Schlumberger – the company you have come to know, or is it?

Disclaimer: Views represented on this blog are entirely personal. They do not represent the views of any of the companies quoted in the blogs.

A look at Schlumberger from an organization’s perspective

Well, if you are not really intrigued by the title, allow me to start off by presenting a little known fact! How do you think the company name “Schlumberger” is pronounced? Is it pronounced as “SHLUM ber ger”, like every other person would pronounce it or as “Shlum bear guh” in a German style? If you knew that the founders of the company were French, then you have an edge. But, if you still get it wrong, then your edge has totally and utterly worn off! The company name is pronounced as “SLUMBER-SHEA”. Anyway, now that you have that inkling of French in your grasp, let me roll right over to what that pronunciation has got to do with this blog and the company. In my opinion, pretty much everything. Why? I allow you, dear reader, to watch the story unfold as you read along!

Loa Tzu has quoted to say “The best soldier does not attack. The superior fighter succeeds without violence. The greatest conqueror wins without struggle. The most successful manager leads without dictating. This is intelligent non-aggressiveness. This is called mastery." The entire quote, in my opinion, reflects Schlumberger and its progress and status as a company today. To justify my point better, I intend to take a personal example. I am a big Manchester United fan for one particular reason above anything else. That reason is that the club has evolved itself, its mission, its values and its philosophy to align itself to changing times in the Barclays Premier League and has kept winning trophies on a consistent basis. To win something once is great! To repeat the feat is truly satisfying! To win something over and over again is just outright heavenly. Ask Roger Federer or Lance Armstrong, for that matter, and I am sure you will get the same answer.  None of the examples that I have provided have ever been dictatorial in their behavior and neither has gone about their ways in virulent terms. Yet, they have reached the top and been at the top consistently. More so, after taking hits and falling down, they have picked themselves up and risen up to the competition. I don’t intend to circumvent the point anymore but, in my humble opinion, Schlumberger falls in the same league.

Origin & Milestones

When Marcel and Conrad Schlumberger formed the Société de Prospection Électrique in 1926, after showing to the world the feasibility of assessing reservoirs using electrical resistivity measurements, little would they have known that the company that they started off would grow to become a $ 40 billion enterprise as Schlumberger stands today. Along the way, the company has been at the forefront of development of new technologies and expanded their horizons right from the ground below to the sky below. Quite literally! The company that started off with a well logging technology went on to collaborate with NASA for the Apollo 11 moon landing program in 1969 and still continues to support space exploration today.

The spate of new and innovative products from the Schlumberger’ stable is just unprecedented. A simple fact to attest this claim is the fact that one out of every two years, the company has come up with an industry leading technology which has left the competition way behind. Right from building the first logging truck to putting the first logging-while-drilling (LWD) setup in the market and innumerable logging advancements, the company has constantly been on the mission to improve and enhance their customers’ experience and performance.

Not just with respect to new product introduction, but an even more striking feature is the fact that where organic growth wasn’t considered feasible or where the opportunity presented itself, Schlumberger has acquired numerous smaller companies with enticing technologies. Crisp and clear are not the kind of words one would associate with a company strategy quite often, but with respect to Schlumberger, the company has followed a clear strategy of acquiring half the stake in an acquisition or joint venture in many cases and has gone on to either buy out the remaining stake or, without any guilt or hesitation, gone on to sell off the acquired stake when the acquisition did not quite fit in. One of the most significant examples of this is with respect to the acquisition of Dowell Schlumberger, a joint venture between Dow Chemicals and Schlumberger Limited.

A few other sidetracks to the growth story have been the relocation of the company headquarters from Paris to Houston and the listing of the company in the NYSE as early as 1962!

Vision and Objectives

Schlumberger’s work is directed by well established company values that focus a commitment towards improving and enhancing customer performance. The values are best described by the phrases below:

·     People who thrive on the challenge to excel in any environment and are dedication to safety and customer service worldwide

• Technology and Quality as the basis for a competitive advantage
• Determination to produce superior Profits as a cornerstone for future independence of action and growth

As crisp and clear the above points sound, I am inclined to leave this section as it is, on their own!

Sustaining at the top

Haven’t you ever wondered what keeps champions going? What keeps them motivated to stay at the top once they are there? How do they sustain their hunger? Well, one of the reasons that certainly bring the best out of you is the competition. Manchester United has faced it and so have Roger Federer and Lance Armstrong. With Schlumberger it has been no different! Apart from the competition, which we will talk about in a while, the volatility and geopolitical importance of oil as a resource has further played truant apart from the fact that the company has had to contend with the resource dynamics associated with a World War as well. Yet, the approach of the company when faced with unforeseen circumstances, the 1986 oil price collapse and the associated affect on global exploration for instance has been stupendous to say the least. As a hyperbole, Newton’s third law has not held true since an action from the outside world has lead to an even bigger reaction! But, on a rather realistic note, from Schlumberger’s perspective, the company at the time, Euan Baird, laid a greater emphasis on R&D to develop a host of new products which served the company very well indeed, during the resurgence period. A demo of one of the products from Schlumberger is here. 

But, to come back to the competition that Schlumberger has had to contend over the years and still today, Halliburton, Baker Hughes and National OilWell Varco have given Schlumberger a real run for their money. A revenue comparison would not provide the same picture with Schlumberger’s $40 billion kitty seconded by Halliburton with a little more than half that turnover. However, we are talking about technology development for the oil and gas industry where where product differentiation is key as there are only so many customers out there. Not everyone in the world would drill down in search for oil. And hence, higher revenues certainly talks volumes about Schlumberger’s product portfolio and customer base. Watch Jim Cramer,  a Wall Street professional analyze Schlumberger against its prime competitor, Halliburton here.

The pie-chart below depicts the revenues in 2011 in $ billion. 

Setting the standard

How do leading companies sustain their leadership position? They get their standards right and they have the right standards. Quite simple an answer yet that bit difficult to see it done! As far as Schlumberger is concerned, they have the right standards in terms of new product introduction and targeting new and emerging markets with differentiated products of the highest quality. And they have got their standards right by a relentless focus on R & D and new acquisitions. For instance, when it comes to unconventional resources like Shale oil or Coal Bed Methane, not many companies can offer a range of solutions and services that Schlumberger can. Yet, the entire industry of unconventional resources has just picked up pace in the last two years.

Not just in terms of technology but standards need to be set in terms of people as well. Schlumberger identifies a great strength in the diversity of its workforce in terms of gender, nationality and background. But, perhaps the most striking point is that its culture is best described by the fact that the company does not have a “nationality” and operates in a truly global fashion around the world. And, with offices in 85 countries and 113,000 people being employed that is just an unbelievable achievement! In this context, the additional flexibility offered to employees in terms of moving across functions, technologies and geographies would seem like just another add-on perk! The Global Citizenship program at Schlumberger is meant to reflect the diversity and integrity of our workforce. Drawn from 140-plus nationalities working in approximately 85 countries, the employees are trained to embody the qualities of global citizens maintaining high standards of behaviour wherever Schlumberger operates. A video of the employees of a Knowledge centre in the Middle East is here.

The company, with its clarity in vision and purpose (just take a peek at the company logo again!), has created quite a conducive environment for their employees to grow along with the firm and reach newer and greater heights. It is one thing to put organizational goals and growth strategy on paper and an entirely different ball game to demonstrate it to the world. Schlumberger, to its credit, has done that in the past and in all probability, could continue to do so for the near future. The company is like a few others, none at least in its own class. Schlumberger has made a difference when it mattered, stepped up to the plate and performed without any constraints and needless to say that this very part is ingrained in its DNA now. In the words of Javeed Jaffrey from the Magie Sauce Ad, "Its Different". And, you know that I am not talking about the sauce, don't you?