Strategic Leadership To Drive The Business Model

Strategic Leadership to
Drive the Business

Model
By
Curt J . Howes
March 15 , 2010
Proprietary & confidential information

Agenda
Key Discussion Points
•Introduction
•
•Strategic Leadership
•
•Business Model
•
•Entrepreneurial Application in a Real Case

Background
ØLead for Advanced Management Education, Exxon

Ø
Ø
ØWorked with ICEDR in sponsoring Leadership Research for Consortium of
Leading Global Companies
Ø
Ø
ØAdjunct Faculty MBA Utah State University and Advisory Board BYU OBHR
Leadership Strategy/OBHR MBA
Ø
Ø
ØConsultant and Executive Coach to Energy, Government and Consumer
Companies
Ø
Ø
ØPartner with thought leaders and access to many key resources
Ø
Ø
ØFocus on establishing comprehensive leadership strategy and system

Participant Introductions
ØCurrent Position
Ø
Ø
ØGreatest Leadership Challenge
Ø
ØBiggest Leadership Question

Leaders are only as good as their alignment of their people to the
business strategy
Robert S. Kaplan and David P. Norton, developers of the Balanced Scorecard, found in
their research that the execution of business strategies is quite poor:
•95% of a typical workforce does not understand its organization’s strategy
•90% of organizations fail to execute their strategies successfully
•86% of executive teams spend less than one hour per month discussing strategy
•70% of organizations do not link middle management incentives to strategy
•60% of organizations do not link strategy to budgeting
Source: Strategy Maps, Kaplan and Norton

Leaders are the link between strategy and results
Organization Performance Strategy Framework

Business -vision, mission, values, brand
Context Strategic Direction -portfolio, business model, goals, CSF’s
-leadership agenda & alignment

Leadership -leadership capabilities
Innovation & Change

-innovation processes -value chain & enabling processes (work)
-technology transfer -technology/ information enablement
-lifecycle management Organization -organization design
-organization transformation Architecture & -high performance culture
-journey plan Capability -governance/ management systems
-people strategies & talent management
-performance scorecard
Results -key milestones achieved
-overall goals achieved
Copyright © 2007 Organization Performance Strategies All Rights Reserved

6

Agenda
•Introduction
•
•
•Business Model
•

Raising Capital
So you are an Entrepreneur with

a new business idea….
What would it take to raise $1

billion dollars in Equity?

Tangible or Intangible Assets
Would it be Tangible Assets?
or Intangible Assets?
We will come back to this also in a

specific case example!!!

High Performance Leaders Use Assets to Turn Strategies into Results!
Tangible Intangible
Assets Assets
Capital Strategy Leadership
Governance
Plants
Organization
Equipment
Culture
Technology
Processes
Raw Materials
Intellectual Capital
Receivables
People Capabilities
Inventory
Results
25% of Market Cap Value 75% of Market Cap Value

10

High Performance Leaders
A High Performance Organization

begins with High Performance
Leadership!
Which of these leaders do you believe

are High Performance Leaders and
why?
11

Which of these people are High Performance Leaders ?
Rudolph Giuliani Rocky Anderson

Former NY Mayor SLC Mayor
John Wooden Kyle Whittingham Bronco Mendenhall

Former UCLA Basketball Coach Utah Football Coach BYU Football Coach
Lou
Gerstner Larry Miller Late Mary Kay Ash Lee Raymond
Former IBM CEO Auto Conglomerate Mary Kay Cosmetics Former ExxonMobil CEO
12

Does anyone know who this leader is?
13

Does anyone know who this leader is?
Short BIO Results
Alan Roger Mulally (born When the blue oval’s current CEO, Alan Mulally arrived
August 4, 1945) is an at the Ford Motor Company in 2006, he was faced with
American engineer and the task of turning around one of the world’s largest car
businessman. He is builders in the face of uncertain fiscal times and since
then has been hard at work to improve production, cut
currently the President waste, sell off valuable assets and bring the entire Ford
and family closer together. Mulally’s best case projections
Chief Executive Officer of saw the American automaker getting back in the black
Ford Motor Company. sometime in the year 2011, however after a tumultuous
2009, he can be proud that the FoMoCo has turned its
Mulally was previously first annual net profit in the past four years and is
executive vice president of looking promising for at least two more to come.
The good news was evident on Wall Street this morning
Boeing and the CEO of
with Ford’s stock rising by 1.9%, or $0.25 a share, up to
Boeing Commercial Airplanes $11.80. The good news for investors came after the
(BCA). Mulally began his automaker’s books showed that they took in a total of
career with Boeing as an $118.3 Billion in 2009, and after paying off all of their
engineer in 1969. Mulally operating costs, turned a $2.7 Billion profit. These
was largely credited with results are outstanding considering that the year before
BCA's resurgence against the blue oval’s bean counters reported a loss of $14.7
Airbus in the mid-2000s. Billion, that’s right, billion with a B.
14

One research study among independent oil companies found a significant
difference in performance based on Total Return to Shareholders
Example Total Return Shareholder Analysis of Energy Companies
20%
High Performers Murphy
Petro-Canada
15% Imperial
Apache
7-Year TRS CAGR (5/96 –5/03)
Total
Devon Encana
ExxonMobil ENI CNR
10% Anadarko
Talisman
BP Super-majors (for
Repsol Occidental EOG comparative purposes)
Burlington
ChevronTexaco
Marathon
ConocoPhillips Woodside Independent Oil
5%
RD Nexen
Shell
company Peer group
Unocal Norsk Hydro

Kerr-Mcgee
0%
-5% 5% 10% 15% 20%
Amerada Hess
-5%
Husky
-10%
5-Year TRS CAGR (5/98 –5/03)
15
Source: High Performance Study of Independent Oil Companies, 2004
Copyright © 2007 Organization Performance
Proprietary & confidential Strategies All Rights Reserved
information
These key attributes stood out as differentiators in the high performers
among the top independent oil companies
Key Attributes Summary Differentiating Characteristics for Independent Oil Companies
Strategy • Growth focused strategy – increasingly leveraging international growth opportunities

• Strategic differentiation: Focus on limited number of areas of outstanding competence
• Able to successfully create value through M&A
Technology • Technology mastery in emerging E&P areas is foundational to strategic differentiation
• Tactical excellence in asset/portfolio management

Operational • Strong capital discipline, steady growth of free cash flow and financial flexibility
Excellence
• Bias toward operatorship and strong operational control
• Ability to relentlessly improve the functional E&P competencies
• Focus on lean operations – both front and back office
Leadership • Hands on management, driving both the company strategy and day-to-day operations
Organization & • Small, highly networked structure for quick decision making and accountability
Governance • Highly effective teamwork that goes beyond formally assigned teams
• Entrepreneurial culture with a strong performance bias

People & Culture • Ability to leverage talent – from both inside and outside the organisation
• Ability to harness knowledge fast and effectively through formal and informal networks
16
Source: “Big Thinkers” Howes, Downie, Adams, 2004 Proprietary & confidential information
Tangible or Intangible Assets
So if leadership is more about the

management of Intangible Assets?
What is the latest research on

Leadership Differentiation in the
Market Place?
17

Leadership Model Drivers (Leadership Research) Cont’d
High Performance Company Leadership Competency Mix
Leadership
Competencies
Leadership Code
(Common) X Leadership
Differentiators
Approximately 65 % Approximately 35 %
Dave Ulrich 2008
18
18
Leadership Model Drivers (Leadership Research)
Successful Companies translate their leadership distinctiveness into

leadership differentiation to create value - - what are they known for?
This organization is known for Leaders at this organization are known for
Wal-mart Always low prices Managing costs efficiently, getting things done on time
FedEx Absolutely, positively, doing whatever it takes Managing logistics, meeting deadlines, solving problems
quickly
Lexus Pursuit of perfection Managing quality processes (lean manufacturing and
design, Six Sigma) for continuous improvement
Procter & Brands you know and trust Developing consumer insights, precisely targeted
Gamble marketing, product innovation
McKinsey CEO’s trusted adviser Leading teams that deconstruct business problems,
synthesize data, and develop solutions
Boeing People working together as a global enterprise for Solving global problems, working as teams, possessing
aerospace leadership technical excellence in aerospace
Apple Innovation and design Creating new products and services that break the industry
norms
PepsiCo Appealing to the younger generation Building the next generation of talent
Dave Ulrich 2008
19
19

Leadership Model Drivers (Leadership Research) Cont’d
Leadership differentiation makes a difference. 10 year P.E. vs. Industry Average
Company P/E ratio of company for the past 10 P/E ratio of industry (not counting the firm) for the Market Capital
years past 10 years (in Billions)
GE 27.58 12.88 363.61
J&J 26.02 24.42 174.40
Teva 33.25 23.39 28.75
Pepsi 28.75 21.12 119.2
Boeing 23.82 15.83 70.17
Disney 27.15 19.57 70.53
P&G 27.0 21.2 199.29
Lexus (Toyota) 10.40 9.89 231.33
Nordstom 22.98 19.23 13.63
Herman Miller 23.85 14.75 2.16
Dave Ulrich 2008

20

Leadership Model Performance Focus Areas
Leadership Model Key Focus Areas

Based on the analysis of XXXXXX leadership requirements, six key strategic focus areas were identified. These
key areas provide alignment on what leaders need to be successful at for XXXXXX to be successful. These
areas form the primary basis for defining the leadership competency dictionary.
X
Company
Performance & Safety People & Team
Execution Leadership Development
Capabilitie
s
Strategic Direction & Customer

Change Focus
Sustainable Partnerships &

Growth Integration
21

Sample Company Leadership Model and Associated Competencies
Performance & Safety People & Team

Operations Excellence People Strategies
Execution Development
Performance Learning &

Execution Culture Development
SHE Management High Performance

Teamwork
X Company
Leadership
Strategic Planning & Strategic Direction & Capabilities Customer
Customer Service
Alignment Change Focus
Capability Customer
Relationship
Development & Mgt Management
Leading Change
Competitive Sustainable Partnerships & Partnership

Positioning Growth Integration Performance
Integration
Innovation & Growth
Business Performance Leadership/ Mgt Communication & Emotional Empowerment &

Knowledge Management Fundamentals Influence Intelligence Decision Making
22

What is Leadership?
Leaders help people get from where they are to

somewhere they have never been before…
23

Agenda
•Introduction
•
•
•Business Model
•
24

Translating Best Practices into the Business and Operating Model
Definitions:
Business Model: The strategic approach to create value for the shareholders and other
stakeholders across the value chain focused on the external marketplace
Operating Model: The organization approach to deliver the vision, strategy and business
model through internal roles, capabilities and infrastructure
25

The Business and Operating Model flow from the Strategy and are a Stepping
Stone to Designing the structure
Positional
Structure
This Business and Operating
Model provide the framework
for what the organization Functional Structure
(Including Design
should accomplish and the key Criteria)
roles of functions and
individuals Business and Operating Model
Strategy & Critical Success

Factors
“EYC uses a systematic four (4) level approach to develop the operating model and organization
structure”
26

This is a client example following a post merger integration of five
high tech companies defining common ground in their business model
Value Chain Steps
Product Development Sales/Marketing Service/Product Delivery Customer Follow Up/Services
§ Develop R&D § Direct contact with customers § Some services/products are § Call Center
outsourced, while some are
§ Technology Partners (providing § Responding to RFP’s § Ongoing people to provide
delivered by STS team
selective, specific products) support
§ Account Management
§Compose teams with different skill
§ Products are customized to
§ Industry Focus sets
industry groups
§ Project Management
§ Technologies from different
partners are integrated.
Business Model Primary Elements
27

Construction Holding Company and Operations Value Chain Example
ACC Business Growth Value Chain
Acquisitio
Opportunit Capability
Business n Monitor &
y Expansion &
Growth Assimilati Expansion
Identificati Acquisition
Strategy on &
on
Integration
m
M
C
A
tS
g
n
s
y
e
a rIio
,d
ACC Operations Value Chain
Business
Development Service
Project Design & Material/
& Project Extension - -
Tendering & Engineerin Resources
Sector Execution Operate &
Planning g Acquisition
Growth Maintain
Strategy
Value Chain Support & Enablers
28

Capability requirements to execute the Business Growth value chain
Value
Value Chain
Chain Components
Components
o
a n
d
tifc
”I e n
toA
&
u
q
is
c
”
“BG
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eu
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rtu
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qm
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itr&
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”
1 1 1
Strategic
Strategic Planning
Planning 5 9
Market
Market Research
Research 1 4
Making
Making Acquisition
Acquisition Offer
Offer Leader
Leader Alignment
Alignment Performance
Performance Monitoring
Monitoring
6 1 1
2 .. 1
Vertical
Vertical Integration
Integration 2 Financial
Financial &
& Technical
Technical 5
Feasibility
Feasibility Analysis
Analysis 0 Negotiating Terms & Value
Value Extensions
Extensions
Analysis
Analysis Negotiating Terms & Integration
Integration Planning
Conditions
Conditions Planning
1
3 7 3Organization
Opportunity
Opportunity Access
Access Organization && Cultural
Cultural
Equity
Equity &
& Financial
Financial Integration
Integration
Management
Management
8
Acquisition
Acquisition Offer
Offer
4 Development
IPO
IPO Development
Development Development
iog
ra m
C
p
In
tes
M
C
A
n
y
am
tS
,d
g
s
er
Holding/ Portfolio\ Corporate Mgt. Model I

Construction
Operations Mgt.Mgt
Construction Mgt
Model
Mgt. Model C F
Risk
Risk Mgt/
Mgt/ HSSE/QA
HSSE/QA J Engineering
Executive Engineering Mgt
Mgt
A Executive Development
Development
Audit
Audit G K
Governance/
Governance/ Contracts
Contracts Mgt
Mgt
B Portfolio
Portfolio Mgt
Mgt
+ D
Operational
Operational Excellence
Excellence &&
standards
standards
Performance
Performance Mgt.
Mgt. + L
Asset
Asset Mgt
Mgt
H M
Shared
Shared Services
Services Manufacturing
E Manufacturing Mgt
Mgt
Branding/Culture
Branding/Culture
N
Trading
Trading Mgt
Mgt
29

Capability requirements to execute the Operations Value Chain
Value
Value Chain
Chain Components
Components
tM
in
a
ig
nP
la O
t&
ra
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p
S
aw
thG
&
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rig
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- n E
xte
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vlp
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ct P
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a
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sig
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r ril/R
so M
u
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rvic
4 1 1 1
1 9
1Subcontracting with 6Project Management 9
Facilities
Marketing
Marketing &&Sales
Sales Subcontracting with Project Management Facilities Management
Management
Estimating
Estimating and
and Design contractors (Maintenance)
(Maintenance)
Design contractors
Bidding
Bidding 1 2
1
2 7 0Facilities Operation
5 0 Engineering HS
HS Facilities Operation
Engineering
Construction
Construction business
business Upfront
Upfront Engineering
Engineering
development
development 1
2 Resource
6 Resource Management
Management
3 Project
Project Budgeting
Budgeting
Operational
Operational R&D
R&D 2
7 1 1 Technical Support
Planning
Planning and
and 8Project Coordination Technical Support
7 Scheduling
Scheduling Project Coordination
Planning
Planning and
and
Scheduling 1
Scheduling
0 Engineering
Engineering
8
Contract
ContractAdminstration
Adminstration 1
3 QA/QC
QA/QC
1
4
Cost
Cost Control
Control
1
5
Procurement,
Procurement, Warehousing
Warehousing and
and Inventory
Inventory Control
Control
Value Chain Enablers

A B C D E F G
Government
Governmentand
andPR
PR Maintenance
Maintenance General
GeneralAdmin
Admin Legal
Legal IT
IT Accounting
Accounting and Human
and Human Resources
Resources
Finance
Finance
30

Agenda
•Introduction
•
•
•Business Model
•
31

Business Model to Raise $1Billion Capital
Purpose:
Deliver __X Return…
Guiding Principles
Best Data and

Best People Best Partners
Technology
Best Investors Best Practices
32

Now what do you do as it gets real?
So now that you have over $1billion of

investors money and an idea that would
transform Oil and Gas Exploration, how do
you sleep at night?
33
Copyright © 2008 Organization Performance

Proprietary & confidential Strategies All Rights Reserved
information
Oil Company example of how all the pieces come together
Purpose:
Deliver 5X Return…
Vision
Guiding Principles
Best Data and

Best Investors
Best Partners
Best Practices
Best People
Technology
Business
Model/
Strategy
Strategic Focus, Value Chain Differentiation, Business Results

Team Leadership
People/ Culture
Relationships/
Partnerships
Technology/
Organization
Operational
Operating
Excellence
External
Financial/
Data
Capital
Model
34

Business Model Exploration and Production Value Chain Strategic
Differentiation
Exploration Appraisal Development Production / Operations
Cobalt Approach
§ Bias toward subsea completions
§ Initial focus on Two Areas (Deep § Accelerated integrated team based § Outsource services as preference
Water GOM and WA) analysis § Creative, repeatable solutions to
§ Small Operating Organization
§ Focused Data Acquisition § Standardized approach agreed prior maximize value
§ Focus on optimizing recovery and
to drilling of exploration well § Control exercised through third party
§ Best team of Explorationist reducing lifting cost
§ Operational control dictates timing agreements
§ ‘Coal Face’ analysis and decision § Enhance value through
§ Leased facilities/tolling agreements
making by experts § Accelerated learning's via the drillbit infrastructure optimization
whenever possible
§ Small staff, play big § Move through in weeks/months
§ Small project management teams
§ Minimize capital outlay
§ Accelerated delivery of commercial
solution.
Traditional Industry Model
§ Global Program
§ ‘Blank Sheet’ analysis § Large Project scale §Internal Focus, company solutions
§ Partner to diversify risk
§ Extensive staff considers all § Plan for all depletion possibilities § Large Production Organization
§ Large staff to analyze basins possible options at outset
§ Maintain large infrastructure
§ Own technology and shoot § Years negotiating with partners § Internal engineering preferred
§ Operator and non-operator issues
proprietary seismic § Unique solutions—”Serial Number § ‘3 Bids and a Buy’ Contracting
§ Large lead time of 5 – 7 years
§ Quality control through multiple 001” strategy
reviews with functions and § Years to get to sanction
management
§ Significant capital expenditure
35

Exploration and Appraisal Value Chain and Capability Requirements
for the Business Model
Value
Value Chain
Chain Components
Components
“E
tin
” lo
rap
x “Ais
l” p
ra
R
d
y
a
e
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ilb
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rile “D
ril” “D
R
u
o
fin
s eS
rc
z” “D
R
o u
fin
v
c eb
ls
ra
”
1 2
Portfolio
Portfolio Build
Build (Select for Drilling) Portfolio
Portfolio Optimization
Optimization (Select for Development)
3 4
Geology/Geophysics
Geology/Geophysics Prospecting
Prospecting &
& Maturation
Maturation Geology/Geophysics
Geology/Geophysics Operations
Operations
6 6
Petrophysical
Petrophysical Petrophysical
Petrophysical
7
Drilling
Drilling Engineering
Engineering
SANCTION
5
(Scoping) Reservoir
Reservoir Engineering
Engineering (confirming/optimization)
8
Drilling
Drilling Execution
Execution (Foreman)
(Foreman)
1
0 Project
Project Scope,
Scope, Planning
Planning &
& Management
Management
1
1 Operational
Operational Planning
Planning
9
Reservoir
Reservoir Defining,
Defining, Optimization,
Optimization, Flow
Flow Mgt
Mgt
1
2 36 HSSE
HSSE
1
3 Land/JOA/Partners
Land/JOA/Partners
Creating the linkages of the Operating Model for Governance
and Execution
Monitor
Approve Progress,
Investors/ Approve
Capital
Approve
Business Ongoing Input on
Portfolio
Board Structure Plan
Decisions
Strategic
Issues
Address
Strategic Manage & Continuous
Executive Set Vision
Approve
Business Plan Business Group Track Improvement
& Operating Set Policy
Team (CEO) Model
Recommendation Issues at Cobalt of the
s Portfolio Performance Business
Level
Value of Predicted Confirm

Assess Value
Business Commercial Potential Value of Value
Of of Developable
Prospects Prospects
Groups Discoveries Options
Sanction
Develop
BG Business Coordinate, Integrate, BG Portfolio Recommendations
•When to Proceed Plan
•How to Proceed
•How Much Confirm
Access Get Drill Define Resource
Drillable Drill
Technical Prospects
Prospects Ready Size & Recoverability
Organization Capabilities
Functions Strategy/ Geological/
Engineering/
Finance/
Drilling/ Legal/ Support
Portfolio Geophysical CFO
Supply Contracts Functions
Analysis IT/Data
Chain
37

Even the technology plays a role in the Operating Model - - Cobalt’s IT
Infrastructure approach
1 Yellow fiber optic cable
1 Server
Knowledge
Economy
Has Changed
38

The Results
Early Results from 4 Years of Start-up
39

Top 30 Companies by Spend - 2007 and 2008
Central Sales Combined*
Gulf of Mexico 2007 and 2008 Lease Sales

($MM)
1,000 100%
900 90%
800 80%
700 70%
600 60%
500 50%
400 40%
300 30%
200 20%
100 10%
0 0%
Ta s
rt rc
as
ne B Da y
on
y d s
C s
S on
d a ol
E OC
ar o
y
S n
e
W e n
P
N P
M OG
A ep i
D er
en n
vr t
am d
LL l e
K e
ro il
at P
C ell
na
d n
r
R En
he a l
r
es
rg is vi
ph
ew d
M rk
so
ne
o
et t o
C xo
H
Pa 'A
S fiel
O
oo e
ar B
na s
tu
ob
in
br
h
N si
ev
C ob
to
h
x
B
N
H
P ta
ur
x
S
o
M
High Bids Percent Successful
40
E
* Source MMS. “Sale Statistics”, October 3rd , 2007 and “Sale Statistics”, March 19th , 2008.
Winners of Deepwater Blocks with Four or More Bids –
Central Sale 205 and 206 Combined*
Blocks Won ($MM)
25 500
422 427 450
20 19 375 400
18
350
14 14 290
15 300
13
230 11 250
10 200
150
95
5 100
22 21 30 22 50
16 9
0 0
s
n
n
lt
ra
l
o
ro
el
s
a
th
b
b
e
v
ro
o
ra
e
S
C
et
a
C
P
Blocks Won Total Spent ($MM) Dollars per Block ($MM)
41
* Source: Outer Continental Shelf BBS Data Proprietary & confidential information
Web Page Explanation of Results
It is not just the number of blocks won, but also the prospectively of those blocks that is
important. In analyzing the Gulf of Mexico lease sale, J.P. Morgan noted that historically
there is a strong correlation between how many companies bid on a block, the chance of
success and the size of discoveries. Looking at blocks where there were four or more
bidders, the research analysts concluded that Cobalt had won the highest number of
competitive blocks in the sale at the second lowest average cost per block.
When these 53 newly acquired leases are added to Cobalt's current lease inventory, the
company will hold 107 leases, consisting of over 600,000 acres at a cost of
US$263,000,000. While successfully partnering on certain prospects with major North
American and International energy companies (Nexen Inc., Anadarko, and BHP Billiton),
Cobalt has steadfastly retained a significant equity position in all its prospects (usually
50-100 percent), so we are in a better position to control our own destiny.
42

Cobalt Goes Public December 15, 2090 with $5 Billion Market Cap
HOUSTON, Jan 07, 2010 (BUSINESS WIRE) -- Cobalt International Energy, Inc. (NYSE: CIE)
announced that it closed the sale of an additional 7,978,000 shares of its common stock at
the public offering price of $13.50 per share pursuant to the over-allotment option exercised
by the underwriters of its recently completed initial public offering. The exercise of the over-
allotment option brings the total number of common shares sold by Cobalt in the public
offering to 70,978,000 shares. Including proceeds from the exercise of the over-allotment
option, gross proceeds from Cobalt's initial public offering and a simultaneous 3,125,000
share offering at $13.50 per share exempt from the registration requirements of the
Securities Act of 1933 pursuant to Regulation S were $1.0 billion. Cobalt intends to use the
net proceeds from the offering and other resources available to it to fund its capital
expenditures, and in particular Cobalt's drilling and exploration program through 2011, and
its related operating expenses, and for general corporate purposes.
Credit Suisse Securities (USA) LLC, Goldman, Sachs & Co. and J.P. Morgan Securities Inc.
acted as joint book-running managers of the public offering.
43

The Role of Leadership Team and Executive Retreats
April 2006 - Houstonian: First start-up discussion of executive team on integrating business model
September 2006 - Montana: Realigning the asset development approach
April 2007 – Galveston: Clarifying the Strategy and building the business plan
Fall 2007 – Galveston: Getting ready for Lease sales
Spring 2008 – Lost Pines: Getting Aligned to strategic imperatives from lease sale results
Fall 2008 – Lost Pines: Developing an Operating Company
January 2010 – Lost Pines: Being SEC compliant and drilling
44

The Top 10 Things the CEO of Cobalt International Learned
As an Entrepreneur of a New Start-up
1.You must have a vision
2.
3.You must have real passion for your vision
4.
5.You must assume that no one else shares your vision, you have to reinforce it everyday to
everyone
6.
7.You must have courage
8.
9.You must be prepared to have a lot of ‘lonely moments’ when it is you against the world
10.
11.You must have the confidence and conviction that you will succeed
12.
13.You must be prepared to knock every barrier down to achieve results
14.
15.You must realize that average people will deliver average results, great people will deliver
great results. You need great people.
16.
17.You must be ruthless with costs
18.
19.You must be able to communicate all of the above in a way that engages the minds of your
organization, your investors, and you partners and makes them your disciples
20.
21.
45

Follow-on comments from CEO email on March 4, 2010 regarding top 10 list
“ this is what comes off the top of my head today. It is not an

accident that the word ‘YOU’ is used in every item. It is about YOU
as an entrepreneur, it is not about delegation.
By the way, Cobalt was the Largest North American E&P IPO in
history. It took 4 years to go from a blank sheet of paper to a 5 billion
market cap company. That has never happened before.”
Joe
46

Why is a Business and Operating Model a Pre-requisite to Knowledge
and Change Management?
•Vision and mission statements alone are usually at too high of a level to create the clarity and
alignment of what people need to do.
•
•You can’t develop a leadership model without a clear business model - -otherwise you are just
creating a generic model for generic results
•Many times we are driven to improve an organization before we really understand at a

meaningful level what the organization is trying to do and how it wants to do it.
•
•In the High Performance research we found that the high performers had a very defined strategy
and were able to link all aspects of operations to that strategy including information
management and technology - - that clarity provides a laser focus on what information, data
and technology is critical for success.
•
•Changing people is not enough, we need to change organizations in an aligned and integrated
way, and until we understand the underlying model driving the business (business model) and the
way it allocates resources, coordinates functional capabilities and sets accountabilities, roles and
rules of engagement (operating model), it is near impossible to create sustainable change.
47

Leaders need more than motivation, they need a coherent Business and
Operating Model to know how to Change to create success
Motivation is not enough
48

Curt J. Howes
Current Position

§ President Organization Performance Strategies

Previous Experience

§ Exxon Corporation - - Executive Training

§ Exxon Chemical Company - - World Wide Manager Education and Training/ Executive Development
§ Accenture - - Energy, Utilities, Chemicals, Natural Resources lead for Organization Change Strategy
Other Background

§ Masters Organization Communications/

 PhD studies Rutgers
§ Advisory Board BYU MBA program for
 Organization Behavior
 _ Adjunct Faculty Utah State University
cjhowes@opstrategies.org 001 801-201-6259

http://www.opstrategies.org
49

Strategic Leadership To Drive The Business Model

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Strategic Leadership to

Drive the Business

Proprietary & confidential information

Key Discussion Points

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ØLead for Advanced Management Education, Exxon

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•95% of a typical workforce does not understand its organization’s strategy

•90% of organizations fail to execute their strategies successfully

•70% of organizations do not link middle management incentives to strategy

•60% of organizations do not link strategy to budgeting

Source: Strategy Maps, Kaplan and Norton

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Organization Performance Strategy Framework

-leadership agenda & alignment

Innovation & Change

Copyright © 2007 Organization Performance Strategies All Rights Reserved

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Key Discussion Points

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So you are an Entrepreneur with

What would it take to raise $1

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Would it be Tangible Assets?

We will come back to this also in a

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25% of Market Cap Value 75% of Market Cap Value

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A High Performance Organization

Which of these leaders do you believe

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Rudolph Giuliani Rocky Anderson

John Wooden Kyle Whittingham Bronco Mendenhall

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Example Total Return Shareholder Analysis of Energy Companies

Unocal Norsk Hydro

Strategy • Growth focused strategy – increasingly leveraging international growth opportunities

Technology • Technology mastery in emerging E&P areas is foundational to strategic differentiation

• Tactical excellence in asset/portfolio management

• Entrepreneurial culture with a strong performance bias

So if leadership is more about the

What is the latest research on

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High Performance Company Leadership Competency Mix

Dave Ulrich 2008

Successful Companies translate their leadership distinctiveness into

Dave Ulrich 2008

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Leadership differentiation makes a difference. 10 year P.E. vs. Industry Average

GE 27.58 12.88 363.61

J&J 26.02 24.42 174.40

Teva 33.25 23.39 28.75

Pepsi 28.75 21.12 119.2

Boeing 23.82 15.83 70.17

Disney 27.15 19.57 70.53

P&G 27.0 21.2 199.29

Lexus (Toyota) 10.40 9.89 231.33

Nordstom 22.98 19.23 13.63

Herman Miller 23.85 14.75 2.16