CNOOC SES Ltd. is an oil and gas company operating the off-shore of Southeast Sumatra, on the north of Thousands Island, in the country of Indonesia. CNOOC SES Ltd is a subsidiary of China National Offshore Oil Corporation (CNOOC). Founded in 1982, CNOOC is one of the largest state-owned oil giants in China. It is authorized to cooperate with foreign partners for oil and gas exploitation. CNOOC SES Ltd. is one of the largest offshore producers of crude oil in Indonesia.
Strategy implementation in Energy and Utilities industry (oil and gas drilling).
Methodology frameworks used:
- Balanced Scorecard
QPR products used:
- QPR Metrics
Integration to other systems:
- Corporate Intranet
“The ability of any company to successfully execute strategy lies on the competence of its people. The critical success factor is to have the right tool to communicate the strategy map to them as well as to enable people to collaborate on the results. To this, we selected QPR Metrics .”
Mr. Fang Zhi General Manager of CNOOC International Limited
To optimize its’ oil exploration processes, work, and environmental safety and – last but not least – to maintain good relations with host nations, CNOOC SES Ltd. needed a tool enabling it to communicate strategic intents to all stakeholders. Among many businesses, the benefit is a cost saving of USD 12.6 million due to reduced production losses.
As an oil and gas company, the main objective of CNOOC SES Ltd. is to produce oil and gas most cost-effectively, whilst at the same time ensuring that the safety of the working environment is maintained at the highest level. As the area has been exploited for a long period, the challenges that the company faces are how to optimize its throughput by optimizing the exploration process and to ensure cost-efficient production by ensuring the integrity of its production plant.
It is also imperative to collaborate with the host government for the best interests of both the host nation and CNOOC SES Ltd. To cope with these challenges, the company has formulated a new strategic direction. They, then, needed a tool that would enable them to communicate these strategic intents to all stakeholders.
Developing the Company Level Strategy Map and Scorecard
CNOOC SES Ltd. began its journey toward a strategy-focused organization by developing a strategy map and scorecards at the company level. This process was led by Mr. Fang Zhi, who was at the time the President of CNOOC SES Ltd. (currently, he holds the position of General Manager of CNOOC International Limited).
The Executive Team attended a one-day session to discuss how the CNOOC SES Ltd. strategic direction would effectively be communicated to all employees. The use of a strategy map helps to accomplish this goal. They also spent the time to reach a consensus on how to measure the success of its strategic journey.
At this point, a lot of candidates for the key performance indicators arose; yet, the Executive Team realized that, for the company-level scorecard, they must focus only on those Key Performance Indicators (KPIs) that are strategic in nature, leaving the more operational ones to the lower level organizational units.
The strategic objectives and the corresponding KPIs were eventually grouped around two strategic themes, namely Asset Utilization and Operational Excellence. The objectives that relate to quality, safety, health, and environmental issues were embedded into both themes, emphasizing that in either theme, they must attain zero accident standards.
Mr. Fang Zhi, who initiated the Balanced Scorecard (BSC) Project and was also the champion of the process of developing the Strategy Map and Balanced Scorecard, has the desire to have a sustainable system that could create a strategy and performance-focused organization. He also shows his great commitment to learning and growth, in terms of people development. He believes that the ability of the company to successfully execute the strategy would lay on the competence of its people.
Creating Value by Fostering Organizational Alignment
The top-level Strategy Map and Scorecard act as a lighthouse for the whole organization. It provides the lower-level organizational units (departments) with the direction to follow. The next phase in the development of the Balanced Scorecard was to cascade down the company-level Strategy Map and Scorecards to the Departmental level.
Mr. Duan Chenggang, the President of CNOOC SES Ltd is one of the two top-level officers BSC champions in CNOOC SES Ltd.
This alignment process covers all departments, both core departments and supporting departments alike.
It’s during this process that the senior team in each department could appreciate the value of crafting organizational alignment. They were able to formulate their departmental objectives that are critical to the success of company-level objectives. On the other hand, the team also must settle on which company-level objectives, their department would have a significant and critical contribution.
The involvement of the senior team served two purposes. First, it facilitated the process of socializing the strategic direction, and the senior team, who acted as the change agent, ¨was expected to be able to communicate the message further down to people in their own Department. Therefore, they were directly in charge of creating awareness. Secondly, it would create ownership for the Balanced Scorecard implementation, a critical factor for its long-term sustainability. The process would alleviate the so-called “not invented here” syndrome, a typical resistance that results from not involving people in developing their scorecards.
A comment from Rickson Lumbantu, Manager of District Exploitation Central, vividly describes the usefulness of the Balanced Scorecard in creating value through the strategic alignment process. As quoted in the CNOOC Newsletter 2nd Edition 2008, he enthusiastically testified, “Now we have cleared forward company strategy, objectives created well; therefore they are more measurable and transparent, and the interdepartmental interaction also becomes more solid.”
Sustaining the Strategic Governance Process
The sustainability of Balanced Scorecard implementation depends heavily on the commitment of the Senior Management Team. They would like to see that BSC is monitored and evaluated regularly. The periodic cycle consists of, typically, collecting the KPI data, reporting the KPI data, analyzing the scorecard result, and creating an action plan. It comes to the notion of the Senior Management Team would need assistance from a permanent unit, typically called as Strategic Management Office (SMO), to ensure that the cycle is up and running.
During the development phase of the scorecard, there was a BSC Project Team whose main role was to manage and supervise the process of building and cascading the strategy map and BSC. It is this Project Team who will subsequently transform to become the SMO. CNOOC SES Ltd. labels its SMO as BSC Team.
The BSC Team consists of Mr. Yohanes Abdullah, Mr. Bambang Setiawan, Mr. Rudiricus Yoseph and Ms. Beriozka Anita. During both the development and implementation phases, they have been persistently driving communication and buy-in from other managers. The BSC Team is in charge of supervising the governance cycle on a day-to-day basis.
As with all deployment of management systems to improve organizational performance, it is imperative to have high-level support to ensure that the system keeps running. Two top-level officers currently act as the BSC Champions; they are Mr. Duan Chenggang, the current President of CNOOS SES Ltd., and Mr. Rudi Simamora, the Managing Counsel of CNOOC SES Ltd. Together, they show a strong commitment to keep the initiative alive and to make it as a management system that ensures that strategy becomes everyone’s day-to-day job.
Developing the Company Level Strategy Map and Scorecard
CNOOC SES Ltd. began its journey toward a strategy-focused organization by developing a strategy map and scorecards at the company level. This process was led by Mr. Fang Zhi, who was at the time the President of CNOOC SES Ltd. (currently, he holds the position of General Manager of CNOOC International Limited).
The Executive Team attended a one-day session to discuss how the CNOOC SES Ltd. strategic direction would effectively be communicated to all employees. The use of a strategy map helps to accomplish this goal. They also spent the time to reach a consensus on how to measure the success of its strategic journey.
At this point, a lot of candidates for the key performance indicators arose; yet, the Executive Team realized that, for the company-level scorecard, they must focus only on those Key Performance Indicators (KPIs) that are strategic in nature, leaving the more operational ones to the lower level organizational units.
The strategic objectives and the corresponding KPIs were eventually grouped around two strategic themes, namely Asset Utilization and Operational Excellence. The objectives that relate to quality, safety, health, and environmental issues were embedded into both themes, emphasizing that in either theme, they must attain zero accident standards.
Mr. Fang Zhi, who initiated the Balanced Scorecard (BSC) Project and was also the champion of the process of developing the Strategy Map and Balanced Scorecard, has the desire to have a sustainable system that could create a strategy and performance-focused organization. He also shows his great commitment to learning and growth, in terms of people development. He believes that the ability of the company to successfully execute the strategy would lay on the competence of its people.
Creating Value by Fostering Organizational Alignment
The top-level Strategy Map and Scorecard act as a lighthouse for the whole organization. It provides the lower-level organizational units (departments) with the direction to follow. The next phase in the development of the Balanced Scorecard was to cascade down the company-level Strategy Map and Scorecards to the Departmental level.
Mr. Duan Chenggang, the President of CNOOC SES Ltd is one of the two top-level officers BSC champions in CNOOC SES Ltd.
This alignment process covers all departments, both core departments and supporting departments alike.
It’s during this process that the senior team in each department could appreciate the value of crafting organizational alignment. They were able to formulate their departmental objectives that are critical to the success of company-level objectives. On the other hand, the team also must settle on which company-level objectives, their department would have a significant and critical contribution.
The involvement of the senior team served two purposes. First, it facilitated the process of socializing the strategic direction, and the senior team, who acted as the change agent, ¨was expected to be able to communicate the message further down to people in their own Department. Therefore, they were directly in charge of creating awareness. Secondly, it would create ownership for the Balanced Scorecard implementation, a critical factor for its long-term sustainability. The process would alleviate the so-called “not invented here” syndrome, a typical resistance that results from not involving people in developing their scorecards.
A comment from Rickson Lumbantu, Manager of District Exploitation Central, vividly describes the usefulness of the Balanced Scorecard in creating value through the strategic alignment process. As quoted in the CNOOC Newsletter 2nd Edition 2008, he enthusiastically testified, “Now we have cleared forward company strategy, objectives created well; therefore they are more measurable and transparent, and the interdepartmental interaction also becomes more solid.”
Sustaining the Strategic Governance Process
The sustainability of Balanced Scorecard implementation depends heavily on the commitment of the Senior Management Team. They would like to see that BSC is monitored and evaluated regularly. The periodic cycle consists of, typically, collecting the KPI data, reporting the KPI data, analyzing the scorecard result, and creating an action plan. It comes to the notion of the Senior Management Team would need assistance from a permanent unit, typically called as Strategic Management Office (SMO), to ensure that the cycle is up and running.
During the development phase of the scorecard, there was a BSC Project Team whose main role was to manage and supervise the process of building and cascading the strategy map and BSC. It is this Project Team who will subsequently transform to become the SMO. CNOOC SES Ltd. labels its SMO as BSC Team.
The BSC Team consists of Mr. Yohanes Abdullah, Mr. Bambang Setiawan, Mr. Rudiricus Yoseph and Ms. Beriozka Anita. During both the development and implementation phases, they have been persistently driving communication and buy-in from other managers. The BSC Team is in charge of supervising the governance cycle on a day-to-day basis.
As with all deployment of management systems to improve organizational performance, it is imperative to have high-level support to ensure that the system keeps running. Two top-level officers currently act as the BSC Champions; they are Mr. Duan Chenggang, the current President of CNOOS SES Ltd., and Mr. Rudi Simamora, the Managing Counsel of CNOOC SES Ltd. Together, they show a strong commitment to keep the initiative alive and to make it as a management system that ensures that strategy becomes everyone’s day-to-day job.
Gauging Internal Customer Satisfaction Online
When developing the scorecard for the supporting departments, the Project Team and the Department Representative (KPI Officer) realized that they needed a measure that reflects the satisfaction of their internal customers.
For this purpose, they built the corresponding measurement, called Customer Satisfaction Index. Its content and the scope of satisfaction criteria will depend on the Supporting Department that owns the KPI. The team ran a special session to learn how to build the proper questionnaire, including how to design the content and set the right number of questions.
Subsequently, they also learned that they must seek to find the best way to distribute the survey and capture the response. They decided that this could be accomplished by conducting a web-based survey, utilizing the existing company intranet infrastructure.
This web-based survey is also designed as such that no respondents will receive more than two surveys to respond to, ensuring a more objective response.
Sharing Balanced Scorecard Results through QPR Metrics
Another critical success factor in sustaining the Balanced Scorecard initiative is to have the right tool to communicate strategy maps and scorecards as well as to enable people to collaborate on the results. To this point, CNOOC SES Ltd. selected QPR Metrics as the performance management dashboard.
The QPR software’s easy-to-use feature is the main reason for its deployment. The web-based dashboard enables the management team to review, monitor and analyze the critical gap in performance.
Using the software, it is easy to consolidate the data from the lower level to the higher level. This allows users to focus more on data analysis and not so much on data collection. Also, because QPR Software is an open application, in the future it is possible to integrate the software with existing applications that can supply the required actual data to some KPIs.
For all phases of the BSC development process at CNOOC SES Ltd., GML Performance Consulting acted as the consulting facilitator.
The CNOOS SES Cascading Framework from Company Level Scorecard to Departmental and Individual Level Scorecards.
Lessons Learned
CNOOC SES Ltd. has enjoyed some benefits resulting from the process of articulating company-wide strategy through a strategy map and scorecard. These include clarity of strategy, transparency of performance management, and the development of individual performance measures that are tied to reward and recognition systems.
The development process also allows the individuals to see how their day-to-day operations could contribute to the achievement of company objectives as well as the Department objectives. They can now understand how to create synergy amongst the Departments to produce an optimal result at the company level.
Gauging Internal Customer Satisfaction Online
When developing the scorecard for the supporting departments, the Project Team and the Department Representative (KPI Officer) realized that they needed a measure that reflects the satisfaction of their internal customers.
For this purpose, they built the corresponding measurement, called Customer Satisfaction Index. Its content and the scope of satisfaction criteria will depend on the Supporting Department that owns the KPI. The team ran a special session to learn how to build the proper questionnaire, including how to design the content and set the right number of questions.
Subsequently, they also learned that they must seek to find the best way to distribute the survey and capture the response. They decided that this could be accomplished by conducting a web-based survey, utilizing the existing company intranet infrastructure.
This web-based survey is also designed as such that no respondents will receive more than two surveys to respond to, ensuring a more objective response.
Sharing Balanced Scorecard Results through QPR Metrics
Another critical success factor in sustaining the Balanced Scorecard initiative is to have the right tool to communicate strategy maps and scorecards as well as to enable people to collaborate on the results. To this point, CNOOC SES Ltd. selected QPR Metrics as the performance management dashboard.
The QPR software’s easy-to-use feature is the main reason for its deployment. The web-based dashboard enables the management team to review, monitor and analyze the critical gap in performance.
Using the software, it is easy to consolidate the data from the lower level to the higher level. This allows users to focus more on data analysis and not so much on data collection. Also, because QPR Software is an open application, in the future it is possible to integrate the software with existing applications that can supply the required actual data to some KPIs.
For all phases of the BSC development process at CNOOC SES Ltd., GML Performance Consulting acted as the consulting facilitator.
The CNOOS SES Cascading Framework from Company Level Scorecard to Departmental and Individual Level Scorecards.
Lessons Learned
CNOOC SES Ltd. has enjoyed some benefits resulting from the process of articulating company-wide strategy through a strategy map and scorecard. These include clarity of strategy, transparency of performance management, and the development of individual performance measures that are tied to reward and recognition systems.
The development process also allows the individuals to see how their day-to-day operations could contribute to the achievement of company objectives as well as the Department objectives. They can now understand how to create synergy amongst the Departments to produce an optimal result at the company level.
Cost saving of USD 12.6 million and other achieved Business Benefits:
- Strategic Initiatives forced some Business Process Improvements to reduce the cycle time of processes, minimized bureaucracy, and eliminated non-added value activities.
- The capability to develop scorecards for all staff levels (around 500 individual scorecards built) was obtained which reduced the cycle time of PMS (individual appraisal).
- The Strategy Map and KPIs were automated to develop a dashboard management system (BSC Portal).
- The BSC Portal allows all employees to see how their day-to-day operations could contribute to the achievement of company and department objectives.
- Service quality improved by having a KPI of internal customer satisfaction index. This had never been considered before.
- Company-level BSC was forced to decrease the annual target of oil production losses by 10% which impacted a net cost saving of USD 12.6 million.
- Support Department KPI was aligned by accommodating expectations from the respective internal customers. PGF, Drilling, and Logistics unit’s KPIs were changed as requested by their internal customer.
- Monthly department meetings focusing on strategy and performance and using BSC Portal as a meeting dashboard were introduced.
Cost saving of USD 12.6 million and other achieved Business Benefits:
- Strategic Initiatives forced some Business Process Improvements to reduce the cycle time of processes, minimized bureaucracy, and eliminated non-added value activities.
- The capability to develop scorecards for all staff levels (around 500 individual scorecards built) was obtained which reduced the cycle time of PMS (individual appraisal).
- The Strategy Map and KPIs were automated to develop a dashboard management system (BSC Portal).
- The BSC Portal allows all employees to see how their day-to-day operations could contribute to the achievement of company and department objectives.
- Service quality improved by having a KPI of internal customer satisfaction index. This had never been considered before.
- Company-level BSC was forced to decrease the annual target of oil production losses by 10% which impacted a net cost saving of USD 12.6 million.
- Support Department KPI was aligned by accommodating expectations from the respective internal customers. PGF, Drilling, and Logistics unit’s KPIs were changed as requested by their internal customer.
- Monthly department meetings focusing on strategy and performance and using BSC Portal as a meeting dashboard were introduced.
