Monday, 24 October 2005

steer clear of the past lane

originally an extract from 15/09/2005) Link no longer available

This week: David Varney, HM Revenue & Customs executive chairman

A few weeks after I joined Shell in 1968, one of the senior managers took me into a room and explained what the future would be like. And the way he explained it was how he had experienced Shell over the past 40 years, which had been phenomenal growth.

A couple of days later, I realised that all the personnel material I'd been presented with was about projecting the past into the future. And it was a wake-up call that in big corporations, if you are not careful, the past just carries you forward - and it carries you forward into a place where the past is irrelevant. So the most difficult thing in an organisation is to really understand how much of the past you should take forward, and what you should invent for the future.

The past for the oil industry - or at least the past 40 years - had all been about growth. More and more energy had been consumed; more and more of it was oil. It had replaced coal, and we could see, or some of us could begin to see, a world in which energy demand would not be as strong. So, all of the tactics based on growth were not going to get us to success; that was one thing.
The other thing is that we'd gone from being in 20 countries, to being in 40, to being in 60; and if you draw the line infinitely we would have colonised Pluto and clearly there was nobody there, and no demand. So, at some point, we had to change the way the organisation thought.

Most of the future is around us today. A lot of the trends have changed, and we haven't caught up. So being prepared means partly being aware of what is happening to the demand for your product or service. It also means exposing the assumptions that are built into the company's everyday culture to members who probably know them best. So, actually spending time describing where we think we're going, and testing whether that's where they think they're going.

I like to understand what the assumptions are in the culture: who are the heroes in the company; what do people think the future is going to look like, and how much of that is a repeat of the past. And if you're not careful when you talk to people, if you don't set out a new view of the future, they go into the future looking at the past. So they retain things that were relevant then, and they become a real barrier to meeting expectations of customers and stakeholders in the future.
So it's really talking about what is going on in the here and now which is changing, and why is it changing. How much do we understand about what customers want, and what's causing them to change their behaviour?

Once you start to get into that sort of dialogue it's amazing how many people contribute insights that are important for the company. Otherwise what you're doing is driving a big company by looking in the rear-view mirror. And if you've ever tried driving a fast car around a race circuit looking at the rear-view mirror, it isn't long before you crash.