S3STR401

Strategy and Entrepreneurship

Compagnie des Services Pétroliers

Session 6

Case

In 2007 The Compagnie des Services Pétroliers (CSP)
was a French oil services company with approximately
3,500 employees and a turnover of €500m. It had been
founded in the 1950s and its headquarters were located
near Paris.

CSP activities
Of CSP's sales, 75 per cent consisted of conducting field
studies for oil exploration. These studies helped locate
and evaluate hydrocarbon reserves both inland and at
sea. Since 1997, CSP had also developed an industrial
activity: it designed and manufactured very specialised
equipment that was necessary for conducting such
studies. Selling this equipment accounted for 25 per
cent of CSP turnover.
Technology
Conducting a study had two phases: (1) data gathering,
through a very large number of on-site measurements;
this phase required specialised tools and quite a large
workforce (around one hundred people for each site);
(2) data processing, in order to obtain maps and
graphics that could be interpreted by oil exploration
experts; this phase required powerful and specialised
computer tools (hardware and software).
Market and competition
Customers were mainly oil companies. The market was
global and CSP was located almost everywhere in the
world, through a network of local branches that were
used as base camps for on-site missions. With a 20 per
cent market share, CSP was the only French company in
this industry. Its two main competitors were American,
each of them also with roughly 20 per cent of the
market. Other competitors were much smaller and
generally specialised in one region.
Structure
CSP was organised in four main departments: Service,
Equipment,
Research
&
Development
and
Administration. A deputy CEO managed each of these
departments. The Service department gathered all
activities that were involved in conducting and selling
studies, managed the network of local branches and
had several computer labs. It was also responsible for
two specialised ships that were necessary for sea
measurements. The Equipment department included
subsidiaries involved in designing, manufacturing and
selling of a whole range of electronic and
electromechanical devices that were used for field
studies. This equipment was sold inside CSP to the

Service department, but also to competitors. It was an
industrial activity.

Personnel
CSP employed a high proportion of managers and
engineers: roughly one thousand out of 3,500
employees.
Among
non-managers,
technicians
comprised the vast majority. Approximately one third of
the workforce was made up of 'prospectors', that is to
say employees dedicated to on-site studies, generally in
remote locations. In addition, CSP temporarily employed
a local unskilled workforce during field missions.
Senior executives
Out of nine members of the executive committee, six
were alumni of the most prestigious French school of
engineering, the Ecole Polytechnique. Almost all of
them had worked mainly for CSP during their career,
starting as 'prospectors'. The CEO and the Deputy
Director Generai - who had been designated as the next
CEO - both had external experience, one in the Ministry
of Industry, and the other in an oil company.

CSP achievements
CSP headquarters had a very unsurprising look:
ordinary architecture, classic offices, minimum interior
design, etc. Even senior executives' offices were neutral
and functional. The only posters on the walls were huge
maps of the world. Discretion was a highly respected
virtue at CSP. However, the company was proud to be
the only non-American company in its industry. It also
took pride in being the only independent company in its
sector: all its main competitors were parts of large
integrated groups offering a complete range of services
in oil exploration and exploitation. CSP was also proud
to have survived the crises that periodically shook out
the industry.
CSP senior executives willingly conceded that this
success derived from the technical excellence of the
company, particularly at the level of 'prospectors' and
mission managers. Thanks to a high human and
technical capacity for adaptation - and to a special
resourcefulness - CSP specialised in operating in difficult
areas (uneven land, deep forest, etc.). In contrast,
American competitors seemed more efficient in areas
where their organisation and procedures could easily be
implemented. 'As long as it consists of driving a truck in
a plain or a desert - for instance in Egypt - the fully
automated American system works perfectly', said a
senior executive.

Audencia is accredited

Case written by Frédéric Fréry & Hervé Laroche – ESCP-EAP Paris School of Management
Page 1/5

In the opinion of some senior executives. 'is the mission leader who is able to adapt with 20 French pros (prospectors) and 200 Gabonese workers. You really need people to share your goals. CSP considered diversifications in order to broaden its portfolio of businesses. his customers. They submitted to very hard working conditions and accepted a very high level of availability: 'A pro who's in the field in Indonesia on Monday. you are able to mitigate these cycles and to get some regularity in your profit. The managing director at the Singapore branch. then in ten years you have nothing left. he goes to Alaska ..' Some executives were very pleased with this: 'It is much wiser to sell our services in Mexico than to sell socks in Singapore. liking for direct and convivial human relations constituted what was called the 'prospector spirit'. at the beginning of the new millennium some changes in the environment and the industry began to create tensions and raised questions.' Conversely. prospectors were offered a sedentary job and worked at the head office.' For others. and if people disagree. or his Singaporean subcontractors. he is actually tied to the head office. you have to be there immediately. but career was guaranteed: after a variable number of years in the field. Obviously.' On this point. This spirit was built 'in the field' during 'missions'. he is very good . belief in the virtue of local and fast action. a hostile takeover is impossible. Trust. But experience has proved that it is the safest approach if you want to stay in the business. If you have more products. Another who's on vacation. 'Ok. because of his training. because everything is cyclical. It was probably because of this special relation between the company and its employees that CSP could cope with a light administrative infrastructure.. Again. mainly among younger executives. And we stick to it. people are the key. You need people like this to manage large operations. Hierarchy and procedures were denigrated. He packs his things and he goes there. in Gabon. we could take over a competitor. CSP top managers were culturally unable to consider diversification outside the oil industry. Sometimes he grumbles. 'The key profile at CSP'.' Senior executives acknowledged the quality and devotion of their employees in the field. built over the years. 'Is it wise when future CEOs of the company are people who have spent three quarters of their Audencia is accredited Case written by Frédéric Fréry & Hervé Laroche – ESCP-EAP Paris School of Management Page 2/5 . not to his environment. Not everyone survives.' Salaries were considered as relatively low. The company owes a lot to these people. anywhere in the world. the average profit must be positive). said the CEO. but he goes there. but it takes too long'. There were some ongoing tests from the technologies used by the Equipment department and from the Service department. they go somewhere else and you remain with nothing left but empty offices. according to its senior executives. because of his future. enabled a high level of decentralisation. explained a senior executive. What you need is a positive integral in the life cycle (i. But in our industry. In the field there are only underlings. Field experience was also used to select young engineers and technicians: on the one hand it eliminated those who were not sincerely attracted by the job and on the other hand it made it possible to spot high potentials. the answer was clear: ‘We do any business in our industry. during the whole life cycle.. you tell him: sorry. you tell him: Thursday you are in Alaska. in spite of a large geographical spread: 'People are simultaneously highly autonomous and perfectly tied. If each time an activity loses money you stop it. some of them could become senior executives.' Concerns about the future However. ‘We are testing a whole range of ideas. He catches his flight. Repeated losses of some activities (in particular studies at sea) regularly raised the issue of redefining the portfolio of businesses.. who are generally very attached to the company. When he survives. In our business. Very few prospectors quit the company: there was no job market for these highly specialised engineers and technicians. CSP differed again from its big competitors: 'American brains are not in the field. contempt for hierarchy. It is certainly not the most profitable method.e. the reaction to these possible diversifications was mixed.S3STR401 Strategy and Entrepreneurship Compagnie des Services Pétroliers Session 6 Case Boldness and technical resourcefulness.

because of the global scope of the business. and finally because it was necessary to hire top-level computer analysts. it was possible to guarantee a positive outcome while preserving the core values of the company.a former prospector . Offering a long and progressive career was not enough to retain them. were exposing CSP to a deadly strategic drift. for example by appointing a CIO and by replacing the current senior HR manager . a much deeper change was to be actively prepared. • Hire fewer engineers and more managers and computer analysts. these consultants drew up the cultural web of CSP. • Appoint the CFO . because of constant evolution of methods and tools.' Amongst senior executives there was no consensus on these concerns. but an experience in the field with no external adaptation or expertise is a dead-end. mainly people able to renew the existing executive committee and above all to manage strategic development. our Service department employs mainly former prospectors. In the Service department. finance. they claimed that the CSP context was deeply unfavourable to change: taken-for-granted assumptions. • Make the hierarchy more explicit and build a more structured organisational chart. data processing was becoming more and more crucial: because of the investments it involved (both hardware and software). and nothing in-between. they recommended a radical transformational change programme. They also demonstrated a lower commitment and a lower loyalty to the company.who was not a former prospector but an MBA graduate . using a series of levers: • Stop the rite of passage of 'in the field' experience for newcomers. We will not find a job for ail prospectors at the head office.' Even inside CSP's core business. significant changes were underway. According to some of them.' Another senior executive also give a warning: 'The main risk is to have young up-and-coming managers and old veterans.by a professional HR manager. Two change programmes at stake When sales and profits were at their lowest in the life cycle of the industry the CSP share price plummeted. routines and procedures. by blocking necessary changes. They immediately asked for higher salaries than former prospectors who had similar positions. preferably a woman. According to this diagnosis. Was it still possible to rely on internal promotion to select managers and senior executives? According to one of the top executives.as Deputy Director General. Whereas for ages the key phase of CSP business had been on-site measurements. the future was worrying: 'After all. high-level competences in accounting. • Diversify the profile of the executive committee members. The CFO felt this need very deeply. In addition. with proper attention and a smart management of demographic evolutions. For others.these specialists. young engineers and young technicians showed the same tendency. whereas traditionally CSP used former prospectors converted into computer experts. because it was absolutely necessary to be competitive at this level (oil companies now signed separate contracts for data processing). there was the secure redeployment of prospectors. As a result. In order to diagnose the change situation. This is probably something we will not be able to do in the future. An experience in the field is undoubtedly a plus. Believing that something had to be done. the CFO decided to appoint a consulting company specialised in the management of change. The last concern was the lack of potential top executives. Audencia is accredited Case written by Frédéric Fréry & Hervé Laroche – ESCP-EAP Paris School of Management Page 3/5 . Other members of the executive committee were less concerned. and because CSP was now listed on the Paris stock exchange. The first indication of these changes was the difficulty to hire . During their final presentation to the executive committee. we go around in circles.or retain . And among our taken-for-granted assumptions.S3STR401 Strategy and Entrepreneurship Compagnie des Services Pétroliers Session 6 Case career in the Company? People who have seen nothing else? People who are totally submerged in oil? Do people who have been trained in the oil service at the Ministry of Industry have the right profile to consider large diversifications? They are not financiers either: they are all engineers. He was considered to be the main change agent. • Replace the name of the company by an updated brand name that would be both more modern and less dependent on oil services. tax and law were required.

others claimed that consultants were unable to understand the true meaning of CSP values.S3STR401 Strategy and Entrepreneurship Compagnie des Services Pétroliers Session 6 Case Consultants also recommended two strategic directions intended to force a reconstruction of the culture of the company: • Transform the Equipment department into a separate company. What would be CSP competitive advantage in front of its powerful competitors without its unique spirit and implicit management routines? According to him. for instance adopting a new brand name or appointing a CIO. Whereas some members of the executive committee considered these recommendations as sound and useful. fully dedicated to data processing. He also proposed to split the Service department into an Operations department. In order to diversify the national origin of the workforce and to increase flexibility in HR management.or an adaptation at the very most . This new organisation would enable preservation of the specificities of the prospecter spirit and consequently the 'CSP way' . in particular. He agreed to the use of some symbolic processes in order to facilitate the evolution of the culture.would kill CSP differentiation.while amending the management of computer analysts. The Deputy Director General. CSP achievements were rooted in its employees' commitment. accountants or financiers towards a more market-based approach. • Consider alliances with competitors . the CFO also proposed to hire prospectors in CSP local branches through local contracts. with a dedicated management structure and fully redesigned procedures. technical expertise would be reduced.with hierarchical structures. Audencia is accredited Case written by Frédéric Fréry & Hervé Laroche – ESCP-EAP Paris School of Management Page 4/5 . Adopting an 'American' approach . formal procedures and limited on-site involvement .and/or partnerships with oil companies and software/hardware manufacturers.or possibly a takeover .was preferable and that the main aspect of the change programme was careful timing: the drop in share price provided a good window of opportunity for incremental evolutions. which would perform ail on-site measurements. and a Computing department. He argued that the 'in the field' experience was the most powerful integration mechanism in the company. He explained that an evolution . instead of hiring them centrally from the head office with French contracts. was strongly against a radical transformation. Stopping this rite would expose CSP to a very high risk of dilution: employees would no longer accept work conditions and salaries.

S3STR401 Strategy and Entrepreneurship Compagnie des Services Pétroliers Session 6 Case Audencia is accredited Case written by Frédéric Fréry & Hervé Laroche – ESCP-EAP Paris School of Management Page 5/5 .