Meet Shell's new CEO
Peter Voser, head of the world's largest oil company, is shaking things up.
(Fortune Magazine) -- Royal Dutch Shell this year has toppled Exxon Mobil from the top of the list of Fortune Global 500 companies, just as the Dutch oil company gets a new CEO. Peter Voser, 50, is a Swiss finance expert and Shell veteran who left the company in 2002 to help turn around the Swiss engineering firm ABB, and then came roaring back two years later.
Even before he took the helm on July 1, Voser signaled that Shell was in for some internal upheaval under his leadership. In late May he fired off a companywide memo complaining that costs were too high, the organization was too complex, and its culture "too consensus-oriented."
The memo, an implicit swipe at the Dutchman he replaced, Jeroen van der Veer, laid out a roadmap for the changes he's planning to implement. One is an organizational revamp that has already led to several high-level departures, including that of the highest-ranking woman in the industry, Linda Cook. "How we work will change," Voser promised in the memo.
Even as he flew around the world visiting Shell operations and settling into his new job, Voser found time to answer some questions from Fortune.
You made headlines even before taking over as CEO with a blunt memo announcing some important organizational changes and the need for "a strong performance culture" at Shell. Is this bluntness typical of your management style, or how would you characterize that style?
Call it bluntness if you like, but I don't see it like that. I like to be direct and open. I like to listen and engage with our staff, our investors, customers, partners, and other stakeholders, such as governments. I have a hunger for information. I like vigorous intellectual discussion and then to make firm decisions.
I like to keep things simple and clear in the way I run the company. For me, the execution needs to be competitive. It's about absolute clarity on strategy and what you want on operational performance. It's about focus, speed, and accountability for delivery. Everyone needs to know what is expected of them. You need to measure performance, have resources to deal with the highest priorities, and leave behind anything that isn't necessary to carry.
Don't forget I know this company well. So I hit the ground running. I know what makes up our DNA, where our strengths are, and know what we can achieve. We have a long track record of developing farsighted market-changing technology that changes the face of our industry. We are focusing on what we do best and are anchoring ourselves back where we are strong.
I believe in strong leadership, with leaders who are visible, prepared to listen -- and humble in their approach, but at the same time able to make tough choices and also able to bring their people along with them because of the respect they generate.
What do you think are your main strengths for this job? Weaknesses?
I prefer to turn this around. Leaders should have vision and conviction. Leaders should set targets. Leaders should develop people. Leaders should be willing to take risks and be themselves. In a job like mine you must have all these qualities.
Getting the best out of every member of your team is essential. You also need to be able to drive accountability but at the same time empower people and foster localized entrepreneurialism.
You mustn't lose yourself in detail, that's one of the biggest challenges you have as a CEO of a company this size. You need to make sure you can operate with less information and still make decisions. You need to get the waste out of your system, and actually focus on those things you really need to deliver.
From a personal point of view I like to continually push myself to the next level and to learn, and through this develop my capabilities. I am a curious, slightly restless person, never happy with my own status quo. I don't let it fester. When I need to stretch my abilities I take action and do something about it.
What have been the most formative moments in your career until now? Please describe them as fully as you can.
Well, strange as it may sound I thrive in turbulent times. That's when you learn not to complain, not to make excuses. And to tackle the problem pragmatically with all available means.
Early in my career at Shell (RDSB) I was sent to Latin America to manage a lubricants plant and distribution operations. This definitely was at a time of crisis. There was hyperinflation -- not typically what a Swiss is used to. It was a matter of daily survival and daily deliveries were key. I arrived with no Spanish and had to learn fast. You had boom times which followed the inflation, but you needed to keep the business lean and mean to be ready to weather the next cyclical storm. That's where I learnt a lot about leadership, and operational focus, and getting the most out of my team. It was the only way to survive. You had thousands of percent of inflation, and thousands of percent of devaluation, so it was an interesting experience.
I returned to Europe to drive the restructuring and unification of the European downstream organization. I needed clear vision and conviction, but it was also critical to move quickly and learn as we moved along. It's hard, as you know, to get alignment between Europeans, but we did it. You also need to manage resistance of some layers of middle management. Vision is often bought into at the top, and by front-line staff, but there is often passive resistance in the middle ranks to change, which you have to deal with.
As you know I left Shell for a short period to go to work for ABB. The main driver for me was to be CFO of a quoted company. I wanted that experience. I was ready and impatient with myself, and I couldn't see that happening fast enough at Shell. As you know I relished in the experience at ABB. It was about survival, and we restructured the company, while sustaining sharp operational performance. Had we not done that, we would have gone under. I learnt that it's better to drive change yourself first, than to be forced by external events to do it. So my time at ABB was truly a formative experience.
Have you had important mentors? Who are they? How specifically did they influence you?
I don't believe in having mentors. I learn from everyone -- internally and externally to get the best view. I like the contact. It has to be real with real people. I need to be out there and hear what's on people's minds.
In terms of Shell being influenced by others, I get concerned when some suggest we are moving to be like another company. Culture is not a copy game. Our DNA is our DNA. You can't change the DNA of a company but you can optimize it.
We are strong in technology development, strong in operational performance, and we are strong in local stakeholder management. But we are weaker in accountability, focus and discipline. So this is not about centralizing or decentralizing or other organizational changes: I'm simply trying to get the best out of our people.
The word around Washington with a new Administration is that with higher mileage standards and a weakened cap and trade bill in Congress, oil is the "loser" and coal the "winner." Do you also read the situation that way?
No, I don't see it that way. Shell supports, in general, efforts to manage nationally and ultimately internationally aligned policies to address climate change.
But we do think that coal-fired power and liquid transport fuels are two very different things and need different measures to reduce emissions effectively. For liquid fuels, higher performance standards are part of the solution, as is blending in sustainably sourced biofuels. What you cannot do is cap emissions from millions of exhaust pipes.
But it's perfectly possible to cap emissions from several hundreds of power stations. According to IEA statistics, between now and 2030, the growth in CO2 emissions from coal-fired power in China, India, and the U.S. alone will be around double the growth of emissions from the transport sector worldwide. The best way to reduce emissions from power stations and other large stationary emission sources is to set caps for the emissions themselves and introduce allowances that can be traded, so that companies have a commercial incentive to go for the most cost-effective solutions.
Recently Exxon's Rex Tillerson said that in 2050 we'd still be getting 80% of our energy from fossil fuels. Do you agree? How seriously do you think renewables will make an impact, and how heavily are you planning to invest in them?
As I said above, the energy transition is starting to happen, but it will be a gradual process. Our scenario experts believe that renewable resources, if pushed very hard, could provide around one-third of the world's energy by the middle of this century. That's impressive and we are working on that basis. But it also means this: It will take 40 years to get there; and that fossil fuels and nuclear will supply the remaining 70% even then. So all energy resources are required and need to be developed. This also includes resources in areas like offshore Alaska where Shell has a long track record (since 1950) and we have shown that we are a responsible operator.
If you look at the future of mobility, it's not going to be a matter of either-or. Over a billion new vehicles will come on to the world's roads in the first half of this century -- that's more than double the number today. They will be powered by all manner of energy: petrol, diesel, electricity, biofuels, natural gas, and hydrogen. And I feel we at Shell are positioned well for this inevitable transition and will help drive it.
In fact, sustainable mobility is an important concept for us. It plays to our strengths and it's something we want to be part of. We can do that in two ways. First, we can work to reduce the CO2-intensity of liquid transport fuels, through a combination of measures such as higher performance fuels, blending in sustainable biofuels, lighter vehicles, and more efficient engines. Second, we can play a role in delivering cleaner electricity by increasing the amount of natural gas for the power sector, and through CCS. Without cleaner electricity, vehicle electrification won't really bring many environmental advantages.