Redundancies in the oil and gas sector could end up driving future competitive advantage

By Katie Lewis

July 24, 2020

A resulting wave of new startups could change the industry

Katie Lewis

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Photo by Markus Spiske on Unsplash

A tsunami-sized wave of redundancies is heading for the energy sector, in the face of low oil prices and impact from COVID-19, BP is cutting 10,000 jobs or around 15% of its global workforce. Centrica is cutting 5,000 jobs, while OVO Energy announced 2,600 job cuts. Chilling numbers.

But there is a silver lining if we look to challenge how we approach the whole redundancy system. Did you know that on average one-third of those people who have been made redundant will go on to start their own businesses? Amazing when you think about it. Adding up the numbers above, that means that 5,808 people will be looking to start their own business. That can’t be anything but good news for local economies, and for the individuals they will most likely hire.

But for this to indeed be the success story we need, collectively we must look to see what we can do to support all these new initiatives, whether they are new freelancers learning how to take the steps through to the next global CEO. Startup rates of success are 10% without assistance but rise to an astonishing 74% when given the support that they need.

Getting big companies to back employee spinouts rather than merely making job cuts, we believe at Rainmaking is a moral responsibility as well as an opportunity for organisations that are shaping the industry with the significant cuts that they are making to workforces. We’ve seen success and know that this is a win/win when done right.

One of the Rainmaking partners was heavily involved in the Nokia took the bold step to run a successful programme when it shed 40,000 jobs. Employees who had been made redundant were able to get €10,000 in backing for a new business idea, a scheme that created some 300 new startups and transformed the Finnish startup ecosystem.

Just like Nokia made a difference in their industry and local economy, we believe that the energy sector can and must do the same. And if done correctly, these programmes can be incredibly powerful for both sides of the equation. Often those leaving with the founder’s bug is because they see a problem within their industry that they believe they can sort.

Innovation within the industry from startups can only be a great thing.

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Photo by Morning Brew on Unsplash

As Rosa Stewart, a UK-based energy project finance lawyer believes the same thing. She highlights “All the energy companies are decarbonising and have net-zero targets but no idea how to reach them. Now we have all these energy experts becoming available who could work on the problem.” Stewart through her programme Spinning Reserve is actively working to create a wave of new clean energy startups through a not-for-profit initiative that matches energy sector experts either with existing clean energy startups or with potential co-founders interested in forming a new company together.

Often startups have much better success at solving these difficult challenges because they aren’t tied to legacy systems or internal structures that place unintended roadblocks. By corporates taking this chance and making the bold move to support their departing talent beyond just providing traditional approaches, they might just be creating an opportunity for building competitive advantage in the long run. Not to mention the brand-building opportunity to showcase their long term commitment to not only the immediate bottom line but their industry and future.

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