Leadership and Lean Six Sigma at Chevron Europe
Eric Sirgo, General Manager of Operations at Chevron Europe, joins Process Excellence Network to talk about their Six Sigma Programme, and how they engage with their leadership teams.
Editor's Note: This is a transcript of a podcast that we ran ealier this year. It has been edited in some places for readability.
PEX Network: I understand that Chevron has been using Lean Six Sigma for many years in its upstream division. What's the history of that programme?
E Sirgo: You're right. It started in about 2000. We started with our Indonesian operations. There was a group there that took on the Six Sigma practice and trained a number of Indonesian nationals in using Six Sigma, and they became black belts, and they started some projects locally. Then it picked up in our California Operations.
In Western California we have a business unit, called San Joaquin Valley, and that programme started there, and I'd say it was like most programmes: it started at grass roots and it started slowly, and it moved, for about four years, doing small projects in that business unit, and then around 2006 they were starting to get a lot of attention on the progress they were making with the savings and efficiency gains, and we have a global upstream standards organisation that picked up on the practice and decided to make it a global standard.
That didn't necessarily guarantee that it would go worldwide overnight. It did say that the company endorsed it as a preferred method for efficiency gains and Leaning out processes, but I think where it really got going fast was the Vice President from the California Operations went to the Gulf of Mexico. His name is Warner Williams, and he has a lot of passion around this particular topic, and he and the President of North America, Gary Luquette, came to the conclusion it was something that North America needed to do, and so it went from a grass roots build over several years, to more of a top down programme. Since 2008 North America has really blossomed, and has really spread Lean Sigma throughout the North America operations.
Globally, we continue to have business units make progress in picking up the practices and the approach, and we probably have another three or four business units that now have pretty active Lean Sigma programmes.
PEX Network: So it started as something bubbling up internationally, and then came back to North America?
E Sirgo: Yes, exactly. It started at a grass roots level with individuals who had a lot of passion around the subject, and they carried the banner for a while.
Steve Turnipseed, in particular, just picked up the flag, and began pushing and pushing. I can remember going to the first training that Steve offered at the global level. He was coming to the staff, the individuals who would push it out, and trying to sell us on the process, we were all extremely sceptical, and Steve was just so passionate about it. And that passion is pretty infectious. He's really been a big catalyst in the grass roots movement, but I tell you, it does help when a President or a Vice President says, this is something I want to do, and makes the metrics very visible, makes the project successes very visible. That certainly puts an expectation for the organisation to pick up and adopt.
PEX Network: You work at Chevron Europe, and Lean Six Sigma is fairly new to your division, what's the background to your Lean Six Sigma implementation?
E Sirgo: I've been in this job, coming up on two years, and the organisation here has been at it about six years. It’s been very much grass roots. I would say that the leadership, prior to me arriving, were supportive, but were not top down. They saw it as another tool in the toolbox, and said that if a project seems appropriate, then you apply the tools. If you want to use it or you want to get trained, you’re free to do it and we’ll pay for that, we’ll reimburse you for that.
We’ve probably completed 20 plus projects here in all different departments, from IT to supply chain to HR to operations to asset development. But I wouldn’t say it’s been a steam-rolling programme; it’s been pretty slow and methodical. When I got here two years ago, we revamped the steering team, we re-chartered the team, we set some goals and we’ve been doing a lot more organisational development in the skills. I think that’s beginning to get our queue up and beginning to get our knowledge up and we’re starting to get more projects through the pipeline.
PEX Network: When you first started off with Lean Six Sigma in Chevron Europe, how did you build the expertise up internally?
E Sirgo: It’s been a couple of things. I’d say it’s been very typical: it’s training, it’s consultants. We’ve brought in consultants from the typical suppliers, like Accenture or IBM, who have supplied black belts and people who are very knowledgeable to help teams move projects along. And then we’ve done a lot of training of our employees.
We have a significant number of white belts, green belts, champions that we begin to just keep building organisational capability and keep spreading the tools and the expertise. So it’s a combination of training and consultants.
We recently hired our first black belt as a Chevron employee, which is unusual. If you take a step back, it’s not a career path in the company to be a black belt. We typically have career paths of drilling or reservoir engineering or geology, and having a black belt career path is a bit of an oddity in the company. And so we just recently hired our first individual as an employee, as a black belt, and we’re going to be working on what the career path would be for them, and we’re working with that with the global group.
PEX Network: As you’ve been building up that competency, what kind of challenges have you been encountering along the way?
E Sirgo: We still have challenges every day. Change is something funny in a big organisation; it does not come free and nor does it flow freely. And everything you’d expect. I’m too busy, I don’t have time for this; this is nothing new, I’ve seen it before. One thing you’ve got to remember is that a company like Chevron is built on the back of a highly technical and skilled workforce that are masters of geology, engineers, people who are experts in their field. They’re very technical and savvy and experienced. And when you come to them and say I can do what you’re doing with Lean Sigma and you could do it a lot better, they’re very, "yes, yes, I’ve seen this before, I’ve done it before". So you’ve got a lot of what we call change management issues to convince people that if you apply these tools, you can make changes stick longer.
And that’s been one of our best selling points: we do have a smart workforce and we do a lot of improvements, but often they don’t stick and they fade after that person maybe moves on. And Lean Sigma helps control the project; it helps create metrics that keep the improvements in place, but it also educates people on what the change is. And so that’s been a big selling point for this workforce: we can make change stick with this set of tools.
So, anyway, back to your question, all the very typical things: I’m too busy, nothing new, I’ve seen it before type attitudes.
PEX Network: One of the things that comes up often when I speak to practitioners is that that top down support really helps, particularly when people are too busy or they’ve seen it all before. How does your leadership really take that active role in your Lean Six Sigma programme? What kind of activities do they do to give you that support?
E Sirgo: That’s been an area that we’ve been trying to improve since I’ve arrived here: getting more leadership involvement and uptake. I’d say our support organisations, in particular IT and supply chain, the leaders have been very active in pushing their organisation to apply Lean Sigma to their projects. The operational area and the asset development area and maybe some of the other groups, drilling, have been less top down. My counterpart here, Dan Chudnov and myself, we have taken a much more active role in asking our teams to generate projects, do brainstorming, assign champions, get people trained and then setting some goals and some challenges to try to move people along this path, and I think that’s going to help.
And I think it’s great when it’s grass roots. I think there are a couple of challenges for grass roots. One, the organisations are so large that you can’t really just expect things to catch fire without somebody pushing it along. I do think you need leadership to make these programmes successful, and I’ll give you another example.
We operate in 180 countries around the world and we operate in a lot of different cultures. And many cultures that we operate in, grass roots is not how it works; top down is how it works. That’s how the culture has come up, and so you really need to adjust accordingly to the culture you’re working in. I think in the US, grass roots entrepreneurship is often rewarded, and so things do get recognised when people take the initiative. But when you want to institutionalise it, I think you do need to put a bit of strong leadership and top down drive on it.
PEX Network: How do you keep different departments and business units on the same track?
E Sirgo: I’d say that’s not quite as sophisticated yet as it could be here in Europe, in our European operations.
But we have a quarterly Lean Sigma steering team meeting that we look at our metrics, we look at our training metrics and make sure we’re making progress on getting bugs trained. We look at our project queue and we look at how many projects we have active and are moving through the pipeline. I look at my project queue with my team directly probably at least once a month, maybe once every two months. We track savings. We have all the very typical metrics for guiding any sort of programme or process through a company.
And I think we could probably be a little more systematic in that we have a new managing director who has only been here about a month or two, and she and I have been talking about how to make things a little more systematic in this area. So I think we do have some room for improvement. In North America, it is fairly systematic now: there are very clear metrics, very clear expectations on people’s individual performance measurements and very clear goals on the score cards of the managers as well as the business unit. So we’re not quite as mature as they are, but we’re heading in that direction.
PEX Network: I understand that you use the balance scorecard. Is that correct?
E Sirgo: We have more scorecards than we know what to do with. Being a very technical and analytical business, we measure just about everything. For instance, in my operations, the very typical high-level things that we measure are environmental and safety performance, our production performance and then our cost performance. And then from there, those three topics, you can go down to dozens of metrics, depending on what we’re chasing. In particular, we look a lot at maintenance and how we’re doing on maintenance backlog and the amount of maintenance we’re liquidating. These things all offer themselves to Lean Sigma tools and processes, so when you say balanced, I just say we’ve got a lot of metrics and they lend themselves to these processes quite well.
PEX Network: Speaking, a little more generally, one of the things that process excellence professionals always tell me is that they’ll never be out of a job because processes are always changing and there are always ways to be eliminated. In your role, what role does process improvement play in helping you adapt to changes in the business operating environment?
E Sirgo: I’d say it’s huge. We do operate in a fairly dynamic business; things do change a lot. Post Macondo, even in the UK we’re dealing with many, many, many changes around permitting, around how we conduct ourselves offshore, contingency plans. So the business changes very rapidly.
But I guess to answer the question a little more specifically, some of the issues around improving processes or making them more efficient are that, number one, sometimes our changes just don’t stick. We’ll look at a process, we’ll analyse it, we’ll make recommendations and then people say, okay, that was interesting, and they go back to how they were doing things. And they just don’t stick, and we tend to revert back to the more entrenched method, and that would be one flag around process change.
I think the other one is that often, either the process is owned by a champion or the effort to improve the process is owned by a champion. We’re fairly mobile in Chevron; we move around quite a bit. And if that person leaves or moves on to a new assignment, then often the improvement goes with them and it doesn’t become engrained or entrenched in the organisation.
So those are very atypical problems with process change and we see them all the time. I’d say one other issue, Chevron were very much built on teams and consensus and sometimes process change doesn’t sit well in a consensus environment, where everyone has got to agree to the change or everyone needs to support the change. I think managers need to step in and be a little more direct. When you’ve gotten to the prescribed method and you know there’s value in it, sometimes you need to be a little more prescriptive about what you want to do.
So reversion to the norm, champions walking away with the knowledge and the process or problems with consensus can all stand in the way of changing existing processes.
PEX Network: You mentioned Macondo. Are there specific challenges this year that are really driving those changes that are playing a role in helping you prioritise what you need to focus on this year?
E Sirgo: Absolutely. The post- Macondo world for the industry is very different. This was an event that was low probability, but very high impact and when it does occur, it does leave a very large ripple. And it has rippled across the world: just about every major base and every major government is asking more questions, requiring more due diligence. And for the most part, I think at Chevron we’re getting a lot of validation from the scrutiny that’s coming from a lot of the different governments around the world that our processes were good and they were in good shape.
So we’re not making a lot of changes to how we do our work; we are making a lot of changes about how we communicate what we’re doing to the regulatory bodies. We’ve answered just hundreds of questions for permitting here in the UK for our deepwater exploration west of Shetland, and it’s just a much lengthier process.
And I think we’re having to come to the conclusion that we need to be working way farther in advance and we need to be much more open about what we do and what we are good at with the regulators.
And I do think you’re seeing much more partnering going on. The regulators here know a lot more about what we do than they used to do in the past, and I think that’s a good thing. I think that’s going to be a very positive outcome from the post- Macondo world. But in general, I think we’re just planning for lengthier lead times on getting things done.
PEX Network: What do you see as some of the key process improvement challenges for the industry as a whole in the coming years?
E Sirgo: It does go back to the three things I talked about, which were safety, production and cost. If you focus on safety, we talked about Macondo and post-Macondo world. It’s a pretty never-ending effort for us to be focused on safety. And as you enter new countries or you enter new projects, you’ve got to bring that culture with you and you’ve got to be able to get a new organisation moving in the direction. I’ll give you an example: we’ve just leased approximately a million acres of land in Poland, and it’s a new country entry for us here in Europe and for Chevron. But that’s a completely different culture: it’s a language barrier, there’s the different governmental process. One of the areas in safety that we’re really concerned about is driving; Poland is not known for very safe driving. So we’re spending a lot of time just getting the workforce there up to standards on driving and driving safety. So that’s just an example.
I think on production, a lot of the world’s reserves and a lot of the oil that has been discovered, we know where it is, we know how much is left, but we can’t figure out how to get it all out of the ground. And so there’s a huge challenge around improving the recovery of oil out of the fields we already own. I have a field here I operate in the North Sea, called the Captain Field, and I believe we’re setting around 30% recovery of the original oil in place, which means there’s 70% remaining and we haven’t quite figured out how to get that out. So I think there’s a lot of opportunity in the fields we own to apply technology and process to try to move some more barrels.
Cost is another challenge we face. If the price of oil runs up, the cost for us to do our business runs up along with it. A lot of people think we don’t see that increase in cost, but we do. And so we’re constantly looking at how we do our work to become more efficient, to make a better margin on the barrels that we do have on these older fields. So the challenges are endless and they’re in all facets of the business.