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Implementing Statoil’s Ambition to Action management model Slide 1 Implementing Statoil’s Ambition to Action management model Slide 2 Implementing Statoil’s Ambition to Action management model Slide 3 Implementing Statoil’s Ambition to Action management model Slide 4 Implementing Statoil’s Ambition to Action management model Slide 5 Implementing Statoil’s Ambition to Action management model Slide 6 Implementing Statoil’s Ambition to Action management model Slide 7 Implementing Statoil’s Ambition to Action management model Slide 8 Implementing Statoil’s Ambition to Action management model Slide 9 Implementing Statoil’s Ambition to Action management model Slide 10 Implementing Statoil’s Ambition to Action management model Slide 11 Implementing Statoil’s Ambition to Action management model Slide 12 Implementing Statoil’s Ambition to Action management model Slide 13 Implementing Statoil’s Ambition to Action management model Slide 14 Implementing Statoil’s Ambition to Action management model Slide 15 Implementing Statoil’s Ambition to Action management model Slide 16 Implementing Statoil’s Ambition to Action management model Slide 17 Implementing Statoil’s Ambition to Action management model Slide 18
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Implementing Statoil’s Ambition to Action management model

  1. 1. Beyond Budgeting - the Statoil implementation Bjarte Bogsnes Vice President - Performance Management Development Chairman - Beyond Budgeting Round table Europe 1-
  2. 2. Statoil in brief • Turnover and market cap Arctic approx. 75 bn. USD North Sea & Norwegian Sea • 20.000 employees in 34 countries Russia • World’s largest operator in Canada waters deeper than 100 metres Caspian • Second largest gas exporter to North Africa Europe US Gulf of Mexico Middle East • World leader of crude oil sales • Listed in New York and Oslo South America West Africa Current production of oil and gas 2-
  3. 3. Fortune 500 ranking (2011) Social responsibility Innovation 3-
  4. 4. The Beyond Budgeting principles Change in leadership Change in processes 1. Values - Govern through a few clear values, goals and 7. Goals - Set relative goals for continuous improvement, boundaries, not detailed rules and budgets don’t negotiate fixed performance contracts 2. Performance - Create a high performance climate 8. Rewards - Reward shared success based on relative based on relative success, not on meeting fixed targets performance, not on meeting fixed targets 3. Transparency - Promote open information for self 9. Planning - Make planning a continuous and inclusive management, don’t restrict it hierarchically process, not a top-down annual event 4. Organization - Organize as a network of lean, 10. Coordination - Coordinate interactions dynamically, not accountable teams, not around centralized functions through annual planning cycles 5. Autonomy - Give teams the freedom and capability to 11. Resources - Make resources available as needed, not act; don’t micro-manage them through annual budget allocations 6. Customers - Focus everyone on improving customer 12. Controls - Base controls on relative indicators and outcomes, not on hierarchical relationships trends, not on variances against plan 4 - Classification: Internal 2011-08-15
  5. 5. Start of the Statoil journey - solving a serious budget conflict Step 1 Step 2 The budget purposes Separate Improve • Ambitious Target • Relative KPIs where possible What we want • Holistic performance evaluation Budget = to happen •Target • Unbiased - expected outcome Forecast • Limited detail •Forecast What we think will happen • Dynamic - no annual allocation •Resource allocation • KPI targets, mandates, decision Resource gates & decision criteria allocation • Trend monitoring “Same number – “Event driven conflicting purposes” ”Different numbers” - not calendar driven” 5-
  6. 6. Key principles – Ambition to Action Performance is ultimately about performing better than those we compare ourselves with 6-
  7. 7. Statoil financial performance - as we define it Total shareholder return 2011 Return on capital (ROCE) 2011
  8. 8. Key principles – Ambition to Action Performance is Do the right Within this ultimately about thing in the framework, performing actual situation, resources are better than guided by the made available those we Statoil Book, or allocated compare your Ambition to case-by-case ourselves with action, decision criteria & authorities and sound business judgement 8-
  9. 9. Spending wisely - the CFO on cost culture Classification: 9 Internal 2011-11-24
  10. 10. Key principles – Ambition to Action Performance is Do the right Within this Business follow Performance ultimately about thing in the framework, up is forward evaluation is a performing actual situation, resources are looking and holistic better than guided by the made available action oriented assessment of those we Statoil Book, or allocated delivery and compare your Ambition to case-by-case behaviour ourselves with action, decision criteria & authorities and sound business judgement 10 -
  11. 11. The CEO on Ambition to Action 11 -
  12. 12. Ambition to Action - purpose and process • Translating strategy - from ambitions to actions • Securing flexibility - room to act and perform • Activating values and leadership principles Strategic Actions & Individual objectives KPIs forecasts or team goals Where are we going – How do we measure How do we get What is my or our what does success progress? there? contribution? look like? • Most important strategic • Indicative measure of • Concrete actions and My Performance Goals change areas strategic delivery expected delivery • Delivery • Medium term horizon • 10-12 KPI’s, shorter/ (forecast) • Behaviour longer term targets • Clear deadlines and accountabilities 12 -
  13. 13. Ambition to Action example People & Organisation Where are we How do going? we get HSE ”Strategic there? objectives” How do we measure ”Actions” Operations progress? Market ”Key Performance Indicators” Finance
  14. 14. More than 1600 ”Ambition to Action’s” across the company …..and more 14 -
  15. 15. Towards a simpler, more dynamic and self- regulating Ambition to Action process More cost conscious - less «cost cutting» More event driven - less calendar driven More translation - less cascading More relative - less absolute KPIs ”Giving Ambition to Action back to the line” Classificati on: Internal 2011-09-07
  16. 16. Implementation advice • Create problem understanding before talking solutions • What’s the real risk – upside vs downside • Design to 80% and jump • A ”pull-based” approach • ”One war but a thousand battles” • Don’t become a fundamentalist Classif ication: Interna
  17. 17. Questions or comments - now or later? Bjarte Bogsnes bjbo@statoil.com + 47 916 13 843 Twitter @bbogsnes Beyond Budgeting Round Table www.bbrt.org 17 -
  18. 18. Want to hear more? 1. The problems with traditional management 2. The Beyond Budgeting model 3. The Borealis case 4. The Statoil case 5. Implementation advice Out on Wiley (US) Available from e.g. Amazon.co.uk (Now available in Russian and Japanese) 18 -
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