Corporate Learning Strategy as a Requirement
to Outperform the Competition in
Exploration & Production (Oil & Gas sector)
Final project Master of Business Administration Part-time, year 2
Ms Mira Zhukenova Student number: 10598448 Supervisor: Prof. Martijn Rademakers Submission date: 31 August 2015
Abstract / Executive Summary
Management practices differ and over the years, East and West each have developed their own favourite approach, structures and strategies. The most recent market developments, however, force developed and developing countries alike to re-evaluate their approach. Corporations the world over are restructuring to cope with the current downturn and to prepare for difficult times ahead.
The only way forward, is to find a way to become more adaptable in the shortest possible time. For developing countries, most of which still adhere to time-honoured decision models and structures, this means a far-reaching change in their traditional approach.
This article discusses the concept of a learning organization within its application in the management practice. It is a comparative analysis of the traditional and the modern concepts in Kazakhstan and other foreign corporations. Examples of the effective use of modern techniques are given, with the vector indicating the direction of further development of the concept.
Table of Contents
I. Introduction ... 4
II. Framing ... 6
A. Corporate learning strategy framework ... 6
B. Leadership concept ... 9
C. The role of HRM ... 9
III. Case description ... 11
A. Comparative analysis of other leading Oil & Gas companies ... 11
B. Analyse the current strategy of my company ... 13
IV. Results ... 19 V. Conclusions /Recommendations ... 22 VI. References ... 24 VII. Appendices ... 25 A. Tables ... 25 B. Figures ... 29
I. Introduction
Today’s markets are becoming increasingly more complicated, and companies face a much stronger competition in their attempts at obtaining resources (assets, human capital, finance, technologies etc.). In particular the oil & gas industry is affected, where from a long-term perspective, investments in new assets and human capital for the exploration and production sector are vital. The worldwide declining curve of limited natural resources on the one hand, and the volatility of the oil & gas market on the other, add even more complexity to the issue.
In August 2015, all worldwide markets faced next financial crisis: 1) a drop in all stock markets indices
2) a drop in the value of the currencies of developing countries;
3) a continuing decline in oil prices. China is considered to be the world leader in oil & gas consumption, and as a result, all attention is on the Chinese stock market, which is experiencing its worst days since 2007.
The global markets are close to panic right now, because of the recently updated six-year minimum oil prices. In May 2015, all analysts predicted oil prices at $62 per barrel (Brent), but current expectations are only $ 49.5 per barrel, or even lower (Figure 1).
Kazakhstan is one of the developing countries, and depends heavily оn its oil & gas industry. A decline in oil prices significantly affects the entire Kazakh economy. On 20 August 2015, Kazkahstan opted for a free-floating exchange rate rather than the regulated currency band for its tenge. The new policy resulted in a depreciation of the national currency by 36%. The top management now faces the following questions:
- How to reform the corporate strategy to allow the company to survive the current crisis and to align its strategy with the ambitious goals?
- What changes are needed to respond to, to remain one step ahead and be in control of such an ever-changing environment?
Corporate strategic plans are no longer set in stone, as they used to be. Whereas before, the CEO would outline them, and the lower echelons would put them into effect, these days a much more fluid approach is required. The strategic plan will contain fewer details, and leave more room for adjustments along the way. This is necessary, since the market is changing rapidly all the time and the speed with which an organization can respond to changed market circumstances may well determine whether it succeeds or fails. The company needs to become a learning organization, and to optimize, renew and implement its strategy through corporate learning.
Continuous learning and improvement is an integral part of the culture of most successful companies. Continuous learning is of direct value, but it also helps companies solve the problems it is faced with by constantly coming up with alternative solutions to reduce the likelihood of such difficulties in the future. Nowadays, lifelong learning is one of the most important and reliable competitive advantages for any company.
That’s why I would like to explore the following research question: “What corporate learning strategy is necessary to outperform the competition, particularly in the Exploration & Production sector?”
II. Framing
From my point of view, there are a lot of academic frameworks and concepts underlying this complex topic. But I would like to address my research area by using the following frameworks :
Corporate learning strategy framework; Leadership concept;
HRM role.
A. Corporate learning strategy framework
Taking into account the worldwide conferences, fora and management literature, the «learning organization» concept has become one of the most popular topics since 1990s (J. Byrne, “Management's New Gurus”, Business Week, August 31, 1992, p.44; Organizational Dynamics magazine, Fall 1993).
There is no one single definition of a learning organization, but the experts reflect a variety of key aspects in their definitions of such an organization:
• Continuous improvement through rapid creation and empowerment, which are necessary for future success (Wick and Leon);
• Promotion of training for all employees and permanent transformation (Pedler);
• Skills and knowledge creation and sharing, as well as behavioural changes that are needed to implement the new knowledge and understanding (Garvin).
A learning organization is a structure in which every employee involved in the process of identifying and solving problems allows the entire organization to develop, to experiment, to find the most productive ways of working. The term was coined by Peter Senge, a prominent American scientist, author of the book "The Fifth Discipline: The Art and Practice of the Learning Organization".
According to Peter Senge, a number of principles and technologies form the basis of a learning organization. These are:
• Personal Mastery - People work on their skills and look for new knowledge, not just because of the requirements of their environment and circumstances, but on their own initiative, because of an innate need.
• Creating a shared vision – This is based on the notion that the greatest success in achieving the overall objectives of the group is, to obtain a clear image of the organization’s overall desired future, which would be fully understood and shared by all employees. This not only improves the consistency of the work, but generates a sincere personal interest in the results as well.
• Group learning – This involves the creation of communal knowledge, that is to say, the education of people in group interaction at the level of individual teams, and of the organization as a whole. This does not only happen in trainings, workshops and seminars, but throughout the work process, through open dialogue, discussions and the exchange of experiences. The result of group learning is a synergistic effect, when it becomes something more than just a collection of people, and their combined knowledge exceeds the simple sum of all the individuals’ separate knowledge.
• Identify prevailing mental models – Mental models are defined as inferred, implicit and unspoken, and sometimes not even realized representations, images and beliefs inherent in people. These mental models may prevent people to learn, since they come into conflict with new ways of behavior. An analysis of existing stereotypes and mental models is required for a successful implementation of change.
• System thinking – This sums up all of the above, and refers to the ability of a profound and comprehensive understanding of the causal links and relationships between the global developments.
It is worth noting that the European concept of a learning organization has its own characteristics, but is not radically different from the one proposed by Senge. It was designed by T. Boydell, P. Dixon .
European authors believe that a real learning organization has 11 main characteristics and that a comparative analysis of the learning and the traditional organizations clearly shows the benefits of the learning organization in the modern world (Table I).
Table I – Characteristics of learning organization.
1 The approach to the strategy that can be considered "learning" as well as the organization itself. (The main philosophy is about constant change, improvement, revision of plans, and current problems)
2 Management policy, based on the involvement of employees (participative policy). 3 Openness and availability of information.
4 Control of organizational performance, accounting of errors.
5 Constant internal exchange of services within the organization. (Subdivisions can act at their own discretion)
6 A fair system compensation of employees. (Objectively evaluated contribution to the total activity).
7 The structure, which gives the prospect of growth (especially promotions) .. 8 Regular review of business environment.
9 Organizational projects should be held in conjunction with the associated groups. 10 The climate within the company enabling environment for learning.
11 The focus on self-development of employees.
The comparative analysis of traditional and learning organizations is presented in the following (Table II).
We come to the conclusion that the concept of the traditional organization is viable in an industrial society, where the goal of the firm is to meet the massive demand and the organization’s expansion is a component of success. The vast majority of organizations in 19th and 20th century, of course, were based on this traditional concept and met the requirements of their time. The famous company of Henry Ford, for instance, in the early part of the 20th century, was built along a traditional organizational structure, in conditions of imperfect competition, which, at the initial stage of the automobile market, was effective. However, you cannot dispute the fact that in today's world, the trend of transition into an information society - a society in which knowledge, information and creative approach of the work play a fundamental part, which implies change in the organizational structure. In addition, the high level of competition becomes a catalyst for innovation.
B. Leadership concept
Leadership is essential factor for any organization’s success and survival. One common definition of leadership is as follows: «Leadership is the influential increment over and above mechanical compliance with the routine directives of the organization». (Katz & Kahn, 1978)
To adapt to the current environment, leaders need to learn new ways, such as to manoeuver, to be self-aware, to be comfortable with ambiguity, to think strategically, and to move away from isolated behavioural competencies toward complex “thinking” abilities. “Organizations have grown skilled at developing individual leader competencies, but have mostly ignored the challenge of transforming their leader’s mind-set from one level to the next. Today’s horizontal development within a mind-set must give way to the vertical development of bigger minds” (McGuire and Rhodes, 2009).
McGuire and Rhodes (2009) describe vertical development as a three-stage process:
1. Awaken: The person becomes aware that there is a different way of making sense of the world and that it is possible to do things in a new way. Confronted with increased complexity and challenge that can’t be reconciled with what you know and can do at your current level, you are forced to take the next step .
2. Unlearn and discern: Old assumptions should be reconsider and replaced by new assumptions , new possibilities for one’s day-to-day work and life.
3. Advance: new ideas are stronger and replace the old ones.
It is time to “transcend and include” the leadership competency ‘mentality’, to be able to develop our leaders horizontally AND vertically at the same time.
Leadership is important factor for corporate learning strategy. C. The role of HRM
Today, “achieving organizational excellence must be the work of HR, through a focus on learning, quality, teamwork, and reengineering” (Ulrich ,1998)
The consequences for HR leaders are a combination of the new roles:
Partner in Strategy Execution – the HR leader should be a partner with senior and line managers in strategy execution, and ought to proactively participate in how the company should be organized to carry out its strategy. For these purposes, HR should help managers by
1) playing the role of an architect, identify the company's way of doing business,
2) identifying which components of the company must change in order to facilitate strategy execution, and by conducting an organizational audit.
3) proposing and creating the best practices in culture change programs
4) by setting priorities and assessing the impact and importance of each initiative that is really aligned with strategy implementation
Administrative expert - HR has 1) to improve the efficiency of both their own HR function and the entire organization by finding and fixing administrative processes. To making the business processes better, faster, and cheaper is part of the work of the new HR, 2) to implement a system to share administrative services.
Employee Champion - HR must 1) be accountable for ensuring that employees are engaged and contribute fully, 2) orienting and training line management about how to achieve high employee morale and how to achieve it, 3) HR should be the employees' voice in management discussions offer employees opportunities for personal and professional growth and represent employees' views and supports their rights.
Change agent - 1) Building capacity for organizational adaptation by defining change initiatives, 2) Helping employees work with necessary changes in work design, behaviours, etc, 3) introducing a change model to their organizations and create the conditions for this model.
“Successful organizations need to develop these roles will he those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions for seamless change” (Ulrich ,1998).
I will explore in my case how is important role of HRM in the strategy development and implementation .
III. Case description
Here in section “A” I would like to compare the corporate strategies of the world’s leading oil & gas companies in terms of critical success factors, effectiveness, growth and opportunities, to learn and understand the underlying theories and concepts of their corporate learning strategies. Then in section “B” I will try to analyse the current strategy of my company, its limitations and established practices that hinder the company in its growth. A. Comparative analysis of other leading Oil & Gas companies
Statoil - Norway's national oil company, began to implement international projects with expertise accumulated in national projects. Its R&D segment is divided on the basis of business clusters. On the upper level, there are three clusters: Norway, the international clusters, and North America. The company has operations in 35 countries. In international business, Statoil focuses on participation in primarily offshore projects, where its expertise and technology provide the Company’s greatest competitive advantages. The company is actively developing its shale gas, which should help realize the ambitious growth plans of the company to 2.7% per year.
Features of Statoil’s management model:
1. Statoil uses a model with a very high degree of centralization, all international activities are managed from Norway.
2. The international project management is centralized: the most part of technicians is located in Norway.
3. The financial responsibility for each level of management is limited. Regional offices have an extremely low own responsibility: almost all decisions are made in the company headquarter.
4. The centralized model provides a high degree of control of the international operations, but reduces the level of flexibility in decision-making.
Statoil’s Corporate learning strategy:
• To provide a supportive culture at all levels of the organization, that appreciates and stimulates innovation;
• The appropriate level of human and financial investment, both internally and externally,
• The openness of thinking and willingness to cooperate, including the desire to learn Innovation is part of the company's strategy and is encouraged by the
management;
• An integrated staff evaluation system includes a component for knowledge and innovation sharing;
• The value of innovation is broadcast at all levels of the company and is set by Senior Management;
• The organizational structure supports teamwork, not just within teams, but also between departments.
LUKOIL, Russian oil&gas company, is characterized by the very mature and autonomous management models of its international activities. LUKOIL entered its first international project having acquired a 10% stake in the largest oilfield in Azerbaijan’s sector of the Caspian Sea in 1994. In 1997, Lukoil Overseas Holding Ltd. was registered abroad (BVI), and endowed with a fairly high degree of autonomy. Lukoil Overseas conducts business in 13 countries. Thanks to Lukoil Overseas, OAO LUKOIL is the leader among the Russian oil companies in reserves and production of oil and gas abroad.
The features of the LUKOIL management model:
1. Since Lukoil Overseas had a very significant operational autonomy in management models from the very beginning, the company’s management has considerable potential for the introduction of advanced management practices.
2. Lukoil Overseas has considerable operating autonomy, and is a full-scale functional independent oil company of international class.
3. The structure of LUKOIL Overseas varies with the number of projects and the volume of transactions, and currently uses functional and regional structures.
4. All of the major investment and operating decisions are approved by the parent company, despite Lukoil Overseas’ purported broad operational autonomy.
LUKOIL’s corporate learning strategy includes but is not limited to:
• Developing the ability to initiate change, and to actively and effectively manage it, • Construction of internal corporate communication and knowledge management
system
Learn from and share not just the successes, but also the failures.
Royal Dutch/Shell is one of the world’s largest international energy and petrochemical companies, with around 94,000 people in more than 70 countries and territories. Today, SHELL has hundreds subsidiaries around the world, which are managed independently by multinationals teams with full autonomy at decision-making level.
Shell's strategy is «to generate profitable growth to go forward with our investment programme, to deliver sustainable growth and to provide competitive returns to shareholders, while helping to meet global energy demand in a responsible way» (http://www.shell.com).
Shell, as one of the first major corporations, realized the benefits of accelerating the learning process across the organization. The extraordinary success of the company in the Seventies and Eighties was largely the result of the fact that the company learned to identify prevailing mental models and “scenario planning”.
B. Analyse the current strategy of my company
My company, KazMunaiGas Exploration Production JSC (“the Company” or “KMG EP”) is the leading oil & gas companies in Kazakhstan, and is specialized in hydrocarbon exploration and production. In accordance with the company strategy (Table III), one of the most important objectives is to explore over 240 million tons of oil & gas by 2020.
We plan to achieve this by acquiring new assets. In 2011, the Company decided to expand its portfolio with offshore and natural gas assets by entering into the international projects, e.g. the ‘White Bear’ joint project with the BG Group (UK), and by setting up an international
office in Amsterdam. We now have a very complex corporate structure with several joint ventures with various partners from different countries. (Figure 2).
According to our strategy, the following regions are considered ‘high potentials’:
1) CIS: Caspian region: Russia, Turkmenistan, Uzbekistan and others. The priority of KMG EP is the acquisition of exploration blocks and projects where there is a possible substantial increase in production, then the acquisition of existing production assets, if possible with low lifting costs.
2) Foreign countries: Middle East, Iraq, North Africa, Vietnam and unlicensed perspective areas of Northern and Barents Seas.
Accordingly, the initial strategy of entering foreign markets will be based on partnership with international oil and gas companies, to obtain experience in managing international projects, as well as access to modern technology. In the future, KMG EP will strive to develop oil and gas projects abroad independently.
For the further effective implementation of the growth strategy, an increase of competitiveness in the international oil and gas market, and an efficient management of the international assets, it is essential to at least:
create operating project companies and companies for tax optimization, and to set-up further management of these companies,
create and apply new methods in management and business development abroad, which will allow quick decision-making and an effective response to any change in a situation in the countries of presence,
develop contacts with the authorities and the national companies from those countries, that represent a strategic interest for KMG EP,
hire personnel with knowledge of the regional geology of oil and gas basins and with operational experience of field development in various countries, by creating a Technical Expertise Centre.
The expansion of scope and geography of foreign operations created the need to improve the corporate strategy. The new corporate strategy should ensure manageability of the
foreign network and an efficient interaction between KMG EP and foreign projects in terms of allocation of:
• functions • authority • responsibility
The inevitable consequence of access to international markets is the need to work in a new business environment. Changes in the business environment arising from the transition to foreign operations are:
• broader access to the resource base of other countries • an increased level of competition
• a new administrative-legal and socio-economic environment
As the company enters the international market, it faces a wide range of projects in the field of oil and gas reserves and gets broader access to employment, financial and technological resources. At the same time, the company is confronted by a higher level of competition, both for supplies and human resources, technology and capital. Moreover, the new administrative-legal and socio-economic conditions of operating in new countries need to be considered. For successful operations in the new business environment, our company needs to solve a number of problems (Table IV).
These objectives can be reached through implementation of a corporate learning strategy. For these reasons I would like to analyse the current learning strategy of the Company, its limitations and the established practices that hinder the company in its growth.
Currently, the concept of the learning organization in my company is limited to group training in the "Corporate University" Samruk-Kazyna ". It is formed by a group of Kazakh oil and gas companies according to the latest trends in corporate education on 30 March 2004. Until 12 November 2009, the institution was referred to as the United Centre of Staff Development JSC "National Company KazMunayGas". Kazakhstan Corporate University is first of all a place where professionals from different companies meet each other. It is, in
fact, a kind of professional community, where they are trained, solve problems and share solutions to common problems.
Meanwhile, KMG EP’s training budgets, especially those for external education, decreased significantly. First and foremost because of the crisis. Secondly, the external training ceased to satisfy the needs of the company. It is very difficult to say how much corporate training costs in Kazakhstan, because our personnel statistics are confidential, whereas the Western companies do not hide such figures: they are proud of. It can be said that in KMG, this percentage varies from 3 to 7% of all operating expenses.
In contrast to spot learning, the Corporate University (the Corporate Training Centre) has a slightly different approach to the company’s organizational training. The approach is systematically different. It is based on the concept of competence - the knowledge and skills required for personnel to effectively implement the specific functionality. But unlike the situational training, in this case it analyses not only the tactical, but also the strategical needs of staff knowledge and skills.
Such centres, to a certain degree, exist in many companies. The most famous of them are Charles Schwab University, Motorola University, Oracle University, University of Toyota and Shell Academy. They not only create a positive image of their companies, but also bring real benefits. Each of these educational institutions managed to align their activities with the company's strategy, to use advanced technology to support the learning process, and to improve partnerships with suitable providers of educational services in order to enhance organizational learning and, most importantly, to measure the results.
However, we must also consider that, for various reasons, the system remains an outside education for KMG, that does not have a close link with the everyday practice, nor the real concept of a learning organization. It seems that a substitution of problem and symptomatic solution occurred. "Decisions aimed only at symptoms, not the basic cause of the problem, at best bring only a short-term improvement" (Peter Senge, 1990).
Let's explore how the Company gains knowledge at all levels, how people make decisions, and how information flows are organized, using the example of one of the existing international project «White Bear».
Due to the limited opportunities for substantial growth in Kazakhstan, KMG EP in 2010 acquired a stake in a project in the North Sea, «White Bear».
The White Bear Project offered KMG EP a chance to participate in the drilling of a High Pressure-High Temperature exploration prospect within the East Central Graben of the UK North Sea. BG offered KMG EP the potential to take equity of between 30-35% in the licence, which BG currently holds 100%. The initial project was to drill White Bear West, which is the largest of the three fault blocks in the prospect (Figure 3).
Figure 3: Location of White Bear block
Project sanction was anticipated in 2014 after an appraisal stage with first gas in 2016. The 100% cost of the exploration works was estimated as 15.7 mln US dollars (KMG EP share is 5.5 mln.US dollars) in 2010 and 106.7 mln US dollars (KMG EP share is 37.3 mln.US dollars) in 2011 (in case of success expenditures at exploration stage will increase 139.9 mln.US dollars on 100% basis due to well testing).
Participation in this venture was KMG EP's first entry into international exploration project. This project failed because of the following :
The organizational structure, business processes and procedures in KMG EP do not meet the needs of business development, asset acquisitions (including international) and international project management.
Absence of mobility at decision-making, associated with long processes of any management decision’s approval.
The cost accounting in KMG EP within the limits of the existing system does not allow separate accounting for specific projects (for future cost recovery).
Each international project requires at least 20 high-qualified specialists. In our company HRM has only the traditional “Administrative expert” role.
IV. Results
The concept of a learning organization is based on several key components that ensure the learning process: organizational structure, employees with more extensive powers to take a decision on their level, free flows of information, leadership, “five disciplines”, HRM role. A modern company with a full set of these components is more competitive, mobile and flexible than its competitors.
Taking into account the current strategy of my company, I would like to prepare my framework of a new corporate learning strategy as follows:
To be in-control in such a market requires a change in the structure, from physical resources to tacit uncodified personal knowledge and resourcefulness. In order to have the most valuable resource, i.e. human capital, the responsibility of our management is to create ‘a confidence and trust for creative knowledge workers to interact with each other, to be mobile and mobilize themselves on issues to be solved” (Groysberg & Abrahams, 2008), with a free flow of ideas, resource mobilization, a clear purpose and real objectives, access to information, fast feedback, and a tolerance for errors. Due to the fact that individual behaviour is mostly influenced by context, our management has to have enough courage to redesign the systematic context (structure, authorities, rewards system and role expectation) to fit the new strategy. These updated conditions will help create more inspirational behaviour (initiatives, ideas) developed by professionals.
To be effective in dynamic complex environments, our company should respond effectively to these changes by replacing the classical organization’s traditional ideas by a set of specific social, administrative and technical measures regarding authority, control, management and rewards. It requires a number of measures, such as:
a. information (both internal and external); b. a way to organise decision-making; c. a way to run meetings;
To translate the values into the system, we should codify them into system procedures and contracts. In our multidimensional organization, control should be programmed in the employees’ implicit knowledge, the firm's culture, its values, institutions, attitudes, etc. (Strikwerda, J, (2010)).
It is known that most organizations generally focus their efforts on how to ensure the transfer of explicit knowledge. Doing so is simply easier, because the explicit knowledge is easy to organize and store, and is not difficult to pass on. Tacit knowledge is much more difficult to organize and transfer, and it is only transferred by strong links and relationships between all key stakeholders. Such knowledge is a personal experience of people that reflects their attitudes, beliefs, values, and personal style of a particular activity. Tacit knowledge, "know-how" is the competitive advantage and the secret of success of the company. Therefore, tacit knowledge is more important than explicit knowledge.
These days, it is difficult to change people’s mentality. Our company needs leaders, who are able to see the big picture; who can transform the company’s mental models and the corporate strategy of whole organization at every level and create a dramatically different future. For instance, our CEO can arrange special meetings, where employees can share their experience and new mental models, discuss problems and suggest their ideas on how to settle them, and create a common vision. The same approach, “hansei”, is implemented in some Japanese companies. A common vision and collective ideas about the ways of its development are important to motivate employees. The common goals change the relationship between people and the company. This is not “their”, but “our” company. The common vison is the first step to create trust between people. Employees will be actively involved in the development of strategies and tactics of the organization.
One of the methods of the operation and the development of a learning organization is group learning. This can take on different forms, both traditional and new, for instance mentoring, brainstorming, analysis of cases. How effective is group learns, depends on several factors. These include the potential of mentoring, limitations within the organization, the culture of learning, and information infrastructure.
The importance of group learning in organizations is, that investments in human capital can easily be lost in the event of layoffs if knowledge has the nature of an individual domain, not a group domain. This determines the importance of preventing employee turnover, and therefore requires efficient and professional management. Lifelong learning: a philosophy, in which staff training is considered valuable. It is lacking in many of the companies in which it is not considered necessary to encourage tuition, but is often found to be a waste of time. In doing so, companies are losing the huge benefits that could result from the application of knowledge, and in the end, knowledge itself. If the company is focused on continuous learning, learning becomes the essence of its culture; at the same time it is closely connected with the work and contributes to the continuous improvement of its results. Very good results are gained from the approach in which learning is built into the work process, and moving up the career ladder depends the success of it. And it is not that employees have no choice but to learn. Education helps them in their work, making it easier, more efficient and more interesting. And, when finding effective solutions to the problems arising in the work, employees can share them with colleagues and, ultimately, will begin to teach others.
The system’s thinking approach has to be implemented to penetrate the dynamic complexity (where cause and effect are separated in time and space, and clearly useful measures do not provide the expected results) to see the deep structures generating change and interdependence, to identify cycle processes, strengthening and constraints factors. This is important to be able to analyse the information properly. The collection and analysis of information about what is happening in and around the organization should be the responsibility of each employee.
V. Conclusions /Recommendations
Based on all my research , I can conclude with the following recommendations :
1. Our management should thoroughly review the concept of a learning organization. Because learning organizations are more competitive, they change rapidly, and therefore, can adapt quickly to the ever changing conditions and market requirements. 2. Learning organizations accumulate not only knowledge, but also the experience,
creating new ideas, as well as methods of action. The point is not simply to increase the qualification, but to build the capacity of flexibility, variability and adaptability. Solving any current problem, a learning organization has set itself the goal of not only achieving the desired result, but also of gaining training experience in the process of problem-solving. Sometimes, these organizations, too, are defined as intelligent organizations, in the sense that they share a high ability to receive, analyse, interpret, and finally, generate new information and new ideas.
3. The application of the concept is quite effective if a set of relevant factors exist (i.e. the preconditions for implementation).
4. The terms and conditions of doing business in Kazakhstan, as well as the local mentality (desire for stability) make it more difficult to apply the concept on the basis of domestic companies.
5. When the company decides on the establishment of corporate learning strategy, it also faces the challenge of the attached real difficulties. There are numerous risks associated with the practical development of the theory, which are difficult to avoid and do not lean towards the traditional concept. In my opinion, we should be cautious when applying the concept of a learning organization, because the level of organizational culture in companies is different, and the professional and managerial skills of employees are often doubtful. A win-win option appears to be a partial, gradual and smooth adoption of the principles and ideas of building a learning organization.
6. In order to adequately respond to changes and to adapt to the dynamics of the external environment, it is necessary to rely on trained professionals. This requires a system that would bring the meaning and details of the changes to each employee’s mind or to each process’ participant, yet still maintain the foundations of the corporate culture. Since changes occur all the time, the system must be constantly
working. Knowledge and experience have become the most important resource, thus companies seek to manage them effectively. For this purpose, a corporate knowledge management system can be formed.
Corporate learning strategy is necessary to outperform the competition, particularly in the Exploration & Production sector. It is a very important issue for the Company, as shown by the transformation/restructuring process that was initiated by our new top-management in 2014 and continues in 2015. Based on the results of my research, I would like to prepare a presentation for the Board of the Directors of the Company. I expect to deliver this presentation by December 2015.
VI. References
• Bob De Wit and Ron Meyer (2010), “Strategy Synthesis: Resolving strategy paradoxes to create competitive advantage”;
• Martijn F. Rademakers (2014), “Corporate Universities. Drivers of the learning organization”;
• Peter Senge (1990),“The Fifth Discipline”;
• Allen M. (2007),”The next generation of Corporate universities”; • D. N. Michael (1973), “On Learning to Plan — and Planning to Learn”;
• Barry Nuhan, Peter Cressey, Massimo Tomassini (2003), “Facing up to the learning organization challenge”;
• Simonin B. L. (1997),” The importance of collaborative know-how: An empirical test of the learning organization “;
• Watkins K. E., Marsick V. J.(1993),” Sculpting the learning organization: Lessons in the art and science of systemic change”;
• Pfeffer, (1998),“The Human Equation: Building Profits by Putting People First”; • Strikwerda, J, (2010), “Command & Control in the Mulitidimensional Organization”;
• Garvin, D. A., & Roberto, M. A. (2005). Change Through Persuasion. Harvard Business
Review. (February), 10.
• Reeves, M., & Deimler, M. (2011),” Adaptability: The New Competitive Advantage. Harvard Business Review(July-August), 135-141.
• J. Byrne (1993), “Management's New Gurus”.
• Nick Petrie (2014), Future trends in Leadership Development, • McGuire and Rhodes, (2009), Transforming your leadership culture. • Katz, D., & Kahn, R. L. (1978). Social psychology of organizations,
• Groysberg & Abrahams, 2008. Duane Morris: Balancing Growth and Culture at a Law Firm.
• Ulrich (1998), “A new mandate for Human resources”
• Dixon, N. (1994) The Organizational Learning Cycle. How we can learn collectively, London: McGraw-Hill.
• Pedler, M., Burgoyne, J. and Boydell, T. (1991, 1996) The Learning Company. A strategy for sustainable development,
VII. Appendices
A. Tables
Table II - The comparative analysis of traditional and learning organizations.
Organization type Traditional Organization Learning organization
Organization Structure Hierarchy or a top-down structure Matrix, projects
Status of Employee Defined, and fixed by employee position Matches to knowledge, skills, and gained professional competence
Decision-Making Management by instructions The decision depends on the specific situation Employee duties Limited by rules and conventions The ability to take the initiative and
independent decision-making Attitude to Conflicts Very negative, conflicts considered to be
destructive
Discussions are allowed The interaction of employees with
each other
Missing or minimized Constant interaction, exchange of information, and opinions are encouraged
Attitude to Information Information is closed, inaccessible Information is available, communications are welcomed and encouraged
Table III - New Strategy KMG EP 2011-2020 (approved by KMG EP BOD 13.12.10) The growth of hydrocarbons production and
reserves The profitability of existing assets and new assets The development of new business competences Maintain current oil production at existing
fields of the Company
Increase the recovery rate at existing fields of the Company
Conduct of exploration in highly prospective exploration areas inside and outside of Kazakhstan, and additional exploration at existing fields
Acquire new assets, both in Kazakhstan and abroad, mainly in selected focus regions Expand the Company assets portfolio
through offshore projects and natural gas assets
Improved cost management Improved efficiency of business
processes and technological processes, including through their automation
Implementation of new technologies Optimization of assets structure and
business management model
Establishment of long-term
partnership agreements with major oil and gas companies in exploration and production and services
Training and development of highly qualified personnel
Development of own technical and technological expertise
Development of experience in offshore projects, gas business and international assets management.
Table IV- KMG EP ‘s current problems
№ Problem Solution Description
1 The increased number of players magnifies the risk of losing in competition for more perspective projects to more mobile and effectively controlled companies, with faster decision-making system. It requires high speed of decision making in a competitive environment.
The optimum number of levels of
management required. To improve the speed of decision-making the number of management levels should be kept as low as possible without the loss of control (levels of management, which are only a link of information transfer should be eliminated).
Effective delegation of authority to lower levels (including the increase in the financial responsibility).
To improve the speed of decision-making, the model should allow to delegate all operational and a reasonable portion of investment decisions on the level of local operating unit (of asset), covering risks of monitoring system, but not excessive involvement of corporate center.
Balanced system of administrative control providing necessary and not excessive level of control over foreign oil and gas assets
The management model must ensure the
implementation of management control systems, ensuring the realization of a coherent strategy and a clear coordination of all foreign network
2 The implementation of the expanded access to foreign technology resources requires establishment of an effective knowledge management system
An effective system of technological knowledge (accumulation and exchange).
Management Model should ensure implementation of the accumulation system (both organizational and informational) of technological knowledge and experience; this would ensure that the knowledge is available to all interested parties (including units in the leading projects within the domestic market). In addition, the system should collect information available in the global market about technology and competencies, and select the most promising of them.
3 The sharp increase of competition in the markets of high-tech services dictates the need for collaboration with leading multinational service companies.
Established system of technological cooperation with leading
multinational service companies.
The management model should allow to enter into partnerships with leading oil and gas and oil service companies - owners of advanced technologies, and to provide experience of interaction with them on international projects.
4 Implementation of expanded access to international financial markets requires the provision of a significantly higher quality of financial services.
Significant training of financial services in the use of various
financial instruments available in the international financial markets.
Since the range of financial instruments available in international markets, is wider than on the domestic market and the conditions of access to them are different, it is necessary to ensure the availability of experts with knowledge and experience in the international financial markets.
5 Possible requirements for local hiring of personnel to a significant extent. The specifics of foreign labor law with regard to conditions of employment. The specifics of of interaction with the local trade unions. Limitation on the use national personnel in other countries due to language and other barriers.
Ensuring constant access to information about local labor markets.
Management model should ensure system
implementation of collection, storage, updating of information on the available workforce, their level of qualifications and restrictions imposed in the regions of presence.
Staff mobility and the opportunity, if necessary, to move into new regions of experts for the transfer of
expertise
Management Model should provide an opportunity to quickly move the human resources between projects, in case of shortage of specialists and the need to transfer knowledge and experience
B. Figures
Figure 2 - KMG EP holding structure (source: KMG EP internal prepsentations ) KazMunaiGas Exploration Production JSC
(Kazakhstan)
KMG EP Finance Ltd. (British Virgin Islands)
KMG EP Netherlands Energy Coöperatief U.A. (Netherlands) CCEL (Canada) Cooperatieve KMG EP UA (Netherlands) CCPL (Canada) 100% 50% 4,9% 95,1% 4,9% 95,1% 100% KBM, Argymak, TulparMunai (Kazakhstan) 100% KMG PetroKazakhstan Inc (Canada) 100% 33 % Ural Group Ltd. (British Virgin Islands)
JV with MoL, FIOC
Ural Oil & Gas LTD (Kazakhstan) 50% 100% KMG EP RF HOLDING BV (Netherlands) KMG EP UK (United Kingdom) PKKR, TP 100%
