How do you disrupt a 110-year old oil and gas supermajor which also happens to be the sixth -largest company in the world? The likes of Tesla and Alibaba are currently working on an answer to that very question, fighting to rival the efforts of Shell Downstream CIO Craig Walker.
“I don’t think in my 30 odd years in this industry there has ever been a more exciting time or a more scary time to be a CIO,” Walker told CBR.
“Make a decision in the 90s and it wouldn’t be wrong for eight years, now it could be eight weeks.”
Craig Walker, VP & CIO Shell Downstream, Shell
Walker joined Shell in 1981 as a chemical engineer, stepping into the role as downstream CIO in 2014. Many may have the perception that once an individual reaches the C-Suite their worth has been proved – otherwise why would they be in such a high position of authority? However, this is the biggest trap a CIO can fall into, with Walker arguing that credibility is a vital step towards success as a CIO.
“I think what CIOs do wrong is they come in and say, ‘hey I’m the new CIO, I want to be on the leadership team and I’m going to help you revolutionise the business.’ Even at my level I’ve walked in to an EVP and he’s gone, ‘yeah Craig, before we talk about that my PC is not working properly.’
“It’s like anything in life, you have to prove yourself before you get on the team.”
When Walker took over the role as downstream CIO he, by his own omission, inherited a department that had big legacy systems and that had “stagnated a bit and actually was too expensive.” Before Walker could even look at disruption, he first had to prove himself, promising the downstream director a significant cut in costs by 2017. The CIO delivered the promised savings by the following year, in 2015.
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“However frustrating it is you can’t rush it, you have to be ready at a point where you see the switch and the switch for me was about two years in – we hit every target, operational performance went up, the stats were there for everyone to see, projects were going faster, the transformation of moving to Bangalore was working really well and suddenly it was, ‘yeah Craig, great slides on cost but tell us a bit more on your ideas on….’
“Suddenly I could go in and have a completely different conversation. Now we can get onto the real conversation of competitive advantage of digitisation.”
Credibility was also the end-game for Walker’s shake-up of his entire department, with the CIO changing out nearly his whole team in order to better focus on three core factors which were “amazingly important to the transformation journey.”
The first of these three core areas was commercialisation, for the the IT function to become commercially orientated. The CIO demanded his team to know and understand how the business makes money and how IT can add value to the downstream.
The second was focused on business outcome, with his department asked to understand the business case of any project or programme. Lastly, the third factor was for IT to become one team, with the CIO telling CBR:
“IT are there own worst enemies by saying this is IT and then there is the business.
“Im not sure there is anything that the business does that doesn’t require a huge dollop of IT these days. Actually we are in the middle of enabling just about everything that’s being done.
“Clearly its time the IT function was not the IT function, we may wish to do that structurally, but from a mindset point of view its the business. How come the people that are front and centre of your whole delivery drive business engine are not at the table? Well, its credibility.”
Walker has spent the last three years “ruthlessly” focusing on the business, building IT’s role in downstream. His team have been charged in becoming a key part of the business, one which is not just a function, but an integral part of the decision-making process. Again, building IT’s credibility within the business.
“You have to be in the room when the business talks strategy or talks any business decision. We have made gazillion dollar mistakes by not realising where the IT was going to take us.”
Walker has succeeded in building credibility in both his own capacity as CIO and in regards to his IT department – and it couldn’t have come at a more important time as market incumbents look to disrupt the oil giant. Although Walker admitted to CBR that he is worried about rivals like BP, it was the Teslas and the Alibabas of the world which worried him more;
“Those people are now after my space, trying to get my customers, cutting the oil company out of the equation.”
Now that Walker has earned a space at the table to talk about digitisation and disruption, the challenge now lies in taking risks and delivering true disruption to the business.
“Am I fundamentally changing the game? Am I fundamentally putting such a different thing out there that I’m disputing my own business. Because 20 million people are looking at where I make money and are out to disrupt me and take my money. I would rather disrupt myself, so the challenge is how we are going to disrupt ourselves.
“You have to teach people to take a little more risk. A big company like Shell, we don’t like failing – actually when I first joined Shell a guy said to me, ‘you known what Craig, Shell doesn’t always like to be first, but it doesn’t like to be second either. We like to be somewhere inbetween.’ But that doesn’t really work in this world, there is always a first mover advantage if you can get it right, but you have got to be prepared to try it out.”
READ MORE: The CIO’s Dilemma
Unfortunately for Shell, there have already been some early disruptors to the oil industry. A year ago WeFuel hit the market in California, with the app delivering petrol to parked cars and cutting the oil company out of the picture. Bentley has also done something similar in California, telling customers that they never need fill up again if they buy a Bentley.
“Where’s my brand loyalty gone?” Asked the CIO.
“Even if I am the most Shell devout person in the world, Bentley are fuelling it for me. I’m paying a service fee and surely they are going to put the best fuel in it for the Bentley car because they want me to enjoy driving it and they don’t want to wreck their engine. But its not my decision, its theirs.”
To put this in perspective, Shell fuels an airplane somewhere in the world every 12 seconds – if a similar service was rolled out for planes it would mean huge losses for the oil company .
In order to fight back against this service business model daring to cut the big oil companies out of the market, Walker is encouraging his team to think like a start-up. Sending his staff to innovation hubs like Shoreditch, he is asking his team to solve problems and take risks. For Walker, if risk-taking ends in a failed project, so what – nothing lost, nothing gained. This is when he goes back full-circle to the importance of credibility – in order to disrupt business, risks must be taken and failures accepted. It is the CIO’s credibility which will carry him or her through failures to the success and disruption craved by the business.
“Things still go wrong,” said Walker, “that happens, but as long as you have built that credibility you are on the right path.”
