Accenture Do You Know Contest #1 : Medco Energy Case Study
The first case study topic is Management Consulting, where Accenture helped Medco Energy. As we know, Medco is a big company from Indonesia, which already has an international reputation around the world. As they want to become a global player in the future, Medco has asked Accenture to help them improve their business and management process. Here is the short explanation.
MedcoEnergi is an integrated energy company with business activities consisting of oil and gas exploration, development and production in Indonesia and abroad, as well as LPG production, chemical, and power generation. It is the first Indonesian company operating in the oil and gas exploration and production business listed since 1994 in the Indonesia Stock Exchange, the Singapore Stock Exchange and the Luxemburg Stock Exchange. Realizing their business challenges, MedcoEnergi asked for Accenture expertise to assist in becoming a global player and leader in the energy business by implementing several improvement projects.
After undergoing an organization transformation at the corporate level, the company has been facing several challenges that hindered its effectiveness to perform as a world-class operation. Based on Accenture’s diagnostic, competency improvement at the leadership level was identified. MedcoEnergi did not have a formalized integrated company-wide leadership program to address the requirements and conditions for a company to grow from within and knowing how leaders can teach leaders.
The complete information is available here
Question: what benefits would MEDCO receive through the various initiatives?
Here are some ways Accenture help Medco Energy:
Accenture assisted MedcoEnergi through an Integrated Program Management (IPM) initiative to ensure alignment, coordination, and integration among multiple improvement initiatives.
IPM acted as a governing body to align initiatives that were formed based on the key findings of the High Performance Business Framework project. It covered the coordination and facilitation of a total of 23 initiatives implementation at both the corporate and subsidiaries levels.
We know that Medco Energy is such a huge company, with a lot of business lines such as oil and gas exploration, LPG production, chemical, power generation, etc. Each of them will have their own core-unit to handle the business daily operational. Each business will have their own plan, their own strategies, which could be different from one to another. This is the difficulty Medco will face, to integrate and synergize all of these units, so that, in the end, all of them can work co-operately to another and well-coordinated, in order to make Medco growing faster. If these business units are not managed well, the risk is they will ruin the bigger plan of Medco Energy. That’s why Medco will need a management that will assure that all of their lines work together simultaneously.
Through an Integrated Program Management, Accenture will help Medco to manage all of these different units, to be able to walk in harmony as Medco vision and mission. The Program will try to align, coordinate, and integrate Medco sub units with improvement initiatives.
IPM itself will act like governing body. Means that they will be the one who rule the coordination and integration process, and the one who keep monitoring the process. At the beginning, IPM will offer the Framework project that provide high performance business standard for all the subsidiaries. This is to make sure that all subsidiaries know what the final goals of Medco, and know the position of them in the Medco Project.
Benefit: With the existence of IPM from Accenture, Medco will be helped to coordinate, align, and integrate their subsidiaries, so that all of them able to work in harmony, know their role better in Medco corporate company, and to avoid the possibility of misunderstanding between some subsidiaries. By using well-planned framework project that will be socialized to all subsidiaries, they will know what standard the corporate use, what are the final goals, visions, and missions, and in the end, subsidiaries are expected to show a good performance and if able, good cooperation between them. In the end, Medco will benefit the good alignment from all of their subsidiaries, that will affect their corporate performance to be accelerated faster, in order to become a global player.
Accenture also helped MedcoEnergi to deliver its Business Process Realignment and Leadership Development Program. The Business Process Realignment focused on building a process and tool to enhance investment/ divestment decisions and transparency, while the Leadership Development focused on designing, developing and monitoring its Leadership Development Programs for Senior Management level.
During this engagement, Accenture worked with 12 Medcoenergi’s best talents and all directors from four different subsidiaries within 6 months in:
- Developing Blueprint for Leadership Development Program which includes coaching, action learning and workshops
- Creating a company-wide integrated program to develop leadership capabilities
- Designing and develop action learning project, workshop material and format based on their leadership competencies definition and requirement
- Implementing and monitor effectiveness of leadership development program
- Creating a Leadership Statement to establish a formal definition of leadership to strengthen culture and values
Business Process Realigment
Business Process Realignment is a process/tool to enhance investment/divestment decisions and transparency. We knew that investment/divestment is a common business process that is done by a company, especially a huge one and have varied business units like Medco Energy. The investment is a process where company invest their money in order to get further profit. One example of an investment is to buy a smaller company that will be merged with the corporate. This way is believed to reduce cost rather than start a new similar company. In the other hand, the divestment is a process where company sells their assets/subsidiaries which already/will not be giving profit to the corporate company. By doing divestment, company looks a way to save their business from profitless units. In addition, they will also able to receive money from the sellings.
As a big company, Medco Energy is quite familiar with investment/divestment process. For example, from this news, we knew that Medco was ready to made $400 million investment in an oil facility in Libya. Medco partnered with local Libyan Investment Authority. From another news here, it’s said that :
Publicly-listed energy firm PT Medco Energi Internasional is planning capital expenditures of US$1.6 billion over the next three years, the company says. President commissioner Hilmi Panigoro told reporters on Tuesday the capital expenditures would be mainly committed to the companys three major projects a gas field in Aceh known as the Blok-A, the Donggi Senoro LNG project in Central Sulawesi and the Area-47 oil field in Libya.
For divestment, from this source, we also know that on July 2008, Medco divested its subsidiaries unit, PT Medco E&P Tuban, while in September 2008, Medco completed the divestiture of PT Aprexindo Pratama Duta Tbk.
Benefit: As a listed company (especially in international listing), the investment/divestment decisions and process of Medco is able to affect the trust of stock market and the shareholders. So, all of the investment/divestment process should be as transparent as it could be. This is to keep the shareholders trust. With the BPM from Accenture, It’s expected that Medco will be able to make a better and accurate investment/divestment decision and process. Besides, that process will be done with appropriate transparency, so that the image of the corporate company will be better and be able to be trusted globally.
Leadership Development Program
This program purpose is to design, develop, and monitor development program in senior management level. Leadership has an important role in a big company. Good leaders will lead good company into a good result. They will be able to control the company, make the right decision, trusted and respected by the employees, and etc. Medco also known how important is leadership. That’s why Medco asked Accenture to help them develop/monitor the Leadership Development Program. Here are some explanations of what Accenture do with the Leadership Program:
- Developing Blueprint for Leadership Development Program which includes coaching, action learning and workshops : By having a blueprint for leadership development program, the senior management will know what actions need to be taken precisely. The more detail the blueprint, the more accurate the result will be, especially because Medco has some subsidiaries which maybe have different characteristic. But, I believe that Leadership, in general, is just the same. From coaching, action learning, and workshops that are done, potential leaders will be found, and they can be given a responsibility to act as leader.
- Creating a company-wide integrated program to develop leadership capabilities: Medco has several subsidiaries unit. But, as a corporate company, Medco also has its own standard. So, by creating a company-wide integrated program, the standard capabilities of Medco subsidiaries will not be far different one to another.
- Designing and develop action learning project, workshop material and format based on their leadership competencies definition and requirement: Because Medco has different subsidiaries, the best development program should cover specific requirement and training for different potential leaders. For example, the workshop between leaders in exploration company should be different with LPG production. The more specific the program (project, workshop, etc), the more potential leaders will be trained accurately, depending on their requirements.
- Implementing and monitor effectiveness of leadership development program: After doing some projects related to development program, the monitoring system will be required, primarily to rate the effectiveness of the program. The monitoring system should evaluate the program periodically, and make some report to the responsible leaders. By having this system, Medco will benefit the program to be as effective as possible.
- Creating a Leadership Statement to establish a formal definition of leadership to strengthen culture and values: With this step, Medco will benefit having potential leaders that know the corporate culture and values well. Besides, it will set the standard and definition of leadership that is accepted in Medco.
With the 3 programs (IPM, BPR, Leadership Development Program) developed by Accenture, in general, Medco will benefit:
- A well-coordinated and integrated business process between all of its subsidiaries, that are expected to boost the corporate performance.
- A more accurate and transparent process of investment/divestment decision, that in the end will be able to increase the public and shareholders trust to corporate actions.
- Potential leaders can be found from internal side, and they will be trained in order to become future leaders, according to Medco standard and cultural values.
This is a post to answer ‘Do You Know’ Contest which held by Accenture