Everything You Need To Know About Strategic Leadership

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Meet Graham Talbot. His leadership style and career trajectory are far from those of the typical run-of-the-mill CFO. One of the strongest strategic leaders in the energy sector, Graham has a strong track record in leading organisations through major change.

He is proof positive that CFOs must possess strategic leadership skills to influence all aspects of a business – not just the numbers.

Arielle: Graham, it’s great to see you.

GT: So nice to be here.

Arielle: I’d like to learn about your approach to strategic leadership. Let’s start wide. What makes someone a good strategic leader?

GT: You’re leading strategically if you’re steering your organisation through a material or significant change from the current status quo.

While many day-to-day management skills apply to strategic leadership, you also have to flex some very specific muscles.

Interpersonally, you need to be highly inclusive, have strong communication skills, be authentic, resilient and – ideally – be a few steps ahead of everyone else.

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Operationally, you need to set the change effort up for success. For me, this starts with defining what the end state will look like.

Most people love the status quo and resist new ideas, so you have to be able to state the case for change in a way that excites and motivates people.

You need to gain buy-in, then execute.

(Related: How To Motivate Employees).

Arielle: Easier said than done, right?

GT: Absolutely. Think about making major changes in your own life, such as losing weight, training for a triathlon, or quitting smoking. There’s no use trying unless you’re in the right state mentally.

Change in business is much the same – with the added challenge of influencing the priorities of many, not just one!

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Arielle: Did you decide to become a strategic leader or “fall into” this path?

GT: My path as a change leader was not one that I actively pursued. And yet today, I struggle to think of working in a business-as-usual environment.

As an aside, I think business-as-usual leadership roles are actually becoming unusual anyway.

These experiences enabled me to see, and be involved in, a lot of change. But evolving as a strategic change leader was a real and ongoing learning process.

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Arielle: Share an early strategic leadership experience with us.

GT: Sure.

Many years ago, I was leading a significant global change, and I was very disillusioned with how it was going.

I was travelling around the world with a 100-page slide deck ‘telling’ everyone what was going to happen.

Back then, that’s how change was done.

I wasn’t enjoying the presentations. The exit surveys were underwhelming. My disillusionment led to me pause the program and look for another way.

We completely reformatted the engagements, introduced music, games, breakouts, posters – all kinds of visual aids.

It was quite a conservative sector of the business (both above and below), and honestly, I wasn’t sure how it would all go.

Fast forward a few months – engagement and key message retention skyrocketed!

What did I learn?

Everyone has a different way of learning – and with big change, you need to cover all formats of communication – town halls, newsletters, videos, blogs, etc. And even when you do all of this, some people still will not get it, so you need a safety net for them.

So this was a key turning point for me. Instead of focusing on the ‘what’, I learned that the real challenge is in getting the ‘how’ right.

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Arielle: Your role as EVP/CFO of Maersk Energy would be unthinkably risky for some. How did you wind up in that particular spot?

GT: Maersk is a great company. It’s publicly listed, but the founding family still retains control.

They have a long-term perspective on the business, which is very refreshing. And they have very strong values which inform discussions and decisions daily.

We had a strong balance sheet, built a strategy around our core strengths and started working on acquisitions.

Our big-picture plan involved changes in organisational design, new markets, new technology, you name it.

This was mid-2014.

A few months later, the oil price collapsed from over $100/bbl to under $40/bbl. This made acquisitions extremely difficult.

Finding common ground was challenging.

Ultimately the Board conducted a strategic review that I participated in, deciding to divest the energy-related businesses from the listed Maersk Company and transform the company into an integrated logistics business.

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This is when I became CFO of Maersk Energy, which was responsible for restructuring the energy assets (approx. $15bn).

I joined the Boards of each of the energy businesses and set about separating them out from the Group.

This restructuring concluded in 2019 with the announced demerger of Maersk Drilling. We conducted a dual track process on Maersk Oil and Gas and ultimately sold it to the French energy giant Total for $7.45bn.

Decisive action by a team of strategic leaders turned a crisis into an excellent outcome.

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Arielle: Tell us about your toughest days in this strategic leadership role.

GT: (Laughs). There were lots of challenging days.

For example, saying goodbye to some great people who had long and distinguished careers with the company but were no longer required given the strategic plans.

This occurred in the business I was part of, and also at the group level.

Another tough situation was losing a major, very material contract – and one of the original building blocks of the oil and gas business.

This hit the organisation hard, especially those who had been part of that journey from the beginning and had built their careers upon it.

These were always bad days for me, as I always think of the opportunity cost of the written-off capital. The process definitely sharpens your focus around future capital investments!

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Arielle: As CFO at Maersk Oil & Gas, you set up a trading team. How did that happen, and was this a first for you?

GT: I had been involved in setting up various components of trading teams in other roles, but yes – this was a first for me in terms of starting it from scratch and then operating it.

Lots of learning!

Everyone has a different view of what a trading organisation entails, what the strategic vision is, as well as its associated risks. So, of course, this meant a lot of stakeholder meetings, a governance structure, a project committee and a risk committee.

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When we set up the design and its internal support structures, I luckily had access to great product marketing people with relevant experience that were under-utilised.

This helped a lot.

We managed to build the business based on relatively low barrels under control. Once we could walk, we started to trade for other companies.

From its standing start, this business unit made a healthy profit with a very aggressive growth plan.

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Arielle: As Finance Director at BG Group, your focus was on revaluing Queensland. How did being the last executive standing influence your leadership strategy?

GT: I had to learn to lead on the fly. There was a real sense of urgency in the delivery of the project. It was very material for BG.

Every day we had a new problem to deal with – and that meant accepting that a large part of the role required the ability to make quick decisions, fix things fast and keep moving.

Not long after my arrival, business leaders had to undertake a full project review and return to the Board for reapproval of a material increase.

This was a very intense period, given the pace at which this $20bn project was moving. This was coupled with the need to rework it and explain to the Board why it was now 25% more expensive.

At the same time, I was working on capital raising and further diversifying our group shareholder base in Asia.

For this, I needed a detailed knowledge of the Group strategy and metrics, together with a lot of detail on the business in Australia, so I could help investors understand what was happening on the ground.

I would ensure that I spent time in the field to understand first-hand how things were progressing, where the issues were and what was being done about them.

They are very clever people and ask great questions which are not always apparent when you’re in the engine room!

Overall, there was a pretty good alignment within the business around a clear vision. The key pain points were around roles, responsibilities and communication.

To rectify this, we had a weekly strategic management team meeting with over 23 people.

This sounds very wrong, but it worked quite well, given the pace at which we were operating and the speed at which plans could change.

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Arielle: What did you learn about strategic leadership in your role as Downstream CFO & Director at Shell Australia?

GT: This was a time when the benefit of visible leadership really hit home to me. Together with the executive team, we were mandated to optimise the business with pretty much full autonomy.

If I recall correctly, on arrival, over 200 staff reported to someone outside of Australia. We moved the reporting lines on shore, set our strategic direction, gave operational leaders much more autonomy to make decisions and ran pretty hard.

As a leadership team, we often presented together with a common cohesive story.

We all knew each other’s leadership styles and businesses pretty well, so could clearly articulate where our own plans interfaced with other functions.

We had some tough strategic decisions to make, but we took them head-on and regularly travelled around the country to each location to talk to staff.

So yes – visible, engaged and authentic leadership style. It was a privilege to work with such a great team of existing and future strategic leaders and achieve great results in such a short time frame.

Arielle: This must have been a rocky road. Talk about the ups and downs, and perhaps what you learned from more experienced strategic leaders.

One of my strengths as a leader is creating stability and calm.

Sounds odd when my overall strategic leadership involves creating change and disruption, but the trick is to think about what you, as a leader, can do to give people confidence and ease their anxieties when everything around them is changing.

This can either be generated either internally or externally.

There is a very fine line between motivating and exciting the organisation and stabilising some critical foundations which keep people sane. An effective strategic leader can do both.

Sometimes they didn’t even know they were in the wrong place. I’ve rarely been disappointed after giving people a leadership role outside of their comfort zone.

I remember recruiting for a head of strategy.

There were a number of ‘expected’ candidates, but I had spoken with a bright engineer and convinced him it would be a great role for him.

I have had senior people move from tax specialisation transfer to planning, and have had an economist move to change leadership and strategic planning.

Knowing the people well – how they work, what motivates them and then how to keep them challenged – made all the difference.

Some team members resisted the possibility that a stretch assignment might be a good thing and that doing something completely different could feel liberating.

Coaching with emotional intelligence was essential.

Letting go of the technical knowledge that got them to where they are can feel very vulnerable to potential strategic leaders.

One way I’ve dealt with this is to move them into an area where the focus is on leadership versus technical expertise.

I like to treat every event – good or bad – as a learning opportunity and demonstrate strategic leadership by example.

Effective leadership development means noticing when someone makes the wrong decision and then working with them to analyse the situation.

See what they can learn from it, then share the learning with other new leaders.

Arielle: Speaking of things not going as planned, let’s dig into your Kazakhstan role. Tell us about some of the risks you took and how you grew from them.

GT: Taking the role in Kazakhstan was a very conscious decision.

Shell was a partner in the venture that was operated by ENI.

So technically, I was employed by ENI, but I was the most senior Shell employee in the venture. I was also a member of the predominantly Italian management team.

This was a truly amazing experience.

It was tough living away from my family. The climate was extreme, the business complex and the political landscape full of challenges.

This leadership role taught me to constantly make fast, calculated decisions with incomplete information, to stay flexible and to build the capability to fix things when they go wrong.

In fact, since this role, I haven’t really come across a business issue that has unduly stressed me.

Thanks to this experience, I’m able to remain calm, explore options and then land on a solution.

As I mentioned, in a project like this, you can’t always trust the information flow.

Not to say that people lie, but they err on the positive at times. So you need to get out into the operational areas and talk to people.

You need to see the reality for yourself. As an added bonus, I made some lifelong friends along the way.

Arielle: You had a brush with the law. Tell us about that.

GT: Kazakh people are master negotiators and are very creative in finding ways to build leverage in negotiation. One ploy is to target an expatriate – often through a breach of the law.

This happened to me.

The tax authorities claimed that one of the documents I signed didn’t comply with the law. This was a known issue whereby we had special conditions under our agreement with the government which were different to common tax law.

I left the country for several months until we could resolve the issue which, of course, was linked to a range of other issues having nothing to do with me.

In short, these assignments come with tremendous and often unanticipated risks. But as I mentioned, managing them is a unique learning opportunity.

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Arielle: How do you shape a true safety culture during times of massive change? This is so tough in a 24/7 business/role, yet so critical to success and reputation.

GT: There is no shortcut to good safety performance, and everyone must be a safety leader.

It’s imperative that strategic leaders walk the talk – especially in safety. During times of significant change, it’s easy to lose focus. Leaders must take care to identify the impact of any change on safety and ensure that it’s managed.

Often an organisation can take its eye off the ball during big change programs, and safety performance falters.

It’s important to make sure that the relevant teams are ring-fenced from the change and focused on maintaining the underlying business safely.

As a finance leader, I was expected to be quite highly qualified in Health, Safety, Security and Environment (HSSE). Without it, I knew my career progression would be impacted. And I had some great role models.

I remember once my finance leader flew in for a visit during a project.

Later that night, several operational staff approached me with positive feedback on the visit from the “Shell HSSE Manager” — what a great guy, he really understands HSSE, he was really inspirational etc.

How powerful is that?

So many team members in functional roles believe they do not have a role in safety leadership.

I would argue the opposite. A functional team member demonstrating safety leadership adds a lot of value and is well worth the investment.

Arielle: Your leadership style differs from that of a typical CFO, who is seen as a bean counter, head chopper type. You influence areas such as employee engagement and retention. How did you earn a seat at the talent table?

GT: As CFO and a member of the finance function, you have great access to information that – very often – no one else can access.

If you’re curious about the business as a whole, you can use this information to communicate insights to the business to improve company culture and improve performance.

This is where the connection to engagement and retention comes in.

This often involves discussions around gender diversity and its impact on career management. This subject requires open discussion to ensure it delivers positive outcomes, as there are often misconceptions that do not work well for the company or its employees.

I see my role on the executive team as a member of the team, versus solely as the CFO.

To me, this means I have both the right and the obligation to create a positive impact where ever I can, not just in my functional area.

Arielle: One of your passions is green/clean energy. What opportunities do you see on the horizon from a strategic leadership perspective?

GT: You really should not get me started on this. (Both laugh).

But the world is changing, and climate change is real. This is a huge challenge – and I am personally fascinated by how the transition will occur and who will be driving it.

Even though this change won’t happen overnight, the strategic leader in me believes that we need to not take our eyes off this ball.

Traditional oil and gas companies need to rethink long-term strategic goals. Power generators and retailers need to rethink their future. There will be more consolidation and integration across the energy sector.

By that, I mean resources through to power generation and distribution.

It is an absolutely fascinating time to be in the energy industry. Even in 2050, fossil fuels will be essential to meet the world’s energy demands, but it will look a lot different than it does today.

Today people think that renewable energy is expensive compared to fossil fuels, but if you include externalities such as population health and the environment, it’s actually cheaper.

So much education is required.

In many respects, this is just another change project requiring strategic leadership. For many, the case for change isn’t clear, the roadmap isn’t clear, and it will take a long time, which is code for ‘not my problem’.

There is too much social pressure and clever people in the world for this approach to prevail.

The key question is – what will transition look like? Personally, I’m getting involved in solar projects, the commercialisation of inverter technology, using recycled plastic and timber for construction materials and biofuels projects.

All of these are great learning experiences and will hopefully do their bit to move the needle in the right direction.

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Arielle: What should CFOs be on the lookout for?

The role of the CFO is evolving quite rapidly.

I still meet some executive teams where the CFO role is very tightly defined and basically looks after numbers and compliance.

But more and more, we are seeing the reverse – where the CFO is the right-hand person to the CEO and is a key strategic leader in the organisation.

With all of this role expansion, CFOs must not lose track of the basics such as cash flow management, financing and capital investment, which, of course, are linked to strategy.

If you don’t have the basics under control then don’t look for any more to do!

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Arielle: Thanks so much for talking with us about strategic leadership today.

GT: It’s been great, thanks for inviting me to share my thoughts on the topic.