KBR is an iconic global brand in the oil and gas industry. But even with a hundred-plus-year history and an international reputation, in 2013, the company experienced what one Wall Street analyst characterized as twenty-seven quarters of negative growth. In early 2014, the board appointed a new CEO, Stuart Bradie.
Then, toward the end of 2014, Bradie brought in his long-time colleague, Graham Hill, as executive vice president, global business development and strategy. Hill immediately accepted the new position. He admits that when he arrived, however, that he was surprised by the complexities of the issues the company was facing. “KBR’s challenges were deeper and more extensive than I could have imagined,” Hill recalls.
Soon, Hill discovered an extraordinarily siloed enterprise. A complicated accounting method had even obscured the fact that many business units were losing money and being subsidized by other profitable units. The internal culture lacked any sense of transparency or collaboration. The mentality was, “don’t tell me how to run my business, and I won’t interfere with yours.” To address this, Bradie emphasized a new team culture, with executives taking responsibility for their parts of the portfolio while also sharing collective accountability for overall success.
With a portfolio that included strategy development, sales, and mergers and acquisitions, within the first six months, Hill worked with Bradie and the executive team to write off about $1 billion and winnowed sixteen business units down to three: technology and consulting, engineering and construction, and government services.
The sale of the company’s infrastructure and buildings businesses and withdrawal from the Power Industry Lump Sum EPC business reduced administrative costs by roughly $200 million.
Hill also embarked on an effort to develop a comprehensive business strategy that addressed market information and trends, incorporated employee insights, customer feedback, and provided clear understanding as to why decisions were made and the direction the company was heading.
“Previously, strategy had just been a check-the-box exercise for the company,” Hill says. “You can learn to get by without strategy, but without the foundation it provides, chances are you will miss signs indicating there are problems long before the organization fails financially.”
KBR held global facilitated workshops with staff and management that were intended to educate and empower the participants. Their input was documented in user-friendly formats and updated with fresh data and employee input annually.
“Many people who had never been involved with developing strategy were invigorated,” Hill says. “It was great to ignite the kind of passion that we need if we’re going to beat our competitors. The process also put our entire business into a much more meaningful context that is guiding us forward.”
A number of high-profile wins for KBR have demonstrated the success of the strategic initiatives and the new team-oriented approach. KBR has been awarded contracts for Statoil’s Johan Sverdrup platform and Maersk’s Culzean project, both in the North Sea, and for BP’s Tortue development in Mauritania and Senegal. The company has also entered into a joint venture with SOCAR, the State Oil Company of the Azerbaijan Republic, and global contracts with BP and Chevron, among others.
Continuing the change in culture and business environment, Hill is the executive sponsor of the OneKBR initiative. It calls for six specific principles throughout the business: collaboration; emphasizing the value and development of each individual; operating with integrity and character; empowering employees to be independent, accountable decision-makers; and leading by example.
Ten weeks into joining the company, Hill, Bradie, and the executive team presented KBR’s new organization, strategy, and leadership at the New York Stock Exchange. Since then, the company has announced regular profits and experienced steady growth.
Part of that growth included nearly $1 billion in acquisitions in 2016 to purchase a technology company and two government services companies. These activities have provided access to highly technical professional services, adjacent technologies, and new government funding sources. They have also strengthened relationships with all branches of the US military.
“Acquisitions are part of our evolving strategy objectives,” Hill explains. “We’re always looking for ways to grow these businesses in pursuit of our long-term goals.”
He has also been instrumental in balancing the company’s business portfolio. When the hydrocarbons markets began experiencing price drops and a worldwide recession, Hill helped shift some focus to technology and innovation. To address new markets requiring new solutions, KBR developed the GVA 10000, a floating production unit that can be deployed in thirty-six months. Capable of producing 80,000 barrels per day of oil, 70 million cubic feet per day of gas, and 40,000 barrels per day of water, the unit becomes operationally economic with oil prices at $40 per barrel.
KBR has also entered a partnership with IBM to introduce digitalization to its customers. “Combining our business domain knowledge and IBM’s information technology expertise creates tremendous new opportunities for our customers,” Hill says.
Although he may have begun with concerns about the challenges he had committed to solving, Hill is now enthusiastic about the new company culture and its path forward. “Strategy is like a muscle,” Hill explains. “If you exercise it, then it gets stronger and extremely useful. And when you can see strategy at work, it’s a good sign that the company is getting healthier, more productive, and ultimately, more profitable. If there’s no sign of strategy, that’s a warning sign for any board.”