How Shell’s Domains Link Innovation and Strategy

Long Range Planning 44 (2011) 250e270 http://www.elsevier.com/locate/lrp

How Shell’s Domains LinkInnovation and Strategy

Rafael Ram�ırez, Leo Roodhart and Willem Manders

This article describes the steps Shell managers took to keep their innovation innovativeafter the original establishment of the GameChanger system, by setting up its ‘innovationcoalition’ as a network in its own right, and by reorganising its portfolio of 85 projects intoa half-dozen ‘domains’. We offer evidence that designing and implementing its domainapproach enhanced the productivity and symbiosis of Shell’s innovation efforts, and use‘Actor Network Theory’ e a conceptual framework extensively used in science and tech-nology studies e to explain how this success was achieved. Domains not only link strategyand technology; but also marry up ‘bottom-up’ and ‘top-down’ innovations and connectthe shorter with the longer term. The article’s consideration of domains renders the notionof ANT analyses more accessible and relevant for long term strategy professionals, as wellas making some of the specific lessons Shell derived from its experience more widelyavailable for application elsewhere.� 2011 Elsevier Ltd. All rights reserved.

Introduction, objectives & organisationWe have been working on different versions of this article for several years. Our difficult work ofreflecting on evolving practices is now sufficiently stabilised to be shared with a wider group ofpeers - scholars and practitioners involved in keeping innovation innovative e and to be relevantto strategies for generating new business growth in large incumbent firms. The article offers twocore propositions: that Shell’s investment in designing and sustaining domains has paid off in termsof enhancing the effectiveness of strategic innovation in the company, and that Actor-Network The-ory is a conceptual framework that can help practitioners sustain strategic innovativeness in suchlarge incumbent firms. While we make no claims as to the wider applicability of these propositions,we expect our company-specific findings to spark further comparative research in large incumbentsseeking to use innovation to renew their strategies.

The use of domains is at the heart of the initiatives Shell has designed to relate innovation to strat-egy. These initiatives developed from the deliberate linking of two important strategic activities withinthe company: scenario planning (Schoemaker and van der Heijden, 1992; Schwartz, 1997; van der

0024-6301/$ - see front matter � 2011 Elsevier Ltd. All rights reserved.

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Domains are at the heart of Shell’s initiatives to relate innovation to

strategy, linking two important strategic activities - scenario planning

and GameChanger

Heijden, 2005; Ramirez et al., 2008; Ramirez et al., 2010), (which had been pioneered by Shell) andGameChanger, a process for developing innovation projects originally based on new and emergingtechnology. The GameChanger process represented a significant activity within Shell for the periodwe studied: in the 9 years to end 2007, 2,150 innovation project ideas had been submitted to theGameChanger process: of these, 1,950 had been stopped somewhere in the gated funnel, and 200had graduated as successes. In their broadest definition, domains can be seen as ‘stepping stones’that link different potential desired company futures (as developed by the scenario planning and cor-porate strategy teams) to Shell as it exists today: they reveal the areas Shell needs to explore and de-velop if it wants to move toward the strategic possibilities identified in a given scenario. Specifically,each domain consists of a small set of flexible strategic propositions and houses a group of innovationprojects that have been chosen to test and develop those propositions. Proposed projects must gothrough a rigorous screening process before they are accepted as live projects for a domain, andthe outcomes of these projects will vary. Some will be incorporated into an existing operation or func-tion while, at other times, the entire domain with its stable of projects may become a new operation.Thus, for example the ‘bio-fuel’ domain could include an ethanol project (producing fuel for the fu-ture from non-edible plants and plant residues) and an algae agriculture project (where fuel would bederived from the algae grown and harvested specifically for the purpose), and these projects e to-gether with perhaps half a dozen similar initiatives from the domain e would give Shell the optionto move to a future where fuels were ‘grown’ rather than ‘mined’.

As the engines of Shell’s strategy-innovation links, domains incorporate the diverse concerns andpriorities of three arenas that are fundamental to the company’s future: the strategic options and de-cisions of corporate and business unit executives; the opportunities offered by new technology andR&D; and the evolving external environment in which Shell operates, as articulated by the company’sscenarios. To ensure all these diverse concerns are addressed, domains are developed in special meet-ings by an innovation coalition of Shell technologists, scenarists, and strategists (as well as other cor-porate stakeholders), to ensure their core propositions focus on areas that scientists and technologistsbelieve will become commercially viable, that they fall within contextual conditions that scenaristshave foreseen, and where strategists believe Shell could ultimately secure a strong position.

The actor-network theory (ANT), which views all activity as interactions between actors and amongnetworks of actors, is a powerful analytical tool that has helped Shell’s innovators to exploit domains totheir fullest potential. (It’s important to note that, from the ANT perspective, ‘actors’ are not limited tohumans involved in an activity, but can include, for example, regulations, natural disasters - any other‘thing’ that might impact the activity is given the same label.) Innovation, scenarios, domains and ANThave been widely researched and reported on; but while ANT has considered innovation (Callon, 1986)and been applied to strategy (Gao, 2005), it has not previously been deployed to explain strategy-innovation relations, nor to explain domains and how they contribute to those relations. This articlereports in detail a real-time, real-world application of ANT at Shell to explain how domains providethe structural foundation for linking its innovation practice to strategy, and how the explicit analysisof this link has developed Shell’s managers’ understanding of the reach and potential of domains.

The article is organised as follows: first we describe how domains became part of Shell’s innova-tion activities, and then review what social science knows about domains, describing our researchboth within and beyond the company. We introduce actor-network theory (ANT) and use it to ex-plain how domains work to link innovation and strategy in Shell. We conclude by reviewing theadvantages and challenges of domains.

Long Range Planning, vol 44 2011 251

How domains became part of Shell’s innovation activitiesShell’s decades-old scenario activity is now well known. Scenarios can be seen as a small set of detailedand plausible ‘stories’ about future contexts, each of which describes a different future business andglobal environment inwhich the companymight operate. Scenarios explore ‘whatmight be’, indepen-dent of the will of the company and its executives and professionals, and their development helps tosurface and challenge the assumptions of strategies and businesses so as to enhance strategic decisions.

Another well-known Shell practice is the deployment of its ten year old ‘GameChanger’ innovationprocess (Hammonds, 2002; V€alikangas andMerlyn, 2002), which emerged after a corporation-wide re-organisation in the mid-1990s that abandoned a thirty-year-old three-dimensional matrix organisationinvolving some 200 decision-makers, and replaced it with a multi-divisional structure reporting to justfive executives (Mathieur, 2001). This was a far-reaching change, and one of themany aspects it affectedwas Shell’s R&D activities. The biggest andmost profitable of the five new divisions, which included thecompany’s exploration and production businesses, decided to develop a new approache called ‘Game-Changer’ - to focus on radical innovations, which was then adopted by other divisions and subsequentlyacross the whole company. GameChanger was set up as a peer-managed, stage-gated, funnel process toconvert ideas into projects and eventually (for successful projects) into ventures (Verloop, 2006;V€alikangas andMerlyn, 2003; vanDijk and van den Ende, 2002). Potential innovation ideas are receivedfrom anyone, or sought out via workshops, and initially assessed by peers to see if they are worth furtherinvestigation. Where an idea is deemed worth exploring, it is converted into an innovation project thatmay include its technical and business aspects for further elaboration. This project is then reassessed interms of how well it would fit Shell activities, and those that are positively vetted are eventually eithertransferred into an existing part of Shell or spun out as external businesses.

GameChanger complemented Shell’s scenario activities - considering

the ‘might-be’ aspects within and beyond the company’s control.

But GameChanger 2 made strategy and innovation interact

GameChanger’s innovation and strategy activities can be seen as complementing Shell’s scenarioactivities. Innovation and strategy consider both those ‘might-be’ aspects that are within the controlof the company’s executives and professionals, and those located within the possible spaces ex-plored by scenarios that are (by definition) beyond such control (Ramirez et al., 2010). But the sec-ond stage of GameChanger e where strategy and innovation are made to interact e is less wellknown than either Shell’s scenario or its original GameChanger practices. This strategy/innovationinteraction, which the current authors initiated with the help of scenario practices, reflected andarticulated a significant evolution in the innovation mindset at Shell.

GameChanger’s original role was to streamline the often ‘fuzzy’ front end of R&D (Koen et al., 2001),first in Shell’s exploration and production business and then across its other businesses. Fuzzyness refersto the presence of unknown, undefined, ambiguous or uncertain factors e in short, of some degree ofignorance. In the first GameChanger stage, such fuzziness was seen as being present only at the begin-ning of an innovation voyage. For example, ‘opportunities in urban mobility’ could refer both to newservices offered in service stations as well as new fuels for city buses. But in the second GameChangerstage (GameChanger 2), fuzzyness was repositioned to what Hatchuel and Weil (2003) call the ‘fuzzyalong-side’ position (Hatchuel et al., 2002) e instead of being eliminated as quickly as possible earlyin the process, fuzzyness (elements of ambiguity or ignorance)was allowed and even encouraged to existthroughout (‘alongside’) the progress of innovation. This was a significant change: innovators and theirprocesses now openly acknowledged that ignorance as well as knowledge could be constructively ex-plored in innovation (Ravetz, 1987). Iterative designs and prototypes are two examples of how igno-rance and knowledge co-evolve in innovation practices: each iteration of a prototype maps new

252 How Shell’s Domains Link Innovation and Strategy

knowledge and explores newly identified ignorance tomake an innovation design workable. In this sec-ond stage, where fuzzyness is welcomed as a resource rather than feared as an enemy to be vanquished,the GameChanger 2 process sought to enhance its ignorance (to discover what we do not know thatmight be useful for innovation). In so doing, it joined other Shell efforts (such as the scenario practice)to obtain and analyse external insights on ignorance e the future, after all, is always just a guess. Thisnew relationship between the GameChanger and scenario teams allowed innovation to link e andsometimes juxtapose e the possible future socio-economic worlds explored by scenarios with the fu-tures scientists and technologists envisaged might be possible; and both had to be aligned with whatShell’s strategists determined about the company’s intentions. This three-way interaction conditionedthe development of domains. The transition to this secondGameChanger stage came about in two steps.

� First, GameChanger convened a broader set of stakeholders e which became known as the ‘inno-vation coalition’ - to ensure the linkages between functions and businesses that innovation needs tosucceed were in place. The many perspectives brought by these colleagues were articulated as‘lenses’ through which innovation initiatives could be assessed, and these lenses became a meansof reviewing the effectiveness of innovation in relation to strategic intent, as well as of its efficiency;

� Second a new set of domains were developed. The first set of ‘GameChanger domains’ had arisen in2003 from conversations during a Cambridge University workshop, when 35 world-class experts(including chief scientists or chief technology officers of science-intensive firms thatwere not Shell’sdirect competitors), helped develop ‘Shell technology futures’, which described potential technol-ogies that might become commercially available in coming years, and the pathways within Shellalong which these might develop (Roodhart and McCormick, 2007). The pathways were assessedin relation to the sets of global (20 year) and long-term energy (50 year) scenarios available atthe time, which also helped weed out technologies that were possible, but which society mightnot allow to be commercially deployed (e.g. GMOs in Europe) (http://www.shell.com/home/content/aboutshell/our_strategy/shell_global_scenarios/dir_global_scenarios_0711). The secondGameChanger stage, initiated with the creation of the innovation coalition and then cementedwith the creation of domains, is the focus of this article, and we explain how it works with thehelp of Actor-Network Theory (Chesbrough, 2006).

The second GameChanger stage began with the innovation coalition

and was cemented by the creation of domains

Domains in social science theoryDomains have been conceptualised in social science in several ways, which we succinctly review here.Based on the work of Norbert Elias, domains as ‘figuration’ are “dynamic structures of mutually ori-ented and dependent people” which may have life-cycles (Dopson, 2001). Considering domains as‘generative metaphors’ enables the study of how they generate new possibilities (Fox Keller, 2002),while conceptualizing them as ‘structuration’ builds on work by Anthony Giddens and is inspiredby Bohr’s complementarity theory of light as both wave and mass: structuration is seen as consistingof cycles of interaction between latent and actual knowledge where ‘structure’ and ‘action’ are seen ascomplementary and symbiotic (Hargadon and Fanelli, 2002). Domains form as ‘institutional fields’“as individuals perceive that mutual problems can be resolved collectively.It is not an objective, prede-termined process, but one of social construction.where social order is negotiated” (Phillips et al., 2000),a view that attests to their ever-changing essence: “domains are cognitive as well as organizational struc-tures.one can only too easily fall into the trap of thinking of them as objectively given, quasi-permanentfixtures in the social fabric, rather than as ways we have chosen to construe various facets of it” (Trist,1983). This view of domains explicitly recognizes disadvantages: “to organize in an innovative waycan cost innovators economically (it increases risk), cognitively (requires more thought) and socially


(reduces legitimacy and the access to resources that accompany legitimacy)” (Phillips et al., 2000). Do-mains as ‘habitus’ builds on Bourdieru’s work to consider them a shared fields that both share, gen-erate, and unify practice (Leung, 2002), while domains as ‘practice’ also explores them in terms of howthinking and action shape each other, and can include emotions (Schatzki et al., 2001). As ‘workmodels’, domains allocate tasks, structure work and approximate goals (Burns and Vicente, 2001),and as ‘niche accumulation’ (Geel and Schot, 2005) they are seen as evolving from small niches toinclude larger markets, landscapes, cultural identity and government support. The‘research programs’ view suggests domains can include the following characteristics

� Research focused on a problem area;� A group of loosely associated projects;� A bunch of people who succeeded in getting money out of a funder;� A Director and a group of more or less willing associates;� A set of sub-networks with outliers;� A set of researchers with different research experience, but who share some common research,

policy and publication interests;� A network e with increased involvement from parties outside the company (Caswill, 2005).

Domains seen as ‘middle-ness’ are entities caught between relevant others, which can be pushed,pulled and torn by their conflicting perspectives, priorities and demands, but which can also workto connect them successfully. ‘Middle-ness’ is manifested organizationally, within the value creationprocess, and in time terms e situated between the very beginning and the end (Gilmore, 1997;Oshry, 1989). The notion of domains as ‘transitionality’ builds on Winicott’s studies of how chil-dren use teddy bears to transition from the psychologically safety of daylight to the more threaten-ing darkness of night-time, and attends to how domains’ designs can similarly aiding transitionfrom one established stage to another, yet to be established (Amado and Ambrose, 2001). Domainsas ‘distinctive’ competence’ build on Teece’s (1986) pioneering work where developing domainsinvolve irreversible investments and generating un-codified (and thus difficult to replicate) knowl-edge to secure new distinctive competences for a firm. Finally, domains can be seen as vehicles en-abling ‘strategic conversations’ across functions, divisions, and skill-sets.(van der Heijden, 2005)Table 1 illustrates how Shell’s domains articulate these various insights.

The innovation team as accidental researchersThe authors have worked together over an extended period to research Shell’s GameChanger activ-ities. This collaboration began in 2000-2001 when the first author (a scholar) spent an initial10-month period on a sabbatical as Visiting Professor of Scenarios and Corporate Strategy at Shell’sInternational headquarters. He was made a full member of the corporation’s scenarios team, andhis stay was extended by mutual consent to cover a full three years, until mid-2003. Over that pe-riod he worked intensively with the other two authors (and their colleagues) finding novel ways tolink scenarios and corporate strategy with GameChanger. This work was carried out in a reflectivepractice mode (Sch€on, 1983), with time and space being explicitly allocated to reviewing practicecritically, so as to understand better what worked and what didn’t. After returning to academiafull-time, his collaboration with the Shell GameChangers continued until 2010.

After returning to academia he also researched six of Shell’s GameChanger projects: while thatanalysis remains confidential to the company, we have been able to refer to it for the purposesof this article.1 More importantly, the first two authors e together with two other academics

1 The selection criteria to find the 6 projects were to choose 2 that the head of Shell innovation (the second author of thisarticle) and his GameChanger colleagues considered “successes”, 2 that they considered “failures” and 2 whose final outcomewas unclear at the time of the study (2004e2006). A ‘within-case’ approach was used, organizing the collected data into singlecase analytical memos based on a common questionnaire protocol, ensuring the monographs had a common structure that allowedfor inter-case comparison. The confidential findings led to a readjustment of criteria for determining success and failure.


Table 1. Social science perspectives on domains in Shell

Social science perspective Exemplified in Shell domains

Figuration Enhanced synergy among projects within a domain; attention to life-cycles

of projects within each domain

Generative metaphor Bio-fuels domain spawning a marine algae business?

Structuration Connecting bottom-up initiatives with top-down ones within domains: the

one being entrepreneurial ideas seeking structure; the other being structural

ideas seeking enactment. These both create sparks (individual projects)

and light fires (domains).

Institutional fields Domains become flexible institutions, with owners, managers, and sponsors.

Over time they become pseudo-business units (actors in their own rights)

Habitus The practices within domains survive only when they find or create a

longer-lasting home in a larger (business) habitat; domain management

becomes a valued skill

Practice Attending to how much felt ‘buzz’ a domain’s synergies create is a

major de-facto criterion for the extra attention that will be given to a domain

Work models Domains fit all categories: intellectual, managerial, and teleological

(approximating ideals)

Niche accumulation Successful domains both (a) accumulate expertise and resources and

social capital and (b) seek to ‘place’ this in a pre-existing company

niche to ensure long-term survival

Research programmes All domains require, carry out, and sometimes commission research

Middle-ness This works at various levels: domains occupy the middle ground

between idea and business, they also occupy the mid-term space

between short and long term strategy

Transitionality Domains are designed as safe spaces in which trial and error can

be carried out, in ways which is not possible once their contents

are in the business operations

Distinctive competence Again, there is a distinctive competence in domain husbandry,

but also each domain seeks to develop a distinctive competence for Shell;

Strategic conversation Domains work through well designed conversations. Often centering

around workshops, but also designed to meet demands in each part

of the funnel in which its projects are evaluated. It has to seek

early conversation with future business hosts if its results are to survive.

The option to create focused scenarios in a domain (as in the Base of

the Pyramid domain) convenes conversations with other multinational

companies and government representatives.

and three other executives e met regularly between 2003 and 2010 to conduct research on strategyrenewal that compared GameChanger with similar arrangements linking technological innovationswith strategy renewal in other large industrial European incumbents, providing a broader compar-ative research base that revealed the strengths and weaknesses of domains in Shell more clearly.

It was not our original intent to perform scholarly research. But the three authors found thatresearch was required to help us accomplish our goal of better linking Shell’s innovation practiceswith strategy and scenarios: so research became an inherent part of the work, not something we did‘after hours’. The two executive authors were deeply involved in developing and institutionalisingdomains within GameChanger, and met the scholar regularly between 2002 and 2008, first asa colleague within the company and later, after returning to academia, in bi-monthly meetings.

This larger comparative studye which forms the basis of this articlee used a multi-method data-gathering process. The executives could access all relevant data and key people at will; made notes onthe domains as they developed; and gave many internal presentations at meetings of the more than 80


members of the internal, loosely structured, inter-divisional and corporation-wide ‘innovation coali-tion’, as well as to external groups of peers in other companies, professional associations, and academicconferences. After he left the company in 2003, the first author did not participate in these events, buthas since reviewed the materials collected and analysed by the two Shell authors and commented onthem. The researched material has been presented in a number of papers in different practitioner andscholarly conferences (Ram�ırez andRoodhart, 2005; Ram�ırez et al., 2005; Ram�ırez et al., 2006; Ram�ırezet al., 2007; Thompson et al., 2007a,b; Ram�ırez et al., 2008), and at the time of writing (2010) is beingprepared for publication, both in peer-reviewed articles (such as this) and in book form.

Our research involved reviewing the social science literature related to domains (as describedabove), becoming acquainted with actor-network theory (ANT) and adapting it to fit our work (asdealt with below). ANT proved instrumental in helping us understand the GameChanger secondphase partnerships that are at the core of domain activity, and how these relate strategies, scenariosand innovation to each other. Our work roughly fits the so-called ‘mode II’ research approach, whereresearch questions are derived from practice, rather than from theoretical considerations (as in ‘modeI’ research) (Gibbons et al., 1994). Joint scholar-practitioner research helps combine rigor with rele-vance (European Management Review, 2009), increases ease of access, improves inductive reasoning,and enhances the applicability of the outputs (Van de Ven, 2008). Problematic aspects to be addressedinclude confidentiality, biases (Freeman et al., 1987; Hertwig et al., 2003), and clarity of accountabil-ity. We have reviewed several versions of this article with both academics and practitioners in work-shops and conferences to address bias, as well as confronting informant data with documentary and,where available, quantitative data (e.g. on project and domain cost, delay, and value).

Actor-network theory (ANT)We describe here the basics of ‘Actor-network theory’ (ANT) and how we applied them to link Shell’sinnovation practices with strategy. ANT theory was originally developed in France e when it wascalled the ‘sociology of translation’ e to study innovation (Miettinen, 1999), although it has beenused extensively in studies of technology and science (Donaldson et al., 2003; Prout, 2008), and is be-ing applied to organizational studies and strategy (Czarniawska and Hernes, 2005; Fox, 2002;Walsham, 1997; Tatnall and Gilding, 1999; Whittle and Spicer, 2008). The idea of ‘translation’ is sim-ple and compelling e how can a focal actor get another to ‘translate’ their role into a new mode thataligns with the focal actor’s objectives? (Callon, 2003; Akrich et al., 2006) Callon (1986), one of the keyscholars in developing the sociology of translation in the 1980s, analysed how the Electricit�e de Franceutility (EDF)e who were attempting to convene a set of actors to create an electric car in the 1980setried to get Renault to ‘translate’ and take on a different role. But Renault refused to move from itsestablished role as a vehicle manufacturer, so EDF’s plans came to nothing.

As we understand it (although different people understand it in different ways (Callon, 1997; Callon,1998; Latour, 1997; Law, 1992)), ANT critically examines (i) the links joining and distinguishing actors,(ii) the relations among those links in terms of dyads and networks, and (iii) how actors and interactionshave Janus-like characteristics, so that actors constitute networks, and networks constitute actors. In ANTeverything is dual ean actor is both a ‘thing-with-identity’ (or role) and a ‘member-of-a-network’ e sothat ANT inevitably sees everyone and everything as being actors in networks or (in its terminology) as‘actor-networks’ (Latour, 2005). Thus, seen through ANT, a project is both a member of a network ofstakeholders (which contextualise and sustain it) and, simultaneously, an actor that contributes to theviability of its network.

In Actor Network Theory ‘actors’ may be human players, or goods,

technologies, or natural entities. actors and interactions are Janus-like e

actors constitute networks, and networks constitute actors..


As noted above, the ANT definition of ‘actor’ is extended beyond human players to include goods,technologies, and (as Callon describes) natural entities such as strawberries or scallops e they are con-sidered actors, because they act on other actors (even if the agency is not conscious), and more impor-tantly because they interact with other actors (human or not). In ANT, relations between actors cometogether into nets which ANT labels ‘super actors’. Thus, in ANT terms, the net of actors in the oil andgas industry includesmajor oil companies (such as Shell), technologies, governments, territories, oil de-posits, laws, interests, and financing, all of which interact with each other. The history of these actors andtheir interactions has jointly created a super-actor (the oil and gas industry itself) over a trajectorywhichYergin (1990) describes in his award-winning book The Prize. Such super-actors are created by trajec-tories that consist partly of intelligent decisions made by actors trying to translate others into roles thatsuit their purposes e but also partly by happenstance, accidental discoveries and other outcomes.

ANT also labels other phenomena: thus, an ‘actant’ is a potential actor that, depending on its tra-jectory over time becomes either an actor or a super-actor; a ‘primemover’ is a network-creating actorthat succeeds in getting network actors to co-create value, so that everyone wins something (although,typically, the prime mover wins most) (Callon, 1986; Normann and Ram�ırez, 2003; Ram�ırez andWallin, 2000); and an ‘actor-world’ is the actor-network that such a prime-mover convenes by ‘en-rolling’ (giving a role to) those it wants to integrate into its plans. To succeed in this enrolment, theprime mover may have to persuade the co-opted actors to translate their identities and play differentroles in its newly constituted world (as EDF was trying to do to Renault).

Domains through the ANT lensIn scenario planning, the links between possible future contexts, strategic choice and unfolding tech-nology options can remain unclear (Harris, 2003). While the scenarios and strategies teams deal withoptions that might be opened up (or closed down) according to future contexts, the promising inno-vations teams monitor families of scientific and technology options (such as GMOs, nano-technologies or super-conductivity) that may ultimately make possible what is currently impossible.A na€ıve perspective would hold that by simply presenting scenarios, strategies and innovation poten-tials to each other, each will take the other two into account, making them work together well. ButANT alerts us to the fact that there are not three actors acting upon each other but six: strategists,scenarists and innovators are also part of the picture, so there are now fifteen inter-relations involved,rather than just three, as Figure 1 illustrates. Domains are a good conceptual structure to host thesefifteen links, offering them a space to co-produce insights, exchange ideas and share experiences.

When we first tried to map the simpler three-way relationship in Shell in 2002, we only met withpartial success. But we realized there was far more potential for co-producing strategic options thanthis exchange could tap, and discovered this had to do (in part) with how each community d tech-nologists, strategists, and scenaristsd pays attention to and reacts to both the products and skills ofthe others (Ocasio, 1997). Using the ANT ‘actor-world’ construct as our guide, we started to considerwhich actors enrolled which others, which played the prime mover role, and which allowed their roleto be translated into what kind of value constellation. This was a productive reflection which contrib-uted directly to Shell’s development of the notion of ‘domains’ (although the label only arose later).

The ANT view of domains gives both the ‘product’ and the ‘producer’ equal roles in an ongoingjoint system of business development. Thus, the ‘output’ (the product) of a team of innovatorswill be assessed differently, depending on who exactly is in that producer team. Producers with a trackrecord of proven successes will benefite there will be less doubt about a high risk product they mightpropose than if they have a reputation for serial failure: while products from a bio-fuel domain (suchas ethanol) may be significant, so is the fact that it is a large oil and gas company like Shell that is pro-ducing them. ANT also highlights why innovation that goes too far away from the core business sooften backfires in companies such as Shell (Luiten van Zanden et al., 2007). Just as the oil and gasmolecules and their chemistry are key actors, the industry super-actor e including large industrialfirms, their clients and suppliers, investors, partners, analysts, journalists, regulators, and so on eis also a powerful counterpart. But there are also other super-actors (such as pension funds heavilyinvested in the industry) alongside these players that can effectively limit the others’ scope for action.


Strategists

GameChangers

Energy & global scenarios

GameChanger innovations

Scenarists

Strategies

15 links

Strategies

GameChangers innovations

Scenarios

3 links

Figure 1. The links articulated by domains without and with ANT considerations

Domains help Shell professionals improve the interactions between innovation and strategy andboth internal and external actors. Our ANT-enabled analysis of how domains help the companystay innovative works at multiple levels e within an actor (a domain) and among actors (betweenprojects within a domain, for example, and between domains at the level of corporate and externalstakeholders). ANT alerted us to the fact that the links between projects become a new form of actor,which can constrain or enrich the domain’s projects. It is the effective creation of the interactionsbetween these new actors that make domains successful. At the same time, domains are effectivelyprime movers, which may translate the roles of their projects, and e as our multiple diagram sug-gests - can also link a domain’s actor-networks to the broader company-wide ‘innovation coalition’.

Shell’s first domainsAt the 2003 Cambridge meeting the innovation coalition identified a large number of potential do-mains, or proto-domains (in ANT terms, ‘actants’ e potential actors: at this point, these are only un-der potential consideration for selection as Shell domains). These actants are situated between thecompany’s present and its possible futures, as shown in Figure 2, which give a graphic example offive theoretical ‘power company - futures’ strategic options and a set of (illustrative only) domains.The coalition - which was not yet an official Shell department, having no dedicated profit and lossstatement and only rather ill-defined accountabilities and responsibilities e prioritised the proto-domains into a more limited set for further exploration. This prioritisation was carried out via severalstrategic lenses (e.g. links to scenarios, connection to energy pathways, etc.) that represent viewpointsheld by different coalition members, as the figure shows.

Each proto-domain (as an actant) is mapped in terms of what projects it might hold, and becomesa domain (actor) when the set of possibilities becomes accepted as a Shell strategic innovation activitydomain, with managerial accountabilities, a designated budget, and an officially vetted mandate. Apotential value statement is developed for each domain, and its key underlying assumptions and un-certainties (derived from the scenarios) made explicit. A set of stakeholders (Shell and external) is setup for each domain, and pathways identified as possible avenues for it to achieve its potential value:existing projects and ideas are mapped onto those pathways, and past projects reviewed to capture


Figure 2. Domains between the company’s potential futures and its present

lessons. These activities set domains up to become learning platforms; even projects that fail are em-bedded within the domain as learning e thus, 30 case studies were analysed in one domain (calledBase of the Pyramid) so the GameChanger database could identify past projects, ideas and peoplethat might provide available knowledge and experience. As the actant>actor transformation trajectoryconsolidates a proto-domain into an actual domain, ideation workshops are held to consider furtherpossible project ideas that could populate the domain, with the aim of having a sufficient number ofinitiatives to explore the full potential of all the domain’s possibilities. A four-day action laboratory isheld to assess how each project works, in terms of both technology logics and potential business plans,which helps the domain coordinator budget and allocate resources: he also considers how the projectfits the available opportunity spaces identified by the scenarios.

Of course these ‘objective’ considerations about the success of projects depend also on the enthusiasmof the subjects (the individuals and communities) that make up projects and domain: without their en-trepreneurial spirit, good ideas go nowhere (as ANT would predict). The portfolio of domains Shellholds at any one time show how far strategic innovation possibilities are related to the core business,and prevent work on initiatives in too distant areas e e.g. that would lead to conglomerate discountsby analysts or dilute the strategic intent of the corporation (Hamel and Prahalad, 1989). In other words,domains can develop and re-interpret what is defined as the company’s ‘core’ business: e.g., is it oil andgas, hydrocarbons e or energy? Figure 3 summarises this process graphically as a ‘domains recipe’.

ANT suggests domainswork at Shell because they are both stable enough to perform as actors, but atthe same time ‘fluid’ enough to continue in their roles as actants. Domains can be transformed timeand again by enrolling and translating newprojects into the domain, andbymaking newdynamic linkswith other domains and businesses. A domain may be transferred as a single entity into a Shell busi-nesses unit, or remain a strategic innovation initiative, spawning projects that themselves end up be-coming whole (or part) Shell businesses. This dual architecture - where domains continue to function


Figure 3. A domains recipe

as actants after some of the component projects they have nurtured have been formally adopted and goon to become actors, or where entire domains mature from actants into business unit actors - meansthat Shell’s whole strategic innovation effort itself also remains both actant (i.e., it is constantly renew-ing itself) and actor (in that it is a permanent fixture of the company), thus preventing innovation atShell from becoming incorporated into a stable routine, department, or process. This avoids the ‘dy-namic conservatism’ (Schon, 1971) that keeps new ventures static in many incumbent firms: insteadShell’s domains exhibit the rich energy of ‘fuzzy-ness alongside’ that leads to productive connectionsbetween uncertainty/ambiguity/ignorance and knowledge/capabilities (Ravetz, 1987).

Shell’s whole strategic innovation effort is both actant (constantly

renewing itself) and actor (a permanent fixture), thus preventing

innovation at Shell from [falling victim] to ‘dynamic conservatism’

Managerial domain attributesOur ANT analysis reveals some key attributes of domains:

Domains engage senior managementDomains engage senior management more effectively and efficiently in the innovation process, withsmaller numbers of larger domains attracting greater interest. Senior managers can be involved in keysteps of the process - such as domain definition and regular portfolio reviews - but the domain helpsto focus their attention on the overall value rather than on individual projects and experiments.

Domains select projects based on strategic criteriaDomains select projects based on strategic criteria so they align with the company’s strategy, fit some-wherewithin the scenarios it has developed, and are supported by its existing or potential technologies.

Domains keep projects connected to the businessThe parameters imposed on domain projects by scenario, strategy and technology considerations en-sure that none which stray too far from the core business are approved. Of course, domains can some-times develop so that they reinterpret what is (or should be, or could be) the core of the business.


Domains have a clear broad vision that can be transformed into actionOnce a domain is identified, the broad vision it encompasses is translated into action-driven pri-orities and goals. Typically this begins with identifying which different technology pathways or newbusiness models could be deployed to meet the domain’s requirements.

Domains’ primary ambition is to grow business valueDomains’ primary ambition is to grow business value rather than being based on a technologyplatform or a hydro-carbon molecule: they must translatable into specific actions which have thepotential to become businesses.

Domains learn via their projectsDomains learn via their projects which function as practical learning vehicles for their further de-velopment. Projects test the key assumptions made when the domain was originally formulated,and are the lead experiments via which the domain can prepare for discontinuities and challengeorthodoxies. Consistent with ANT, domains encourage individuals and projects to co-evolve, tohelp each other, and to test each other to make them stronger and more effective actors. (It shouldbe noted that domains are typically assigned longer-term funding than are any of the individualinnovation projects they house.)

Domains link technologies, scenarios and strategies to each otherDomains link technologies, scenarios and strategies to each other, and also to outside actors andnetworks, such as businesses that might become join-venture partners, or external investors forspun-out businesses. Domains require technologists to leave the comfort of their own specificdeep (‘vertical’) expertise to study the contribution of other technologies, and makes them relateto other experts. In the same way, domain strategists gain much deeper understandings of what dif-ferent disciplines offer - they must learn how to compare apples and oranges, and how differentfruits might lead to a better domain harvest.

Domains are reassessed regularlyThe innovation coalition meets twice a year and assesses the whole portfolio of domains and thepotential each holds for the company’s future, with the CEO attending regularly to providea top management steer.

Domain life cycles, challenges and pitfallsDomain life cycles follow a traditional arc, beginning with identifying a domain that will link withcompany strategy to advance Shell’s innovation practice effectively; followed by the domain beingset up; then being developed to its fullest potential; and finally being closed down or handed over toa business unit. Table 2 summarizes the issues involved in each phase, and shows how ANT helps tounderstand these issues, while Table 3 reviews some of the important challenges or setbacks thatdomains may face, and shows how ANT helps to understand them.

Discussion: less failure and more success

How domains help manage the flow of innovation projectsA company with 100,000 employees cannot afford to let thousands of flowers bloom, for the exper-iments this unrestrained attitude would encourage would be too expensive to sustain. While Shellwould like to tap this type of bottom-up, Hamel-inspired entrepreneurial energy (Hamel, 2000;Hamel, 2006), it must also take top-down considerations into account. Campbell and Park(2004) have identified how, in the innovation efforts of large corporations such as Shell, long-term strategy determined by the top prevents the company from being distracted by too manyexperiments. For this reason, GameChanger involves a stage-gated process with 4 stages - idea cre-ation, idea maturation, idea execution and idea graduation e which evaluates projects at each stage


Table 2. ANT perspectives on key domain issues

Domain activity & key issues ANT perspectives

Domain identification

1. Include system of external discontinuities & other scenario

considerations, existing industry orthodoxies, expected

technology developments that will shape the

company’s context and future possibilities?

2. Which potential company futures could be created?

3. Which domains does the company wish to start developing now to

be successful in different possible company futures?

1. What actants might become relevant for the company’s success (e.g.

new regulation, novel technologies)

2. What might the company enrol to become the desired actor-world?

What actor roles could the company play in possible future contexts?

3. Which actants do we need to create, marshal, or configure to get

the company prepared for the different futures?

Domain setup

4. What does the domain management structure need to look like

(Domain Manager, Sounding Boards, Relevant Champions,

Key business Leads, other Companies, World Experts, etc.)

5. What resources are required to make the domain successful (technologies,

budget, people)

Important to think about the right actants within and around the

domain to enable right strategic conversations (see Figure 1)

4. Which human & process actants need to be involved in this domain?

5. Which human and/or physical actants do we need to allocate to the

domain in order for it to be successful?

Domain development

6. What is the current status (and past experiments) of

the company within this domain? What are

learnings from the past?

7. What is the external context of the domain (customers, competitors, trends

& possible trend breaks)

8. What is the vision of domain (size of prize, strategic fit with company’s aspired

future portfolio) in relation to the company?

9. What are possible pathways within the domain and what ideas / projects need to be

initiated to further develop the idea? What experiments need to be launched?

6. What are existing (or latent) actants within the company? Which need

to be sped up to become actors?

7. What external actors / actants are relevant for the domain? Which

can be enrolled and how? Which cannot and what relations with them?

8. Does the idea sustain the existing business model identity? How

does it affect the company‘s existing actor-network? Does it

involve creating a new actor-network, involving strategy renewal

and identity transformation?

9. What actors do we need to create or co-create (new technology,

new company, and new source of competitive advantage)? What

networks do we need to promote and enrich? Which should we

avoid? How do we test whether actants can be developed

into actors and/or enrolled?

262

How

Shell’s

Domain

sLinkInnovatio

nandStrategy

The domain also works as a mechanism to solicit ideas. Key learnings and assumptions

become Ambitious Business Challenges like Kennedy’s “how can we put a man on the

moon and bring him back to earth safely in 10 years time”. It is a holding place of ideas as

well as of challenges that go to the root of the value creation potential of the domain.

Overcoming the challenges produces a winning proposition. So projects/experiments

focused on addressing the root causes/key challenges are prioritised.

Domain hand over or closure

10. At regular reviews, decisions whether to stop,

continue or accelerate the domain development.

10. Is the domain succeeding to enrol key actants and actors

outside AND within the existing organization? Is the

domain being enrolled by an existing unit in the organization?

Is the domain becoming an actor in its own right and does

it need to be become part of a (new) business unit? What

can be learned from the different projects (in a way

‘new actor experiments’)?

Long

Range

Planning,

vol44

2011263

Table 3. ANT perspectives on domain challenges

Some challenges in domain development ANT perspectives

Domain is absorbed by one specific business unit too soon e an

ends up being rejected.

Enrolment of the domain by an existing business unit happens too early, before the

actant is mature enough to become an actor, and thus its potential gets hijacked.

The potential of a new actor (e.g. a new business model or a promising technology)

might not be realised. Strategy renewal will also not happen.

Domain is tolerated but in effect ignored. It ends up being

developed completely independently and becomes an orphan.

The emerging actor-network that the domain constitutes is not making connections

with existing actor networks and is therefore (a) weaker, (b) with an undefined identity,

(c) misses right strategic conversations, and (d) missing opportunities to co-produce

stability and resilience. Even if it ‘succeeds’, it becomes isolated.

Happens to lots of venturing activities.

Domain does not make the right connections, and fails to stimulate

the right strategic conversations. This may make it fail to bridge

the differences between communities that link strategy with

technology, or contribute to unsustainable bias top-down or bottom up.

If a domain fails to enrol the right counterparts (actants and/or actors) it may

consist efor example- of only strategists which would lead to very good analytical

‘white-papers’ but insufficient prototyping. If a domain is too scientist-centred it

might become a technology platform which develops technology leads but no new

business. Both white-papers and technology leads are actants that in becoming

actors will fail to deal with the conundrums at the beginning of this paper.

In the same way, under-attending to top-down/bottom-up balances can lead to failure.

Domain persists but fails to create actionable projects, becomes

a ‘talking shop’

Domain management fails to enable the actant>actor trajectory by focusing

too much on white papers and not enough on prototypes & experiments.

Domain produces too many projects which do not live long. Domain management is transforming actants into actors too quickly,

without attending to the developing and sustaining robust networks

of co-production that will sustain project identity resilience over the longer term.

264

How

Shell’s

Domain

sLinkInnovatio

nandStrategy

against four GameChanger criteria e potential value, timing, novelty and business alignment e todetermine which should be stopped and which allowed to continue to the next stage. Deployed as‘lenses’, the GameChanger criteria enable the assessment not just of individual projects, but also ofthe domain’s total portfolio: in this second use, some lenses may be ‘coloured’ to reflect a long-termcorporate strategy or senior management thinking.

For this article, we evaluated the 1,435 ideas on the GameChanger database over the 12 years from1996 to 2008, and scored them against the four different criteria of value, timing, novelty and businessalignment. Total project scores were than calculated by adding these individual scores and normal-ising at a 100% scale. Figure 4 depicts ‘scatter plots’ of the stage-gated GameChanger process, showingthe distribution of the projects’ total scores against their start times at each of their four stages e cre-ation, maturation, execution and graduation e and illustrating the forming of a smaller, but stronger,portfolio after each gate after the introduction of domains. Stage one (Figure 4a) (which includes allthe GameChanger projects ever submitted) shows a random variation in quality over time e since nocriteria are applied to the proposition of projects, the average score is around 50%. A large variety ofideas was submitted that might or might not align with the domains that were progressively intro-duced between 2001 and 2003 and developed thereafter.

Projects that were ‘killed’ in the first selection round are omitted from Stage 2, which shows onlythe first round survivors (Figure 4b). The alignment lens, which checks how well a project fits at leastone domain, is very important in this second stage. (Since this lens only existed in reality after do-mains came on stream in 2003, the second author and another Shell colleague retrospectively fittedthe alignment lens to all pre-2003 projects for the purposes of this study.) It can be noted that the pre-2003 projects exhibit much more random scores than projects started after domains were set up: fromthis point, few projects with total scores below 40% survived, resulting in a 30% survival rate, as com-pared to the pre-2003 survival rate of some 60% as shown in Figure 5. This trend continues throughstage 3 (Figure 4c) and (most visibly), into stage 4 (Figure 4d), which depicts only those projects that

Figure 4. All GameChanger projects, stage by stage


Figure 5. Survival rate of GameChanger ideas before and after the introduction of Domains

graduated to become Shell businesses or spin-offs. The horizontal straight lines in Figures 4aed, de-pict the average scores pre- and post domain introduction, which clearly show that projects whichstarted post-2003 and went on to graduate (graduation date is not visible in the graph) scored overallratings on average 50% higher than those of pre-2003 projects: in fact, very few projects with totalscores below 50% now survive.

The Figure 5 graph (again based on all 1,435 ideas) presents the percent of ideas passing the first stagegate (on the left axis) and the number of ideas which were successfully implemented into the business orwere spun-out (on the right axis). The data showsmaterial improvements in the scores of GameChangerprojects after 2003. The proportion of ideas surviving the first gate was reduced from 60% to 30% butwith no decline (even an increase) in graduating project quantity, while the overall average portfolioscores (a measure of quality) also increased. Although difficult to attribute to any single improvementfactor (given that Shell is an ever improving organization) we believe the increased focus on domains tobe a key part of overall improvement these results show. In other words, the increased number of pro-jects graduating from a smaller number of projects initially accepted show that the introduction of thedomain concept has led tomore focused development and the earlier selection of ‘winners’. The numberof ideas coming from outside the company has also grown significantly in the last five years e whichmay, again, be a secondary effect of domains, which have helped Shell to focus its external effortsand to select the right companies, universities, etc. to work with.

ConclusionsShell innovation managers have evolved GameChanger to include both the innovation coalitionand domains so as to reinvigorate the company’s innovation practices, to prevent them from be-coming stale, to render them more effective, and to connect them to strategy. The impact hasbeen two-fold: projects that would have died later (and thus involved more expense) are now killedoff earlier; and the adoption rate for those that ‘cross the valley of death’ (Murphy and Edwards,2003; Moore, 1999) to graduate into being Shell businesses has improved significantly.

Our review of how Shell developed domains and thus prevented its innovation efforts from be-coming stale has shown that this effort has profited from reflective co-produced research and fromunderstanding the different theories and perspectives on domains offered by the social science lit-erature. In particular, the actor-network theory (ANT) has helped us understand how and why do-mains work effectively, and that its detailed use has shown it to be relevant in helping Shell


practitioners reflect on their innovation practice, not just as a theoretical framework, but as prac-tical intellectual framework to assess how innovation works. We find that domains connect twoforms of innovation - top-down and bottom-up - by enabling networks of activities, which functionboth as actants and actors, to interact in a dynamic system of projects and initiatives over the longerterm. Domains house these co-productive actor-networks, which are revealed as consisting of fif-teen interlocking links. And domains themselves are both actants and actors, and this dual role en-ables them to be both sufficiently stable to be transferred into businesses or spun out, but alsosufficiently open to remain innovative and to enhance innovativeness in the company.

In the 1990s, with employees as ‘intrapreneurs,’ firms became far better

at starting projects than stopping them .. the challenge for managers is

to retain this innovation drive while avoiding overload

In the 1990s, before the dot-com bust, it was popular for large organizations to entertain the idea thattheir employees could become ‘intrapreneurs,’ and develop new ventures in the same way as dot-comboom entrepreneurs. Many organizations became far better at starting projects than at stopping them,thus suffering ‘initiative over-load’, so the challenge formanagerswas to retain this innovation drivewhilecontaining the risk of overload (Shah et al., 2008). Our research suggests that domains are one way oflimiting the number of initiatives, by shepherding related initiatives into larger and fewer ‘chunks’ thatreflect and support the organization’s strategic options and priorities. In large companies themeeting be-tween technologists, scenarists and strategists occurs at corporate, business unit, specific project, and in-dividual levels, and domains can work at each of these levels to integrate the four efforts more effectively.

A key benefit of domains is that they are consistent with the step-by-step process of new tech-nology implementation. New technologies in large established companies go from laboratories tosmall prototypes to small-scale pilot plants and then to full commercial facilities; the process oftentakes years, and in the oil industry perhaps several decades. Domains help strategies go through thesame process, so that new business models are also prototyped and tested prior to big bets beingtaken. Imagine a future where non-technological strategies e such as cross-Atlantic mergers andacquisitions or bailouts of large financial institutions e were also developed as domains usingthe same step-wise development. Messages from the future are fed in as the work progresses, adapt-ing the actant-actor trajectory. And if the scenarios on which the domain’s interest depends becomeobsolete, the domain too would either adapt or be ‘disappeared’.

We make no claim in this article as to how general the applicability of domains might be, butother research we have undertaken (which we plan to report at a later stage) suggests that severallarge incumbents have developed comparable mechanisms. In summary, our research shows thatdomains offer a rigorous approach to planning for and with the future, as well as to creatingand implementing step-by-step action plans to enact and ultimately achieve that future. It confirmsour view that ANT is a pertinent theoretical construct for strategy work, and practical for linkingpeople, processes and functions in large organizations to enhance their value and relevance.

AcknowledgementsThe authors thank the journal’s editor and anonymous reviewers for their helpful comments on ourearlier versions.

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BiographiesRafael Ram�ırez holds a PhD from the Wharton School in social systems science. He is Fellow in Strategy at the Sa€ıd

Business School and in Green-Templeton College and Senior Research Fellow in Futures at the Martin School,

University of Oxford. In 2000e2003 he was for three years Visiting Professor of Scenarios & Corporate Strategy

with Shell International in London and he was Chairman of the Global Agenda Council on Strategic Foresight of

the World Economic Forum 2008e10. Sa€ıd Business School, University of Oxford, Egrove Park, Oxford OX1 5NY

UK. Tel: (þ44)-1865 422765 e-mail: [email protected]

Dr. Leo P. Roodhart was Head of Strategic Innovation for Shell International until 2008, when he became President

of the Society of Petroleum Engineers. He has held many positions over 25 years with Shell and has been an

Associate Fellow of Oxford’s Green-Templeton College and of the Sa€ıd Business School since 2004. At ‘Group

GameChanger’, he built and led Shell’s ‘GameChanger Coalition’, instrumental in defining the group’s innovation

strategy. He holds a Ph.D. in Molecular Physics from Amsterdam University and has authored over 25 technical

and business publications and conference papers. e-mail: [email protected]

Willem Manders’ background is industrial engineering and management science. He started his career in consulting

and project management. For the last six years he worked as a strategic innovation manager in Shell’s Game-

Changer program, identifying, seed funding and developing future step-out business opportunities. Willem cur-

rently is Manager Learning Strategy and Innovation for Shell, exploring how to increase the learning potential of

the company. Shell International BV, Carel van Bylandtlaan 16, 2596 HR, The Hague, The Netherlands. Tel: þ 31 70

377 4276 e-mail: [email protected]


mailto:[email protected]



How Shell’s Domains Link Innovation and Strategy

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