Structural Transformation at ONGC
Since its inception, ONGC has been instrumental in transforming the country's limited upstream sector into a large viable playing field, with its activities spread throughout India and significantly in overseas territories.
The 1990s had begun on a grim note for ONGC. It took almost a decade for the Corporation to sort things out in most uncertain of times.
Among many problems, the Corporation was also suffering from the organisational atrophy. In order to survive ONGC sought help from Mc Kinsey.
Mc Kinsey's mandate was to evolve an organisational structure that was far more responsive to its business needs than that based on business groups. The ONGC system run by functional heads often meant delays exceeding a year in matters requiring urgent decisions on fields. Also, since responsibilities were shared at production platforms between different business groups, the system degenerated into wrangling over responsibilities. Similarly, group loyalties often took precedence over the requirements of tasks. But, most importantly, it was found that the performance evaluation criteria based on business group yardstick were completely at loggerheads with requirements on fields. Mc Kinsey recommended an asset based approach with clearly-defined responsibilities in its presentation titled ‘Organisation Transformation Project’
Though Mc Kinsey recommendations were broadly accepted, coordination issues concerning commonly-shared services needed to be sorted out.
Finally, the first control over all service personnel working with asset teams was vested in asset managers, on grounds that being responsible for the performance of their strategic business units they must rightfully exercise control over all personnel working with them. Even procurement powers were devolved. Finally, a new structure made up of 14 assets and 11 centralised services was rolled out.
Which approach did Mckinsey recommend to ONGC?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Asset Based Approach
Option (1) Employee Centric Approach — Incorrect. The passage does not mention such an approach.
Option (2) Product Based Approach — Incorrect. The passage names the asset, not the product, as the basis of the new structure.
Option (3) Asset Based Approach — Correct. The passage says McKinsey “recommended an asset based approach with clearly-defined responsibilities”. Each asset team was run by an asset manager who controlled all the personnel working with it and was responsible for its performance. Clear responsibility removed the old wrangling between business groups.
Option (4) Customer Centric Approach — Incorrect. The passage does not mention such an approach.
Note: The passage is the NCERT case study ‘Structural Transformation at ONGC’, which has been reproduced by NTA in the exam.
NCERT (2026-27 Edition): “Structural Transformation at ONGC … Mc Kinsey’s mandate was to evolve an organisational structure that was far more responsive to its business needs than that based on business groups. The ONGC system run by functional heads often meant delays exceeding a year in matters requiring urgent decisions on fields. Also, since responsibilities were shared at production platforms between different business groups, the system degenerated into wrangling over responsibilities. Similarly, group loyalties often took precedence over the requirements of tasks. But, most importantly, it was found that the performance evaluation criteria based on business group yardstick were completely at loggerheads with requirements on fields. Mc Kinsey recommended an asset-based approach with clearly-defined responsibilities in its presentation titled ‘Organisation Transformation Project’” |