Enhancing Core Competence Through Improvement Initiatives: MedcoEnergi Case Study

Problematic Situation and Background: Based on Case Study

MedcoEnergy case study shows that the main problem is related to leadership capabilities and competency improvement. The summary is developed by Accenture. As the global company, MedcoEnergy is facing big challenge that can influence internal and external organization. If it is not resolved soon, the problem will make MedcoEnergy in the perilous condition. It must be awared by the MedcoEnergi because the problem can hinder the business process and competitive advantage of the company.

The global perspective requires a competitive company to face the high competition in the globalization. Every company is required to be powerful and ready to fight and then become the winner. Another reason is come from organizational perspective. The modern perspective said that the analogy of organization is same as an organism. Based on Darwin’s Theory, the organism must adapt with new condition. If the organism can adapt with new situation, it will be survived. This is related to the concept of change.

Before continue to the next step, this explanation will provide a glance of the importance of leadership improvement capabilities. Leadership is the matter of human resources competency. As the key important point of organization, human resources must have several capabilities to support and reach the goals. That’s why, some organizations require high quality of human resources to make it different with other organizations. Based on Resources Based View (RBV) perspective, there are 4 kinds of strategic resources in the organization (Wikipedia):

• Valuable – A resource must enable a firm to employ a value-creating strategy
• Rare – To be of value, a resource must be rare by definition.
• In-imitable – If a valuable resource is controlled by only one firm it could be a source of a competitive advantage
• Non-substitutable – Even if a resource is rare, potentially value-creating and imperfectly imitable, an equally important aspect is lack of substitutability

If organization has those criteria; valuable, rare, in-imitable and non-substitutable; it possibly can reach the core competence because the organization has a high quality of human resources. However, it can’t be reached in easy way, but it must require many aspects that can improve the quality of organization such as good leadership, good communication and so on.

However, the analysis of MedcoEnergi must remember the various functions of management, often classified as planning, organizing, staffing, leading/directing, and controlling/monitoring (Dwiatmaja et al, 2001; Handoko, 2000). All of the functions are related each other and just like a circle. Therefore, the organization should continually implement it in the organizational activities. In addition, the process of controlling/monitoring is used to provide information about strength, weakness, opportunity and threat.

Offered Solutions

Accenture assisted MedcoEnergi through some improvement initiatives. There are 3 main majors solutions from Accenture diagnosis to help MedcoEnergi:

• Deliver its Business Process Realignment

The Business Process Realignment focused on building a process and tool to enhance investment/ divestment decisions and transparency.

• Integrated Program Management

The coordination and facilitation of a total of 23 initiatives implementation at both the corporate and subsidiaries levels.

• Leadership Development Program

Leadership Development focused on designing, developing and monitoring its Leadership Development Programs for Senior Management level. During this engagement, Accenture worked with 12 MedcoEnergi’s best talents and all directors from four different subsidiaries in:

1. Developing Blueprint for Leadership Development Program which includes coaching, action learning and workshops
2. Creating a company-wide integrated program to develop leadership capabilities
3. Designing and develop action learning project, workshop material and format based on their leadership competencies definition and requirement
4. Implementing and monitor effectiveness of leadership development program
5. Creating a Leadership Statement to establish a formal definition of leadership to strengthen culture and values

The Implementation and Benefit for MedcoEnergi

The diagnosis has been provided by Accenture to help MedcoEnergi to achieve high performance. Not only does deliver knowledge and concept, but the diagnosis also place them into action. This is important because the list of solutions must be applied into the company policies and processes. As a result, MedcoEnergi can make some changes in the leadership matter from top management to the subsidiaries.

The three main solutions provided by Accenture to MedcoEnergi will be explained more detail below. It will consist of several explanations about the offered solution as well as the benefit that will be received by MedcoEnergi.

• Deliver its Business Process Realignment

The Business Process Realignment focused on building a process and tool to enhance investment/divestment decisions and transparency. Realigning core business processes can lead to a significant improvement in performance, market position, and customer focus, by helping management respond to internal problems and react to external threats.

Based on the explanation above, business process realignment is very important to make all processes clear in the company using a tool that can be easy to guide into right track or to find an error. However, it needs a tool that can help management to conduct an action in the company process. It helps to make a decision whether the decision brings benefit to company or not. In addition, business process realignment can be implemented in the vertical/horizontal business process or serve the customer process. The important thing is business process realignment can help to reach high value process. Nonetheless, the results must be practical and structured for continuous improvement.

Now, how’s the business process realignment in MedcoEnergi? As an integrated energy company with many business activities, MedcoEnergi must have guidance to ensure that the organizing until controlling processes is fine. It’s because MedcoEnergi have many processes in the parent company until its subsidiaries. Consequently, MedcoEnergi must ensure that the processes must run smoothly.

The business process realignment in MedcoEnergi is very vital. It can help to make a decision as well as deliver its feedback. As an integrated company, MedcoEnergi should have a powerful system, especially to support the decision making. The nature of competition in globalization era requires all companies to provide an effective and an efficient decision. Therefore, a tool of business process realignment must be created to reach the goal. It can help to make a high-quality decision.

The business process realignment above will bring benefits for MedcoEnergi. The benefits for MedcoEnergi are:

• As a guidance to make a decision

Making decision is not simple. It’s very complicated, needs many considerations and sometimes there are many pressures from internal and external organization to do that. However, organization must maintain the situation and take a decision as soon as they can. Decision making is a risky part.

Business process realignment can minimize that risk. It can help the managers to make a decision based on the process that has been prepared.  They can be guided by the business process realignment. Thus, they can follow step by step of the flow chart in the business process realignment.

Sometimes, the decision making needs much time. On the other hand, the decision must be taken to be implemented in the business process. Hence, the business process realignment facilitates the MedcoEnergi in the decision process.

• Deliver high quality of decision

The business process realignment is made to assist the decision maker to improve the quality of decision. The nature of MedcoEnergi as the integrated company requires high quality decision to be implemented in their portfolio business.

MedcoEnergi needs a high quality of decision as the important thing to face the competition pressure. The company must make an effective and an efficient decision in the same time. Because working in many portfolio of business, the MedcoEnergi must always be ready to take important decision for the businesses, include for investment or divestment. The business process realignment helps the manager to produce a high quality of decision. In addition, the decision also more effective and efficient.

• As a tool to control the goal, decision and its implementation

Another benefit of the business process realignment is related to make easy in controlling and evaluation. It can support the manager to know the right track and then make it in line with the goal, decision and implementation.

If there is any problem in the implementation, the business process realignment can help to find the source of problem. Moreover, the size of company can effect the implementation of decision, so the business process realignment can help to control and give an evaluation.

• Integrated Program Management

The next explanation is about Integrated Program Management. It will discuss about coordination and facilitation. Actually, it’s still related to the first strategy about the business process realignment. Accenture has help the MedcoEnergi to implement a total of 23 initiatives implementation at both the corporate and subsidiaries levels. The size of organization obliges the MedcoEnergi to have a good coordination between the parent company and its subsidiaries. For that reason,  the initiatives must be coordinated and facilitated to the parent company and subsidiaries so they can work together to reach the goals.

Truly, this part will help the MedcoEnergi to have a good communication and coordination. As discussed before, the company size of MedcoEnergi need an excellent communication and coordination in the parent company and subsidiaries. Those can make MedcoEnergi reach the high performance in all level; the parent company and the subsidiaries.

However, the strategies above must be supported by an admirable leaders. That’s why, in the next strategy, Accenture provide a leadership development program to enhance the core competence of organization. The explaination will be provided in the next part.

• Leadership Development Program

Leadership is very popular in the part of organization competency. Many researchers and practitioners have given attention in the leadership matter. Hughes et al (2002) said that leadership is not just talked about the leader, but it also talk about the follower and the situation. Thus, the relationship of leader, follower and situation should be managed to reach the organization goal.

Leadership Development focused on designing, developing and monitoring its Leadership Development Programs for Senior Management level. During this engagement, Accenture worked with 12 MedcoEnergi’s best talents and all directors from four different subsidiaris. Leadership Development Program below will bring several advantages for MedcoEnergi.

There are 5 aspects in the Leadership Development Program and each of them has its own purpose. The Leadership Development Program is given to Senior Management level. It’s meant that the senior management level must deliver the motivation, the goal and the strategic management of the organization to the lower level.

• Developing Blueprint for Leadership Development Program which includes coaching, action learning and workshops

Blueprint for Leadership Development Program in MedcoEnergi is really important to define the concepts and ideas of the leadership development program including the goal of program, the materials, timing of the program and the output. In all session of the program, the managers can get the leadership skill improvement through coaching, action learning and workshops. They can learn each other as well. After the training, the managers must deliver and apply the leadership skill to the others.

• Creating a company-wide integrated program to develop leadership capabilities

This point is also very interesting. MedcoEnergi must create an integrated program to develop leadership capabilities. It is because the MedcoEnergi is an integrated company which has many portfolio of business and subsidiaries. Therefore, the leadership development program in the parent company and subsidiaries must be integrated.

• Designing and develop action learning project, workshop material and format based on their leadership competencies definition and requirement

This point is still related with point (a). Thus, the designing and developing of action learning project, workshop material must be in line with the blueprint of leadership development program. It is important also to do a need analysis of the training. It can assess the need of participant so that the material will cover the participant need. It will make the leadership development program more effective and efficient because it comes from the need analysis of training.

• Implementing and monitor effectiveness of leadership development program

One of the functions of management is controlling/monitoring (Dwiatmaja et al, 2001; Handoko, 2000). Hence, the leadership development program must be monitored to know how well the training and how the process of the program. In addition, the monitoring also can measure the output of the program. Therefore, the monitoring needs a tool that can control and assess the program. If there is any deviation, the action should be taken to make it back to the right track.

• Creating a Leadership Statement to establish a formal definition of leadership to strengthen culture and values

Leadership statement is like a motto that can give a motivation and spirit to the human resources in the organization. For that reason, MedcoEnergi must develop leadership statement to improve the motivation. Beside that, the leadership statement reflects the culture and values of the organization.

Conclusion

Based on the analysis above, MedcoEnergi will get several benefits from the Accenture’s recommendation including Business Process Realignment, Integrated Program Management and Leadership Development Program. Those are very related each other so the company must improve the capabilities through the initiatives. As its impact, MedcoEnergi will reach the core competence so that they can be a winner in the globalization era.

References

• Dwiatmadja, Christantius dkk. 2001. Manajemen: Suatu Hampiran Fungsional. Salatiga: FE UKSW.
• Handoko, T. Hani. 2000. Dasar-Dasar Manajemen. BP FE Universitas Gajah Mada. Yogyakarta.
• Hughes, Richard L, Robert C Ginnett, Gordon J Curphy. 2002. Leadership: Enhancing The Lesson Of Experience. McGraw – Hill. Fourth edition.
• …………..Resources Based View, the article can be read in Wikipedia in the link below http://en.wikipedia.org/wiki/Resource-based_view