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The Digital Future is Now: Executive Talent Implications of Digital in Oil & Gas

 


Oil Gas Monitor | June 1, 2015


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Oil Gas Monitor - June 1, 2015 
By: Stephen Morse & Jennifer Rockwood

Digitization is challenging the status quo of every industry across the globe, including Oil & Gas (O&G), where digital automation and technological advancements are helping to drive improvements in productivity, reinventing the sector. Oil & gas companies are looking for leaders to guide th​em through digital transformation as demand for tech-savvy talent continues to grow, giving rise to new positions of prominence such as the Chief Information Security Officers (CISOs), while mandating evolution of the more traditional roles including CIOs and CTOs. To attract and retain the right candidates to fill these positions, it is important to understand the growing role that digital technology is playing within the oil & gas industry, and the evolving skill set needed at the leadership level to fill knowledge gaps and take full advantage of ensuing growth opportunities.

Digital Transformation in Oil & Gas

Russell Reynolds Associates conducted a Digital Pulse​ survey with more than 3,000 respondents from a number of industries to capture how people are driving digital transformation and how organizations are adapting to this changing landscape. The majority of energy industry respondents* (65%) believe that the industry will be further disrupted by digital in the next 12 months and 16% think this change will be dramatic. More than two-thirds of respondents in the energy industry said their company has a digital strategy in place, and 64% remarked that their company has a digital team in place. However, a minority of the respondents (43%) thinks they currently have the right people and skills in place to drive digital strategy and only a little over one third (35%) said they have the right people to execute on the digital strategy. Finally, less than one third (27%) observed they have the right organizational structure in place to take advantage of digital opportunities.


According to energy industry executives who took part in the Digital Pulse survey, the top three barriers for an effective digital strategy are: 1) lack of digital expertise and skills; 2) insufficient management bandwidth; and 3) leadership’s perception of digital strategy as secondary. Interestingly enough, even with a dearth of capabilities, time, and sense of urgency from the top down, according to Digital Pulse respondents from the energy sector, 37% of companies depend on their CEO to set digital vision and strategy, while 16% rely on the CIO and 15% the CMO.

* A majority of the respondents come from the oil and gas sector

Talent Implications of Automation

Automation in the energy sector offers many potential benefits in exploration, development and production. According to a recent report by McKinsey & Co, maximizing asset and well integrity, increasing field recovery, and improving oil throughput are just a few of areas digital can help to optimize production efficiency. As the Oil & Gas industry is facing a major demographic crisis, recruiting and retention will be very important to fill the digital knowledge and experience gap.

Oil & Gas companies successfully pursuing automation programs are building broad IT teams with leaders whose backgrounds range from data management to interface design. However, building an effective digital team also requires adequate training of the current workforce to ensure proper integration of new and old technologies. Oil & Gas companies are now actively recruiting for tech-savvy CIOs and CTOs. Individuals who stand out in the recruiting process have experience leveraging new technologies to enable new business models, spur digital change, and are strong technologists who can deliver solutions that can drive the company’s broader objectives via online/digital resources. The best potential leaders are those with transformational change competencies, as well. Digitally disruptive leaders have the following five competencies:
  • Learning agility
  • A willingness to take calculated risks
  • The confidence to go against the grain
  • An entrepreneurial spirit
  • The ability to exert influence and gain support

Rise of the Chief Information Security Officer

The issue of data security is not new but the rapid development of data-intensive processes in the industry, such as digital oil field or integrated operations, has led a majority of companies to consider the protection of sensitive data and IT.

Cyberattacks are persistent, pervasive and penetrating. Given the scale of recent breaches across a wide range of business sectors, cybersecurity is now a key item on the agenda of boards and executive teams – and these discussions are not theoretical. As BP Chief Executive Officer (CEO) Bob Dudley noted back in 2013, “We see as many as 50,000 attempts [at cyberattacks] a day.” Since then, media reports on cyberattacks affecting energy companies and the security concerns surrounding important Oil & Gas infrastructures have been on the rise.

Not surprisingly, Cisco’s 2015 Annual Security Report notes that utility and energy respondents report the highest levels of security involvement and knowledge. However, having well-documented processes and procedures in place does not necessarily mean they are more secure than organizations in other industries.

The Chief Information Security Officer (CISO) role is now more important than ever to help carry out the cybersecurity agenda set by senior management and the board of directors. Strong management, leadership, communication, and influencing skills are critical. In Oil & Gas, physical security is directly linked to cybersecurity, as cyberattacks could prove interruptive or even fatal to thousands if not millions of people. This very real potential for widespread disaster is increasing the scope skills needed to be an effective CISO.

The CISO role is changing and demand far outweighs supply. The best candidates are receiving multiple offers, putting pressure on the typical recruiting process. The hyper competitive market is having a trickle-down effect felt by less experienced executives, as well.

To remain competitive, companies are moving the CISO role up the corporate org chart, closer to the Executive Committee and Board. To attract the best talent, companies should be prepared to offer competitive compensation packages. In addition, companies should be open-minded when looking at the background and skill set of potential candidates. In addition to the existing pool of cybersecurity professionals, CISO candidates are also former military or law enforcement professionals, less likely to have traditional corporate experience. These new CISO leaders can be trained in cybersecurity and positioned for broader risk management roles.

Digital at the Board Level

Digital transformation requires leadership from the top down. In our conversations with CEOs and Boards, we have repeatedly heard that having the right person in the boardroom asking the right questions is a strong catalyst for change. However, according to our analysis of over 100 board members from the 10 largest US Oil & Gas companies, there are only 3 individuals with experience in technology and no members with digital experience. Appointing digital directors sends a clear message that the company is committed to developing a digital culture. Organizations across a wide range of business sectors succeeding on the digital front have one thing in common: they have made a conscious effort to adopt a digital culture, making them more adept at disrupting their respective industries.

On the path to becoming more digitally enabled, Oil & Gas companies will need to adopt a more data-driven, learning oriented, risk taking, and flexible culture. While it is tempting – particularly during downturns – to decrease investment in innovative tools and digital technologies, leading Oil & Gas companies should view digital as the fast track to remaining on top. Filed Under: Employees, Employment, Technology.​

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The Digital Future is Now: Executive Talent Implications of Digital in Oil & Gas