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Lex: Royal Dutch Shell

Financial Times: Lex: Royal Dutch Shell

“Mr Ollila’s high international standing and proven track record of running a global business make him a credible addition to Shell’s new single board. But, importantly, he is also a Finn.”

Friday 5 August 2005

Published: August 5 2005

The fact that “all major oil” is an anagram of Jorma Ollila is probably not among the reasons why Nokia’s departing chief executive has been appointed as Royal Dutch Shell’s non-executive chairman.

Mr Ollila’s high international standing and proven track record of running a global business make him a credible addition to Shell’s new single board. But, importantly, he is also a Finn. It makes sense for Shell, keen for its streamlined structure to be seen as neither too British nor too Dutch, to appoint someone from outside both cultures.

For Mr Ollila the timing seems right. He is leaving a dominant company as it faces increasing competitive pressures. He will join one, which, while not out of the woods operationally, has reorganised its structure after a damaging governance scandal. For Shell, committed to an organic growth strategy, Mr Ollila is the architect of one of the world’s most successful home grown transformations.

Despite Nokia’s more recent woes, Mr Ollila’s strategic abilities are not in question. It is too early to know what his agenda will be and how aggressively he will pursue it. But it is fair to ask whether something more than an organic strategy is required. Thus far Shell’s approach has yielded an unattractive growth profile and poor project delivery. Even Mr Ollila, however, may find it difficult to guide Shell on the hard choices between high-priced acquisitions and a more aggressive return of cash to investors.

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