For two days last month, 60 Jones School MBA students found themselves in the fictitious South American country of Latinia. The year was 2006, and Latinia was in turmoil; the government’s plan to nationalize the energy industry was unpopular.
Sixteen teams playing the roles of political parties, disgruntled villagers, the oil workers’ union, nongovernmental organizations and national and private oil and gas companies had to develop objectives and the strategies and alliances to achieve them.
This scenario was part of the fifth annual Jones School International Energy Simulation at McNair Hall, sponsored by Chevron. The simulation concept was developed by former Royal Dutch Shell executive Donal O’Neill, who served in more than a dozen countries for Shell and was concerned that not enough attention was given to risks that could derail a project. For last year’s exercise, Rice President David Leebron dropped in for almost an hour to take on the role of the United Nations secretary general dealing with a crisis in a fictitious country that resembled Myanmar.
Bill Arnold, professor in the practice of energy management and a former Shell executive, oversaw the exercise together with O’Neill, his former colleague. Arnold said the ability to see issues from the perspective of various stakeholders is key, especially in industries where time and financial concerns are important.
“The ability to find ways early on to work with people who have some stake is critical,” he said. “Sometimes you find that some people are going to be hostile to you under any circumstance — there’s no way that there’s going to be some kind of accommodation. But trying to meet people somewhere along the spectrum is a worthy objective.”
All participants in this year’s exercise got a general briefing, and each team received its own specific briefing containing “proprietary” information. As part of the real-world simulation, the students encountered leaks of supposedly proprietary data, lies and shifts in facts on the ground. The exercise reached its peak when a coup was staged shortly before lunchtime on the second day. “Teams needed to recover, adjust and move on,” Arnold said.
MBA student Elaine Phillips played the role of Latinia’s former president, recently ousted from the government. She said the exercise stressed the importance of strategy. “The biggest challenge was initially forming strategy,” Phillips said. “We started off a little slow to action the first day because we wanted to have a clear picture of the different priorities of other groups and the current political situation. The most helpful thing we did was to physically map out the main stakeholders and relationships to determine where to focus our efforts. The groundwork we laid paid off because during the second day, things went into motion very quickly. We came out publicly denouncing the government for all the scandals. When our call for new elections was refused, within an hour we had a coup and an executive team already lined up that was made up of three political groups.”
Nathan Pope, an MBA student, said the exercise brought into focus the importance of compromise. He was part of the Tupiza Villagers, tribes of local villagers living in remote, backwoods areas of Latinia. “We wanted to continue coca production, but we needed money more than anything, which resulted from ongoing gas production,” Pope said. “Once we compromised and worked with all parties involved, agreements and deals were reached.” Pope felt the villagers were not as powerless as one might perceive. “Don’t underestimate the influence local villagers may have, especially when we leveraged the media and nongovernmental organizations to advocate on our behalf.”
MBA student Ailin Yin said the biggest challenge for her was to work as a cohesive team facing all the other teams. “Each of us had different thoughts and ideas about how to proceed and how to deal with every other team,” she said. “It’s very difficult to bring everyone on the same page at all times. For the simulation, I let the team strategy flow with the energy level of individual team members because of time contraints. In reality, I would probably have spent more time consulting internally to reach more consensus so that the team could be more powerful. A team would be easier to be attacked by the enemy if it has fractures inside.”
For Chris Mackey, a member of the Los Colorados opposition group that eventually gained power in the coup, the key lesson learned was that power can be fleeting and nuanced. “I learned that having absolute power to change a government didn’t necessarily mean that we would have a voice in how that change continued afterwards,” the MBA student said. “We had to use our option one time and make it as effective as possible.”
At the end of the exercise, the students heard from Chevron international government affairs executive Jeremy Haken, who spoke about links between the simulation and the major “above-ground risks” international energy companies face every day, which were very similar to the one the students experienced during the simulation.
Participating students came from all of the Jones School’s MBA programs and received 0.5 credit hours for the simulation.