operational conditions that affect its ability to
implement different strategies—this includes the
regulation it faces, internal or external capital
constraints, and the potential synergies between
current business areas and future ventures.
We have analysed the different responses of
three companies in each sector. Understanding
the motive and context allows for the outcomes
of each company’s response to be understood
holistically and deeper parallels to be drawn to
the potential future responses of the oil and gas
industry.
Two companies demonstrate a relatively
minimal response, with a continued focus on
improving their current business through the
existing organisational model. USPS, protected
by a monopoly on letters but banned from
entering new non-postal markets, represents the
minimal response or “hold firm” approach to
industry-wide trends, both in terms of business
strategy and organisational structure. RWE is the
parallel example in the utilities sector, preserving
a focus on its traditional assets rather than on
integrating renewables.
Our four other cases all chose to split their old
from their new businesses organisationally,
although in different ways. Both the UK’s Royal
Mail and Innogy were legally split from larger
companies to help them reorient their business;
Deutsche Post split its businesses organisationally but did not divest; while DONG Energy
separated its businesses and then divested old
business units.
Two companies pursued business strategies
that led to a deep shift towards flatter, less hierarchical organisations. Innogy was separated
from RWE in 2016 to focus on new energy
markets and has taken measures to increase the
autonomy of its business units (based on target
customers) and enable more agile investment and
divestment in rapidly changing markets.
Deutsche Post was privatised in 2000; it then
diversified from its former core business, both
geographically and in terms of products offered.
To support this, it took an organisational shift
towards decentralised and autonomous divisions.
Two other companies pursued quite different
business strategies, with both seeking to change
their organisations, yet without radically changing their organisational structure. Royal Mail was
unbundled and privatised in 2013 to increase
focus on competitive mail and parcel services;
and it took a range of measures to de-layer the
organisation, reduce operational costs and reorient its corporate culture and processes towards
customer service. DONG Energy is an even more
extreme example of business strategy change,
completely divesting its oil and gas exploration
assets to focus on offshore wind generation.
While this was accompanied by various changes
in organisational culture and responsibilities, it
has not (yet) resulted in the degree of diversification and decentralisation seen in Innogy and
Deutsche Post.
Table 1 illustrates the role that motive and
context plays and the general response archetypes that each of our cases falls into. In response
to structural shifts, companies within the same
sector and facing the same shifts have chosen
alternative strategies, due in part to their differing
motives and context. This has led to a range of
outcomes and organisational shifts—oil and gas
companies facing their own unique motives and
context can learn from these cases to better guide
their future responses.
(3) Lessons from the case studies—the postal
sector
(1) United States Postal Service (USPS)
The US government’s priority was for USPS to
provide service security. This motive, combined
with legislation that constrained USPS to its
existing core business areas, meant the business
strategy and hierarchical structure remained
unchanged in response to declining letter volumes.
• Context: The Postal Accountability and
Enhancement Act of 2006 was passed after
USPS posted several years of strong earnings.
This act prevented diversification into
non-postal
areas
due
to
potential
cross-subsidisation, with monopoly earnings
leading to unfair competition and market
distortion. However, the timing of this act
was unfortunate, as mail volumes began to
decline from 2006 onwards.
Special Report 1: A Study of China’s Energy Supply Revolution
59
implement different strategies—this includes the
regulation it faces, internal or external capital
constraints, and the potential synergies between
current business areas and future ventures.
We have analysed the different responses of
three companies in each sector. Understanding
the motive and context allows for the outcomes
of each company’s response to be understood
holistically and deeper parallels to be drawn to
the potential future responses of the oil and gas
industry.
Two companies demonstrate a relatively
minimal response, with a continued focus on
improving their current business through the
existing organisational model. USPS, protected
by a monopoly on letters but banned from
entering new non-postal markets, represents the
minimal response or “hold firm” approach to
industry-wide trends, both in terms of business
strategy and organisational structure. RWE is the
parallel example in the utilities sector, preserving
a focus on its traditional assets rather than on
integrating renewables.
Our four other cases all chose to split their old
from their new businesses organisationally,
although in different ways. Both the UK’s Royal
Mail and Innogy were legally split from larger
companies to help them reorient their business;
Deutsche Post split its businesses organisationally but did not divest; while DONG Energy
separated its businesses and then divested old
business units.
Two companies pursued business strategies
that led to a deep shift towards flatter, less hierarchical organisations. Innogy was separated
from RWE in 2016 to focus on new energy
markets and has taken measures to increase the
autonomy of its business units (based on target
customers) and enable more agile investment and
divestment in rapidly changing markets.
Deutsche Post was privatised in 2000; it then
diversified from its former core business, both
geographically and in terms of products offered.
To support this, it took an organisational shift
towards decentralised and autonomous divisions.
Two other companies pursued quite different
business strategies, with both seeking to change
their organisations, yet without radically changing their organisational structure. Royal Mail was
unbundled and privatised in 2013 to increase
focus on competitive mail and parcel services;
and it took a range of measures to de-layer the
organisation, reduce operational costs and reorient its corporate culture and processes towards
customer service. DONG Energy is an even more
extreme example of business strategy change,
completely divesting its oil and gas exploration
assets to focus on offshore wind generation.
While this was accompanied by various changes
in organisational culture and responsibilities, it
has not (yet) resulted in the degree of diversification and decentralisation seen in Innogy and
Deutsche Post.
Table 1 illustrates the role that motive and
context plays and the general response archetypes that each of our cases falls into. In response
to structural shifts, companies within the same
sector and facing the same shifts have chosen
alternative strategies, due in part to their differing
motives and context. This has led to a range of
outcomes and organisational shifts—oil and gas
companies facing their own unique motives and
context can learn from these cases to better guide
their future responses.
(3) Lessons from the case studies—the postal
sector
(1) United States Postal Service (USPS)
The US government’s priority was for USPS to
provide service security. This motive, combined
with legislation that constrained USPS to its
existing core business areas, meant the business
strategy and hierarchical structure remained
unchanged in response to declining letter volumes.
• Context: The Postal Accountability and
Enhancement Act of 2006 was passed after
USPS posted several years of strong earnings.
This act prevented diversification into
non-postal
areas
due
to
potential
cross-subsidisation, with monopoly earnings
leading to unfair competition and market
distortion. However, the timing of this act
was unfortunate, as mail volumes began to
decline from 2006 onwards.
Special Report 1: A Study of China’s Energy Supply Revolution
59