/ demand, environment—become nationalistic and competitive
A price on carbon evolves, eventually globally
Focus on coal, “bad” biofuels: independence, nationalism
Greater electrification of the vehicle fleet
Electrification is largely unpursued
Supply-demand gap, but transition is relatively smooth
The gap between supply and demand becomes painful
Highlights of Two Paths:Blueprints & Scramble
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Clear Identities, Clear Choices
Coalitions develop Blueprints for a new energy framework
Governments Scramble to secure their own energy supplies
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Timeline: Clear Stories
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Timeline: Clear Stories (cont’d)
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How Shell Applies the Energy Scenarios
Impacting Strategic Decisions
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1970s oil Crisis
Growth in unconventional natural gas
Slow down in key market GDPs
OPEC response to rising oil prices
Arab Spring
Anticipating Big Shifts
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Pull out of Mackenzie (Alaska to lower 48) piplineWhat will energy prices look like
with/without?
Sell large UK refinery
A First: Shell actively prefers “Blueprints” and is pursue strategies to move markets in that direction
Apply Scenarios to Strategy
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Embarking on Scenario Planning
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Spectrum of voices; events inside and outside of industry
Clear budgets, timelines, personnel; support from the top
Information flows in all directions; continually collect data
Number of scenarios for your purpose, from draft stories Shell typically produces two IHS operates with three: Global Redesign, Metamorphosis Vortex
Determine the audience of your scenario products Internal market Public (value add?)
Invest in branding; allows audiences to instantly recall implications of a scenario entails by seeing logo, name
Seek support: e.g., Scenario Planning Institute (CSU) for training, research, consulting
Steps for an Internal Process
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Transportation FirmLong-term implications of fuel prices?What events in Wall Street Journal imply
one scenario or another?Potential for new fuel options anticipated?
Overseas ManufacturingStories about human capital, resources,
incomeMonitor these storiesDevelop contingency plans?
Save Time & Money:Apply Existing Scenarios
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Plausible, recognizable, yet challenging stories Well researched and verified with data Based on today’s realities Describe potential realistic, unfolding realities
High stakes stories Guiding the allocation of billions and trillions of
dollars
Describe multiple possible future realities Need multiple pathways Result in multiple scenarios Might end up “bracketing” reality (e.g., Shell’s
“Recession & Recovery)
Scenarios: Vision for Value
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Anticipates global economic, energy trends
Creates buy-inthroughout theorganization
Engenders engagement
Offers practical insightinto strategic decisions
A Resource for Creating Change
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Thank you!
Questions? Contact Us:
Leslie Martel BaerEnergy Intersections 303.377.5006leslie.baer@energyintersections.com
Herb RubensteinThe LEEEGH 303.592.4084 herb@sbizgroup.comwww.theleeegh.orgwww.sbizgroup.comwww.leadershipforeducators.orgwww.leadershipforlawyers.org
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