Leadership in Crisis

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CaseAnalysis-FrancoBernabe&ENI
Binus Business School,
MM Executive Batch 20
Presented by Group I
Alexander Christian
Dina Sandri Fani
Ridwan Martawidjaja
Jenna Widyawati
Case Study Analysis
Franco Bernabe - ENI

2.  Activities began by Agip in
1926
 Eni was founded with law
136 dated 10 Feb 1953;
came into force on 11 Apr
1953
 Enrico Mattei was the 1st
Chairman of Eni
 Public statutory body at
the beginning to foster and
implement activities of
national interest in
hydrocarbons
ENIataGlance
2
2/12/2015CaseAnalysis-FrancoBernabe&ENI
 Engaged in all aspects of
the petroleum industry
 Core business was in
energy, hydrocarbon in
particular
 Upstream and downstream
activities
 Natural gas transmission
and distribution
 Petrochemicals
 Oil field services and
petroleum engineering/
construction
 2 core units, i.e. AGIP
(upstream) and SNAM
(downstream)
 Meeting shareholders’
expectation through value
creation
 How to get there:
 Cost efficiency
 Continuous improvement of
its products & services
 Attention to the needs of its
employees
 Commitment to a
sustainable growth pattern
 Encompassing the careful
assessment of the
environmental impact
 Innovative & efficient
technologies
The MissionThe Business ModelThe History

3. ENIataGlance
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 Experienced declined on political
independence
 Staked out by the political parties as
their area of patronage
 Lose professionalism: political
consensus to fill board and top
management position
 Policy highly dictated by political
party
 2 main responsibilities include
maintaining technological
capabilities and large international
operations as well as fulfilling “social
purposes”
The ImpactAftermath – Post Mattei
Significant loses
for many years
1
2
Heavily
subsidized by the
State

4. ENIataGlance
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After BernabeBefore Bernabe
1
State-owned company
Politically controlled entity, incapable
management resulted to high debt
1
2
3
Ineffective internal controls allowing
culture of corruption
Turned to be private
yet professional
company
2  Independent
 Free from political
parties’ influence
3  Introduced scorecard
measures in operations
 Sell irrelevant subsidiaries
 Fire & reshuffle some of
the executives
 The right man on the right
place
4  Start to make profit
 No need for the State
subsidy

5. AboutFrancoBernabe
ChildhoodandCareerPath
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Childhood
 Born in 1948 in Vipiteno, Italy
 Live in US since his teenage years
 Graduated from University of Turin majoring political
science and economic policy
Career path
 1972 : work with professor Franco Reviglio
 1973 : Fellow of Einaudi Foundation
 1975 : Professor of Economic Policy at Turin School of
Industrial Administration
 1976 : Senior Economist for OECD
 1978-1983 : Chief Economist at Fiat
 1983 : Assistant to the Chairman at ENI
 1984 : Vice Director of Corporate Development,
Planning, & Control at ENI
 1986 : Director of Planning Department at ENI
 1990 : Managing Director & CEO of ENI

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AboutFrancoBernabe
PersonalTraits
Visionary leader
Analytical + logical thinker

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AboutFrancoBernabe
LeadershipTraits:Whatmadehimanexemplaryleader
•Never ran the nitty-gritty of an operating business
•Fire and replace incompetent, corrupt executives & managers
Integrity
•Able to envision ENI as a focused global network of professional business
•Encyclopedic knowledge of ENI’s operation
Intelligence +
Knowledge
•Lead from within; an inner compass pointed toward humanity and justice
•Build rapport from others; however free from agendas of others when make decision
Credibility
•Desert Storm operation: taking the company by surprise
•Quickly assess the situation accurately
•Immediately developed a compelling plan for the future of ENI
Sense of Urgency
•Tireless advocacy for change
•Strong commitment to create more transparent, productive, & competitive company
•Willingness to take a risk consistently
Consistency
•Bottom up and top down approach
•Concise, clear message on ENI’s future mission: to build a great and global company
that is able to behave with the agility, creativity, and entrepreneurship
Communication
Skills

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FrancoBernabe’sMainChallenges
TogetoutoftheswampofpoliticsandcorruptionandtoturnENI’sintoahealthyandprofitable
company
1 Intense resistance
Was regularly excoriated in the media as a traitor who
was destined to bring down ENI due to his idea toward
privatization
2 Clean Hands case
Being trapped by a culture of embezzlement, bribery,
and kickbacks within ENI involving 20 top ENI’s
executives
3 Incompetent executives and managers
Lose professionalism: political consensus to fill board
and top management position
4 Huge loss and unfocussed business
Posted a loss of $554 million; heavily subsidized by the
state: creating the needs to rid ENI’s of its noncore,
unprofitable business

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FrancoBernabe’sLegacies
1 A healthy, profitable company
 Free from political interference
 Capital spending decreased by $1.3 billion
 Debt decreased by 9.1 billion
 Profits of $3 billion in 1997
 Successful IPO: sold 1.2 million shares and netted
$5.2 billion
2 Culture of innovation and operational excellence
Labor productivity has risen 112% during his leadership
period
3 The ENI Code: an inner compass
 Stewardship of the company’s first-ever code of
practice
 Laying out company values and standards of
behavior
 Adherence to the values of professionalism,
transparency, and honesty

10. LessonlearnedforIndonesia
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1 The existence of inner compass
Lead from within; an inner compass pointed toward
humanity and justice. Have the code of practice
implemented consistently across organization
2 Personal survival traits
Indonesia needs someone who is brave enough to
embrace the risk, accepting solitude, and providing
strategic and moral direction where little existed
3 No need to form political allies to reach the success
Driven not by personal ambition but by a sincere
commitment to the company’s and the nation’s fate
4 Free from political interference
State-owned enterprises need to be treated like
common private sector organization in the way they
operate

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