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Binus Business School,

MM Executive Batch 20

Presented by Group I

Alexander Christian

Dina Sandri Fani

Ridwan Martawidjaja

Jenna Widyawati

Case Study AnalysisFranco Bernabe - ENI

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

ENI at a Glance

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NI

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

ENI at a Glance

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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

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2Heavily subsidized by the State

ENI at a Glance

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After BernabeBefore Bernabe

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State-owned company

Politically controlled entity, incapable management resulted to high debt

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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

About Franco BernabeChildhood and Career Path

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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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About Franco BernabePersonal Traits

Visionary leader

Analytical + logical thinker

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About Franco BernabeLeadership Traits: What made him an exemplary leader

• Never ran the nitty-gritty of an operating business

• Fire and replace incompetent, corrupt executives & managersIntegrity

• Able to envision ENI as a focused global network of professional business

• Encyclopedic knowledge of ENI’s operationIntelligence +

Knowledge

• Lead from within; an inner compass pointed toward humanity and justice

• Build rapport from others; however free from agendas of others when make decisionCredibility

• 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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Franco Bernabe’sMain ChallengesTo get out of the swamp of politics and corruption and to turn ENI’s into a healthy and profitable company

1 Intense resistanceWas regularly excoriated in the media as a traitor who was destined to bring down ENI due to his idea toward privatization

2 Clean Hands caseBeing trapped by a culture of embezzlement, bribery, and kickbacks within ENI involving 20 top ENI’s executives

3 Incompetent executives and managersLose professionalism: political consensus to fill board and top management position

4 Huge loss and unfocussed businessPosted 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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Franco Bernabe’s Legacies

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 excellenceLabor 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

Lesson learned for Indonesia

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1 The existence of inner compassLead from within; an inner compass pointed toward humanity and justice. Have the code of practice implemented consistently across organization

2 Personal survival traitsIndonesia 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 successDriven not by personal ambition but by a sincere commitment to the company’s and the nation’s fate

4 Free from political interferenceState-owned enterprises need to be treated like common private sector organization in the way they operate

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