Situation Analysis

Back in 1989, Syncrude Canada Ltd., one of the world’s largest producers of synthetic crude oil from oil sands, was a company facing significant strategic and operational challenges. The situation was exacerbated by a fractious management committee, composed of representatives from its eight owners. Each owner had differing interests and views on the company’s core strategy—some wanted to grow the business, others wanted to milk their existing investment. Board meetings focused on non-strategic items for hours. Syncrude called on Strategic Decisions Group to serve as a catalyst for change in unblocking the strategic agenda and aligning everyone on the future direction of the organization.

Discovery & Solutions

SDG began with a pilot project to demonstrate the impact of the Dialogue Decision Process (DDP) on strategic issues that were both organizationally and analytically complex. The pilot focused on educating Syncrude executives on the six elements of Decision Quality (DQ), using decision analytic tools to aid the process. If successful, the pilot would be expanded to address the issues that were most contentious within the management committee.

In late 1990, SDG moderated a three-day strategic retreat with the Syncrude executive team and management committee members. Prior to the session, each committee member was interviewed individually about his concerns. This led to a productive and healthy debate at the retreat about some of the big strategic issues that had eluded them for so long—i.e., Should Syncrude be grown? How should ownership be structured? How should the value of operations and options be measured?  The executive team used the discussion at the retreat to identify and prioritize a strategic agenda with the management committee, demonstrating the DDP at work, along with showcasing the results of the pilot project. They gained agreement from the committee on the frame for a broad strategy effort and a go-ahead on applying the DDP to determine Syncrude’s future configuration and alternatives.

Work then began on multiple configurations to describe alternative strategic visions for the company. A joint Syncrude/SDG team developed a “strategy table” to define each decision lever and the alternative options for setting that lever, and applied analytic tools to model the possible outcomes, risks, and impact on value.

Results & Impact

The results of the analysis transformed the vision for the business. The committee agreed to grow into a regional, integrated business with high-value added, differentiated products. The team reached crucial agreements that defined the execution agenda for the next 18 months, with clear direction on how to make it happen. SDG continued to assist Syncrude with more frequent strategy retreats as implementation proceeded. From 1989 to 1995, Syncrude’s production increased by more than a third, productivity increased by 71 percent (driving down costs), cash flow increased by 149 percent, and earnings quadrupled. The company also established long-term plans for $3 billion in capital investments to create a regional, multi-product operation. Equally important, Syncrude’s broadened vision and strategic direction led it to perceive that environmentally and socially responsible conduct provided an opportunity to foster community relationships. The company became Canada’s largest private sector employer of aboriginals, and established a preserve on restored land to help repopulate the endangered wood bison of Alberta. The DDP transformed the decision-making culture of the organization. Phil Lachambre, then-CFO and VP, Business & Corporate Affairs for Syncrude, said DQ is now “integrated into our leadership development programs. Our technicians know what our long-term strategy is, they know where we’re headed, and this works into our employee gain-sharing program. We’re getting all employees to think and act more like owners of the company.”