Suncor Energy Corp.

Michael MacSween   Let me first welcome everyone, especially the guests that have come from far away. I mean, impressive to come from Australia or Lebanon or from Europe. I came from three blocks away, so I live in Calgary. I'm a proud Calgarian. I've been here about six years. And so it's great that you've come from far and near because I know there's a lot of familiar faces in the room as well. This is the third time I've spoken in this hotel this week. It's strange. We had our board meeting Monday and Tuesday this week and so I spoke Monday. I had a presentation Monday and Tuesday. Monday went a little bit better than Tuesday. Yesterday I had in the major projects group, which is the area I lead now in Suncorps. We had all of our admin assistants together. They have an annual get together because they're spread geographically around a number of different areas and they have a lot of common issues and it's an opportunity for them to do some professional development. And so I spoke for an hour at lunch and it was just the room next door. So those of you here, you may have heard some laughter and some good times with it, but I'll tell you, it's the first time I've ever spoken with a group that was exclusively female. And the questions were a hell of a lot harder than the ones I had Monday and Tuesday. And it's good that there was no videotape. Anyway, with that I'll start and I think I'm least comfortable talking about myself, so I'll make that the briefest. I've been at Suncor since 1996 and been in the oil industry for over 20 years and currently lead the major projects group at Suncor. I've worked in operations, technical kinds of functions in a variety of levels. I'm currently in the executive team at Suncore and it's a company that's changed dramatically over the time that I've been part of it. And I'm going to speak specifically around the merger that occurred with Petra, Canada and Suncorps in 2009 because I think it is a little bit of a special case. I've worked with Paul and Paul's been a great confidant and thought partner through many aspects of what I've dealt with in my career through the Requisite organization thinking, but in other areas as well. And that's taken its form in a number of different roles and areas. But I thought I'd focus on the merger because it is a little bit of a specific case and it has some unique aspects to it. So I'll start with and I am technically challenged. Here the button in the middle. Okay, there we go. So I'll start a little bit about suncor and PetroCanada. I know lots of people here are familiar with the companies, but for those from away, suncor is Canada's largest integrated energy company. We're involved across the country about a $52 billion market cap this morning. And we have oil and gas production. We have retail gas, we have offshore production, some international production in the North Sea and in the Middle East. We have a refining network that is in Canada and into the US. And so it is a vast, diverse company with about 14,000 employees. So it is big. And the merger with Suncor and Petro Canada was the biggest in Canadian history. So it was a big deal. The oil sands industry is what defines Suncor. So Ken talked about the boom that's been happening in Alberta and it's been happening for some time. There's been certainly different levels of velocity through the last ten years in this region. But it is largely driven by the oil sands and development of that energy resource, which does distinguish Suncor as well. If there is one aspect to Suncor that I describe, all the components of the company, the one aspect that I think differentiates us from others is the vast resource that we have in the oil sands. And oil sands initially when it started in the mid 60s, was mining. And so a lot of times you see the media reports, you see the mines. And there is a large amount of the resource that is too deep to mine. And it is the vast majority of the resource, roughly 80% across the province. And it's true in Suncor's case as well, that are resource based. It's about 80% what we would call in situ, which is too deep to mine. And there's different methods that are used to extract the material. The most common is something called SAGD, which is steam assisted gravity drainage. And it was commercially developed in kind of the scales we're seeing about twelve years ago. And it was really the horizontal drilling techniques, much of which are now getting implemented in oil shale and shale gas that you hear about that changed the industry. That was the technology that allowed us to access this resource, this 80% of the oil sands resource. So that's a little bit about Suncore. That's a little bit about the area as well. I don't want to dwell into too much technical detail about the area of the organization. I'm going to talk to you. But it does help to know what we do in the area and in Suncorps, there's a couple of operating sites, firebag. It's named after the Firebag River and First Nations people would carry fire in a bag as they would go on hunting expeditions. That's how the site gets its name. And the Mackay River, which runs by the Mackay River. And so these are two operating sites. Firebag was a Suncore legacy site, and Mackay River was a PetroCanada legacy site. And so there's operations, there's projects. Roughly about $15 billion worth of asset value so about $12 billion of asset value at Mackay River or at Firebag and about three and a half at Mackay River. So big capital intensive projects that have been developed over the last ten years. And the technology piece, it is a young industry. There is technology and innovation that is happening at a very rapid pace. There's intense competition as well. So there was one site I mentioned twelve years ago, there's now 33 sites, all competing with each other, lots around technology and people. So the people piece of this, I would say, is the largest constraint. So Paul mentioned that I started together with him in 2008, and I came into the operating area. Most of my background was in operations. And it's funny, you go into an area and you see things right away and you have to act quickly. And I've had some great mentors that have said, and I'm sure how many Star Trek fans there are here, but you get assimilated into the Borg if you're there three months. Like, you stop seeing things that you would have seen with cold eyes coming in first. And so it's important to take note and always have the mindset that you're eventually going to deviate towards the norms if you're not careful. And what I recognized in the place was kind of a combination of new tech, resource developed people running operations with a project, mindset that the facility had never really kind of gotten out of being a project, yet it was operating and the results weren't great. And a big piece of what I recognized is it wasn't clear who was doing what or who was accountable for what. And even the people who you would think would be accountable didn't think they were. And things just weren't structured or organized in a way that was sensible. So that's in part how Paul and I got involved. I had Paul come back about six months after we'd made some of the initial changes because I wanted a sober second look again in terms of how things had progressed. And it's always with changes that are made in terms of organization or with strategy. It's never perfect. It's an 80% kind of view always that you take. And so my attitude was, let's make some changes, let's do things in the right way with the structure grouping, work appropriately, getting accountability clear. Not sure it's perfect in terms of selection of people, but we have to go and we'll come back and look and fix things after in six months if there's things that are out of sorts. And so that was a little bit of how things evolved with Paul's initial involvement, coming into help to look at the operation, thinking about the culture that existed as well, that was there. So if you can think of this industry being a new industry, it's not quite conventional oil and gas, but you'd have some of those people there who are drilling and operating in the subsurface, and so there's a certain way of thinking and operating in that environment. The surface components are big. Twelve, $15 billion worth of kits, so big boilers, big steam generators, you could see a manufacturing operation on the surface. And so there's a unique blend of this subsurface surface group and coming from a variety of cultures and so each thinking that they knew how the thing should run, the thing very integrated in that neither succeeds without both pieces working together. And so really addressing how those components worked, getting accountabilities clear and the collateral relationships well understood and agreements in place were needed. And there was a big operation down the road as well. It was an elephant. This is the oil sands mine upgrader, which is the mothership for Suncore. There was connection with that operation and it was connection beyond just the physical connection of pipe, it was connection of culture, it was connection of shared services. There was a lot of elements and organizational aspects as well, and so accounting for distinction, but as well ensuring that we maintained that connection and the Suncore culture and all that we did. And the other aspect that I mentioned already was just the fact that there was a project and the project group had run the site and the project group was still the most predominant group on the site because we kept building things. And so that is a very different operation or a very different set of activities when you're building. And I'm coming to appreciate it now in my current role. But when you design and build things, it's a different cast of characters and it's a different way of thinking versus operating something day in and day out, looking to manufacture oil in a consistent, reliable way. So those were some of the aspects that we had to work through in terms of setting up the structure in the right way with clarity and accountability, really establishing the culture as being an operating site beyond just a project site and ensuring that we did the checks as time passed. So fast forward to 2009, paul and I were reminiscing last night just about how the whole process worked. And one of the things that I would say was a great fortunate at the firebag site premerger was the team that was established there was probably the closest I've ever been part of. We went through this process together. We had very methodical selection process in terms of the right characteristics of people and it was high performing and it was high performing only for six months. And then we had this merger come. It was special, but it was too short. And that's the one regret I have about the merger because I think it would have been phenomenal what this team could have accomplished. Things happen, big merger occurs and with it another set of cultures coming together. This being a corporate culture, I think the best way to describe the difference is in a simple way between Suncorps and PetroCanada. Suncor, very entrepreneurial, had started in the oil sands and almost a maverick like identity. And so, you know, Suncor would be shoot, shoot, aim. That's how you would describe how Suncorps operated PetroCanada extremely methodical. I wouldn't say bureaucratic, but definitely not quick and would think through things very carefully and would act, but much more thoughtful and planful is how I would say. And so it was ready, aim, aim, aim, aim. And they would eventually shoot for sure. But it was just a very different set of cultures coming together in that aspect. Lots of common values around safety and a lot of common elements. So I wouldn't suggest that this was diametrically opposite kinds of cultures. There were aspects definitely that were the same, but there were some distinctions. And I would mean it was the senior executives and how they operated that did have the largest effect on that whole culture. So the company name was Suncore. The executive team was split. Our CEO, Rick George was from Suncore. And our board chair was from Suncor. So there was definitively a Suncore set of systems and feel. But it was recognized that this company had to be very different. We could not operate with the same kind of maverick attitude. With 14,000 employees and being very large, we'd grown from a medium to a large company and now we're a very large company. And so operating the same way was not going to be an option. So we labeled it the new Suncore and really wanted it to be operated in a very different way and to take the best of both and blend something that would be know, the merger opportunity. I guess fortuitous in that. Paul and I had worked together. We'd worked through the firebag area and had developed a couple of sets of steps there to group work appropriately. So there was certainly some portability of that part of the operation. There was the Mackay River operation that came together. And so at merger, a number of different business areas got grouped. We had two refineries in the Suncorps network, two refineries in the PetroCanada network. Those got grouped. There was a natural grouping of different asset groups. And so that's how the insitu area formed. Firebag, Mackay River and all of the other undeveloped properties came together. And when you look at Suncorps PetroCanada and how different groups came together, it was one of the areas, especially in the business units, that was a pure split. It was 50% PetroCanada. 50% suncor. That was the group of people coming together in other areas. For instance, oil sands, mining, heavy suncore, the downstream, the retails like obviously the PetroCanada network across the country, heavy petra, Canada. And so there were different business areas with different flavors. This was, I think, one of the business areas that was effectively half and half. And so great synergy opportunities, a new industry, very competitive, lots of technology that we'd independently been working, lots of groups coming together. It gave us an opportunity to get really clear with accountability and getting firstly the work structure set up properly right off the bat, getting real clear with accountabilities in terms of who was accountable for what, linking that to the strategy because we had a strategy of firstly developing synergies coming out of the merger and a strategy of operational excellence and building the foundation for Growth in that we needed to innovate and build technology. So there were definitively elements of that. And we had a triangle, we built a diagram to depict that along with a vision statement and a mission and all of that along with the grouping and organizing, happened in the span of three months. So I'll talk firstly of the benefits of building that requisite organization and I'll speak about the benefits three years hence, but I'm speaking here mostly about the benefits at the time because it's an intensely chaotic period, as you can appreciate. My wife remembers that summer very well. It's interesting because we both are small town people, we're not big city people. We were married in Canmore, which is a nice town towards the mountains here. And so we purchased a place and I purchased it because market conditions were right. But as well, I knew it was going to be a hell summer and I purchased it in May and she spent the summer there. And I did not have a day off work the whole summer. It was three months of intense, tense activity. The benefits that I saw firstly, we had a common language. So we had Paul come in with the group and we set the top level first and had the top group and it was 50 50 between the legacy organizations that came together. And what I noticed is that we would talk what we thought was the same language, but oftentimes it was very different in terms of what the context was or the quality was. And so with many of you from an HR background, we would talk about succession planning and you talk succession planning, but then we'd each have a very different set of succession plans in terms of the quality, in terms of things we'd look for, in terms of how low we would go with levels. And so you really had to drive two and three questions deeper to fully understand each other. And this presented a common new language. It presented an ability for us to structure things and talk about accountabilities and talk about grouping of work and what the work was in a very common language that we could collectively understand. So a fresh start, the slate is clean, you're starting with these pieces coming together and you don't have the 45 year legacy of people and positions or the aspects of having to do things a certain way because of what senior or even board level people think. And it just allows you to get work grouping in the right way and allows you as well to think through and take stock where you're at and to think, where are we going to go in the next three years? Because a lot of times you can kind of barrel along and forget that over time and not progress structure in a way that supports things that have happened in the business that are positive or how things have moved. It allowed us as well, to really focus on a playbook and Paul helped us through that process and it was all about the strategy, what we were going to deliver in terms of the goals or expectations and allowed us check in points along the way to check how we were progressing. So those were some of the benefits, some of the challenges. I mean, it was incredibly intense. The merger was announced and it closed three months later. There were lawyers in the room through the whole process until the competition bureau had finalized the merger. That was two of the three months. And so that was stifling. I'm not sure how many have worked any lawyers in the room? No. Okay. It was stifling at times. We could not obviously go into discussion areas until things closed that, you know, that were appropriate, but it it was challenging and and there's a lot of things happening. I mean, it's not just this you need to think through, it's combination of benefits, it's combinations of all kinds of human resource pieces, it's strategic thoughts around disposal and combinations and you're dealing with operations that are still running as well and keeping things moving because it's a 24/7 deal aside from all of this. And so there's a lot to sort through the culture, I describe some of it, but just the style, the way things occurred in different interactions in general, I think it was important to set the right context and environment to ensure those things, you know, were honored. But that was difficult. And then when the structure was set, it was about selection. And there were lots of leaps of faith in this process because I was very clear that we had a blend coming into this and we needed a blend throughout and we needed the best people for the right roles. And there's bias, there was different levels of understanding of different people's capabilities and there were 60 people who exited in this area, the organization, there was 700 people. This was a growing area as well. So you can appreciate in other areas that were not growing, it was even more challenging. But selection is tough in that circumstance and that's where it was important for us to come together as a team, as a senior team, and agree to things and leave the room. Agreed. And a lot of complexity because it's not just your area, things are happening, it's happening everywhere. And so there's managed chaos is how I describe it. So three years in, I would say I'm extremely proud of the insituary. There's terrific people who've done amazing things there and I've not been leading it for the last ten months. But I look at it every day and I can tell you that there's a lot of aspects I'm very proud of. It has the highest reliability in terms of the surface facilities, higher than even the refineries. And so the reliability and consistency of the operation has been very good. The culture, I think, is one that is very progressive. The tests for me were that people stop referring to themselves in terms of what their legacy heritage was very quickly. And I'm not sure that happened in every area and I've frankly still seen it in some areas in the company. So that was one of the measures, but I don't think it solved everything. There's always work to do, there's always opportunities, but I think it is something that has progressed very positively to that new Suncor that we were working to create. The synergy value has been immense, it's been staggering. And the biggest piece was the technical groups coming together. And it's not just the technical groups, the operating groups came together and I would say the Suncor manufacturing focus on the surface was stronger than the PetroCan manufacturing focus. The PetroCan subsurface focus was much stronger than the Suncore focus. And so those two pieces that I described were very complementary and we mixed and matched people right off the bat to get the groups together in a way that was going to generate that as quickly as possible. And it's very exciting what's been created. We've had changes since in the organization, so we continue to grow, continue to evolve. We had a change this year with Steve Williams becoming our CEO. And so with those structural changes, we've been able to port parts of the organization. And what I like is parts of the organization are emulating and copying what we've know. That I think is good in a lot of ways in terms of the way things were structured and developed. And I think it's an amazing future. I think it is a very exciting business and terrific people that are there. So anyway, that's a little bit about my experience around requisite organizations and specifically the merger that occurred three years ago at Suncorp PetroCan. With that, I'll turn it over.

Speaker B Thank you very much, Michael. His story about the lawyers reminded me was the first time one of the things we needed to do when we were merging was to not accept the fact that titles over in Petracan would necessarily represent the same level of work complexity that we were talking about. Like was a vice president really a level four, for example, or was a director really level three, whatever. And they had some different kind of titles that they were using over there as well. So one of the things we felt we needed to do if we're going to follow the requisite principles was to make sure there was an alignment of those. But the funny part of the story was I wanted to go and of course, interview those people and do some leveling interviews around trying to find out what the complexity of the work was. You part of PetroCan, and it was the first time I've ever had to go through a lawyer to make sure that the questions I was asking were going to be okay and not contravention to any kind of competition bureau rules or regulations. So that was kind of an interesting experience. What we'd like you to do now, if you would please, for about five minutes, just huddle at your tables and talk a little bit about some of your reactions to what Mike had to say about how the principles may have been helpful to a very strategic kind of situation in a company, the merger particularly, and maybe try to come up with one question that you might have for Mike, and then we'll go around and get as many as we can in the time that we have. All right.

Speaker C I'm Susan Tangy from Warley Parsons.

Speaker A Oh, hi, Susan.

Speaker C My question is, I'm curious as to what your staff at the level two would be saying in terms of what they've noticed as the change or the benefits. And well, I'm assuming, you know, because there will be with this model, some communication upwards. So I'm curious as to what they would say.

Speaker A It's a great question, and I would say directly after in terms of the context of the merger, I think having that clarity very quickly was important for them because I'm not sure that it necessarily existed before in terms of what their accountabilities were. And I do think we had a number of areas where we had jam ups at level two. Level three, one of the challenges with language is we went through this and corporately we kind of reversed the leveling designation. So level one was our CEO and level two was my level. So we were always having a language challenge that Miles laughs around that. So I have to reorientate myself always between the two. It's like speaking English and French. But I think removing some jam ups was an important thing that we accomplished through this. And that's definitively one thing that I heard, and there's probably others as well. But starting the ground running with clarity was important.

Speaker B I'll come down this way somewhere. We got a question down here somewhere. How about this table over here? Got one.

Speaker D Well, we discussed mergering because it's a fascinating story, of course. My name is Franz Beerling. I'm from the Netherlands, by the way. But there's also this aspect in your organization that you told about the future. Are there any next steps in strengthening requisite organization in your organization? Do you have a next step, model or plan?

Speaker A Yeah, I have a next step because I'm in a new organization now and I intend to implement the Ro principles with it. So I don't think universally across Suncore we apply the principles I think we applied them to lesser or more extents. And so in my organization, my new organization, I intend to implement them. I would say in the Insitu group, it's something that always has to get viewed periodically because the organization is growing. When Paul started with us, we were producing 30,000 barrels a day at Firebag right now, the combined entity produces 140,000 a day and it's going to produce over 200,000 by the end of the year and so end of next year, so it evolves. And so there's an annualized or process that needs to happen periodically to view the work because the work's changing.

Speaker B Okay.

Speaker E Hi there. I'm Edwin nickerson. I'm from two blocks that way. I was wondering what tools you used because I think it would have been very difficult for you to select your new team 50 50 because you have a four year interview with half of the team or half of the candidates and potentially I'm not sure what tools you used for the other half of the candidates. So if you could talk about that, that'd be interesting.

Speaker A So the first thing we did as a leadership team and so I selected the top five members of the team. So there was five leaders at the next level, at the VP level. And the Firebag leader was a legacy Petracan person. The Mackay leader was a legacy Suncorps person. I purposely flopped people at the next level and I set the expectation with that group and we agreed to it that we would hold true to the principles of selecting the best people, that we would represent the people within that team. So it was some of the steps of trying to create a higher trust environment with that team, the senior team off the bat. And it wasn't easy because people were coming with a variety of different feelings coming into this relationship. Some people thinking that they were better suited for my job than I was. I had to kind of look past all that. But it was really establishing it with the senior team to start. And then as we went through that selection process, we were all faced with the same situation because the leader of Firebag was a former PetroCan leader and so he didn't know the people. And so when we're staffing the organization, but I knew the people. And the similar case happened at Akai River where we had a former Suncorps person involved there, I could maybe add.

Speaker B I mean, we did set the minimum critical specification as information, process and capability for level of work. So for example, for his direct reports, we shared the constructs with the PetroCan people as well. So it made sure that we were on level ground and we set that up that those were level four capable individuals. And then all the other things that Mike had talked about came into play and the same at the next level was were these next level. People, the senior directors and directors, were they operating people that were currently capable of operating at that level. So that was a minimum, but not sufficient criteria for selection. A couple more questions. Anybody just want to come up to the microphone and Wanda, why don't you put the mic in?

Speaker C Good morning. Our question from our group is how did you measure Operational Excellence, culture and synergy so that you knew that things were progressing the way that you wanted them to?

Speaker A There's a variety of leading lagging indicators, I think, for all of them. And so I'll speak first with Operational Excellence, it starts with safety and there's leading and Lagging indicators around it. And when you run reliably and you have consistency and you're improving and you're doing things the right way, you see that first, that first measure. There's others that follow around just how things operate. And lastly, you see production and costs decreasing. So that would be the Operational Excellence piece. I think it's true in the project, with new projects we brought in, but as well, with the technologies that we were progressing, there was definitively steps or measures leading and lagging in those too. In terms of culture, I would say the piece about people moving past legacy. And we talked about the L word, and we had to stop using the L word and the new identity, creating that identity and people feeling part of that identity. And so I described our vision and mission and we had a symbol. It was a triangle. And everyone had the triangle attached to their ID card. And so it was one measure we established at each of the operating sites, a closed circuit television system where we would have frequent information about all the operations. So not just the Firebag or Mackay River operation, but vice versa, and tried to have information about other company aspects as well. But it was a lot of working to get information and getting people aligned to that new identity. And so it's probably the toughest one to measure. But we did have surveys with lagging results that kind of showed connection with values and that type thing. The synergy piece, we actively measured it. I think you can quickly get into false accounting in that exercise because you can show whatever you want and there's maybe a bunch of downticks somewhere else that don't get shown in the variances. But to me, the truest measure was our cost decreased significantly. And that was true in both operating sites. And we had real tangible pieces that we could point to. But I think the biggest piece was just how the groups came together. That's what created the synergy. It wasn't the fact that we applied an exchanger cleaning method, one place that had been used somewhere else, or we used some pipe that we had stored on the ground at one site that could get used at another site. Those were trivial details compared to the power of the people come together.

SPEAKER A

Just quickly, by the way of introduction and making connections. As I mentioned, my colleague of mine, Sue Symington, who's in Ovacom, Inc. Had a client relationship with the EVP of oil sands, and he had, from the previous work he had done, he liked the principals very much. And so he asked us to come in and to do some work. I first actually met Adrienne. I guess I met Adrienne first in the sense that at that time she was with Suncor. She's now with a different organization, which she'll explain. So they had a little issues, a few issues, minor issues, some considerable issues in a mergery kind of thing going on, in the sense of a. An outside purveyor of maintenance services was coming in to work with the sustaining projects group. And so Adrian was the director of the sustaining projects organization at the time. That's where the work started. And then sue and I began to work with Kirk around, taking a look at his. At his entire organization. And then that's where I met both Mike and you, Annemarie. And just like Mike, I think people with the kind of capability that these people have very quickly recognize some of the power and the opportunity that were in these principles. And I think Ag Marie, I think you were kind of first out of the gate. You said, I want some of this stuff. And so that's where the work began. So with that, I'm going to turn it over to you. And away we go.

SPEAKER B

So Adrian and I are going to tag team our presentation. And as introduced, I'm actually an operator. I'm a mining engineer by trade. I've worked in industry and technical roles and operations roles with increasing responsibility for about the last 25 years in my industry, the first 16 in coal, metallurgical and thermal coal in western Canada, and then in the canadian oil sands for the last eight years. We were talking at our table this morning during some of the discussion about the impetus for introducing Ro, and I'm going to describe just briefly a little bit about that. So I think about the business challenge we are faced with. And I joined Suncorp in 2004. Mike eloquently described this morning our organization, and I think he used the word we were mavericks. So we started in the mid 1960s in the oil sands, and our operation for the first 2025 years of its life was about existence. It was about proving that this technology could actually work and could be viable in a business sense. When I joined Suncor in 2004, we'd just gone through the millennium expansion, and at that point in time, about 95% of the bitumen that was going into the plant came from the mining operation. And when I got there, the first thing that struck me was that I couldn't figure out who was running what down at the ground level. I think I counted after I understood all the leveling, I had about four people working in the l two space. And intuitively, I'm an n for all you people who think about that. So intuitively, I just knew this was wrong. So I started slashing layers out and doing some work and getting some accountability work clear. But it was as our organization started to grow, I started to work with the engineering group and regroup and restructure that work. And it was in conversation with my EVP saying, look, I gotta go after the operation too. Some of the reasons here are why I had to go after the operation. In 2006, the middle of 2006, we completed the reserves in one mine called the Steep bank mine, and we consolidated all our mining activities in a single pit called the Millennium Mine. This made us one of the largest, most complex and most congested mines in the world. So at the point in time that I met Paul Tremlett, we had gotten to the point where we were docking the productivity of our fleet by 14% because of traffic jams in the field. Any of you who've been up to Fort McMurray and know what traffic's like on highway 63 at shift change, that's essentially what our operation was starting to look like. So the size and complexity of this operation was about the geography of the pit. It was also about the equipment and where we were heading. So the picture to the right is one of our shovels. So we have 15. We had 15 cable shovels. At that time. We had over 100 ultra class haul trucks, the largest haul trucks in the world. And I knew within 18 months we were going to have 140 of them running around in that mine. And we were growing, as you see by the sides. We had about 2000 employees. We're going to add another couple hundred truck drivers. We were expanding our contractor capacity and it just could not go on with the infrastructure we had in place. We were adding at l one at the front line. But we had not changed our l two managerial level in years and years and years. It's complicated by running four shifts, three days on, three days off, three days, three nights, six off. So you got four crews, four cultures, four independent ways of working. So why was ro the solution? That summary, I started giving you a bit of hints about this, but I would say first and foremost was feedback we were getting from employee engagement surveys. Our HR department was very fond of employee engagement surveys. I mean, we don't like getting the results, but some of the comments to the bottom spoke to the fact that people felt they were just a badge number. Remember, we had been a small, maverick company where you knew the executive vice president because he was out in the field and you only had a couple hundred employees. They said we weren't keeping up with the pace. The supervisors are overworked, they're understaffed. These are just. And I actually grabbed them from the 2004 survey to share with you. Somebody spoke early about mutual recognition units. You know, intuitively, I kind of knew that there was too many people working for each manager and director, but certainly at l three, my director, you know, we were targeting somewhere, hoping for three to 400 people. I think, Paul, your advice was 250. I had 900 people working for an l three director. There's no way that he's going to get to know the people and create that sense of community. Thirdly, we'd had a fatality. July 8, 2008 was the first time there was a fatality that happened on a property that was under my control. And some of the learnings from that, you can see the little puzzle pieces to the bottom. One of the puzzle pieces was around organizational conditions. And specifically, we said, you know what? As an organization, we had to get role accountability for all our staff. We needed to ensure that management was really clear on who was supervising jobs. Now, this wasn't the root cause of the fatality, but it was a contributing factor. There were a lot of people working in the area, and they all thought they were working for somebody else. So who was overseeing the work? Who was checking the field level risk assessment? Who was making sure that the work was being done following procedure? If everybody thought somebody else was supervising that particular job that particular day, the fourth thing that I would say is also very similar, and at least to the little picture up at the top, right? I had an incident. Well, you know, your phone always rings when you're an operations leader one day. So the next morning we're having a conversation with my two directors. At this point in time, and for the life of them, and these are both incredibly great guys, like, very, very talented. Neither one of them legitimately thought they owned the incident. I mean, I had it by then you might have figured out that I can hold my own with the crowd. So I kind of looked at them and said, you've got to be careful if you don't own it, Bob, and you don't own it, Kevin. You really think I own this one? Like, so we had to get very, very clear. And with the complexity of having an automated dispatching system where, you know, computers, it's like air traffic control, right? A series of computers are telling trucks and shovels where to move and where to go. All day long you've got equipment moving and faces moving and advancing. We kind of said, gee, we really have to get to the heart of this. So we created this little vision up at the top where people have two accountabilities, managers and frontline supervisors. They are both a people manager of a group of people. Could be similar to a homeroom in a high school, right? You have a homeroom teacher, but you don't spend your day with your homeroom teacher teacher. So we were both people leaders, and we are geographic leaders. So out in that vast expanse of a mine with all this equipment running around, there was a portion of the footprint of the mine that was yours. It's yours from an environmental perspective. It's yours from a safety perspective. It's yours from a production perspective. But the people who you're accountable for is anybody working in that footprint because somebody else gave them to you? You. And it's also your home base from a perspective of vacation attrition, needing time off, performance management perspective, you had a home based group. So that was really important in a dynamic organization. So those were some of the reasons why we said, hey, let's give this a try. We need to get something that's very structured. We can't just keep faking this on Ann Marie's intuition. And I have Adrienne, who actually worked for me in the mine at one point in time. But at the point we took this on, she had become an HR practitioner, and she's going to describe really briefly some of the four key implementation essentials that we found.

SPEAKER C

Thanks, Anne Marie. So, in terms of the implementation essentials, what I'd like to talk about was, I guess, maybe the first problem that we had. So, as Anne Marie described, people are used to in a mine having everyone, all the equipment operators, primarily report into one person. And that's the model and the paradigm. So although we did some really good work to come up with a structure and have people managers and geographic managers, it kind of hit a bit of a roadblock at l three, and they're like, no, it can't work. No, it can't work.

SPEAKER B

We've never seen it.

SPEAKER C

We've never seen it. It's not going to happen. And we're making no progress. So in order to break the logjam, what we did was emory, as our l four leader said, I'm going to give you the musts. These are some musts. And so I actually put up there a little document of just circling some of the things that we put down as the must. And then she said, l three team, you go away and work the solution. You work it because there's some musts. We have. We have to have, for example, clear accountability around safety in any geographic location in the mine. We also have to understand that our supervisors, who are really important people in the mine, their talent in coordinating all the activities in the mine on a daily basis are fantastic. But they operate at l one. And so as l two leaders, you can't assign your managerial responsibilities to, to your l one leaders, which was what was happening. So they thought they had a good enough sized team because they had all these supervisors out there to support them, but they didn't have the skills, time or capability to do the leadership work that was required. So we put down some muss and Emory flew us down to Calgary and we rolled up our sleeves and I think after about an hour the guys said, no, it's not happening. We can't figure it out. I said, okay, well, I'm going to get on the phone and call Emory and tell her we're done. That really happened. And so they're like, oh, well, maybe we'll try a little longer. So two days later we came up with a solution and why this was a great implementation. Essential is not that we came up with that much different than what we had, is the time that they had for those two days where we worked it and talked through the issues, made them experts in the actual principles. I don't want to say experts, but highly proficient and very knowledgeable. And their team just kind of bonded and they really own the design. So I think the piece around l three, whether you come at it because things just weren't working or you choose to just really put a lot of accountability in your l three leaders was something that we found really helpful. The next step was the requirement for a pretty comprehensive project implementation plan. We touched many stakeholders. There's thousands of people. It was a pretty broken up organization at the time. We really wanted to make sure that as we did it, we had the strategic patience to take it from the structure, it was to the equipment operator. Otherwise we wouldn't really achieve our goal of reconnecting the people. We also had to consider that we had to have a safe go live. So we looked at all the things that had to happen. We looked at the conversations, bringing it down through the organization, doing sort of the side to side check. Am I aligned with my peers? Do our leaders understand? And we went through workshops and education, and that actually was the determining that project plan, which is a little snapshot with some scribbles because it was in the middle of a very calm, complex planning behind it that actually said, this is when the go live date can be. So I did hear one comment earlier today that, you know, sometimes you have to go and go quick, and that's really important, but sometimes you have to have the strategic patience so that at each level they have the sync time to actually understand and appreciate the principles. So in this case, we had to wait till November 10, 2009, and we started our journey in January. So after we touched all, in order to touch all the shifts and all the stakeholders, we had to take the time to do it right. The next piece is the education piece, the education and knowledge. And I'm not going to spend a lot of time on this, but what we found was our guys were very easily able to understand gaps and jam ups and solve them on their own because, you know, our l three guys were really close to the principals, and the l two managers also became, had the same skills and they became the teachers. So when we had the big workshops, it wasn't me giving the slideshow on accountability based principles. It was actually the managers themselves. And I think that really solidified the commitment as we went moved through the organization. The last piece is a coaching approach. So fortunately, Anne Marie's team were trained in real time coaching. And so as we worked through the different role descriptions, it was more a case of questioning and probing and digging into areas where things hadn't worked before. And will this new solution work? And the types of conversations that we had with these leaders, they again began to bond and sort of had a safe environment where they had some candid discussions and they pushed around some ideas. And at the end of it, I think Emory had a exceptional team when we finished. So that's how I spent eleven months in four minutes, and I'll turn it back to Ann Reid and she can tell you whether or not it was worthwhile.

SPEAKER B

Adrienne actually says, I actually left and didn't see what happened. And even though we're personal friends, we never really discussed what's happened with this. So it's been quite an interesting experience to pull this together. I want to speak a little bit about the results and some people asked about metrics and other things earlier. First and foremost, you can expect I was interested in safety results. And I cannot attribute 100% of our safety improvement to implementing ro principles. But it certainly played a significant foundation. We are also ten years into a cultural change around safety, something we call our journey to zero. And obviously that was the cornerstone of our safety improvement. But to give you some real numbers, when I joined the mine in 2004, we had a recordable injury frequency that year of 1.36. That means for about the 3000 people that I had working in my operation, 41 people required medical attention. So their injury was significant enough that they needed stitching, they needed something cast. Those aren't lost time incidents, but I had 41 people require medical attention. By 2008, the time that we really got into this work, the recordable injury frequency had dropped to 0.98. So 30 people. So eleven fewer people annually were requiring medical attention. And I can tell you that last year, which is the year that I left the mine, our recordable injury frequency for mining operations was 0.46. So last year, 14 people required medical attention. So 27 fewer people required medical attention in a single year in our operation. And to me, that's worth it right there. You don't need any other results. So that's fantastic. A couple other things. We did get some feedback from subsequent surveys. So Mike Agnew spoke about the merger. And we did some cultural surveys just at the time of the merger and a year later from the merger. And one of the quotes that came out in our management review of the cultural survey was that clarity around accountability remains a key theme at oil sands overall. But the result is not as prevalent in the mind. That means we made accountability good progress. Fewer people said they were unclear about their role. Accountabilities in the mine. And actually the stats at the bottom show that particular feedback. So we had about a 3.5% improvement in our accountability score. Is it enough? I don't know, but it's a signal and a metric in the right direction. We also did meet my goal of establishing mutual recognition units. So there are currently between 120 and 148 employees per manager. And there are now three directors working in that mine with the 1100 staff. So you know what people are feeling that sense of community at the start of shift, it's still not perfect. There's more things that have to happen, and perhaps most significantly for me is that when I built the business plan and presented it to my EVP, I actually told them this was going to have some legs. We were going to do this in three phases because I needed to make some immediate changes. We were then going to go and we were going to open a second mine, the north steep bank mine. And we are going to do that around the end of 2011. And in fact, we did open the north Steep bank mine. We opened it in December of 2011. It was delivered ahead of schedule, under budget from a capital perspective. And in March of this year, just months ago, I did stumble across a presentation where the directors of the day were, and these are one director is the same guy I spoke about earlier, Kevin, but another lady, Lynn Gould, is the second director. They were using these same ABM principles to describe we're doing phase three and who's who in the zoo and how are we running with the new mining operation. I also know that we figured out the foundational structure we want for mines at Suncor. And when we look to our Fort Hills joint venture mining operation, should it receive sanctioning towards the end of next year. Year, we already know the mining structure that we'll be putting in place. So now you've got transferability amongst three mines with a similar structure where people know what the roles are in each of these locations. So I think the longevity of this work kind of speaks for itself. And the fact that we were able to implement the first three phases of the work we wanted to share. Finally, some key successes, success factors and lessons learned that we had. And I'll speak to some of them, but Adrienne might actually jump in and add other points. The one thing Mike spoke to a little bit, there was a couple questions and he said, you know, there was a question about is this a corporate driven initiative? And Mike said, you know, we do have accountability principles, ro principles within our organization, but it's implemented at data different levels by different leaders. The one thing that was a bit difficult for us was some of our central support functions, supply chain, it, HR, they weren't going through the same ABM work while we did it, because I did it through mining operations, mining maintenance, mining engineering, technical planning, but I didn't have those support functions. Our finance group, that was a bit difficult at times. We did bring in all the functions at my level. So anybody who sat on the mining area, cross functional team and below who were embedded within our business in a dotted line fashion, but had their solid line to the corporate function, were engaged in the cross functional conversations, in the design and the implementation. But there was some tension with some of their leaders about why are you wasting your time on that conversation of things? So, you know, I think if you have the luxury of it having the alignment of all the functions required to support the business would be advantageous. The infrastructure, it. Adrienne, did you want to jump in?

SPEAKER C

Yeah. I think when we put this point together, what you can have happen is if you're not prepared, if you have systems like SAP, if you put in a really good organizational design, but then go live and folks aren't able to, to do their work, you really lose a lot of ground. So we spent a good amount of time ensuring that all those roles were mapped effectively, as well as ensuring that we reviewed all the safety procedures as well. So if a new role existed or a new process existed or there was a certain person who had to sign off on it, that the sort of the structural things that support you day in, day out, you can't ignore those. It really helps to make sure that people can be successful on their go live.

SPEAKER B

I think somebody else earlier today spoke about a follow up. We also had a follow up about a year later in our plan do check act. I asked for a check and Paul came in and interviewed a number of the leaders at all levels, right down to the front line to operators, to see if the intent of what we had been trying to put in place actually happened. There were a few corrections, but they weren't major. The major emphasis of what we were trying to accomplish had been put in place. The last one I'll really speak to in any way is the investment. So Adrienne talked about really teaching and building that competency of the line to understand ro principles. This has paid off in spades. Several of the key directors who worked for me at the time have, and they're all awesome people. They've gone on to more senior roles and in other parts of the organization. We recently set up a regional development group. Two of the guys who worked with me were over in that area and they actually told their vice president he needed to use the Ro principles. And here's who you phone in Calgary and they'll get the right people helping you. So it's kind of organically growing by laying that foundation. On this flip side of that, though, I'm sure many of you have attrition challenges, you know, so we have some people leave, you know, occasionally. It's rare, of course, in this day and age, but occasionally people leave companies. So there has to be a foundation somewhere in your company. You know, in a large organization like we are, we need internal ro, professional capability, and that happens in our human resources organizational effectiveness group. And people have been talking about Miles Miles, you should stay. Stand up and smile. Myles is here from our HR group. He's our partner. So if you've got the really tough questions, you can ask him how we're performing. But they're there to be our constant resource. And we have talked about some basic cbts for new employees joining our organization so they can understand that language because people have talked about the importance of common language and it can be lost over time if you have a lot of, of attrition. And then we did things like embedded in our recent, in our recent management system changes, and it's just getting it really foundational into the organization, I think has been some of the successes for us.