Why Managers Are Becoming Obsolete: Leaders May Be Asleep At The Wheel

Forbes

5 days ago

Last week's earning call with Chevron led the Wall Street Journal (WSJ) to publish an article with the bold headline, 'The Leaner, Meaner Chevron' along with a half-page sketch of Chevron CEO Mike Wirth, wearing boxing gloves and a grim expression, pugnaciously inviting a fight.
Yet reading the transcript of the call reveals no sign of lean-and-mean pugnacity. There is talk of reorganizing but no mention of a change in strategy. Indeed, CEO Mike Wirth is at pains to 'reiterate the consistency in our strategy' which is 'to continue to deliver growth and shareholder value.' Innovation is put in terms of becoming more efficient, not of doing anything different. With no mention of customers or the environment, the goal is clear: making money for shareholders and executives. (Wirth's own compensation rose from $28 million in 2023 to $33 million in 2024.)
Changing The Culture?
The WSJ reports that in February earlier this year, at a company meeting, Wirth had a 'stern message' for Chevron's 40,000 employees. 'Stop being so nice to each other.'
Now, six months later, WSJ reports that Chevron is 'overhauling the oil giant's culture.' Apparently, 'overhauling' means putting a patch on things, rather than basic change. Thus Wirth said, 'I'm incredibly proud of Chevron's culture and wouldn't trade it for anybody else's. We're working to further strengthen our culture with an even sharper focus on performance by executing faster and more efficiently, simplifying our organization, and delivering targeted innovation.'
Chevron is thus getting a facelift to its existing way of doing things, rather than rethinking from first principles what it could mean to be a oil-drilling corporation in the age of the Internet, AI and a global environmental crisis.
Wirth ended the call with a wish to 'reiterate the consistency in our strategy and our fundamental commitment to capital discipline and superior shareholder returns and how we intend to continue to deliver growth and shareholder value into the future.'
At best, Chevron's strategy is to become more like its bigger brother, the litigious Exxon-Mobil, which according to the WSJ is sometimes seen 'as a law firm that produces oil." Now Chevron can triumphantly wave around its victory over Exxon-Mobil in the long and costly arbitration over Guyana drilling rights.
Although revenues fell short of expectations for the last quarter, earnings per share were up, due to the dubious magic of share buybacks.
Reorganization: Moving the Boxes Around
On the call, Devin McDermott (Morgan Stanley) politely inquired about the differences between 'the new organizational structure versus what Chevron currently has.' The answer was that 'we come from a decentralized kind of operating model where we really get things done locally and have very strong relationships locally, we wanted to build on that to unlock incremental value.' The goal is to 'achieve cost reduction, by centralization, standardization, and reducing staff numbers.'
Chevron expects 'faster innovation and scaling of solutions like AI to optimize fracs in real time and accelerate exploration data analysis, among other use cases."
Chevron's Mission Is Drilling
Chevron's mission in life is to 'drill, baby drill' the single-minded goal of making large amounts of money for the executives and the shareholders.
Wirth has spent 40 years at Chevron. With its arbitration victory, Chevron is becoming steadily more like the litigious Exxon-Mobil, which has been 'likened by some to a law firm that produces oil.'
Last year, Chevron moved its headquarters from California to Texas, to join Exxon-Mobil in a state that is less likely to ask pesky questions about the environment or customers. In Texas, Chevron can get on with drilling and making more money.
A Future For Chevron Beyond Drilling: Equinor?
Oil is a dying industry, although oil drilling won't vanish overnight. Some estimates suggest that the industry will have a long dusk, lasting 30-50 years as a major business, transitioning to niche roles after 2070. So Chevron could continue to survive with its 'drill, baby drill' mission for some decades.
Yet with different leadership, Chevron could also envisage a different future by addressing wider societal concerns. Take Equinor, the Norwegian multinational energy company, which was once just an oil company, like Chevron. But in 2007, it began making investments in renewable energy and lithium mining. Although it is still much smaller than Chevron, Equinor's ten-year performance (2015–2025) shows strong relative value growth compared to Chevron:
Maybe it's time for Chevron to think about a future beyond drilling. It might discover that today, firms that create new kinds of value make more money than those focused solely on making money.
And read also:
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