Introduction
Business excellence entails various managerial practices that effectively help organizations to achieve excellent results. Business excellence models employ fundamental values and concepts that are critical in enabling an organization to emerge on a level that is as highly competitive as possible in its line of operations. Such models focus on ensuring consistent, structured, and systematic ways of enhancing performance.
In other words, they form a road map that prescribes the preferred future success level for an organization. This means that a business excellence strategy is incorporated into an organization’s mission, vision, and value statements. Consequently, in the analysis of any organization’s business excellence approach, this role underlines the need to discuss mission and vision statements, including how they affect an organization’s business strategies.
As evidenced by the case of the Abu Dhabi National Oil Company (ADNOC), effective business excellence strategies can increase the performance of state corporations, boosting their economic success. ADNOC reflects its business excellence strategies in its mission and vision statements and KPIs. Its business model aims at deploying the organization’s most talented human resources in decision-making processes, a business excellence plan that has enhanced the company’s global competitive advantage.
Its move to promote highly talented individuals into leadership roles exemplifies this strategy. The outcome of this approach was reflected in the Super Brand Award that ADNOC received in 2016 for the third consecutive year. In addition to examining these strategies, this study will address various topics including the metrics of company preferences, conflicts and conflicting demands for change, ADNOC’s balanced scorecard, its mechanisms for achieving a business award, and the company’s research and development (R&D) plan.
An examination of these mechanisms clearly indicates that the company constitutes one of the major gas and oil producers worldwide. Through the successful deployment of its business excellence strategies, ADNOC produces about 3 million barrels of oil on a daily basis. Its production of raw gas stands at about 9.8 billion cubic feet per day. In maintaining this level of production, the organization believes that success cannot be achieved without considering all parties that form the parts of its operations.
This understanding compels the company to look for ways to enhance customer, employee, and even public satisfaction. Excellent energy management strategies constitute one approach, helping ADNOC to secure the 2017 globally competitive Clean Energy Ministerial Award. This award-winning company prides itself on its effective mechanisms for enhancing performance in different operational dimensions, a strategy that has facilitated the making of comparisons across different operational periods. Here, a balanced scorecard comes in handy in light of the fact that today’s globally competitive organizations do not base their performance only on financial metrics.
Hence, because of its outstanding business excellence strategies, ADNOC has greatly affected the UAE population, especially considering that the UAE is largely dependent on oil production to drive its economy. In other words, effective business excellence strategies can help to increase the performance of an organization.
Business Excellence at ADNOC
ADNOC Group remains committed to the business excellence approach that has guaranteed a competitive advantage now and promises to continue to do so in the future. For example, in 2016, the CEO of ADNOC and the UAE state minister, Sultan AL Jaber, unveiled the company’s new brand. The goal was to reshape the company’s mission, values, and vision, consequently driving its business strategies. ADNOC is focused on the effective deployment of oil and gas resources within the UAE to create economic prosperity. Business excellence strategies in an organization build on past performance lessons. In the case of ADNOC, the new strategic brand adopted in 2016 reflected the organization’s legacy of success in the gas and oil production sector.
ADNOC’s business excellence model is based on productivity, efficiency, and performance. People are an important pillar of the organization’s business excellence agenda; thereby, ADNOC displays its undying commitment to safety, environmental integrity, health, and operational efficiency. Through the four pillars, the company has evolved into an agile organization that boasts about its capacity to maintain a competitive advantage in today’s globally changing business environment. This evolution has been critical in ensuring that the organization continues to participate in the collective expansion of the UAE and its people through enhanced development and economic diversification mechanisms.
In line with the organization’s business excellence objectives, ADNOC ensures that it makes decisions that have the ultimate objective of maximizing shareholders’ value. For example, through good political will coupled with effective managerial decision-making processes, ADNOC is increasing efficiency levels by achieving more even as it consistently spends minimal monetary resources within acceptable business practices.
ADNOC’s Vision and Mission
An organization’s vision and mission statements should reflect its business excellence strategies. ADNOC anchors its vision on the effective deployment of human resources and a wealth of natural resources (gas and oil). The vision statement reveals how the company endeavors to make energy available, steering the country as this asset has been tapped to facilitate the smooth running of the nation’s operations. This vision reflects the strategy of using energy resources as a mechanism for ensuring the nation’s prosperity.
However, it also recognizes that such efforts are unachievable without efficiency in the use of the critical resources at its disposal: for instance, people. Hence, the vision dictates the building blocks of ADNOC’s strategy.
The mission statement indicates the company’s anticipated future position upon the effective deployment of its business excellence strategies. The statement presents the company as a result-oriented facility that relies heavily on innovation and human wealth to realize an agenda based on development and sustainability, a strategy that has enabled it to stand out in today’s competitive energy market. An analysis of this statement reveals that the organization uses its business strategies—namely, performance and people—to secure value for its operations in the energy sector.
The mission indicates that ADNOC seeks to achieve performance through innovation, which is a function of investing in people-centered success strategies. In other words, ADNOC’s mission statement affects its strategy since it enumerates what that strategy should do to help the company achieve success, including the mechanisms for reaching the desired position.
ADNOC’s KPIs
Performing businesses need to develop an understanding of the underlying key performance indicators (KPIs) and metrics. Tracking such KPIs provides information on not only business performance but also the necessary adjustments required to achieve predetermined goals. Indeed, ADNOC recognizes the need to establish mechanisms to assess performance in the effort to understand its standards as directed by the best acceptable plans for achieving its future development agenda in line with the organization’s business excellence approaches.
How then should ADNOC’s KPIs be conditioned? The company’s KPIs have been set to respond to various concerns about performance relative to vision, mission, and the fundamental aspects of business excellence. When an organization implements strategic objectives, it needs to have mechanisms in place for ensuring that targets and objectives are met, including the extent to which they have been realized. For instance, KPIs can measure the company’s use of resources, which includes organizational human resources, competencies, and physical and financial resources. In other words, KPIs that focus on measuring these aspects are instrumental in indicating business effectiveness and efficiency.
Organizations serve the interest of many people, including shareholders, employees, customers, and suppliers. ADNOC has developed KPIs to measure these concerns. For example, increased financial earnings, returns on investment, sustained good dividends, and high earnings for each share held are critical KPIs that determine shareholders’ satisfaction. In 2016, ADNOC adopted new operating approaches that were aimed at increasing profitability and commerciality. These two aspects are critical KPIs for ADNOC that form the locus of control for its operations in the market.
Metrics of the Company’s Preferences
Companies employ various metrics that play a pivotal role in the development and implementation of their business excellence models. However, whether to focus on measuring return on capital investments (ROIC) or people-centric measurements is a challenge that many businesses are required to meet. ADNOC cannot ignore the need to gauge its progress based on the systems that determine a company’s financial performance.
Such metrics reveal the level of efficiency and effectiveness in using invested financial resources. Nevertheless, these measurements involve metrics that pay little attention to wealth creation engines, including the incubation of knowledge repositories, reputation, and any relationships created by innovative people owing to a company’s investment in training, research, and development.
Whether the heterogenic existence of performance across various organizations exists amounts to one of the fundamental questions in the discussion of a company’s preferred metrics. Thus, it is enough to examine the reasons that make organizations act as they do, as reflected in their goals, vision, and mission statements. As can be seen in the case of ADNOC, the basic assumption within the sphere of business excellence strategies is that companies set their goals, vision, and mission in a manner that can be reduced to the need to boost their endeavors related to financial performance. Some of the perspectives that immensely influence the economics of many organizations predominantly rest on the concepts of profit maximization.
Nonetheless, increasing the value of people-centered investments in driving ADNOC’s success underscores the need for metrics regarding company preferences outside the financial sphere, such as customers, employees, and shareholders’ satisfaction.
Conflicts and Conflicting Demands for Change
In 2016, ADNOC established various brand values that were organized around the need to successfully deliver its mission and vision. This move helped to define how the organization would operate to increase its performance. Supporting values include agility, efficiency, collaboration, reliability, and the development of a value-driven organization. Collaboration guarantees result in an environment that is based on teamwork, rather than one in which people work as lone entities. Agility implies the need for skillful responses to the various changing market conditions for the company.
ADNOC appreciated that desired change would only be achieved upon the development and implementation of a new operational model while ensuring a clear and sustainable commitment to the organization’s business operation strategies. Consequently, the change created conflicts and conflicting demands. Of course, any change may involve proactive and reactive approaches. While change, in most cases, is adopted when a new way of serving clients or a need in the market arises, it may also be adopted when a crisis occurs.
ADNOC‘s change is proactive. The company seeks to maintain a sustainable performance without having to undergo the pain of a crisis. In the organization, the leadership addresses all conflicts and conflicting demands concerning change by ensuring that employees are prepared to face change, minimizing incidences of failure to embrace it. By pursuing this course, ADNOC believes that its new model will create highly profitable upstream businesses coupled with valuable downstream deals without sacrificing the sustainability of its line of business as well as its talent base.
ADNOC’s Balanced Scorecard
In the past, managers deployed financial measures to evaluate their respective organizations’ performance. However, this approach changed in the 1990s, following the development of a balanced scorecard (BSC). The BSC helps ADNOC to solve the problem of relying on financial measures to determine performance. The technique enables the company to pay attention to minimal critical measures, reducing the degree of complexity involved in evaluating the organization, and monitoring processes due to information overload. The strategy considers several aspects of ADNOC’s performance evaluation processes amid growing organizational complexities.
The financial element identifies limited high-performance monetary measures at ADNOC. In particular, the company’s financial measures require the selection of aspects that respond best to the concerns of the organization in terms of how it would appear to its owners or shareholders. In contrast to traditional financial measures, the BSC’s financial perspective not only responds to what has happened in ADNOC’s past fiscal year but also to what needs to be done to improve performance in the forthcoming financial period. Here, the BSC acts as an indicator of current and future success.
The customer aspect aids in responding to the concern of how clients perceive ADNOC. Its objective is to satisfy the wants and needs of an organization’s customers. The internal business perspective responds to concern about the necessary strategic focus of the organization to improve its performance. The learning and growth perspective provides ADNOC with information about necessary improvements to permit value creation and modernization. Its objective in the company is to offer a paradigm of dynamic organizational improvement.
How ADNOC Can Achieve a Business Award
Business awards help an organization to tell success stories both locally and on global platforms. They also help in improving a company’s image in the eyes of consumers. Awards are given to organizations that emerge as the best in an industry in certain operational aspects under study. In other words, they depict an organization’s competitive advantage compared to its competitors, to the extent that loyal customers will continue to enjoy the benefit of being associated with a particular organization. Those who consume competitors’ brands may consider establishing a business association or partnership with an award winner. These benefits can persuade organizations to look for a way to attain business awards.
The surest way of achieving a business award entails developing and implementing policies that satisfy the prerequisites factored in when seeking a given award of interest. For example, the Clean Energy Ministerial Award is given to corporations that deploy excellent energy management strategies with the objective of realizing energy-related and economic sustainability. One of the requirements for accomplishing this goal is the possession of an ISO 50001 standard certification.
Indeed, having acquired this ratification as well as standing out in meeting the criteria considered for the Clean Energy Ministerial Award, ADNOC received the award this year. Furthermore, ADNOC secured the 2016 UAE Super Brand Award. The Super Brand Council gives this prestigious award to organizations that display distinctiveness in their product and service values. These two examples underline the necessity to continue seeking ways to meet the recommended standards that have been established by a respected awarding entity as a reliable way of achieving a business award.
Research and Development (R&D)
Product and service preferences in a target market may change, leading to a sharp decline in anticipated returns. Such a situation compels an organization to develop new products to meet emerging environmental changes and ensure continued competitive operation. Hence, investing in research and development (R&D) remains a suitable goal for ADNOC. Indeed, the company upholds the concept of agility as a mechanism for maintaining a competitive niche in the modern global business environment.
This dream cannot be achieved without an increased focus on developing the company’s employees via promoting research and development. The process begins with the recruitment and placement of highly knowledgeable personnel who can then share their knowledge base with other employees in an organization.
In 2016, ADNOC appointed various executives to leadership roles owing to their outstanding performance records. The company believed that the knowledge and experience of these people would enhance the kind of forward-thinking that is critical in the delivery of the organization’s strategic initiatives. This conviction corresponds to the lofty goal of enhancing various revenue streams, developing new ones, and improving the sustainability of the realized investment returns.
Consequently, ADNOC recognizes the need for top talent development and nurturing since the mechanism qualifies as the organization’s main building block for future growth. Consequently, it promotes top-talented workers, having the goal of generating future leaders who possess the capacity to maintain the company’s success in the coming decades. Such top talents are only available in companies that invest in research and development, such as ADNOC.
Conclusion
The above topics are infused with lessons that individuals and businesses can learn when seeking to boost their productivity. For instance, the Clean Energy Ministerial Award and the UAE Super Brand Award won by ADNOC exemplify the company’s success in its endeavors to use outstanding business practices to power the UAE’s prosperity through human and natural resources. The company’s business excellence practices have enabled it to track all its operations to ensure that they comply with its mission and vision statements.
Second, the use of a balanced scorecard has helped the company to track financial performance while at the same time enhancing metrics for measuring non-financial aspects, for instance, customer and employee satisfaction. This lesson is vital since success in today’s dynamic business environment requires companies to tap into their human resource potential to attain success.
Third, ADNOC recognizes the need to alter business practices as necessary to face future operational dynamics. However, it must borrow from past performance records and seek to maintain performance in the future. For instance, the organization not only adheres to the need to develop and implement new operational models but also maintains a clear and sustainable commitment to its business operation strategies.
Although ADNOC has maintained high product and service values in all its markets, it is crucial for the organization to recognize the growing demand for better products and services in terms of sustainability. In full recognition of this demand, the company understands that it must turn to its knowledgeable human resources to continuously develop new solutions to emerging problems.