From challenge to excellence
"My goal is simple, yet ambitious. I want Alyeska Pipeline Service Company to be the best-run pipeline in the world," says David Wight, president and CEO of Alyeska.
Today it is possible to believe in such ambitions. 2003 was the best year ever for Alyeska in terms of service, safety and financial results. However, it was just three years ago that DNV raised some significant concerns about the company's management systems. Indeed, one DNV analyst wrote: "There is a significant gap between Alyeska's formal business processes and how the work is actually committed." At that time, the company's present ambitions would have been unrealistic.
"I remember how challenging it was." says Dan Hisey, the chief operating officer responsible for implementing the resulting recommendations. "DNV did an excellent job. These were hard hitting statements, but it was an eye-opener. It is my belief that Alyeska would not be where it is today if what has been done in the past few years had been left undone."
Answered yes, but...
Alyeska, named after an Aleut word meaning mainland, operate the Trans Alaska Pipeline System, a 1,300-kilometre (800-mile) long and 120-centimetre (48-inch) diameter steel pipeline crossing the entire mainland of the huge state of Alaska. In 2004, about one million barrels a day are brought from Prudhoe Bay in the north of Alaska, to the Port of Valdez, the northernmost ice-free port in the United States, located near Prince William Sound on Alaska's southern coast. On its way, the pipeline crosses some of the world's most sensitive environmental areas under the watchful eyes of regulators and special interest groups.
DNV's original task was to act as as an external third party to verify the capability and effectiveness of Alyeska's management system in ensuring compliance with the requirements laid out by the Federal Grant, State Lease and all relevant laws and regulations. After operating the pipeline for almost 30 years since 1974, Alyeska had to seek another 30-year right-of-way in 2004.
While the DNV report concluded that the pipeline system - on a day-to-day basis - met the right-of-way obligations, the obligations were met through the knowledge and extraordinary efforts of Alyeska's personnel rather than through the strength of its management system. The conclusions reached by the DNV report were tough, but Alyeska recognized that action had to be taken.
Behavioural and cultural changes
"In 2001, our existing compliance management systems had served their intended purpose. The time had come to improve them," says Hisey. "We had to address root causes rather than just fix symptoms."
DNV had used strong words in the technical report. But instead of jumping into the trenches to defend its existing system, Alyeska took a positive and creative approach. The COO, being responsible for implementing the recommendations, used even stronger words himself: "It was easier to start when we had so many challenges. We recognised that the path would not be easy or short. The transition to new systems would require the creation of a new ways of conducting business as well as behavioural and cultural changes."
To stress the relevance of the concerns raised by DNV, some of Hisey's management colleagues use statements like "an unhealthy culture" and "silo-thinking" when describing the past.
New management system
Where others might have had a defensive approach, Alyeska took a positive one. They established a System Renewal project to overhaul their entire management system, redefine how business is conducted, and facilitate behavioural and cultural changes throughout the organisation. The project was headed by Kathleen O'Connell, aided by a competent and motivated team. The access to senior management in general, and to Hisey in particular, was visible and positive.
"Our mandate has not only been to address the DNV management system findings, but to go beyond those aspects required for compliance and improve the overall efficiency and effectiveness of conducting business. The overall objective has been to deliver the strategic objective - replace the management system, improve business processes, and align process measures to deliver results. We've delivered the objective by redesigning the major business processes using a combination of project team members, users, and customers and a well-defined and consistent methodology. We built the management system one business process at a time" explains O'Connell.
"They won the people," says Earnest Maxwell, Alyeska's strategic planning director, referring to the project headed by O'Connell. "A direction was set, and we kept to that direction. Our ambition is to be the best-run pipeline in the world," he repeats. "Today a new management system is in place, and our staff has re-discovered how all our working processes are linked to each other. We are no longer working against each other as 900 individuals. We are involving each other and working closer together in a new Alyeska."
Change the future
Several managers underlined that it was previously hard to understand the information flow within the multiple management systems in place. The System Renewal process was an eye-opener. Inputs and outputs of each business process were analysed - how they were integrated and how each working process was influenced by others.
"DNV helped us understand the magnitude of what needed to be done and shared their experiences with other companies who had similar issues," says Hisey. DNV entered as an independent third party. No one could question their integrity, and the timing was perfect. We had to take action. However DNV directed us away from the symptoms and towards the root causes, allowing us to formulate a much more robust improvement plan."
The structure of the project was important. An overall framework was established. A systematic methodology was developed and used. Good use was made of appropriate technology to hold and communicate system information. Users and customers of the business processes were involved in the improvement and roll-out, while the project team was not allowed to falter.
"Everyone involved in our company has been active and had a positive approach to changing the future for Alyeska," says Hisey. "We have more focus on our core activity - to bring a million barrels of oil through the huge state of Alaska each single day. The goal is still the same, but we are doing the job with fewer people, more motivated, focused and collaborating people, trusting a new management system - and all this with a greater focus and better results when it comes to safety and reliability than before."
