Marathon Presentation: Krista Peters & Jackie Murrenus

Marathon does not exhibit many green (create) quadrant characteristics. They do not value doing things first as highly as they value doing things right and fast. Value drivers for this quadrant include innovative outputs, transformation, diversity, creativity, and agility; majority of which are not demonstrated within Marathon. Due to the nature of the petroleum industry, there is not much focus on innovation in terms of new product development. However, the few green quadrant qualities that are exhibited at Marathon lie within R&D, process improvement and their diversity initiative.

• The Green (Create) Quadrant is demonstrated at Marathon in terms of its leaders…

◦ Speculate emerging opportunities

■ Marathon has invested heavily into the research and development of alternative and renewable fuels and energy efficiency as well as a number of other emerging technologies.

■ By exploring new technologies, both in house and out, Marathon will be able to better adapt their business model to address challenges facing the energy industry and to identify potential investment opportunities.

◦ Forecast the future

■ Once a year, Marathon conducts a thorough industry analysis and examines current and projected governmental regulations to realistically forecast where Marathon will be in the next 10 years and where they want to be.

• Organizational culture in terms of norms, values, practices and processes

◦ Marathon is in business to provide a commodity, not to create new products, therefore innovation must come in the form of manufacturing and processing improvements.

◦ Marathon is always striving to increase efficiency, reduce energy usage, and increase the overall value of the product that comes out of the refineries.

• Outcomes, or the bottom-line value the organization intends to achieve

◦ Marathon strives to have an diverse and inclusive culture where every one's ideas and thoughts are understood and valued. Marathon believes a diverse employee and customer base will ultimately benefit the bottom line by fostering a collaborative work environment and encouraging creative problem solving and idea creation.

◦ Marathon does not necessarily strive to be a leader in R&D but rather a “fast follower”.

Marathon is relatively strong in the yellow (collaborate) quadrant. Each of the value drivers (commitment, communication, and development) is demonstrated on a daily basis within the organization.

• The Yellow (Collaborate) Quadrant is demonstrated at Marathon in terms of its leaders…

◦ Build cross functional teams

■ The CEO, Clarence P. Cazalot, Jr., demands that all projects and assumptions are vetted with all other vice presidents and everyone must agree that it is a viable project and that each VP supports it.

■ Employees aren’t only encouraged by leaders to collaborate during the day-to-day work but also when it comes to setting goals and action plans for the organization.

■ CEO, Clarence P. Cazalot, Jr., stated that in 2009, “A wide spectrum of employees collaborated to set goals for environmental, socio-economic, governance and workforce performance. We have action plans to achieve our goals and measure performance.”

◦ Establish shared values between people

■ “Marathon’s core values are the backdrop of everything we do and the basis for how we think and act -- not because it gets publicity or it’s convenient, but because it’s the right thing to do. Living Our Values defines us as a company.” Dale Malody, Operations Manager.

• Organizational culture in terms of norms, values, practices and processes

◦ One of Marathon’s core values is ‘high performance’

■ Marathon believes that their sustainable value is created through their high performing team culture and by providing a collaborative and supportive work environment.

◦ “Marathon is committed to fostering an environment of inclusion and mutual respect that promotes individual development and high performance teams while translating our key drivers into business initiatives” CEO, Clarence P. Cazalot, Jr.

■ There are several corporate-wide programs help foster such an environment.

■ Mentoring programs, diversity & inclusion education programs, cultural awareness programs.

◦ Marathon strongly encourages communication

■ While there is a hierarchy and a chain of command, in most instances communication is open and isn’t limited to this chain. Employees are encouraged to communicate and collaborate with individuals at all levels.

■ Management by walking around is prevalent.

• Outcomes, or the bottom-line value the organization intends to achieve

◦ Marathon CEO, Clarence P. Cazalot, Jr., has stated that, “The need for collaborative approaches will grow as societal challenges become more global, complex and interconnected.” Even though Marathon is already a highly collaborative organization, this just stresses how important collaboration will be as Marathon continues into the future.

◦ Marathon is trying to attract and retain top talent through leveraging their collaborative work environment and culture. The strategy has worked for them in the past enabling them to bring in talent that is very committed and dedicated to Marathon. This results in the turnover rate to be relatively low with a rate of 3-4%. This low turnover rate helps to reduce costs and improve the bottom-line.

◦ Marathon strives to establish a highly engaged workforce. Results from their employee satisfaction and engagement surveys are exceptional year to year.

The red (control) quadrant is strong within Marathon. The value drivers for the red quadrant include efficiency, timeliness, consistency, and uniformity. Consistency and efficiency is greatly stressed through the use of management systems.

• The Red (Control) Quadrant is demonstrated at Marathon in terms of its leaders…

◦ Conserving fiscal resources

■ Marathon’s 2011 budget shows their emphasis on being risk adverse in how the organization operates. CEO, Clarence P. Cazalot, Jr., has stated, “Marathon's 2011 budget has shifted toward an emphasis on more scalable and lower-risk activities.”

◦ Complying with regulations and applying quality control system to prevent costly mistakes

■ In a recent ‘Living Our Values Report’ CEO, Clarence P. Cazalot, Jr., said “Marathon takes seriously our responsibility to provide a safe workplace and we remain focused on preventing all incidents.”

• Organizational culture in terms of norms, values, practices and processes

◦ Implementing systems to control complex tasks

■ There are control systems in place to conserve fiscal resources, comply with government regulations, prevent costly mistakes, ensure adherence to professional standards.

◦ Using continual improvement processes

■ Marathon focuses on continual improvement in all areas that pertain to safety (i.e. on-the-job, process, health programs). This is done through a Management System, which allows them to put into practice policies, standards, communication, education, and risk identification and reduction.

• Outcomes, or the bottom-line value the organization intends to achieve

◦ The practices and policies in place should theoretically help to protect Marathon from incidents, ranging from small injuries to catastrophic events. Even though a disaster, such as what happened at BP, could still happen to Marathon, their rigorous controls and safety measures are intended to decrease the risk of it occurring.

◦ Marathon has a very strong safety and environmental conscious culture and a desire to do no harm to its employees and the environment in which they operate in.

■ They strive to provide a quality product to their customers while maintaining compliance to all government laws and regulations.

■ Marathon’s goal is “zero accidents, zero environmental instances, zero quality instances, and no infractions of laws and regulations.” This goal is hoped to be accomplished through their control systems and processes.

Marathon is an extremely blue organization, this is arguably their strongest quadrant in the competing values framework. The value drivers for the blue quadrant include market share, goal achievement, and profitability. Marathon exhibits each value driver through emphasizing performance at all levels.

• The Blue (Compete) Quadrant is demonstrated at Marathon in terms of its leaders…

◦ Making real time decisions in a fast moving workplace

■ Marathon has a highly collaborative cross functional group of vice presidents and senior vice presidents in refining, marketing, and transportation and logistics that will change their operating plans (what products to run or produce) on a daily basis in order to capture the most profitability out of the market every day.

■ The short term in nature and allows them to optimize profitability by capturing opportunity with quick reaction in the market place.

◦ Marathon drives for superior returns on investments

■ “We will support programs that enhance our ability to operate profitably and add value for Marathon and our stakeholders. We will set goals, evaluate performance and build on lessons learned to improve.” CEO, Clarence P. Cazalot, Jr.

■ In conjunction with this, leaders discussing projects together as mentioned in the yellow quadrant, is a way for Marathon to drive returns on investments.

• Organizational culture in terms of norms, values, practices and processes

◦ Marathon focuses on a few quantifiable performance objectives

■ Marathon has a unique culture that is partially driven by the compensation system which is based on the overall success of the organization. Performance metrics for bonus consideration are broken into three categories:

■ Financial performance, environmental performance, and safety performance.

◦ Marathon drives through barriers

■ There is a culture of a can-do attitude. Employees are very hard working and willing to do what ever it takes. They go above and beyond. They use technical and commercial solutions to turn barriers into opportunities.

• Outcomes, or the bottom-line value the organization intends to achieve

◦ As an example of how marathon competes and gets superior return on investments, in the last 10 years Marathon downstream has been in the top three of its peers in income per barrel of crude refined. Marathon’s ability to compete has had a positive effect on the bottom-line and has helped Marathon be profitable.

◦ Like all corporations, one of Marathon’s primary objectives is to create value for shareholders and provide quality products and services for their customers. Their net income of $2.6 billion in 2010 was 76 percent higher than in 2009.