Missed Signals
Every day brings new headlines concerning Shell's booking of oil reserves. This is the typical pattern for scandals of this type. While I've made the odd comment along the way, here, there have generally been enough other topics to talk about, and the FT, WSJ, and NYT are generally doing just fine covering the story. When I thought about it this morning, though, I finally realized what had bothered me most about the revelations concerning Shell's top management. It wasn't just that Shell had a solid reputation in the industry. My discomfort stems from what I do for a living.

For the last seven years I have been involved in scenario planning, initially within a major oil company and now as an independent strategy consultant. In the world of scenario planning, Shell was the great groundbreaker, developer of many of the techniques still used, and most visible and vocal corporate practitioner of the technique. Just go to their website and look at all the information and articles devoted to the subject, as well as current and past scenario output.

The disconnect is not that Shell didn't have some previously worked out scenario dealing with a corporate scandal--they might--but that an organization that so rigorously analyzes the major social, political, and economic trends and forces shaping the world in which they do business should have failed to internalize the learnings from that work at the highest levels in the company.

In particular, consider their concept of TINA, "There Is No Alternative." As I understand it from reading their publicly available material, TINA would include the increased need for transparency, something Shell has embraced in the context of corruption. But somehow that didn't translate into elevating transparency with shareholders into a deeply-held value at the top. The principles are the same.

My purpose is not to pillory Shell. Rather, this should be another loud wake-up call to business across the board, as if Enron, WorldCom, Parmalat, et al weren't adequate clarions. Simply put, it's what so many managers derisively refer to as the "soft stuff", the things that constantly get trumped by the expediency of meeting this quarter's numbers. Getting the soft stuff wrong can cost you far more than any deficiency in your basic operations.

Having processes, programs and standards in place is not sufficient, if the leadership does not live by the principles behind them, and apply those principles equally to areas that were not their original focus. All the scenario planning in the world is pointless, if the human beings who commission it and participate in it are unwilling to accept what it tells them about the changing external world.