Strategy Capsules - Strategy Shift Examples

 

Management consultants often rely on acronyms and buzzwords, which can make strategies appear overly complex. Our mission is to distill large, macro-scale strategies into clear, actionable, and easy-to-understand processes. Effective consulting teams excel in adapting their communication style and approach depending on their audience, ensuring alignment while staying focused on the organization’s objectives and goals. Hence the need for simplification.

Organizations striving for rapid progress or recovering from setbacks often choose to proactively embrace transformation rather than risk being left behind by external changes. Below, we highlight examples of companies that successfully shifted their strategies and reaped significant rewards.

1. Shell (Restructuring in the 2000s)

Diagnosis: Shell faced falling profits due to over-diversified projects, inefficiencies in its operations, and weak cost controls.

Guiding Policy: Streamline operations and focus on core areas of expertise (deepwater drilling and LNG) while divesting from underperforming assets.

Coherent Actions:

Ø Sold non-core assets, including downstream refineries and retail operations in non-strategic markets.

Ø  Invested in LNG infrastructure and deepwater projects where Shell had expertise.

Ø  Increased focus on operational efficiency through standardized processes.

2. BP (Post-Deepwater Horizon Crisis, 2010s)

Diagnosis: The Deepwater Horizon oil spill led to reputational damage, legal liabilities, and a strategic identity crisis.

Guiding Policy: Rebuild trust, focus on safety, and reorient the company toward low-carbon and sustainable energy.

Coherent Actions:

Ø  Invested in advanced safety technologies and improved operational protocols.

Ø  Established a dedicated renewable energy division (e.g., wind and solar).

Ø  Rebranded with a focus on sustainability and set net-zero emissions targets for 2050.

3. Equinor (Transition from Statoil, 2018)

Diagnosis: Statoil faced mounting pressure to address climate change and the transition to renewable energy, threatening its long-term viability.

Guiding Policy: Transition from a traditional oil and gas company to a broader energy company focusing on renewables.

Coherent Actions:

Ø  Rebranded from "Statoil" to "Equinor" to reflect its shift in focus.

Ø  Invested heavily in offshore wind projects, including pioneering floating wind farms.

Ø  Diversified investments in hydrogen and carbon capture technologies.

4. Saudi Aramco (IPO and Diversification Strategy)

Diagnosis: Overreliance on oil revenues made Saudi Arabia vulnerable to price volatility and long-term demand uncertainty.

Guiding Policy: Monetize a portion of the company through an IPO to fund the country’s broader diversification (Vision 2030).

Coherent Actions:

Ø  Launched the world's largest IPO in 2019 to raise capital.

Ø  Invested in downstream industries (e.g., refining, petrochemicals) to capture more value.

Ø  Supported Kingdom of Saudi Arabia Vision 2030 through investments in infrastructure, renewable energy and tourism.

5. Rio Tinto (Divestment and Sustainability Focus, 2010s)

Diagnosis: Rio Tinto faced backlash over environmental concerns and poor returns from non-core assets.

Guiding Policy: Focus on high-return assets, particularly in iron ore, and strengthen ESG (Environmental, Social, Governance) initiatives.

Coherent Actions:

Ø  Divested from coal operations to align with shifting market and regulatory trends.

Ø  Increased focus on core commodities like iron ore, copper, and aluminum.

Ø  Adopted aggressive decarbonization goals, including reducing emissions in mining operations.

6. ExxonMobil (Shift to Carbon Capture and Hydrogen, 2020s)

Diagnosis: ExxonMobil was under pressure from investors and the public to address climate change and reposition itself for a low-carbon future.

Guiding Policy: Leverage its technical expertise to lead in carbon capture and hydrogen technologies.

Coherent Actions:

Ø  Invested $15 billion in low-carbon technologies over six years.

Ø  Scaled up carbon capture and storage (CCS) projects in industrial hubs.

Ø  Partnered with governments and corporations to develop hydrogen infrastructure.

7. Anglo American (Turnaround under Cynthia Carroll, 2007-2013)

Diagnosis: Anglo American suffered from operational inefficiencies, safety issues, and underperforming assets.

Guiding Policy: Improve safety standards, divest non-core assets, and focus on operational efficiency.

Coherent Actions:

Ø  Shut down high-risk operations and implemented a company-wide safety culture.

Ø  Divested non-core assets, including its steel and coal businesses.

Ø  Focused on high-margin commodities like copper, diamonds, and platinum.

8. TotalEnergies (Rebranding and Transition, 2021)

Diagnosis: Like many oil majors, Total faced the challenge of transitioning to a low-carbon economy while maintaining profitability.

Guiding Policy: Rebrand as a multi-energy company and invest heavily in renewables and sustainable fuels.

Coherent Actions:

Ø  Rebranded to "TotalEnergies" to reflect its broader energy ambitions.

Ø  Committed to spending 25% of its capital on renewables by 2030.

Ø  Invested in solar, wind, and electric vehicle charging infrastructure.

9. Vale (Post-Dam Disaster Recovery, 2019)

Diagnosis: The Brumadinho dam disaster caused severe reputational damage, legal liabilities, and operational disruption for Vale.

Guiding Policy: Prioritize safety, repair community trust, and rebuild sustainable operations.

Coherent Actions:

Ø  Invested in safer tailings management technologies and eliminated high-risk dams.

Ø  Paid significant reparations to affected communities and strengthened community engagement.

Ø  Increased focus on sustainable mining practices, including decarbonization efforts.

10. Chevron (Renewable Energy and Technology Investments, 2020s)

Diagnosis: Pressure from investors and stakeholders to adapt to the energy transition while maintaining financial strength.

Guiding Policy: Leverage its scale and expertise to expand into low-carbon technologies while maintaining core oil and gas profitability.

Coherent Actions:

Ø  Invested in carbon capture, renewable natural gas, and hydrogen projects.

Ø  Partnered with startups and tech companies to innovate in emissions reduction technologies.

Ø  Expanded biofuels production and integrated sustainability metrics into operations.

 

Key Themes Across These Examples:

Diagnosis: Each company recognized a specific challenge or opportunity, whether related to market shifts, operational inefficiencies, or reputational crises.

Guiding Policy: They developed a focused, realistic strategy to address these challenges, often by pivoting to renewables, streamlining operations, or adopting ESG principles.

Coherent Actions: Success came from taking coordinated, tangible steps that aligned with the guiding policy, ensuring resources were focused and impactful.

These cases, although some corporates already did another strategic shifts recently,  showcase how the Oil & Gas, Energy, and Mining industries are navigating complex transitions while maintaining profitability and addressing stakeholder concerns.