Extracting the Algorithms of the Shell Shock

Royal Dutch Shell

Forbes writer Christopher Helman announces it bluntly What the Hell, Shell? Oil Giant Warns on Disastrous Quarter.  Meanwhile, The Australian writer Matt Chambers worries Local fallout likely from Royal Dutch Shell's shock profit downgrade.

I want know to why this came so surprisingly, so as to catch newly minted CEO Ben van Beurden apparently off-guard and so as to shock analysts and reporters.  

A miscalculation can be corrected.  Planned investments can be pulled back.  Business lines can be pressured to deliver.  van Beurden said as much in a statement:

How will Shell turn it around? Figuring that out falls to new CEO Ben van Beurden. “Our 2013 performance was not what I expect from Shell,” he said today. “Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”

But really the critical factor is for Shell to understand what the hell happened.  In my language, it is about extracting the algorithms (i.e., essence) of what internal analysts and executives had surmised when they decided to invest in the Eagle Ford shale of Texas.  Any business projection and plan - and I mean any - are fraught with uncertainty.  But what did Shell see and not see, ahead of that investment, and how did they come to decide what they decided?  

Extracting the algorithms may reveal that the pressure to play catch-up in Texas shale affected the assessment and consequently the judgment on what to pursue.  Perhaps there were other reasons and motives involved, and perhaps Shell bit way too much more than it could chew, especially in the midst of a CEO transition.  Were top leaders sleeping at the wheel?  

Extracting the algorithms is also about learning what to do differently going forward.

It's like this: I played a golf scramble with friends one time, and among my team members I was the least experienced and skilled.  So when we were putting, their instruction for me was to make sure I didn't put short.  Interestingly, this scramble took place in Dhahran, Saudi Arabia, and at that time the golf course was entirely sand.  The so-called green (i.e., putting area) was actually brown, as course managers packed it down with oil.  But this packed sand captured the path of the golf ball, and therefore revealed the lie of the surface.  

In essence, then, because there was a greater likelihood that I would miss the put, at the very least let our team draw on my failure to learn how they needed to put in order to hit the hole.  Specifically my putting even a missed shot long positioned my golf mates to extract the algorithms of the putting "brown" surface in the best possible way.    

Whether or not anything is communicated to the media, Shell must extract the right algorithms and to do so fully.  Otherwise, van Buerden keeps his giant of a company vulnerable to major miscalculations, lost investments and delivery shortfalls.  

Take a Hit and Keep Going, by Barbara Corcoran

I played football in 8th grade and as a freshman. I was a second-stringer at best, but I had good determination and persistence.  I was pretty small, and I didn't have a lot of talent.  But I learned to wring as much fierceness in myself as I could.

Football is what comes to mind, as Barbara Corcoran talks about the importance of entrepreneurs getting slammed, taking that hard hit, and quickly shaking it off.  They feel the hurt, but they don't let it keep them down for any length of time.

Steely Determination of Gurbaksh Chahal

"If you fail, you fail... that's just the byproduct of trying." Gurbaksh Chahal has a steely determination about him.  He acknowledges fear, but works quickly at checking it off:  `Does not apply.  He's a go-getter, and he knows that you have to put in the `sweat equity, simply because getting funded for your venture is not likely to come.

Jane Wurwand Opens up on her Creative Process

I share Jane Wurwand's love for intellectual curiosity, and appreciate her running down her creative process so openly.  She pays attention to things, jots them down, wonders about them, and tosses around ideas.  "Gather thoughts like a magpie."  

Spirits Up, in Economic Down Times

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The Economic Times offered some good news - US factor orders hit 1992 high:

US factories orders climbed in November, led by a surge in aircraft demand. And businesses stepped up spending on machinery, computers and other long-lasting goods, a sign of investment that could fuel economic growth.

The improvements could signal accelerating growth in 2014. Americans are buying more cars and homes, increasing demand for steel, furniture and other goods. That has led factories to hire more workers, generating additional economic momentum.

Four years ago, I gave a keynote presentation on keeping our spirits up in those economic down times.  I brought a rubber ball with me, and toss it up in the air to demonstrate how things that go up must, and do, come down.  Then, I bounced it off the floor to demonstrate, in turn, how things that go down must, and do, come up.

Analysts offered pat perspectives on the new normal in the economy.  Its devastating nature suggested to them, at least, that the economy will never ever be the same.  They may or may be not right.

To me, what they say is not very important, because the economy seems to work off cycles.  Its elements are so intricately woven together that civilized societies around the world will at some point need goods and supplies.  Why?  Because things wear down and things run out.  Demand and purchases, then, stimulate manufacturing activity, and such activity requires more employees.  More employment means more income for people, which they use for necessary and discretionary stuff.

So to the point of the foregoing article, economic good news was bound to come, and the New Year has the privilege of welcoming it with open arms.

The Disruptive Potential of Bitcoins

According to Coinbase's Fred Ehrsam, the digital currency bitcoin is making in roads to become a dependable and less volatile currency.

There I was, at a New Year's Eve cocktail party, and my conversation with a couple of people turned to bitcoin... 

Coinbase's Brian Armstrong tells FORBES how they want to use their most recent $25 million investment round and hope to change the way e-commerce is done.

One friend called bitcoin "internet money" (i.e., fake). But nailing down a $25 million investment sounds very real to me! 

 

KnC Miner sells machines that help the Bitcoin network work. The reward, if a miner is lucky, is a cut of the digital money.

Under-the-hood of what makes the bitcoin network run... 

I had seen thumbnails of these three videos, many times on Forbes' channel, but didn't feel prompted to watch them until that New Year's Eve conversation.  Bitcoins seem very much a curiosity for people, but my sense is that it could outdo such stalwart currencies as the dollar, euro and yen and revolutionize e-commerce in general.    

But the question from the first video is apropos:  Will bitcoin ever be mainstream?   

Blackberry Interim CEO Rebuilds the Jenga Tower

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As a game, Jenga begins with a neatly-stacked tower of blocks.  Then, each player takes a turn pulling a block off.  Of course, the tower becomes increasingly unstable, as blocks are removed.  The player who pulls the block that makes the tower collapse loses the game.  

So writer Zack Whitaker makes a telling and fitting reference to this game in his article headline - BlackBerry rebuilds key talent Jenga tower with former HTC executive.  After another failed round of efforts in recent months, notably to sell the ailing company, Blackberry is trying to right the ship once again.  Interim CEO John Chen is playing a kind of reverse Jenga by bringing in new top level talent to restabilize a teetering tower.  

Says Chen, in hiring former HTC executive Ron Louks:

"On our path to return BlackBerry to profitability, nothing is more important than remaining deeply connected to our customers and designing and delivering secure products that exceed their expectations."

We know that high technology firms, from Google, to Yahoo! and Facebook, are acquiring companies not so much for their products or markets, or even patents per se, but for their innovative and entrepreneurial talent.  So what Chen is doing isn't necessarily all that novel.

But is he hiring the right talent, and will said talent be enough to rebuild the Jenga tower.