Chevron: Using the Beer Game to Address Complexity

Shira Hetz By Shira Hetz, Analytics Business Analyst, Chevron

The challenge: Like many global corporations, Chevron is challenged with improving organizational thinking, fostering collaboration, and sharing best practices in the face of relentlessly increasing complexity in many areas of the enterprise. Specific factors include:

  • A large and geographically dispersed workforce;
  • A wide variety of services offered; and
  • A range of analytical methodologies in use throughout the company.

These factors present significant barriers to using a common analytical methodology across the value chain.

The approach: Chevron developed a comprehensive strategy focused on growing the organization’s capability in analytics. A key component was the Modeling and Analytics Community of Practice (M&A CoP), which was formed in 2011 to:

  • target individuals with varying levels of analytical experience across various Chevron business functions, such as drilling, supply and trading, information technology, etc.;
  • provide opportunities for these individuals to enhance their understanding of analytics; and
  • hold events focused on internal knowledge sharing.

In addition, Chevron identified universities specifically aligned with Chevron’s strategic recruiting needs and leveraged their learning exercises.

For example, Chevron has recruited from and collaborated with the University of Texas at Austin (UT Austin), for more than 10 years. The ongoing relationship with the Supply Chain Management Center of Excellence (SCM COE) within the McCombs School of Business has consistently encouraged Chevron’s participation in curriculum development and classroom engagement. This strategic alignment was the perfect context for implementing classroom education methodologies within a Fortune 5 corporation.

The tools: “The Beer Game” is a business simulation game centered on beverage distribution that was created by Dr. Peter Senge at the MIT Sloan School of Management in the early 1960s to demonstrate the dynamics of a supply chain. This game is played every year by students at Sloan, McCombs, and other universities as well as at corporations around the world..

Through multiple initiatives during the fall 2014 semester, it became apparent that several members of the UT Austin faculty were familiar with this experiential learning game, creating a perfect context for applying MIT’s systems thinking approach to the supply chain, which is a critical and dynamic component of the energy industry and virtually every other industry, large or small.

The game was hosted at Chevron’s downtown Houston office and open only to Chevron employees and contractors. The thirty participants, representing diverse levels of experience and business function, included, for example:

  • a newly hired data scientist;
  • an early career business analyst; and
  • a veteran global advisor in supply and trading.

The latter, Diego Jaramillo, business analyst for supply and trading, commented, “This game opened my eyes and assisted me to understand the effects of our actions and the complexity of a system like a supply chain.”

Wade Wallinger, general manager of Chevron’s Value Chain Optimization Center of Excellence, said, “As one who represents our executive sponsorship of the Supply Chain Management COE at McCombs, it is impressive to see the impact of this collaboration in action and how it is expanding the internal competencies regarding analytics and system thinking.”

The results: “The Beer Game” showed that each member of the value chain has a very direct, although not always instant, effect on the organization. This important lesson is invaluable for Chevron’s workforce.

Attendees from the M&A CoP gained insight into the dynamic aspects of the supply chain in a non-subject-specific way, and their view of their own impact on the system clearly changed. Several later shared what they learned within their respective teams.

Moving forward, Chevron will continue to look to its many university partners for learning opportunities as it builds its workforce through recruiting, classroom lectures, and workshops . MIT has created a brand of innovation that reaches beyond academics to impact industry, not only by educating highly talented individuals, but by creating academic methodologies such as “The Beer Game” that develop the growing analytics workforce.

The author wishes to thank fellow Chevron colleagues and University of Texas faculty and staff who helped make this opportunity a success.

Shira Hetz