OIL COMPANIES ON BURNING PLATFORMS
Our goal must be to do our best and ensure oil companies do not go into flames due to factors beyond them
“BURNING platform” is a business lexicon that emphasises immediate and radical change due to dire circumstances. The origin of this term comes from a story of a man on an oil platform that caught fire in the North Sea.
He was awakened by a terrible explosion and fire. He had seconds to make a decision-either to jump into the freezing water of the North Sea or remain on the burning platform. His philosophy was “better probable death than certain death.” He jumped into the freezing sea and was rescued on the verge of death.
“Many years ago, my mentor told me the following, “you must work as though the entire world is depending on you to survive or as though this is your last day to make an impact on earth.”
Four years later, I thought my mentor was so cruel with me and came to the brink of disengaging him. Not any more, little did I realise he was trying to permanently alter some aspects of my mindset including inculcating a higher level sense of urgency and pro-activity at that time.
Some aspects of our lives can lead to dire consequences and you wonder why certain things happen a certain way to us. We are a mirror image of our thoughts, words and actions. Our lives can go in flames. The oil companies we belong to and which serve us can go into flames due to factors within and beyond their control. We can bring ourselves to living a life of firefighting every day.
This is very painful and frustrating. Sometimes, we seek to maintain a status quo and fail to align with evolving positive trends until something major hits us.
Thomas Paine once said, “a long habit of not thinking a thing wrong gives it a superficial appearance of being right.” Many of us seem comfortable pretending things are alright when they are not. Our lives are in flames. Our organisations are in flames.
And this brings me to the topic of today-“Oil Company in flames.” My focus is on the internal happenings of an oil company. Oil companies all over the world exist in extremely competitive environments.
They are looked at as prestigious and money spinners. Infact even oil company employees are thought of being wealthy. When people hear you work for such and such an oil company, they smell a lot of money on you. They accuse you of getting free fuel, hiking pump prices, owning farms, automobiles, holidays so on and so forth. When people look into the car parks of oil companies, they get perplexed.
But many oil companies and their dealers are going through significant challenges mainly because of factors beyond their control in a regulated environment and ever growing competition. If nothing is done about it urgently, most of them could become a burning platform if not already one.
Last month, one executive
in the oil industry lamented to me the extent of losses they are making and at one time they came to the brink of almost stop importing fuel and remain dry due to the extent of the losses they were making.
In my research paper for my MBA in 2012 titled “Success and Failure Factors of Operating a Fuel Franchise,” I discovered that thousands of petrol stations close or are given up every year even in the most developed countries due to factors within and beyond their control.
The biggest worrying factor which is eroding the regulated margins is the exchange rate movements and that the cost of doing business has significantly gone up. Fuel prices on the international market have also been going up. Industry rivalry and new entrants are also threats.
The Petroleum Transporters Association of Zambia (PTAZ) has also become very powerful and can now dictate what happens in the industry. In the next 5 to 10 years, PTAZ could emerge to be the most powerful force to reckon with in the industry. As at now they have achieved unity of purpose amongst themselves and if they refuse to drive, the industry gets plunged into a burning platform.
Financial houses such as banks also look at oil companies as money spinners due to huge turn over they see in the accounts. The reality is that some oil companies are doing fine yet many are undergoing through serious challenges. They are a burning platform.
When you see continuous employee turnover, the company could be a burning platform. When you see banks refusing to give you loans, you could be a burning platform. If you can’t survive without overdrafts and credit you could be a burning platform.
Burning platform can manifest itself through the state of your financials and ability to remain an attractive destination. Negative inflections (events) can also render an organisation a burning platform. Consistent loss of market share and margin can one day render you a burning platform.
And this is the reality on the ground; consistent loss of market share and a margin under consistent and pro-longed weight of the exchange rate among other negative factors must not be left unchecked for long.
Poor internal controls and processes that are not responsive will ignite the platform and so is ill discipline among the employees and colonies (dealers). When you see dealers giving up, it is sign not to be taken lightly. When you see oil companies giving up on some filling stations and retrenching, it is a sign. They could be a burning platform already or they are trying to avoid a burning platform ahead.
If you are not able to do good things you used to do and enjoy due to circumstances beyond your control, it is a sign. When you start failing or struggling to pay your suppliers and employees, it is a sign of a burning platform. When adulterating fuel, changing scales and theft become part of your culture, you are a burning platform already. You are surviving on criminality.
If failing to comply with license conditions is becoming part of your culture, you are already a burning platform. You will lose the organisation one day. If you are spending more time fighting too many court cases trying to put out fire; you are a burning platform. If the life of what has been your main stay is under consistent threat, one day you will be rendered a burning platform. If you cannot accumulate money in your bank account or maintain a status quo but you are depleting, you are in serious danger of becoming a burning platform if not one already.
In all these instances and many more than I have not highlighted, there is a way things can be turned around. Sometimes split second decision making is required.
All of your knowledge, education, experience, reasoning, intuition, common sense and confidence must come together extremely rapidly to deliver change from different key stakeholders. If these qualities are not available in house, outsource. Go for radical measures and create a positive turn around.