Statoil’s Folly

This is making me all misty-eyed with nostalgia for the late ’90s/early ’00s:

The board of directors of Statoil proposes to change the name of the company to Equinor. The name change supports the company’s strategy and development as a broad energy company.

Back in the days when New Labour were sneering at anything traditional and wrecking institutions that had worked well enough for centuries, the business world was going through it’s own version of similar self-harm. British Airways replaced the Union Flag on its tailplanes with tribal art, reversing the decision a few years later. Having spent £75m on branding experts, PricewaterhouseCoopers changed its name to Monday, which proved to be a mistake. Sun Alliance and Royal Insurance changed their name to More Than, which it keeps to this day. British Petroleum switched it’s name to BP, getting rid of the shield logo and replacing it with some sort of flower. They also adopted the tagline Beyond Petroleum, despite sales of oil, gas, and petroleum products making up pretty much all their revenues.

It’s this last example which I’m reminded of the most by Statoil’s rebranding, for obvious reasons. Have a read of the guff they’ve come out with to justify it:

The world is changing, and so is Statoil. The biggest transition our modern-day energy systems have ever seen is underway, and we aim to be at the forefront of this development. Our strategy remains firm. The name Equinor reflects ongoing changes and supports the always safe, high value and low carbon strategy we outlined last year,” says chair of the board in Statoil, Jon Erik Reinhardsen.

Basically, Statoil doesn’t want the word “oil” in its name any more despite oil (and gas) production being their core business by a mile and a half. Yes they do other things, including renewable energy – as all the major oil firms now claim – but these activities are negligible in terms of revenue when compared to the production of hydrocarbons and their derivatives, and always will be. If you want to invest in a solar energy company, invest in a solar energy company. Don’t invest in an oil company that has bought some solar energy capability for PR purposes. I noticed a few years back that Porsche now makes luggage and sunglasses, or at least licenses their brand to someone that does. What Statoil’s doing is the equivalent of Porsche rebranding in the hope nobody notices their core business is still making cars.

“Equinor is a powerful expression of who we are, where we come from and what we aspire to be. We are a values-based company, and equality describes how we want to approach people and the societies where we operate. The Norwegian continental shelf will remain the backbone of our company, and we will use our Norwegian heritage in our positioning as we continue growing internationally within both oil, gas and renewable energy,” says Sætre.

A values-based company. Uh-huh. Which company isn’t these days? I’m sure the good folk who dropped a bridge on innocent motorists in Florida claimed the same thing, but what does it actually mean? If values are something you need to consciously adopt and then advertise, perhaps you don’t have them. A friend of mine recently switched employers and one of his first assignments was to attend a three-day workshop with the senior management to decide what the company values would be. This is the same category error as when a CEO stands in front of his staff and says “we need to adopt X culture”. Values, like culture, is something you develop organically, intrinsically, personally. They cannot be imposed by decree, and a company’s culture or values is simply the aggregate of the people within it. If you were to send someone into a modern corporation with a copy of its “values” and tell them to report back when they found the first instance of a manager acting in a way which completely contradicts them, you’d barely have time for a cup of tea. As I’m fond of saying loudly in meetings, if you want to change the culture in a company you need to employ people who already subscribe to that culture, put them in charge, and fire those that don’t (this suggestion doesn’t always go down well.)

“Equinor is a name that is forward-looking, and creates a strong platform for engagement and dialogue with a broad set of stakeholders. We believe it will create internal alignment and pride, and help attract capital, partners and talents,” says Reidar Gjærum, Senior Vice President for Corporate Communication in Statoil.

Here’s another anecdote. I once worked for an outfit that wasn’t doing very well, and the reasons were obvious. The best thing the CEO could have done in terms of helping the company was gas himself in his garage, but instead he decided the company name and logo should change. He hired a consultant to tell him the name and logo was holding them back, but the consultant returned with the message that, on the contrary, the name and logo were probably the best things about the whole damned outfit. The consultant got fired on the spot, but the name and logo remained. The episode taught me that if a company is looking to change its name and logo (slightly updating the latter is fine), it’s got other, more serious problems that aren’t being addressed and the name change is merely a distraction. To their immense credit, RoyalDutch/Shell has retained the latter part of its name and the Pecten logo despite both being completely outdated and irrelevant in terms of what the company does. Coca-Cola never changed its name or logo, despite the company branching out far beyond cola production. And Chicago Bridge and Iron (CBI) famously isn’t in Chicago, doesn’t make bridges, and uses no iron.

Many people are as unimpressed as I am at Statoil’s name change:

The firm, the world’s 11th largest oil and gas company, released a video on Thursday announcing that after 45 years of operations, it is changing its name to Equinor.

The video is perhaps not what you’d expect from a company with assets worth more than €100 billion.

Starting off with the scream of a woman echoing through a forest, the video then cuts to her giving birth, before shots of a little girl doing gymnastics, a classroom of children learning that “to learn is to change”, and a spotty teenager looking in the mirror cross the screen.

Does this sound like an oil company with its eye on the ball? This doesn’t help, either:

Oil majors aren’t famed for their pranks, but Statoil ASA had analysts checking it wasn’t April Fool’s Day when it announced a new name that turned out to have been acquired from an Oslo veterinary practice specializing in horses.

When people think your company’s proposed name change is an April Fool’s joke, you might want to reconsider. Note the disparity between the earnestness of the Statoil CEO and the degree of seriousness on display from the journalist in this passage:

“I don’t expect Equinor to be love at first sight for everyone,” the CEO told reporters in Oslo on Thursday. “Give it a little time, let it mature. I feel very confident that this is right and important for the company to do.”
Statoil declined to disclose how much it paid the veterinarian, who will soon be offering services from equine dentistry to castration under the name of Equina.

And this is illuminating:

The name change is bound to “stir up some emotions,” said Frode Alfheim, the head of Industry Energy, Norway’s biggest oil union. But what counts is that the company remains 67 percent state-owned, stays in Stavanger and focuses on the Norwegian continental shelf, he said.

Basically, a state-owned oil company doesn’t want to be branded as a state-owned oil company; they’re embarrassed by who they are and what they do. How very modern.

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28 thoughts on “Statoil’s Folly

  1. I wonder if there is a career in making crazy videos for pretentious companies?

    I have lots of suggestions if anybody needs a creative consultant.

  2. Can’t say I’d ever heard of Statoil, but if I had shares in them I’d sell them now.

    >I noticed a few years back that Porsche now makes luggage and sunglasses, or at least licenses their brand to someone that does.

    I bought a Lacie hard drive a few years back. It was ‘designed’ by Porsche. Not that the design was anything special.

  3. The idea of Mr Ecks going into this line of creative consultant business is perhaps the best idea I’ve heard all year. How can I invest?

  4. Here’s another anecdote. I once worked for an outfit that wasn’t doing very well, and the reasons were obvious. The best thing the CEO could have done in terms of helping the company was gas himself in his garage, but instead he decided the company name and logo should change.

    Haha, you’re fiery today. Big night out last night and regretting it?

  5. They kept “Statoil” after merging with Norsk Hydro’s oil & gas division in 2007 (which included the former Saga Petroleum). Back then, it would have made sense to rename the united company.

    Telenor gets naturally parsed as Nordic or Norwegian telecommunications, but Equinor?

  6. Ecks, always seems keen on lamp posts lynching etc, if he rebrands as offering stylish neckties he may get more traction…me even.

  7. I had an audit client once – coincidentally also in the oil business, but a very junior player. They were about to crash and burn – they were failing the ‘ceiling test’ for valuation of their production assets, the write-down was going to put them in default on their debt covenants, and that was going to be the end of them. The CEO was a former audit manager at our firm, and was still best buddies with the current manager and partner. They knew his situation, and were putting pressure on me to ignore the write down, as it would preserve the only real asset the company had, which was its listing on the Vancouver Stock Exchange.
    The CEO resolutely took on the challenge of keeping the company afloat by spending most of his day coming up with a new logo and letterhead for when they renamed the company. I don’t think he had the foggiest idea what business it would be in, but it would have a new name – that’s what would be important! We stuck with the write-down, and I think the plug got pulled before he got his new business cards.

  8. Values, like culture, is something you develop organically, intrinsically, personally. They cannot be imposed by decree

    I don’t think that’s necessarily true, although it tends to be universally true, especially in large organizations. It is absolutely possible to change a corporate culture from the top down, though, by doing exactly what you said: communicating the culture, living it, and (most importantly) being willing to cut people who resist. Microsoft and HP are famous for doing this multiple times during their heyday.

    a state-owned oil company doesn’t want to be branded as a state-owned oil company; they’re embarrassed by who they are and what they do.

    Given the greater accuracy of market data these days, and the Chick-Fil-A effect, I often wonder why this sort of thing keeps happening. Nothing that happens on Twitter matters in the real world, and there’s ample evidence that progressives don’t actually vote with their wallets. I can see this kind of CSR virtue signalling as a way of deflecting government attention, but surely Statoil being 67% state-owned would preclude that? I always had the impression that the Scandinavian countries were pretty smart about protecting the income stream that lets them play at socialism.

  9. Haha, you’re fiery today. Big night out last night and regretting it?

    Heh, no, that was Friday night. 🙂

  10. The idea of Mr Ecks going into this line of creative consultant business is perhaps the best idea I’ve heard all year.

    Isn’t it just?

  11. They kept “Statoil” after merging with Norsk Hydro’s oil & gas division in 2007 (which included the former Saga Petroleum). Back then, it would have made sense to rename the united company.

    They did what often happens: change the name of the company to a combination of the two (StatoilHydro) and then drop the suffix a few years later, returning it to what it was originally. All at great cost, no doubt. Total did the same thing going Total-TotalFina-TotalFinaElf-Total, but – as with the case with StatoilHydro – it was political. It’s an easier sell when absorbing a company if you say you’ll keep their name for a while. TechnipFMC will go back to being Technip eventually, too.

    Telenor gets naturally parsed as Nordic or Norwegian telecommunications, but Equinor?

    About that:

    Explaining the meaning of the new name, the company said that “Equinor is formed by combining ‘equi’, the starting point for words like equal, equality and equilibrium, and ‘nor’, signalling a company proud of its Norwegian origin, and who wants to use this actively in its positioning.”

    I like how it’s just assumed everyone will immediately understand how equal, equality, and equilibrium are related to a Norwegian national oil company.

  12. It is absolutely possible to change a corporate culture from the top down, though, by doing exactly what you said: communicating the culture, living it, and (most importantly) being willing to cut people who resist.

    Yes, but you need proper leadership who lead by example. Simply announcing it and then leaving everything to carry on exactly as before doesn’t work.

  13. Ducky: Consignia. Now who, in the Royal Mail, thought it was a good idea to get rid of such an iconic brand and end up with a stupid bland name like that? Fortunately every one bar none laughed their asses off so it very rapidly died the death.

    Along similar lines, a few years ago some minor govt dept or quango in the UK was setting up some sort of online thing for kids and decided to call it Buster’s World. If you googled that, the top hit was a bear who was a balloon fetishist as well… On searching now, it looks like Buster has departed or morphed.

  14. Simply announcing it and then leaving everything to carry on exactly as before doesn’t work.

    Oh, well, yes. I thought you meant that institutional inertia meant it was impossible to change existing employees’ behaviour.

  15. I have two, minor, things to add. Tim’s points about replacing competence with compliance and replacing diversity of thought with superficial diversity and promotion of those who reflect the seniors thoughts is all over these examples. The bridge is an example we don’t see often but the rebranding is a manifestation of the same underlying problem, a failure to understand what the organisation is actually for.

    Apropos rebranding even small changed can be dumb. I Used to work for a company that had a sort of “main brand – suffix” thing going on. The CEO hired a golding buddy who knew nothing about marketing as Chief Marketing Officer. Consultants followed who recommended dropping the suffix. Thing was the suffix was important to our customers as it made them feel we were more local than multinational huge company who didn’t care. The head office didn’t care as thy wanted to show they were in charge of a massive company. Inevitable results followed. Financial pressures caused serious issues at head office including suicides. Now sub brands are back.

    On the culture change thing I have seen it done well, and badly. Well involves real effort from top down, rewarding those who do the right thing and punishing those who don’t. It means physical changes to back up the new cultural expectations, no more directors canteen etc, if that’s a thing that is needed. I currently work somewhere that talks about values and culture an awful lot but doesn’t punish or reward. Nothing changes and a year in everyone sees it’s bullshit and credibility is zero. Every initiative is just done for the wrong reasons to show the initiative is there rather than to change things.

    Head down. Thinking of the pension……

  16. Oil and gas company tries to make itself an ‘energy’ company, with not a scrap of evidence that its got any skills or ability to function as an ‘energy’ company.

    Time to short Statoil I think…

  17. Shell did consider changing their name and logo in the height of this in the mid 2000s I think – my wife was working for an agency doing brand tracking for shell at the time. Spent millions on research and consultants but ultimately sense prevailed.

  18. Pedantry alert on Tim’s point about Porsche accessories. Porsche Design Studio was established as an entirely separate industrial design firm by Butzy Porsche, grandson of founder Ferdiinand Porsche when it was decided that no member of the family should be employed by the car making company. He was more of a industrial designer than engineer, his most famous design of course being the 911. Later the business was acquired by Porsche the car maker, but the business still designs non-automtive products from kitchenware to consumer electronics, for other manufactures. But yes Tim’s point still stands…Porsche sells over-priced accessories to people with more money than taste.

  19. A new award winning corporate HQ and you will know that a business really is on the skids.

  20. Yes, StatoilHydro – how could I forget? The name only lasted for two years and three months. ExxonMobil is still holding out though, twenty years after the merger.

  21. ExxonMobil is still holding out though, twenty years after the merger.

    Yup, whereas BPAmoco and ChevronTexaco both applied the hacksaw.

  22. A new award winning corporate HQ and you will know that a business really is on the skids.

    Indeed, that’s the surest sign.

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