Over time, I’ll be introducing readers of this blog to a series of 10 specific Domino Principles. These Principles provide a framework for taking control of our lives and businesses, navigating the present, and shaping an exceptional future. In this article, I’m using the news of the past week coming out of Marathon Oil to introduce “Domino Principle #4: Distress Potential.” (The Domino Principle framework is still evolving and somewhat fluid. Things may change.)
Marathon Oil has been in the news the past few days… first the announcement Wednesday that the company now expects to spend $3.52 billion in investment and exploration in 2015, down from its December 2014 estimate of $4.3 billion to $4.5 billion: Marathon Oil Sets 2015 Capital, Investment and Exploration Budget of $3.5 Billion; 70% Directed Toward High Return U.S. Resource Plays.
Then the breaking story on Thursday… Houston Business Journal: “Marathon Oil to cut hundreds of jobs” indicating that about 400 jobs (about 10% of the company) would be cut, primarily “above-the-field and support services personnel.” That means that infrastructure jobs back at the home office are being eliminated.
The oil exploration industry is in a time of crisis, with oil prices dropping by more than 50% since last summer. When an industry comes into crisis, Darwinian selection, the principle of survival of the fittest, comes into play. Businesses that are the strongest and the most able to adapt tend to weather the crisis and are poised to thrive once the crises ends, while the weakest and least able to adapt go out of business or are acquired under distressed conditions. Times of crisis also encourage new innovators to arise who are able to take advantage of the new status quo by thinking in very different ways from the existing and entrenched players. Think of Netflix taking over the market that Blockbuster once owned, as an example.
The steps Marathon Oil is taking are clearly intended to assure that it’s organization is one that survives the storm. Better to trim 400 jobs and eliminate inefficiencies than see 3300 jobs disappear if the company were not to survive. See: Reuters, February 19, 2015: Marathon Oil going after costs, has saved $225 million so far.
Dominoes don’t fall in just one direction. Domino Principle #4: Distress Potential recognizes that the greatest potential and opportunities for growth often come out of times of crisis and distress, both in our personal and business lives. This is because crises tend to remove the boundaries under which we are typically constrained. The greatest and most beneficial changes in our lives and in our businesses are far more likely to occur when we are outside of our comfort zone. These times are not easy. They are often quite painful. Yet these are the times at which we are able to grow and innovate the very most. It was this kind of an environment that led up to my launching The Domino Principle.
We will discuss Domino Principle #4: Distress Potential in far greater detail in the future. But for the moment, I recommend this great article from psychologytoday.com: “Turning Crisis into Opportunity: Steve Jobs did it. Now it’s your turn.”
Perhaps even more interesting than reading the news articles and press releases about Marathon Oil this past week was reading Facebook postings from friends actually working at Marathon. Like this one:
“The layoffs have started in my company. 400 people which account to 11% of the workforce in my company. Taxis are lined up downstairs, security is tight on the 41st floor (the executives are there) and the lobby. Gosh, I live in a country full of gun nuts, I hope the laid off people don’t start shooting or something like that. I feel bad for those people. I hope my badge works when I get back from lunch!”
It is important to remember that this isn’t just the story of Marathon Oil. It is 400 more stories of people (and their families) whose lives will be plunged into a degree of turmoil by a layoff which is entirely outside of their individual control. Each person will have a chance to rise to the occasion and use the time of distress to find greater challenges and opportunities (how they might do that is certainly fodder for future articles on The Domino Principle); or they will fail to find a way to respond in a constructive manner, and may perhaps even act in a highly destructive manner.
Clearly Marathon Oil’s leadership is hoping for the best, but preparing for the worst. We live in a world in which they unfortunately must do so.
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