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Archives for October 2010

Shell’s Scenarios and Risk Management

In a recent post I reviewed Black Swans and mentioned that I would have a posting about Shell Oil’s use of scenarios to identify future risks and opportunities.

First, what are scenarios?

Scenarios are pictures of possible futures facing an organization. They are developed via an amalgam of perceived trends and intelligence on possible actions of stakeholders. External factors such as economics, competition and market conditions are considered. Quantitative and qualitative tools such as econometrics/ statistical forecasts, Delphi technique, and surveys may be used. The results of all analyses are organized into comprehensive pictures of a number of possible futures. Shell pioneered this technique in the early 1970s and they still use it.

The Scenario page is nestled in the About Us/Strategy section. The main page offers much useful information — definitions, videos and a link to current scenarios — and great use of visuals and a slide-out menu of links to related information.

Access to scenarios in future decades is viewed by simply clicking on the year. In the upper right, see Blueprints: clicking on the + icons provides additional information about the scenario.

Deloitte (PDF) offer some useful advice on Scenarios and Corporate Governance —

Why do scenario planning?

The Risk Intelligent Enterprise utilizes risk information to influence strategic planning in three key ways:

  1. Risks are identified and analyzed when considering strategic alternatives and developing business/organizational strategy
    • Risks of the strategy
  2. Risk appetite serves as a guidepost in setting strategy and allocating resources.
  3. Once business/organizational strategy has been selected, risks that might affect the organization’s ability to implement key strategies are identified and managed
    • Risks to the strategy

Common risk management challenges include:

  • Failure of modern risk management
  • Information filtering
  • Mental models

Desired results may include:

Better understanding of risk

  • to the strategy
  • of the strategy

Shared commitment and approach to:

  • manage key risks to within risk appetite
  • exploit risks where the organization has a strategic advantage

Want to know more? Here are some additional worthy resources–

The use and abuse of scenarios McKinsey Consultants

Why Scenarios? Global Business Network

Summary Post October 17, 2010

  • Mixing Oil and Water
    We all have a water footprint; some of us have larger ones than others. (You can assess your personal water footprint here)
    Companies also have water footprints, and this will vary across sector: if you’re a services provider, then your footprint will inevitably be smaller than if you use water as part of your operational processes. […]
  • Alphabetical Order: More about the Candidate Experience
    As noted in the previous post about candidate experience, Peter DeVries offers some interesting suggestions about talent technology in his post on Overcomplicating the Candidate Experience.
    Highlights:
    Problem 1: “You have a compelling story to share with candidates, but based on the current paradigm with ATS (Applicant Tracking System) providers, you lose much of your ability […]
  • Research Shows Advertising Creative is More Important than Media Buy
    New research from comScore ARS Group provides a new vision of the marketing budget with creative positioned to take a bigger chunk of the upfront investment in advertising than media placement.  The question is whether or not companies will actually take the research to heart and apply it to their own marketing strategies and budgets.
    Let’s […]
  • Goodbye New Gap Logo – Welcome Back Old Gap Logo
    Last week, I published a post here on Corporate Eye about the debate over the new Gap logo.  This week, Gap is taking a new step to put out the controversial fire that the new logo started.  Exactly one week after the new logo debuted on the Gap website, the company announced that the old […]
  • Green advertising: Feeling the pressure 1/2
    An interesting sea change has caught my eye over the past 12 months : the stricter regulation of green advertising.
    Eight months ago we reported how Denmark was introducing tough measures to stamp out greenwashing.  The announcement said:
    Environmental or ethical claims in marketing should therefore be correct and precise and exaggerations as to the […]

JetBlue Differentiates Brand with YouTube Videos

In a clever attempt to differentiate its brand from other airline brands, JetBlue turned to YouTube and launched a series of videos that call attention to the common airline policies that anger consumers.  Each video uses a hidden camera to capture consumers’ reactions to airline policies applied to other aspects of daily life.

For example, a New York City taxi driver reclines his seat and explains the legroom policy in his cab to paying passengers or he tells passengers that they’re required to pay a $25 baggage check fee to carry luggage in the trunk of the taxi.  Other videos show an elevator ride destined to stop on every floor because it’s not a “non-stop” trip and a New York City street vendor pouring drinks into airline-sized disposable cups for customers rather than handing over the entire can.

As you can imagine, the reactions of New York City patrons are honest and amusing, and they perfectly support JetBlue’s message: “You wouldn’t take it on the ground. Don’t take it in the air.”

The videos work for one simple reason, JetBlue does offer more legroom, first checked bags are free, and you get the full can of Coke and a free snack no matter where you sit.  In other words, JetBlue offers tangible differentiators and clearly demonstrates why consumers shouldn’t settle for less.

The YouTube videos are just one part of a larger marketing push JetBlue is launching in target cities across the United States, which will include online, mobile, offline, ambient, and in-flight initiatives.  In other words, this is a well-strategized, fully-integrated marketing campaign.

You can view some of the JetBlue video montages below and check out all of the videos on the JetBlue YouTube channel within the Ground Rules playlist (which is great use of a playlist on YouTube, I might add!).

Glass Half Full Montage

Cab Jam Montage

Taken for a Ride Montage

The Local

What do you think of this effort by JetBlue?  I like it, but I’d like to see even more social media efforts supporting the campaign which could carry the entire campaign to the next level of success over time.  Leave a comment and share your thoughts.

Mixing Oil and Water

water-footprintWe all have a water footprint; some of us have larger ones than others. (You can assess your personal water footprint here)

Companies also have water footprints, and this will vary across sector: if you’re a services provider, then your footprint will inevitably be smaller than if you use water as part of your operational processes.

Increasingly companies are responding to public interest and awareness of water use by providing information about this on their corporate website.

Water and Responsibility

Some companies make no mention of their use of water at all, while others provide detailed information about their own use, and run CSR campaigns around water issues. Examples of water-oriented programmes include:

There are many more water-oriented programmes, big and small, being run by large companies across the full range of water-related issues, but if you haven’t been to see the SABMiller pages on their Ten Priorities, then you should: look at the water priority page for an excellent example, not forgetting to check all the tabs.

Water and Business Risk

Water scarcity is a significant future risk, and one that is engaging the minds of governments and forward thinkers already. It is also a risk to business, particularly ones which are highly dependent on water operationally. Other water-related risks exist, such as risk of flooding, risk of water pollution and risk of damage to marine environments.

SABMiller have produced a report on water scarcity and business risk. Brewing is highly water-intensive, and so water plays a large part in their business, but water scarcity could be a risk to other businesses too.

Water and Reporting

bg-group-coal-seam-gas
Because of the highly publicised Gulf of Mexico spill of oil into water earlier this year, I thought it would be interesting to review a corporate site in the oil and gas sector, and see how they approach their water reporting.

I’ve chosen to explore BG Group, which finds, develops and connects natural gas to markets worldwide.

Helpfully, BG Group provide an explanation of how water is used in at least part of their business: to produce coal seam gas, they drill wells, and pump water out of the coal bed, freeing up the gas to flow out of the rock. This isn’t an obvious process to those of us who aren’t in the business, and so this is useful educational material.

BG Group and water: environmental risks

BG Group identify 5 potential environmental consequences of their business activities: 3 of these are water-related:

  • the impact of wells, pipelines and other infrastructure on marine ecological habitats and biodiversity
  • the release of hydrocarbons or chemicals into water
  • use of scarce water resources or the production of excess waste water.

Although water scarcity isn’t explicitly stated as a business risk in the extensive set of risks provided in the Risk section of the online annual report, the risks of oil/chemical spills and damage to the environment are included. And water management has been identified as a material issue.

BG Group and water: environmental strategy

While the unconventional gas resources being developed may be able to reduce the overall greenhouse gas emissions, their production requires careful local environmental protection, including:

  • the treatment and disposal or beneficial re-use of salt water produced by coal seam gas wells
  • the management of the water used to fracture rock to release shale gas
  • the hydro-geological effects of water abstraction and water injection, including the impact on local groundwater sources

BG Group are basing their water measures on UK, EU and US guidelines; their group-wide water management strategy should be available soon.

BG Group and water: operational explanation

BG Group explain that there are three different aspects to their water impact:

  • Freshwater withdrawal, that is, water drawn from:
    • Surface water (rivers, lakes, wetlands)
    • Ground water (via wells and alluvial sands)
    • Piped or trucked water from municipal authorities or other industrial users
  • Operational use: as input and as output:

    Water is used extensively in shale gas wells. To reduce freshwater use, in Louisiana, USA, BG Group have agreed with a local paper mill to reuse waste water from the paper pulp manufacture.

    Water is produced in large quantity by coal seam gas wells. This is saltwater, and must be treated or evaporated before it can be used. BG Group are looking at options to reuse this water for local communities in Queensland, Australia, where there has been a prolonged drought.

  • Spillage: either of oil into water, or spills of water.
    • Oil into water: BG Group report on spillages and indicate the measures put in place to reduce this
    • Water loss: again, details explaining the spills are provided.

water-wave

BG Group and water: Performance

2009 (the most recent report, and the first year the report was available online only) was an interesting year, water-wise, for BG Group, because it included:

  • beginning the development of a group-wide water management strategy (target: 2010)
  • reporting on freshwater withdrawal for the first time
  • increasing the use of water operationally, primarily because of the acquisition of QGC in 2008
  • bringing water produced by the Egyptian and the Trinidad and Tobago operations onshore for treatment, to protect the marine environment
  • reporting of produced water has changed to be brought into line with the GRI recommendations
  • beginning to collate information about environmental training courses in their competency development system.

2009 was clearly a year in which BG Group began to focus on water management. Data on discharges to water – and which type of water – are available online.

It is unfortunate that their operational water use increased, but acquisition of other companies is bound to bring a variety of issues, and water use should be included among these. Interestingly, water management has only recently emerged as a material issue for the group, following their acquisition of other businesses.

The newest acquisition, QGC should be ISO14001 certified (the international standard for environmental performance) by Q1 2011; it will be interesting to see the changes in water use over time as the water management strategy takes effect.

sabmiller-water-beer
SABMiller: more beer – less water
Overall, I found that the discussion of water use by BG Group was admirably full, clearly presented and informative. It appears that BG Group are taking their corporate impact on our global water resources seriously, and the details on both controlled and uncontrolled discharges to water are also easy to find and clearly stated. The reuse strategies for both input and output water I find fascinating; perhaps there should be more such partnerships established between industries?

I couldn’t spot any specific water-related targets, and it would be good to see more charts, perhaps something similar to the SABMiller water:beer ratio, to give the visitor an idea of how much water is needed to produce X amount of natural gas. A barrel of oil is a concept that the average visitor – me – can grasp, but a billion cubic feet of gas is more difficult to visualise. How many homes would a billion cubic feet of gas heat for how long?

That said, though, I think this is a commendably detailed approach to reporting on water use by this company, and I look forward to the 2010 report.

What do you think? Could BG Group have done more to report on their impact on our water?

blog-action-day-2010

 

 

This post is part of Blog Action Day, which this year is discussing water.

Previous contributions to Blog Action Day were:
2009: Climate change and the corporate site
2008: Celebrating the FTSE 100: action on the breadline
2007: Enticing the green investor

Alphabetical Order: More about the Candidate Experience


Alphabet Block

As noted in the previous post about candidate experience, Peter DeVries offers some interesting suggestions about talent technology in his post on Overcomplicating the Candidate Experience.

Highlights:

Problem 1: “You have a compelling story to share with candidates, but based on the current paradigm with ATS (Applicant Tracking System) providers, you lose much of your ability to tell that story when, where, and how you want to tell the story.”

Solution: “Some ATS vendors have recently begun to implement APIs (Application Programming Interfaces), which enable interaction between the ATS software and other software – in this case your career website.”

Advantage: “APIs allow you to control the presentation of data to candidates, while remaining true to your corporate brand.”  And you can even use APIs to “embed Employment Brand and EVP information throughout your job listings, not just on static pages in the Career website.”

Problem 2: “It is difficult to manage and update all of the information spread throughout your career site. Time passes, business moves on, but the content doesn’t – instead, it becomes old and stale, another complaint of job seekers.”

Solution: “Consider using a CMS (Content Management System) to help you take control of the information on your career website.”

Advantage: “A CMS gives you the tools and flexibility to manage how and when content is updated.”  For example:  “If you have a big win at your organization, you can easily promote that on the home page of your career website – yet again strengthening your Employment Brand.”

So how can you take advantage of these technology tips?  Problem 1 is not actually all that easy to address, as it turns out.  A quick scan of Gartner’s 2009 Magic Quadrant for E-Recruiting Software (PDF) reveals not much info about this subject.  Only HRSmart is noted for its API offering, while the Swiss company netMEDIA gets plaudits for its “integration”capabilities (whatever they may be).  Taleo mentions API in promotional literature for its Business Edition, but offers no details.

On the other hand, there are a lot of candidates for solving Problem 2.  A complication arises, however.  If your company has an Enterprise Content Management system (ECM), it may have or be compatible with Web Content Management systems (WCM).  Find out more about this from the trusty Gartner MQ on ECM (PDF).  It’s the WCM part you really need for speedy updates to the Careers site, and that functionality may actually be available in the organization—for example, in use by the PR department or Marketing, just not deployed to HR—or might be easily added.  If there’s no sort of content management already in place, then the next move is to a standalone CMS/WCM offering.  For more info on this option, browse around at CMS Wire.

If it comes down to spending money on solving either Problem—you’ll need to justify the investment.  Coming soon:  a post on building the business case for a better Careers site.


(Thanks to chefranden for the excellent alphabet block.)

Research Shows Advertising Creative is More Important than Media Buy

presentationNew research from comScore ARS Group provides a new vision of the marketing budget with creative positioned to take a bigger chunk of the upfront investment in advertising than media placement.  The question is whether or not companies will actually take the research to heart and apply it to their own marketing strategies and budgets.

Let’s take a closer look at the comScore ARS Group research findings.

First, here is what comScore ARS Group researched:

comScore ARS Group conducted research to determine, “the importance of sound strategy and strong creative elements in driving effective campaign execution for TV and digital advertising campaigns.”  This wasn’t a quick study of a small population.  According to comScore, the research was “extensive.”

Next, here is what comScore ARS Group learned:

Jeff Cox, executive vice president of ComScore ARS explains, “Based on our years of research in this space, we’ve determined that the quality of creative is four times more important than the characteristics of the media plan in generating sales.  In fact, creative is the single most important factor and accounts for over half the changes in a brand’s sales over time.”

Furthermore, the study found that 70% of campaigns with an “above-average creative strategy” in the study resulted in “above-average execution,” while 65% of campaigns with a “below-average creative strategy” resulted in “below-average execution.”  In other words, ads with a strong creative strategy provide the results companies are looking for far more frequently and consistently than campaigns that lack creative strategy.

The comScore ARS study found that the marketing variable which influence changes in brand sales in the United States in terms of the contribution those variables provide to sales changes are as follows:

  • Ad quality = 52%
  • Media plan = 13%
  • Other (price, promotion, distribution, etc.) = 35%

Finally, here is what brand managers and marketers should start to think about based on the comScore research data:

On the surface, these are some compelling statistics, particularly at a time when marketers and brand managers are spending a lot of time on building relationships and social media connections rather than investing in the creative side of advertising.  If nothing else, these statistics should act as a warning that the creative aspect of marketing and advertising is far from over.  In fact, if this research is accurate, creative investments should still hold a significant portion of the marketing budget.

This is just one more factor that marketing executives need to include in the strategy and budget planning process to ensure marketing fundamentals (including great creative) aren’t forgotten in favor of newer opportunities (such as social media).  The best marketing plan will be well-integrated with a mixture of traditional and new media initiatives, all supported by great creative.

What do you think of the comScore ARS research data?  Will it affect your marketing budget and strategy?  Leave a comment and share your thoughts.

Image: stock.xchng