Why The Oil and Gas Industry Needs to Disrupt Status Quo to Future Proof Business
| Mar 14, 2019 | 3 min read
If you sell anywhere along the Oil & Gas value chain, you will know full well the volatility of oil prices over the past 50 years. You could argue that disruption is nothing new to this environment in which you operate and have survived so far – so you must be doing something right (see the OPEC Basket Price).
However, with a myriad of compounding factors (including the Paris Agreement of 2015) you would be hard pressed to find a time when the industry has been in a greater state of flux. Even if you’ve weathered every storm to date, it doesn’t necessarily mean you’re prepared for what may come tomorrow.
With that said, it’s interesting to observe that even in a turbulent industry in a turbulent time, so many Oil & Gas value chain companies hang to a status quo posture of ‘do nothing, whether the storm, and things will eventually bounce back’. This is especially true with regards to Sales and Marketing strategies, which have lagged far behind technological advancements and innovation.
This fact is very concerning. In a highly volatile, complex and often brutal economic climate, survival of the fittest hinges on redefining a company’s go-to-market model. If you don’t innovate, you won’t survive.
I personally saw this best exemplified in an IT solutions provider to Oil & Gas companies I once worked with in the Middle East. This Mid-Market player sold IT and Telecom solutions exclusively to upstream oil field service companies. Its offering was mainly ‘IT-out-of-the-box’ soft- and hardware solutions. Twenty years of steady growth made this company overly confident in its ability to manage the typical economic swings. Leadership had forgotten the key question of Oil & Gas; business may be booming today, but what if it busts tomorrow?
Then the 2014 oil downturn hit, and 10s of service companies, especially in the upstream Oil & Gas sector, went out of business every day (see Forbes: The 15 Biggest Oil Bankruptcies). Our Mid-Market friends initially adopted the ‘weather the storm and bounce back’ posture until the pain became too great. The company started losing hundreds of thousands in revenue, witnessed unprecedented levels of staff attrition and saw its market share rapidly disappear. This was a wake up call. Adapt or die!
Thankfully, our Mid-Market friends reconnected with their primary sense of purpose (their Customers) and put these Customers at the heart of their go-to-market strategy. The goal became efficiency expertise or knowing the Customer’s business better than the Customer did. As a result, Sales reps started delivering commercial insight Customers had not considered or prioritized; and highlighted ways to save money and avoid risk. This represented a fundamental change in the sales experience and led right back to their IT solutions in a unique and compelling way.
If the recent downturn taught us anything, it’s that organisations across the Oil & Gas value chain must have go-to-market strategies strong enough to handle inevitable market shocks. Investing in Sales and Marketing talent and leveraging a robust go-to-market plan isn’t a nice-to-have, it’s future proofing the business.
For those in the Oil & Gas value chain, finding themselves in this situation, I recommend focusing first on changing three areas of the status quo mindset:
To learn more on disrupting the status quo, see how Siemens is thriving by using Challenger to understand their new Customers.
Damian Howard is a Senior Business Development Manager at Challenger, advising organisations on commercial strategy and transformation within the Energy and Utilities industry across EMEA. With a background in sales, strategy and management Damian is passionate about helping organisations overcome business challenges to improve commercial performance. Damian is based in Challenger’s London office.