Innovative Ideas for the Shell Company - Essay Example

?Shell UK Innovation Introduction The oil and gas industry have been experiencing the imminent threat of scar of resources and increased competition (Crooks, 2010). Furthermore, there are increasing geographical challenges as the companies explore resources in among the worst conditions in the world. Owing to these issues in the industry companies including Shell are advised to come up with new and innovative ideas to deal with the global energy crisis. Oil and gas companies are exploring ways of maximising their profits by minimising costs incurred in the production process. Shell UK has been reviewing its supply chain and looking into ways in which it can improve its production through innovation and technology (Shell UK Plc., 2012). This paper identifies opportunities and inhibitors of creativity in the company and their impact on organisational performance of Shell. Additionally it identifies one innovation that would have made the most impact on Shell and individual contribution towards the company’s creative ability by applying the relevant theories. Shell UK has the key responsibility to meet energy demand and provide affordable and clean energy. The company is in the second spot in the UK market and the fifth largest globally. It is the leading tax payer in the economy and the number one company in market capitalisation. The company was established in 1897 and has opened offices in various parts of the country. Though the company’s business has reduced slightly in the recent past, it is still one of the leading companies in the UK. Shell UK boasts of having a workforce composed of 6400 skilled workers and a sufficient number of contractors (Shell UK Plc., 2012). The UK market is unique since it has like- minded climate policies and international ideologies of leadership shared by Shell UK. Lastly, the UK population is a rich source of brilliant recruits that specialise in the Projects and Technology and Upstream where they bring their invaluable knowledge in leadership and management capacities. Background of the Company Shell is an energy company that operates the oil and gas sectors in the United Kingdom. The company concentrates on fuel service systems that manufacture a variety of chemicals and fuels for industrial use and domestic use. Additionally, the company takes part in research projects which include technologies that are involved in engineering, lubricants, additives and the environment. The company’s main core objectives focus on helping the company meet the international demand for energy at low prices, provide competitive shareholder gains and to be a future energy provider. The company’s activities can be broken down into three categories, Upstream, Downstream and Projects and Technology (Shell UK Plc., 2012). The company organization is in line with the definition of an organization since it is a social entity that has clearly laid out objectives, boundaries and a well developed structure (Butler, 1991). However, the organizational structure is characterized by bureaucracy and has limitations bound by the entity’s rules and regulations. The strategic and tactical levels in the organization can be viewed to the major agents of change. Shell UK Nature of Change In the modern world, the future of the organization has become increasingly unpredictable (Furnham, 2000). Additionally, the oil and gas industry which Shell operates in have been experiencing the imminent threat of scarcity of resources and increased competition (Crooks, 2010). This section gives a discussion of its external environment since it is believed to have a profound influence on the company’s activity (Brooks, 2004). The strong influence on the external environment can be traced by analyzing the socio- cultural and technological factors (Senior & Swailes, 2010). Some of the socio- cultural factors affecting the company are caused by the company’s exploration activities in harsh enironments. In the recent past, Shell UK suffered from a huge capital spending followed by a considerable reduction in the level of production (Shell Group Plc., 2012). A practical example of this scenario is the suspension of production activities in the Niger Delta in Africa due to military interruption (Pink, 2008:57). This had a profound impact on the company’s financial statements as this program failed to yield the desired profits. The other issue adversely affecting the company’s operations is the lack of incorporation of new technology systems in the company’s operations. This can be attributed to the company’s failure to invest in alternative sources of energy that would have saved the company from investing in unsuccessful exploration ventures such as the ones in Iraq and Nigeria. Application of modern technology mostly in supply chain management is not impressive also the company’s commitment towards the exploration of alternative sources of energy is questionable. The main inhibitors facing Shell’s innovation is lack of flexibility in the adoption of new technology. The company uses the method of flaring and burning gas as a technique of disposing wastes which is an outdated method and is environmentally unfriendly. The company’s operations are too rigid and it is complex to integrate new and inventive techniques in their production process. This can be observed from the unparallel focus it gives towards high cost exploration projects for oil and gas (Shell UK Plc., 2012). This clearly shows that Shell is not fully committed towards creative and innovative energy solutions. This major factor affecting the entity’s operations with regards to technology lies in its supply chain (Ramalhinho, 2001: 15). As earlier explained, the gas industry operates as a global supply chain that involves the use of modern technology, local and international transportation, handling of raw materials among other functions. The sector stipulates the application of a strong model for employing supply chain management operations (Chima, 2007:50). The company’s supply chain is characterised by several operations including drilling, producing and refining. Shell UK has several subsidiaries making decentralised decisions to maximise their profits, this leads to lack of co- ordination and inefficiency in the supply chain. In addition to this, it results to breach of one of the original objectives of the company which is to put the customers’ needs first. Other problems encountered include delays in deliveries leading to high operational costs and longer production times. The above factors demonstrate the changes should be made in the external and internal environments of the company in order to come up with sustainable energy and maximize their profits. The organization has acknowledged the need to implement structural and organizational change as explained by Mason (2007). In general, organizations should pursue external integration and internal integration (Schein, 1998). This calls for the fast paced response to new opportunities and threats occurring in the market to deal with any unforeseen surprises (Ansoff & McDonell, 1990). Level and Type of Change The alpha, beta and gamma model of change discovered by (Golembiewski, Billingsley, & Yeager, 1976) measures the change in accordance to the level perceived by different stakeholders in the organization. The stakeholders and their level of influence can be shown by the power matrix in the figure below. Stakeholder Mapping: The power/interest matrix (Mendelow, 1986) cited in (Johnson, Whittington, & Scholes, 2011). Level of Interest The company’s major stakeholders are shown in the figure below and each of them has a varying level of interest and power in the company’s operations. There have been different levels of change owing to the differentiated stakeholders and their level of influence can be explained using the ‘power matrix’ above. The major stakeholders are the shareholders who are considered to be at the ‘beta’ level of the power matrix. The stakeholders can introduce subtle but arousing change in the organization. “Beta’ change is inconsistent and can cause a major turmoil in the organization. ‘Alpha’ change can be defined as the constant change in the organization and can be measured accurately. This relates to all matters pertaining to leadership in the company. However, leadership in the perfectly fine and is fully committed towards achieving the company’s goals and objectives. Finally, ‘gamma’ change results to redefinition or revolution which leads to a paradigm shift and it is referred to as the ‘big bang’ change (Golembiewski, Billingsley, & Yeager, 1976). This can lead to the dismissal of major employees in the employees who are considered to be ‘trouble makers’ in the organization. The change that has taken place in the entity over time has been dramatic, systematic at organic at time as shown in ‘The Change Triangle’. This model demonstrates how different stakeholders respond to change in the organization. The change in the organization can be described as being systematic as it was driven by specialists in the organization. The overall change in the entity can be shown by the ‘major types of change model’ shown in the figure below. Strategy for change implemented There has been so much controversy surrounding the Lewin Model and the Ice Cube Model of change. It would be wise to qualify Lewin’s model as an outdated one but his contribution to organizational change has been of great importance. A more in depth understanding of the change implemented in ‘Shell Uk’ can be understood by combining (Kotter, 1996) 8 stage model theories on how to implement change with (Lewin, 1951) ‘Ice cube model’. Impact of Opportunities and Inhibitors of Creativity and Innovation on Organisational Performance The opportunities available to the company if appropriately exploited can give a competitive edge over its major competitors. The company can explore the alternative sources of energy including exploration of hydro carbon and bio fuel energy to diversify the forms of energy available to the population. Innovation is arguably the best ways of ensuring that the company stands out from other competitors (Bruton and White, 2007:56). This will give the firm a sustainable advantage by ensuring that their products are outstanding in the market. Strategic innovation takes place in several levels that should be surveyed by the company to achieve the required level of technology. These include volume innovation, value innovation, market innovation, cost innovation, boundary innovation and most importantly knowledge innovation. The demand for alternative sources of energy has increased over the years due to the depletion of natural resources. Thereby Shell should be more committed towards the course of alternative sources of energy to increase their profits presently and in future. The company has continued to face increasing setbacks over the year arising from its operations in the oil industry (Shell UK Plc., 2012). The inhibitors facing the company’s innovation have further worsened the situation. These include stringent government regulations, growing competition, increased political risks and emerging hostiles in areas endowed with oil resources. The industry is characterised by harsh competition over the available resources. This has forced the company to produce oil from hostile environment which tends to be extremely risky and expensive. There is growing concern of the scarcity of resources and in the coming years Shell UK may not be able to meet the quantity demanded by their customers (Shell UK Plc., 2012). In the real sense, scarcity of resources is not the cause of supply restrictions as there are ongoing discoveries in different parts of the world. The major problem facing the company is the using the available resources to produce the final product at the least cost possible. Supply chain management is considered to be the company’s strongest window to the application of innovation and technology (Shell Group Plc., 2012). However, this has not been the case as there has been limited application of innovations in this sector. The core objective of a supply chain is to offer the best customer service at minimal operational costs of the company. An efficient supply chain requires the application of several strategic practices so as to achieve the most important goal. The company’s supply chain is characterised by lack of co- ordination and inefficiency in the supply chain. In addition to this, it results to breach of one of the original objectives of the company which is to put the customers’ needs first. Other problems encountered include delays in deliveries leading to high operational costs and longer production times. Innovation that can have the Most Impact on Shell The one thing that should be change in relation to Shell’s innovation is its commitment towards alternative sources of energy and deep water mining. Global oil companies are moving to deep water mining of oil (Shell UK Plc., 2012). This technique has shown great promise but requires huge capital investments to implement. Though this innovation is politically and technologically challenging, its results are impressive and this gives more reason as to why the company should look into this option. The main focus of this project would be deep water mining is to produce oil from the sea, come up with an environmentally friendly way of producing energy and minimise any legal problems with regards to energy production (Shell UK Plc., 2012). In addition to this, hydrocarbons are considered to be the most economic form of energy to date. It is believed that natural gas will play a key role in dealing with the global energy crisis and bring the much needed paradigm shift to enhance its demand. In conclusion, Shell should replace oil production with ethanol production that has proven to be cheaper and presents less environmental problems. These innovations will result to the availability of cheaper, sustainable and environmentally friendly energy for the current and future generations. Individual’s and Group Contribution towards the Creative Ability in Shell Developing an entity’s individual and organisational creativity is an important aspect of overall innovation and technology. Creativity is referred to as the process of having authentic ideas that add value to the company’s operations (Tiegland, 2010). Shell UK considers individual’s contribution towards innovation an invaluable asset towards the entity (Shell Group Plc. 2012). The company has employed over two thousand workers mainly in Projects and Technology and in Upstream. These workers bring their innovative thinking and expertise to the firm’s supply chain (Buzan and Buzan, 2006:27). The company’s Project and Technology department plays an important role since it is responsible for the generation of innovations. It is heavily funded to enable it execute its mandate. The company encourages its employees to be innovative and share information among their colleagues on any ideas brilliant ideas they come across (Christensen, 1997:45). The management has set policies that govern the innovative operations in the company. One of the popular models that can be used to manage innovation in Shell UK is John Cooke’s Cyclical Innovation Process Model. The model focuses on management of innovation for the future benefit of the company (Cooke, 2010). There are three main areas that can be used to determine the path to be taken by the innovation process. Firstly, there is need to establish the value model and the business process. It is crucial to find out the company’s history, the management’s attitude towards innovation and the drive for innovation in the company. The heart of innovation in Shell UK lies in the production process and there is need to improve the supply chain so as to boost production at low costs. Moreover, it is mandatory to evaluate the current processes in the company. This helps identify the innovation progress made by the capital and their views on asset and capital spending. It can be observed that the company has made huge steps towards improved innovation; however, the company can improve on certain areas especially in the overall production process. Individuals are encouraged to exploit their creativity by coming up with ideas that are of value to the entity (Amabile, 1996:70). They are advised to categorise their thoughts by considering their differences and similarities (Ken, 2010:30). They should understand that innovation is of a greater value to the entity than information itself. Information is power therefore the employees are encouraged to share their ideas among themselves and to the top management (Howard, 2009:18; Burk, 2010). This gives a framework for the ideas to be improved through contribution by other employees and for facilitation by management. Shell instils creative thinking in their workers by allowing innovativeness in the company and managing it (Csikszentmihalyi, 1997:34). This is by encouraging habits and routines such as sharing of creative ideas. The management on the other hand manages these ideas and implements the ones that are credible. The company has set policies and regulations with regards to innovation. The fear and resistance of change among the employees is handled through timely and effective communication concerning these changes (Sloane, 2007). Innovation and creativity are considered to be intellectual property therefore they are patented. This prevents duplication of the technology by other players in the oil industry (Buzan and Buzan 2006:27). The company should invest in IT to augment its network and database and this improves the flow of information and sharing of ideas. Shell UK should encourage the culture of information sharing as it is more important than Information Technology itself (Hartley and Rowley, 2008:34). This is highly dependent on the contribution by workers as they must learn how to gather information, develop it and share it for the greater good of the company (Debowski, 2006:34). In addition to, employees should have a proper understanding of the technology that is used to generate and share information. The company ensures safety of workers by ensuring their safety in their line of work. When workers work in safe environment, they are able to deliver and this contributes to the overall performance of the company. In a nutshell, the creative capabilities of employees should be managed also; the management should create and enhance the culture of creativity. Conclusion Innovation is regarded to be an ongoing process in the oil production industry. In order for Shell UK to promote innovation and creativity in the organisation, the company needs to actualise the ongoing changes in the business world, level of competition, technology and demographics and become accustomed to these changes. Currently, the company is working for a cleaner and sustainable source of energy to be used by the future generations. This explains why the company has directed its resources towards the development of natural gas. Gas is better to use, abundant and affordable. In the near future, the company will focus on the production of more gas than oil and is employing new technologies to obtain liquefied natural gas so as to meet the increasing demand for energy in the UK. 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