Shell’s recent corporate announcements have said much about the company’s strategic thinking. See www.ft.com
While a move to increase operational performance is to be praised, especially at a company known for its slower, consensus style decision making, it remains to be seen whether Royal Dutch Shell’s leadership can create real competitive advantage.
A push for efficiency, simplification and operational effectiveness surely must be a first step to get to a base competitive position versus its direct competitors. The recent shareholder rebellion against key Directors paying themselves handsomely even though they did not meet their own targets (they finished 4th versus peers) highlights their position. This competitive position, and the market’s perception of RDS performance and style, is reflected in their share price underperformance over the past decade, especially versus Chevron and Exxon.
Chasing Exxon in cost efficiency and operational performance is a fine goal but real competitive differentiation for RDS may well come from a focus on revenue growth and greater risk taking in allocation of capital to growth markets (geographic and product/technology areas). In any case, a change programme within Shell, to drive the kind of changes BP drove through several years ago (and Exxon before that), will be required.
Expect more news from Royal Dutch Shell.
