Process Excellence Network http://tiny.cc/tpkd0

1. Leadership and Lean Six Sigma at Chevron Europe
Eric Sirgo, General Manager of Operations at Chevron Europe, joins
Process Excellence Network to talk about their Six Sigma Program,
and how they engage with their leadership teams.
Editor's Note: This is a transcript of a podcast that we ran earlier this
year. It has been edited in some places for readability.
PEX Network: I understand that Chevron has been using Lean Six Sigma for many years in its
upstream division. What's the history of that program?
E Sirgo: You're right. It started in about 2000. We started with our Indonesian operations.
There was a group there that took on the Six Sigma practice and trained a number of
Indonesian nationals in using Six Sigma, and they became black belts, and they started
some projects locally. Then it picked up in our California Operations.
In Western California we have a business unit, called San Joaquin Valley, and that
program started there, and I'd say it was like most programs: it started at grass roots and
it started slowly, and it moved, for about four years, doing small projects in that business
unit, and then around 2006 they were starting to get a lot of attention on the progress
they were making with the savings and efficiency gains, and we have a global upstream
standards organization that picked up on the practice and decided to make it a global
standard.
That didn't necessarily guarantee that it would go worldwide overnight. It did say that the
company endorsed it as a preferred method for efficiency gains and Leaning out
processes, but I think where it really got going fast was the Vice President from the
California Operations went to the Gulf of Mexico. His name is Warner Williams, and he
has a lot of passion around this particular topic, and he and the President of North
America, Gary Luquette, came to the conclusion it was something that North America
needed to do, and so it went from a grass roots build over several years, to more of a top
down program. Since 2008 North America has really blossomed, and has really spread
Lean Sigma throughout the North America operations.
Globally, we continue to have business units make progress in picking up the practices
and the approach, and we probably have another three or four business units that now
have pretty active Lean Sigma programs.
PEX Network: So it started as something bubbling up internationally, and then came back to
North America?
E Sirgo: Yes, exactly. It started at a grass roots level with individuals who had a lot of
passion around the subject, and they carried the banner for a while.
Steve Turnipseed, in particular, just picked up the flag, and began pushing and pushing.
I can remember going to the first training that Steve offered at the global level. He was

2. coming to the staff, the individuals who would push it out, and trying to sell us on the
process, we were all extremely skeptical, and Steve was just so passionate about it. And
that passion is pretty infectious. He's really been a big catalyst in the grass roots
movement, but I tell you, it does help when a President or a Vice President says, this is
something I want to do, and makes the metrics very visible, makes the project successes
very visible. That certainly puts an expectation for the organization to pick up and adopt.
PEX Network: You work at Chevron Europe, and Lean Six Sigma is fairly new to your division,
what's the background to your Lean Six Sigma implementation?
E Sirgo: I've been in this job, coming up on two years, and the organization here has been
at it about six years. It’s been very much grass roots. I would say that the leadership,
prior to me arriving, were supportive, but were not top down. They saw it as another tool
in the toolbox, and said that if a project seems appropriate, then you apply the tools. If
you want to use it or you want to get trained, you’re free to do it and we’ll pay for that,
we’ll reimburse you for that.
We’ve probably completed 20 plus projects here in all different departments, from IT to
supply chain to HR to operations to asset development. But I wouldn’t say it’s been a
steam-rolling program; it’s been pretty slow and methodical. When I got here two years
ago, we revamped the steering team, we re-chartered the team, we set some goals and
we’ve been doing a lot more organizational development in the skills. I think that’s
beginning to get our queue up and beginning to get our knowledge up and we’re starting
to get more projects through the pipeline.
PEX Network: When you first started off with Lean Six Sigma in Chevron Europe, how did you
build the expertise up internally?
E Sirgo: It’s been a couple of things. I’d say it’s been very typical: its training, its
consultants. We’ve brought in consultants from the typical suppliers, like Accenture or
IBM, who have supplied black belts and people who are very knowledgeable to help
teams move projects along. And then we’ve done a lot of training of our employees.
We have a significant number of white belts, green belts, champions that we begin to just
keep building organizational capability and keep spreading the tools and the expertise.
So it’s a combination of training and consultants.
We recently hired our first black belt as a Chevron employee, which is unusual. If you
take a step back, it’s not a career path in the company to be a black belt. We typically
have career paths of drilling or reservoir engineering or geology, and having a black belt
career path is a bit of an oddity in the company. And so we just recently hired our first
individual as an employee, as a black belt, and we’re going to be working on what the
career path would be for them, and we’re working with that with the global group.
PEX Network: As you’ve been building up that competency, what kind of challenges have you
been encountering along the way?

3. E Sirgo: We still have challenges every day. Change is something funny in a big
organization; it does not come free and nor does it flow freely. And everything you’d
expect. I’m too busy, I don’t have time for this; this is nothing new, I’ve seen it before.
One thing you’ve got to remember is that a company like Chevron is built on the back of
a highly technical and skilled workforce that are masters of geology, engineers, people
who are experts in their field. They’re very technical and savvy and experienced. And
when you come to them and say I can do what you’re doing with Lean Sigma and you
could do it a lot better, they’re very, “yes, yes, I’ve seen this before, I’ve done it before”.
So you’ve got a lot of what we call change management issues to convince people that if
you apply these tools, you can make changes stick longer.
And that’s been one of our best selling points: we do have a smart workforce and we do
a lot of improvements, but often they don’t stick and they fade after that person maybe
moves on. And Lean Sigma helps control the project; it helps create metrics that keep
the improvements in place, but it also educates people on what the change is. And so
that’s been a big selling point for this workforce: we can make change stick with this set
of tools.
So, anyway, back to your question, all the very typical things: I’m too busy, nothing new,
I’ve seen it before type attitudes.
PEX Network: One of the things that come up often when I speak to practitioners is that that
top down support really helps, particularly when people are too busy or they’ve seen it all
before. How does your leadership really take that active role in your Lean Six Sigma program?
What kind of activities do they do to give you that support?
E Sirgo: That’s been an area that we’ve been trying to improve since I’ve arrived here:
getting more leadership involvement and uptake. I’d say our support organizations, in
particular IT and supply chain, the leaders have been very active in pushing their
organization to apply Lean Sigma to their projects. The operational area and the asset
development area and maybe some of the other groups, drilling, have been less top
down. My counterpart here, Dan Chudnov and myself, we have taken a much more
active role in asking our teams to generate projects, do brainstorming, assign
champions, get people trained and then setting some goals and some challenges to try
to move people along this path, and I think that’s going to help.
And I think it’s great when it’s grass roots. I think there are a couple of challenges for
grass roots. One, the organizations are so large that you can’t really just expect things to
catch fire without somebody pushing it along. I do think you need leadership to make
these programs successful, and I’ll give you another example.
We operate in 180 countries around the world and we operate in a lot of different
cultures. And many cultures that we operate in, grass roots is not how it works; top down
is how it works. That’s how the culture has come up, and so you really need to adjust
accordingly to the culture you’re working in. I think in the US, grass roots

4. entrepreneurship is often rewarded, and so things do get recognized when people take
the initiative. But when you want to institutionalize it, I think you do need to put a bit of
strong leadership and top down drive on it.
PEX Network: How do you keep different departments and business units on the same track?
E Sirgo: I’d say that’s not quite as sophisticated yet as it could be here in Europe, in our
European operations.
But we have a quarterly Lean Sigma steering team meeting that we look at our metrics,
we look at our training metrics and make sure we’re making progress on getting bugs
trained. We look at our project queue and we look at how many projects we have active
and are moving through the pipeline. I look at my project queue with my team directly
probably at least once a month, maybe once every two months. We track savings. We
have all the very typical metrics for guiding any sort of program or process through a
company.
And I think we could probably be a little more systematic in that we have a new
managing director who has only been here about a month or two, and she and I have
been talking about how to make things a little more systematic in this area. So I think we
do have some room for improvement. In North America, it is fairly systematic now: there
are very clear metrics, very clear expectations on people’s individual performance
measurements and very clear goals on the score cards of the managers as well as the
business unit. So we’re not quite as mature as they are, but we’re heading in that
direction.
PEX Network: I understand that you use the balance scorecard. Is that correct?
E Sirgo: We have more scorecards than we know what to do with. Being a very technical
and analytical business, we measure just about everything. For instance, in my
operations, the very typical high-level things that we measure are environmental and
safety performance, our production performance and then our cost performance. And
then from there, those three topics, you can go down to dozens of metrics, depending on
what we’re chasing. In particular, we look a lot at maintenance and how we’re doing on
maintenance backlog and the amount of maintenance we’re liquidating. These things all
offer themselves to Lean Sigma tools and processes, so when you say balanced, I just
say we’ve got a lot of metrics and they lend themselves to these processes quite well.
PEX Network: Speaking, a little more generally, one of the things that process excellence
professionals always tell me is that they’ll never be out of a job because processes are always
changing and there are always ways to be eliminated. In your role, what role does process
improvement play in helping you adapt to changes in the business operating environment?
E Sirgo: I’d say it’s huge. We do operate in a fairly dynamic business; things do change a
lot. Post Macondo, even in the UK we’re dealing with many, many, many changes

5. around permitting, around how we conduct ourselves offshore, contingency plans. So the
business changes very rapidly.
But I guess to answer the question a little more specifically, some of the issues around
improving processes or making them more efficient are that, number one, sometimes our
changes just don’t stick. We’ll look at a process, we’ll analyze it, we’ll make
recommendations and then people say, okay, that was interesting, and they go back to
how they were doing things. And they just don’t stick, and we tend to revert back to the
more entrenched method, and that would be one flag around process change.
I think the other one is that often, either the process is owned by a champion or the effort
to improve the process is owned by a champion. We’re fairly mobile in Chevron; we
move around quite a bit. And if that person leaves or moves on to a new assignment,
then often the improvement goes with them and it doesn’t become engrained or
entrenched in the organization.
So those are very atypical problems with process change and we see them all the time.
I’d say one other issue, Chevron were very much built on teams and consensus and
sometimes process change doesn’t sit well in a consensus environment, where everyone
has got to agree to the change or everyone needs to support the change. I think
managers need to step in and be a little more direct. When you’ve gotten to the
prescribed method and you know there’s value in it, sometimes you need to be a little
more prescriptive about what you want to do.
So reversion to the norm, champions walking away with the knowledge and the process
or problems with consensus can all stand in the way of changing existing processes.
PEX Network: You mentioned Macondo. Are there specific challenges this year that are really
driving those changes that are playing a role in helping you prioritize what you need to focus
on this year?
E Sirgo: Absolutely. The post- Macondo world for the industry is very different. This was
an event that was low probability, but very high impact and when it does occur, it does
leave a very large ripple. And it has rippled across the world: just about every major base
and every major government is asking more questions, requiring more due diligence.
And for the most part, I think at Chevron we’re getting a lot of validation from the scrutiny
that’s coming from a lot of the different governments around the world that our processes
were good and they were in good shape.
So we’re not making a lot of changes to how we do our work; we are making a lot of
changes about how we communicate what we’re doing to the regulatory bodies. We’ve
answered just hundreds of questions for permitting here in the UK for our deep-water
exploration west of Shetland, and it’s just a much lengthier process.

6. And I think we’re having to come to the conclusion that we need to be working way
farther in advance and we need to be much more open about what we do and what we
are good at with the regulators.
And I do think you’re seeing much more partnering going on. The regulators here know a
lot more about what we do than they used to do in the past, and I think that’s a good
thing. I think that’s going to be a very positive outcome from the post- Macondo world.
But in general, I think we’re just planning for lengthier lead times on getting things done.
PEX Network: What do you see as some of the key process improvement challenges for the
industry as a whole in the coming years?
E Sirgo: It does go back to the three things I talked about, which were safety, production
and cost. If you focus on safety, we talked about Macondo and post-Macondo world. It’s
a pretty never-ending effort for us to be focused on safety. And as you enter new
countries or you enter new projects, you’ve got to bring that culture with you and you’ve
got to be able to get a new organization moving in the direction. I’ll give you an example:
we’ve just leased approximately a million acres of land in Poland, and it’s a new country
entry for us here in Europe and for Chevron. But that’s a completely different culture: it’s
a language barrier, there’s the different governmental process. One of the areas in safety
that we’re really concerned about is driving; Poland is not known for very safe driving. So
we’re spending a lot of time just getting the workforce there up to standards on driving
and driving safety. So that’s just an example.
I think on production, a lot of the world’s reserves and a lot of the oil that has been
discovered, we know where it is, we know how much is left, but we can’t figure out how
to get it all out of the ground. And so there’s a huge challenge around improving the
recovery of oil out of the fields we already own. I have a field here I operate in the North
Sea, called the Captain Field, and I believe we’re setting around 30% recovery of the
original oil in place, which means there’s 70% remaining and we haven’t quite figured out
how to get that out. So I think there’s a lot of opportunity in the fields we own to apply
technology and process to try to move some more barrels.
Cost is another challenge we face. If the price of oil runs up, the cost for us to do our
business runs up along with it. A lot of people think we don’t see that increase in cost,
but we do. And so we’re constantly looking at how we do our work to become more
efficient, to make a better margin on the barrels that we do have on these older fields. So
the challenges are endless and they’re in all facets of the business.
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