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.
Since ONGC was suffering from Organizational atrophy, it sought help from Mckinsey. What did Mckinsey do in order to resolve this issue?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Mckinsey evolved an organizational structure that was more responsive to its business needs.
Option (1) Mckinsey evolved an organizational structure that was more responsive to its business needs. — Correct. The passage says McKinsey’s mandate was to evolve a structure “far more responsive to its business needs than that based on business groups”. An organisation structure is the framework of jobs, departments and authority within which work is done; a good one fits what the business needs.
Option (2) Mckinsey evolved an organizational structure that was more responsive to its business groups. — Incorrect. The old structure was the one based on business groups, and it caused the problems. The new structure was to move away from it.
Option (3) Mckinsey suggested changing the methodology of managing tasks and formulating new policies. — Incorrect. The passage speaks of a new structure, not of new policies or methods.
Option (4) McKinsey recommended a product-based approach with clearly-defined responsible teams in its presentation titled ‘Organisation Transformation Project’. — Incorrect. McKinsey recommended an asset based approach with clearly-defined responsibilities, not a product-based one.
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 … 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’” |