Dr' William H' Glick

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Plenary Session Three
Thought Leadership onRisk and Change
Dr. William H. Glick Dean and H. Joe Nelson III
Professor of Management at the Jesse H. Jones
Graduate School of Business Rice University
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Perfect Storm

• Is the current storm good or bad for your firm?

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Returning to Normal Profits

• Are you trying to be the first in your sector to
  return to normal profitability?

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Silver Lining in Storm Cloud

• Watch out for emergencies. They are your big
  chance.
• Fritz Reiner
• Symphonic Conductor

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Dont waste a crisis

• "Never let a serious crisis go to wasteit's an
  opportunity to do things you couldn't do before.
  
• Rahm Emmanuel
• White House Chief of Staff

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Crisis is an Asset

• When you have a crisis, the crisis itself
  becomes one of your biggest assets Everyone
  gets very modest and humble and listens. If you
  need to do rough things, you do rough things.
• Carl-Henric Svanberg
• President and CEO of Ericsson
• Incoming Chairman of BP

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Crises Force Us to Think

• " Crises and deadlocks have at least this
  advantage, that they force us to think.
• Jawaharlal Nehru
• First Prime Minister of India

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Academic Perspective

• There is no crisis to which academics will not
  respond with a seminar.
• Old saying

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Crises Stimulate Change

Great Depression
Photocopies
Television
Paperback Books
Jet Engine
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Crises Stimulate Change

• Great Depression

LSD
Car Radio
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Dot.Bomb
Crises Stimulate Change
iTunes 99 Solution
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Reinvention as Competency

• Seismic Exploration to Submarine Detection
• Cell Phones to Embedded Processors

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Capacity to Change

• Energy Industry has Demonstrated Capacity to
  Change
• Deep sea exploration
• Sugar based ethanol

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Confronting Change

• Mergers National Oil Companies

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What happens to you?

• Disrupted or Disruptive Innovator?
• How can you survive and thrive as the change
  leader?

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Simple Model of Change
Unfreeze
Move
Refreeze
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Challenge of Change
Unfreeze

• Knowing when to change
• Challenging beliefs

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Supply Chain Volatility AmplificationThe
Bullwhip Effect
Retailer
Customer
Distributor
Factory
Equipment
Tier 1 Supplier
Information lags Delivery lags Over- and under
ordering Misperceptions of feedback Lumpiness in
ordering Chain accumulations
SOLUTIONS Countercyclical Markets Countercyclical
Technologies Collaborative channel mgmt.
(Cincinnati Milacron Boeing)
Source Fine, MIT
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Feeling the Crack of the Whip

• Are you on the wrong end of the bull whip?

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Scapegoats

• Is Scapegoating effective?

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Unfreezing Beliefs

• Lead, follow, or get out of the way
• We have a winning team, but game has changed
• Compelling case for action/ burning platform
• Reframing context as opportunity rather than a
  threat

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Opportunities for Change
Move

• Creative exploration
• Thriving on knowledge of others
• Crafting a vision
• Communicating a vision

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Reinforcing Change
Refreeze

• Small wins
• Positive reinforcement
• Creating heroes

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Simple Model of Change
Unfreeze
Move
Refreeze
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Which Crisis?

• Which crisis will give you the greatest
  opportunity?
• Access to reserves (4)
• Uncertain energy policy (6)
• Price volatility (new)
• Cost containment (3)
• Worsening fiscal terms (2)
• Human capital deficit (1)
• Climate environmental concerns (8)
• Competing services from IOCS OFS (new)
• Supply shocks (9)
• Aging infrastructure (new)

2009 (2008) Ernst Young Business Risk Report
Oil Gas
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Legacy of 1980s

• Lessons from the past
• Dramatic down-sizing
• Inability to predict long-term prices
• Bullwhip effects on supply chain
• Talent supply chain

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Rebuilding Talent Supply

• Executive Education
• Executive, Professional, and Full-time MBAs
• Undergraduates
• K-12 focus on science and math

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Energy at Rice

• Center for Energy Education Leadership
• Jones Graduate School of Business
• Rice MBA concentration in energy management
• Fulbright Jaworski Energy Directors Conference
• Energy Finance Forum
• Baker Institute for Public Policy
• Richard E. Smalley Institute for Nanoscale
  Science Technology /AEC
• Rices Energy Environmental Systems Institute

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Conclusion

• Strategic change starts with an idea
• The winner in the next decade will be the
  smartest investor, not the first to turn a profit