Energy firms can keep small problems from turning into major process issues by transforming into a High Reliability Organization.
ow often are you or your team called on to stomp out fires in your organization?
By one account, managers spend as much as 65 percent of their time engaged in “firefighting” — that is, dealing with unexpected events, issues or problems in the workplace. "Firefighting is one of the most serious problems facing many managers of complex, change-driven processes,” says management expert Roger Bohn, Ph.D., in the Harvard Business Review.
Rather than stomping around, a better strategy for dealing with fires is to snuff out the sparks before they have a chance to grow into full-blown conflagrations. In other words, anticipate events, issues or problems and gain control prior to an event occurring.
This is especially crucial within the energy sector, where a seemingly minor issue can develop into a major disaster. Witness the BP Deepwater Horizon explosion in 2010, where lax oversight of the condition of an underwater safety device resulted in the worst oil spill in U.S. history and multiple deaths.
One way that energy firms, and others, can get ahead of an issue is by transforming into a High Reliability Organization (HRO).
An HRO creates a number of established systems that promote consistency and keep the focus on achieving company goals while avoiding major errors. These systems not only make the HRO more nimble, responsive and functional than a non-HRO competitor, but they alsodeliver more efficiently.
A Frank Assessment of Operations
The HRO approach is familiar in many sectors of the business world, but energy firms are just starting to adopt its principles. The timing of that trend couldn’t come soon enough with developing threats in the field, including cyber attackers targeting control systems and weather extremes making facilities vulnerable to disruption in the business cycle.
The first step in the transformation process is a frank assessment of operations. Managers must be ruthless and preemptively and transparently address any barriers that may slow implementation. They must establish a vision for the transformation, set egos aside, communicate clearly and often and make implicit to the organization how the transition will be different from those of the past.
It’s also important to implement accurate measurements and targets, provide opportunities for training and role model the behaviors of an HRO.
Still, one assessment rises above all others: addressing overall organizational health.
Organizational health is the softer side of the business that is frequently dismissed because it is often viewed as both difficult to revamp and even more difficult to measure. While it’s true that revamping can be a challenge, there are in fact various metrics for determining organizational health within the energy sector that relate to EBITDA, cost per barrel and working capital, to name three.
A healthy organization is agile; it constantly learns and adjusts to current stimuli and has a future focus that evolves over time. This dynamism is the ultimate competitive advantage, says Patrick Leconi in his book The Advantage: Why Organizational Health Trumps Everything Else in Business. Leconi further contends it is even more important than the competitive edge based on intelligence.
Is Your Organization an HRO?
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Clearly, successful change and transformation are accomplished by focusing on organizational health and performance. They cannot be accomplished separately or in silos. They must be executed in concert to achieve the desired long-term sustainable outcomes.
Yes, transforming to an HRO requires due diligence and quite possibly an overhaul of culture. But the good news is that starting the process pays quick dividends that presage long-term benefits. Time-wasting behaviors are eliminated, for instance, and the ability to spot problems earlier ramps up.
What follows is a checklist of general traits and characteristics related to an HRO that can help you assess your organization’s readiness and health.
If you find yourself answering no to a number of the above questions, your organization may need to address its reliability and its health.
Your organization may need to stop stomping around and start transforming.