Given the prolonged downturn in the oil and gas sector, it is surprising to learn that a chief executive of an offshore support company has actually been turning down business opportunities.
Saying no, however, is one of the ways that Topaz Marine chief executive René Kofod-Olsen has steered his company through the choppy waters of what he calls “the worst industry conditions since the 1980s”.
“Having come through the crisis it would be daunting to say ‘yes’ to all the various projects and even consolidation invitations,” he said. “But having the ability to actually say ‘no’ if it was not a clear, positive valuation for the company is not always easy. That is another thing I think we have done pretty well over the last 12 months.”
Mr Kofod-Olsen has been intent on finding a competitive structure for Topaz that will give the company the best strategic footing to build for the future and to weather uncertain market conditions.
He and the company have managed to resist the impulse to move away from the profit-per-ship strategy they set in 2012, in response to the challenging market conditions he describes as “the new norm”.
“It can be tempting to just have more ships and more portfolio,” he said. “We have always had the view that we should make the most amount of money per ship, not have the most amount of ships to make money on, and there is a difference in that.”
In practice, Topaz’s strategy is a carefully cultivated shift away from a traditional asset-focused model, to create a service-driven business.
“Coming out of the crisis it is clear to me that it is important to own ships, but it is paramount to have a portfolio of services,” Mr Kofod-Olsen said. “We are transforming our company fundamentally to a more service-orientated business, and I believe that is the necessary medicine for the industry.”
More generally, among the many keys to success in business, Mr Kofod-Olsen highlights culture as paramount.
“I think culture drives everything in a business and it can’t be understated,” he said. “You can have the most brilliant written strategy, you can have all the right cornerstone visions and missions, but if you don’t have an underlying culture where everybody understands what to rally behind, I think you will never have sustainable value.”
With this in mind, Mr Kofod-Olsen explained that his business is driven by being “humble to the numbers”; that is having the ability to adapt when necessary and courage in the face of change.
“You shouldn’t really be afraid to make changes,” Mr Kofod-Olsen said. “It can hurt and when it has to do with people, many times you are waiting six to 12 months too long to make the necessary decisions. You need to be able to make those tough decisions and be able to explain why you had to make those decisions.”
“[As] leaders, we can’t procrastinate in the face of big, big change,” he said.
Two of those big, big change agents involve digitalisation and global climate change. “I think the language of the 21st century is really data,” he said, “so we have a very strong culture of data flows in Topaz today.”
All of Topaz’s vessels are, according to Mr Kofod-Olsen, equipped with 21st-century communications technology. The company’s internal social media platform is designed to promote visibility and transparency, giving personnel on board a clear view of what he and his leadership team are doing. Topaz is heavily involved in monitoring the efficiency of its vessel logistics and Mr Kofod-Olsen explained that the vessels and those on board can now perform many of the operations previously conducted on shore.
“Unleashing everything that has come out of technology on board the ships is the future for everything that we do,” he said. “That is a big part of our future, to embrace digitalisation to a level that has never been embraced in our industry before.”
Mr Kofod-Olsen said he believes wholeheartedly in the oil and gas sector. He acknowledges that coal must be removed from the energy mix, but is not convinced that batteries and their reliance on rare metals are the clean energy solution the world requires to halt the damaging environmental effects of climate change.
“You cannot look at it from a binary perspective as oil being a great pollutant; the energy mix is quite different than just that. I believe that the energy needs of the world will, for many, many decades to come, include hydrocarbons,” he said.
Mr Kofod-Olsen will be the keynote speaker opening day one of the annual Offshore Support Journal Conference, Awards & Exhibition in London 6-7 February 2019