Nicolás Picazo Larrañaga
Managing Partner

Process-Based Management for PEMEX’s Transformation

Wed, 01/21/2015 - 13:32

Maintaining business processes aligned with each other and with an overarching corporate strategy is imperative in a permanent model of improvement. One way of achieving this objective is by implementing a process- based management model that bases itself on seven focus areas, including governance, process engineering and business process modelling, integral IT architecture, project portfolio, project administration, coordination of actions, and cultural alignment. In Mexico, this model has been spearheaded by a business consulting firm called Genkco, a name derived from its motto, “Generating Knowledge Consulting”. According to the company’s CEO, Mario Sánchez de Aparicio, this model has been helping PEMEX to improve its organization structure over the past ten years and is playing a preeminent role in its current transformation. “Nowadays, we have a direct interaction with the governance structure of PEMEX that drives the improvement of the eleven processes that are part of its operations,” says Sánchez de Aparicio. “Such processes include upstream, downstream, commercialization, logistics, procurement and supply, financial assets, human resources, technological assets, and information assets, among others. This interaction is focused on helping the governance structures make strategic decisions that facilitate PEMEX’s transformation into a productive enterprise of the state that can deal with all of the incoming variables,” says Sánchez de Aparicio.

Nicolás Picazo Larrañaga, Managing Partner of Genkco, believes that PEMEX’s new role as a productive enterprise of the state is key to understanding its drive towards aligning its processes. “When we talk about productivity and focus on profitability rather than parastatal duties, the management’s way of thinking changes dramatically. The mere fact that PEMEX is now thinking in terms of value creation will have a great impact on its processes. Moreover, PEMEX will move from volumetric towards performance goals, which will undoubtedly impact the entire value chain,” says Picazo Larrañaga. “The best way to deal with such a mindset paradigm shift, from production to productivity and profitability, is through management by processes. Our Strategy to Design and Action to Results framework (S2D:A2R) explains how this  can be achieved as a management cycle. In the S2D:A2R framework, the purpose of a strategy is “to drive to strive” and give direction for fast-changing market conditions. This strategy is then used to design a performance-based culture, taking into account best practices and critical thinking. From such culture, actions arise and represent a transformation through accomplishment, which in the end yields tangible benefits achieved through real innovation and improvement. To this, Picazo Larrañaga adds that any proposal to change any management model or any process within any company in the world needs to create an impact that is reflected on three levels: time, cost, and quality. “The impact of our activities must express itself in a direct and tangible benefit for our client’s operations,” he adds.

“Process-based management in PEMEX has been continuously evolving,” adds Córdova Rayas, Consulting Director of Oil & Gas at Genkco. “We are strengthening this model by making it more methodologically robust and up- to-date, while aligning this methodological actualization with the needs that are detected in the processes themselves. Through this alignment, we can design models that respond to the specific needs of PEMEX in this difficult time of change and transition.” By clearly defining expectations of each department and outlining the way that processes need to be carried out, PEMEX can avoid having its different divisions implementing their own strategies to achieve the same objectives.“This applies, for example, to the new way in which PEMEX is going to have to consider its downstream future,” says Picazo Larrañaga. “All future changes in that division will have to be made with an awareness of how they will affect the rest of the institution. Impacts on productivity, profitability, and even corporate culture will have to be carefully considered.” In its new role, PEMEX will have to align processes, people, and technology with a new corporate culture of efficiency over protocol. Vicente Córdova Rayas believes that the plunge in oil and gas prices during the last trimester of 2014 will only reinforce the need for process-based management as PEMEX optimizes its expenses and increases its operating margin during 2015 and 2016.