By Babs Omotowa
Steve Jobs in 1985 foresaw computing in homes and for recreation, rather than just an office tool. He took action and grew Apple, to put “computer in a book” and today Apple is valued at $2 trillion.
A leader must always look beyond the present, to assess the future, communicate with and enroll stakeholders, and proactively implement solutions to harvest opportunities or to protect the entity.
By end 2012, my first year as CEO of NLNG, we had grown revenue to $11bn (from average $6bn) by producing more LNG, selling to profitable markets in Asia, and benefiting from high oil price.
We declared the highest dividend ever ($5bn) and paid generous bonus to the employees. Everyone celebrated and looked forward to a rosy future,
However, as CEO, I was worried.
I had analyzed that the future would be challenging. The global debt crisis would affect demand for our product. Competition would be fiercer with Qatar, Australia and USA building new plants. Renewables, growing fast due climate change would compete. Our business environment will be more challenging with end of our tax holiday and new regulations. I also foresaw that the then high oil price would be followed by crash, due the history of price cycles since 1970.
These strong headwinds that I saw, contrasted to stakeholders’ optimism. Many couldn’t reconcile the record performance with the headwinds. It was like a football team on top of the league, whose supporters were blind to the growing problems of youth development, unhappy players or increasing debt.
This was a dilemma and wasn’t going to be easy!
As such it was important to raise awareness of this imminent threat and develop proactive responses. I shared the analysis with the board, management, staff, and externally I spoke about the “closing window of opportunity” to take action.
I began to plan how to prepare the company for the headwinds. I developed “A to B” pathway of where we were and where we needed to be. I then set up a Transformation Improvement Team (Project TIM) composed of talented staff, to develop and implement strategies. It had four streams, each supported by a consultancy firm, and steered by a member of my management team.
Big changes come with big steps and big risks.
The Culture stream went very well with huge staff involvement and developed 10-behaviors such as teamwork to integrate the prevailing silos.
The Commercial stream went well as additional new markets in Asia were identified, domestic LPG driven and the pursuit of growth (Train 7).
The Cost stream reduced cost by 40% although some aspects were not so popular like changing the practice of all staff going on overseas course every year, to local training.
The Organization stream did not go smoothly. It was contentious and had to be phased as the Board did not support holistic change. Typical resistance to change by beneficiaries of status quo as well as some shareholder discomfort due historical mistrust, were some of the challenges.
The period was challenging for all and I later discovered that staff began to call me “Hurricane Babs” behind my back.
By 2015, oil prices fell 80% from $140 to $30pb, revenues fell by 50% to $6bn and fell further in 2016 to $5bln. Oil price has remained $20-70pb since and competition became fierce with Qatar, Australia, USA and growing renewables.
The anticipation of the headwinds and proactive actions, enabled NLNG to weather the storm and stay profitable despite low revenues. It enabled decent returns to shareholders, and unlike other oil and gas companies who resorted to staff layoffs, as a knee-jerk response to lower revenues, NLNG did not lay off a single staff and company flourished.
It was only then that staff and shareholders came to appreciate the foresight during the prosperity period (fat cows), that helped to prepare for the years of drought (skinny cows).
There were some elements of the change program that could have been done better like engaging more, and addressing stakeholders concerns earlier. However a leader must always have the courage to take needed actions, as leadership is not about popularity or majority opinion, but about molding consensus and doing the right thing.
Are there any lessons from this for Nigeria?
Leaders, at all levels, must be proactive and plan for the future, as leadership is not only about the present. Looking back, our population growth was foreseeable and we should have taken actions in past years, to have built additional infrastructures for electricity, rail, road. We should have foreseen the security threats we are now facing, and should have in the past, strengthened our security forces with the latest technology and equipment, and progressed community policing and avoided the kidnapping and banditry scourge. We must now regain foothold on our security and infrastructure, as these are essential for our progress.
But the past is past, so now looking forward
Climate change will impact our future and we should accelerate our pace of diversifying from oil and increase local produce and manufacturing. The 4th industrial revolution with digital technology (like artificial intelligence) will shape the future and we should prepare our youths now with the right skills and capabilities, and reshape our industries to compete globally. Health will be a future challenge with our current lifestyles and we should start getting our public health systems and insurance sector ready. The loss of core values in society is glaring and fracturing of our cohesion is growing, and as such we should drive citizen reorientation. We should develop 25-50 year national plan, with key stakeholders involved, and given a legislative backing, so that it is sustained, irrespective of any political party in government.
We cannot afford to remain like the servant, who chose to bury the talent that his master had given him, instead of utilizing it to multiply.
We have what it takes to be great. Let’s do it.
(Partly culled from the Amazon #1 best seller book “From Storeroom to Boardroom” which can be bought on Amazon and will be in bookstores in Nigeria later in the year)