Leading Innovation and Change Report: Petronas Innovation Strategies

This report provides a detailed analysis of leading innovation and change within Petronas, a major oil and gas company. It begins with an introduction to Petronas, its business operations, and the significance of innovation and change within the organization. The report outlines the aim and objectives, identifying challenges faced by leaders in fostering innovation, such as employee resistance and adaptation difficulties. A situational analysis assesses strategies for leading innovation, including technological investments, partnerships, and the adoption of the Blue Ocean Strategy. The report then explores important changes to business practices for achieving financial value through innovation and sustainability. The second part includes an evidence review, conceptual models, and research methodology. Finally, the report concludes with a reflection on employability enhancement, evaluating skills and leadership requirements for future career development. The report emphasizes the importance of leadership in driving innovation and change, offering insights into Petronas's strategic initiatives and the challenges it faces.

Running head: LEADING INNOVATION AND CHANGE
LEADING INNOVATION AND CHANGE
Name of the Student
Name of the University
Author’s Note

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Table of Contents
PART 1: COMPANY’S REPORT..................................................................................................3
Introduction..................................................................................................................................3
About Petronas.............................................................................................................................3
Aim of the report.........................................................................................................................4
Objectives of the report...............................................................................................................4
Challenges faced by the leaders while fostering innovation and change within this organization
.....................................................................................................................................................5
Situational analysis to assess strategies for leading innovation and change in the present
operating business environment of Petronas...............................................................................6
Important changes to business practices of Petronas for achieving new financial value capture
through innovation for sustainability...........................................................................................8
Tracking system to periodically monitor progress and performance outcomes from defined
leadership position.....................................................................................................................11
Conclusion.....................................................................................................................................13
Part 2: Evidence Report.................................................................................................................15
Introduction................................................................................................................................15
Background information............................................................................................................15
Rationale of research.................................................................................................................16

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Research Problem......................................................................................................................17
Research objectives...................................................................................................................17
Literature Review......................................................................................................................17
Conceptual models for innovation.............................................................................................18
Innovation Genome...................................................................................................................18
The Pentathlon model................................................................................................................20
Conceptual change model..........................................................................................................21
Mc Kinsey7S model..................................................................................................................21
Research Methodology..............................................................................................................22
Data collection method..............................................................................................................23
Sampling method.......................................................................................................................23
Research timeline.......................................................................................................................23
Part 3: Reflection for employability enhancement........................................................................25
Realizing critical thinking and core capabilities needed for achieving this consultancy task...25
Evaluating skills, knowledge and competencies for assessing ability to complete this task.....26
Leadership skills required for future personal development and career accession....................27
References......................................................................................................................................29

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PART 1: COMPANY’S REPORT
Introduction
The present report provides an overview about the importance of leading innovation and
change interventions of the company. The company that is chosen for this assessment is Petronas
that is situated in Malaysia. Innovation and change has huge significance in the organization as it
facilitates them to work in new way and manufacture new commodities and services. Innovation
can also been seen as capacity in changing that can aid the enterprise define new things.
Innovation basically involves change while every change does not involve innovation.
Innovation can be of different form that includes- process innovation, disruptive innovation,
product innovation etc. Additionally, change includes dissolving behavior patterns, establishing
some new behavior and thus making them norm. Change can be of various types – incremental,
revolutionary, reactive and anticipatory, hard and soft changes. Leaders play a vital role in
fostering innovation in the organization. The company that gives priority on innovation tends to
embrace the leaders in order to bring about change in the work environment (Euchner 2017). In
the first part of this study, the strategic initiative of this organization for implementing
innovation and change has been illustrated. The second part highlights on the evidence review
that supports the self-determined conceptual theories. The last part of this report is the reflection
on the enhancement of employability skills readiness.
About Petronas
Petronas (Petroliam Nasional Berhad) is the biggest oil and gas enterprise situated in
Malaysia, which was founded in the year 1974. Petronas has been ranked as the 75th biggest
enterprise in the globe by the Fortune. In addition, this enterprise is also been considered as one

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of the most profitable companies in the globe. This company is mainly owned by the Malaysian
government and thus takes responsibility of the total oil as well as gas resources of this nation.
They basically manufactures products including- petroleum, natural gas and petrochemicals. In
fact, they also offer shipping services to their customers. This company provides huge source of
income basically for the Malaysian government (Petronas.com.my. 2018). They have earned
huge profit in the year 2017 and thus improved in their financial performance. Total number of
employees working in this enterprise is near about 51000 as recorded in the year 2016. This
organization has its business worldwide that is near around 35 nations and thus has 135
subsidiaries. Few subsidiaries of this company are petronas chemical, MISC, KLCC property
Buildings, Petronas Gas, Bintulu Port and so on. Their business strategy regarding their
innovation and change is that they seek to work with worldwide innovators for driving industrial
growth and improve their capabilities. Their business activities involves – development and
manufacture of oil as well as natural gas in both domestic and international market, liquefaction
and transportation of LNG( Liquified Natural Gas), processing as well as transmission of gas,
refining as well as marketing of the petroleum products etc.
Aim of the report
The main objective of this report is to critically analyze contemporary evidence as well as
core knowledge of theory relating to leading innovation and change. In addition to this, a sellf-
determined framework regarding lead innovation in the enterprise context is the aim of this
report. Furthermore, this importance of leadership in fostering innovation and change within the
organization is another objective of this study.

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Objectives of the report
 To identify challenges faced by the leaders while fostering innovation and change within
the organization.
 To analyze strategies for leading innovation and change in present operating business
environment
 To propose change in business practices for achieving financial value through
innovation for sustainability
 To recommend solution and adoption of innovation and change for Petronas
Challenges faced by the leaders while fostering innovation and change within this
organization
Leaders as well as managers also faces huge challenges when managing as well as
leading innovative changes in diverse as well as multicultural business enterprise. One of the
challenges that the leaders of this enterprise face while fostering change and innovation is those
employees who do not support innovative idea. It has been found out by Davila, Epstein and
Shelton (2012) that, in the enterprise where the workers are used to perform daily task in varied
ways, resistance is necessary while introducing change and innovation. There are some workers
in Petronas who are afraid of this change owing to increase in demand for work and insecurity
that they might have regarding innovation. In addition to this, another challenge that the leaders
of this organization faces when leading innovation is the workers facing huge difficulty while
adapting to new change (Vaccaro et al. 2012). It has been noted by some researcher that this
difficulty arises in Petronas owing to diverse business environment. Furthermore, when the
innovative idea is introduced in this enterprise, the leaders also face difficulty in assigning task to
the team members. This is because these employees take time to accustom themselves with this

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innovative idea owing to their different cultural backgrounds. Apart from this, another difficulty
situation arises for the leaders when some of the workers become slow in understanding this new
idea.
Situational analysis to assess strategies for leading innovation and change in the present
operating business environment of Petronas
Strategic situation analysis mainly needs the utilization of business framework for
assessing strategies adopted by the organization for fostering change and innovation in the
presence of operating business environment. Due to the present volatility in the prices of oil,
innovation and change within the enterprise is necessary for minimizing cost as well as
optimizing returns. As the this oil and gas enterprise is mainly run by the government of
Malayasia, the President of this company obeys their order. The management if this enterprise
adopts the strategy to embark on the new phase of innovation and change with the use of new
technology within the business environment. Over the last few years, this enterprise has been
identified as one of the top enterprises in terms of leadership (Schalock and Verdugo 2012). For
making the innovative idea and change to be successful, the leadership team of this enterprise
uses their skills as well as knowledge for executing this properly. Recent study reflects that
leaders of this organization apply proper judgment in the innovative projects in order to make it
successful.
It has been opined by Mohamad and Said (2012) that, gaining competitive advantage
mainly occurs through situational analysis, which involves understanding external as well as
internal business environments. Recent evidences highlights that this enterprise has allocated
near about MYR 1.1 billion for their E&P technology centre in order to develop innovative
technology. This organization implemented this strategy in order to rejuvenate their mature oil

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fields, enhance production in maturing the oil fields and also design methods to monetize their
hydrocarbon resources. For attaining success in this strategy, they have employed more than 150
skilled people. In addition to this, these challenges on commercial as well as technical fronts
have lead to innovations and change, which in turn helped them to reduce overall cost as well as
enhance performance through usage of these technologies. They also strategizes to work with
other technology partners for innovating different products as well as services and bringing about
change in the organization. Moreover, the managers as well as leaders of these organizations also
consider the way their employees adapt to these new changes (Pisano 2015). In fact, these
managers also strategize to motivate their employees for fostering innovation and help them to
become resistant to change. This in turn also improves the performance of these workers.
The leaders of this organization also involve all their team members in the process of
innovation in order to avoid these challenges arising from implementation of new changes. It has
been found out by Fullan (2014) that, the employees might be open to these changes if the
enterprise gives the opportunity to involve them in the process of innovation. Apart from this,
another situation in Petronas highlights that the leaders of this organizations informs their
employees about the innovation idea and also prepares their minds for bringing about the change
within the workplace. It has been opined by Høyrup et al. (2012) that, participation of employees
in the process of innovation also enables the workers to understand their requirement for
innovation and also gives them ideas of different ways of manufacturing innovative product and
service. In addition to this, it also enables the workers to understand their role in this change
adoption.
Recent study reflects that this organization partners with MIT innovation for developing
iCWD( Intelligent Circulation While Driiling). ICWD is a technology that is used by the

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enterprise for reducing drilling cost (Norman and Verganti 2014). However, implementation of
this strategy helps this enterprise to have remote- controlled business operations along with agile
activation. In fact, the innovation of this technology also facilitates the leaders and mangers of
this enterprise to improve their domestic as well as international business operations. All of the
technological endeavors of this enterprise are mainly geared towards driving innovations
basically with the potential of being game-changer for manufacturing, storage and supply of
hydrocarbons worldwide. Additionally, this organization has also adopted BOS ( Blue Ocean
strategy) in their business operations for fostering change within the workplace environment.
This in turn also reaped them huge benefits in account of savings of overall business cost.
Adoption of this strategy also improved their profit margin despite several market challenges.
Furthermore, this company has been leading a sector wide effort including 25 PACs (Petroleum
arrangement contractors) for embracing structural change in oil and gas upstream work
environment in this nation. But still this company should apply several innovative approaches to
the technology, which in turn will help them to unlock as well as maximize sources of energy
from remote as well as difficult environments. Furthermore, in order to foster change within their
workplace, Petronas should also adopt strategy of provide training to their employees on the
utilization of hydrocarbon technologies. This organization should also strive for more innovation
and change for improving yields, increasing efficiency and reducing business costs. Additionally,
it will also help them to improve their business growth.
Important changes to business practices of Petronas for achieving new financial value
capture through innovation for sustainability
The steady growth of Petronas over the last few years reflects their commitment to
innovation, leadership and sustainability of their services and goods. The business practices of

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this enterprise mainly open innovation through challenging creative minds and crowdsourcing
around the world. For this enterprise, sustainability defines as carrying out business in socially
responsible as well as holistic manner for ensuring continued business growth. Sustainability is
mainly guided by the CSF ( Corporate Sustainability Framework) that delineates those areas
where they plays the role in managing their risk as well as affect and also leveraging their
strength for contributing to sustainable development (Doppelt 2017). The CSC ( corporate
sustainability council) is the major deliberative body on issues in this company. This CSC is
basically responsible for their sustainable development policies as well as strategies, specifically
in the areas of world concern that includes change in climate and use of natural resources. They
mainly strive to continue developing their business in socially, environmentally and ethically
responsible manner while facing increasing technical as well as environmental challenges in the
market. They are mainly committed to address all these challenges with the help of their business
practices for building capability in some niche areas and creating positive economic influence in
the communities.
The climatic actions of this company are basically geared towards decreasing GHG
emission through their delivery of business operational excellence. For making this action
successful, they have changed their business practices that involves-
Promoting the natural gas as low carbon fuel-They advocates natural gas utilization as
solution in pathway towards low carbon nation (Ockwell and Mallett 2013). However, they have
gone on board for building PFLNG SATU, which in turn unlocks value mainly from the gas
reserves.

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Improving efficiency of energy in their operations-They have innovated ELMS( Energy and
Loss Management System) for monitoring as well as improving utilization of energy in their
downstream operations. Additionally, they have also innovated cogeneration plants as well as
cooling system for improving efficiency in energy.
Reducing emission of methane in their operations- The carbon commitments of this company
have been designed for adopting zero venting basically for the upstream assets.
Delivering efficiency of fuel in their products-They have innovated fuel saving goods
including Petronas Dynamic Diesel Euro 5 for efficient utilization of fuel and decrease of GHG
emission (Krishna et al. 2012).
Reducing flaring where feasible-The decrease of flaring has been one of the vital aspects
within the carbon commitments of this organization. Moreover, new facilities have been mainly
designed based on the philosophy of zero flaring.
Carbon footprinting practice-Petronas have continuously increased as well as align their
carbon footprinting practices based on the industrial guidelines. In the year 2017, the GHG
emissions of this enterprise have decreased at high rate as compared o previous year. However,
this emission has been one of the main contributors to their carbon footprint (Benn, Edwards and
Williams 2014).
Maritime operations have been one of the vital aspects of their business. There has been
emerging problems impacting the seas that involves- inter- state conflict, piracy, arms
proliferation, trafficking, illegal fishing and so on. However, Petronas have changed their
business practices regarding their maritime security by developing governance mechanisms
according to their SeMS (Security Management Systems). Apart from this, they also conducts

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security assessments by applying asset classification. In addition to this, water being the vital
commodity to this industry, this company has changed their water management practices for
achieving financial value and business growth (Petronas.com.my.2018). They conducts risk
assessment relating to water for identifying as well as assessing stress levels of water and making
changes in management practices of fresh water. They have implemented Water 3R initiative
that is reduce, reuse and recycle for promoting efficient as well as responsible utilization of water
in their business operations. Furthermore, this company also continuously recognizes, evaluates
and controls risk throughout their commodity life cycle. However, the management approach of
their product life cycle mainly entails reduction of hazardous chemicals utilization in both
upstream as well as downstream operations. In the year 2016, the PCG ( Petronas Chemical
Group Bhd) have conducted risk assessment of their product systematically across their portfolio
for facilitating the development of GPSS ( Global Product Safety Summaries).This in turn
provided them product safety and also decreased risk. Although they have changed their
sustainability framework, they should make certain changes and innovate new idea for
improving their business. Being the strategic consultant in this organization, they should foster
innovation as it will help them to supply sustainable as well as affordable energy. Therefore, this
enterprise should change and introduce new business practices for attaining new financial value
and maximize profit in the business.
Tracking system to periodically monitor progress and performance outcomes from defined
leadership position
The leaders as well as managers of the organization are required to monitoring progress
periodically and assessing performance outcomes of action taken by them. Petronas mainly use
tracking system for monitoring progress and outcomes of performance of the products and