HOUSTON—When Marc Edwards came onboard Diamond Offshore Drilling Inc. (NYSE: DO) as president and CEO in 2014, the landlubber had to quickly find his sea legs as the offshore pioneer sped toward what he calls “the worst downturn in the history of the energy business.”

Edwards immediate challenge was taking the company from its world-class roots to something different, a task made all the more difficult “when you’re in a business where you’re economically unviable.

“You got to find a way to make your product attractive to your clients because right now, with the price of oil, all deepwater drilling it doesn’t make any sense,” he said at the recent KPMG Global Energy Conference.

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Nevertheless, a sucker punch was winding up around the corner for the Houston-based company: a 60% plunge in oil prices that would force the service company to distinguish itself from its competition more than ever before.

The challenge came with extra baggage including his own personal barriers, Edwards said. What emerged was a different company, a “first-of-its-kind” agreement with GE Oil & Gas (NYSE: GE) and a new sense of purpose.

Brick Wall

In 2014, Edwards arrived at Diamond Offshore to helm a company that had achieved years of success.

Diamond Offshore’s roots date back to the earliest days of offshore oil and gas drilling with one of its predecessor companies designing what was likely the first submersible drilling rig.

“We were printing cash—it was very successful business—but like all good things, they eventually come to an end,” he said.

Things changed when a plunge in commodity prices shook the entire industry. The fall in prices was a brick wall the company had to avoid slamming into in the markets they operate: the Gulf of Mexico (GoM), Offshore Brazil, North Sea, West Africa and in the Asia-Pacific.

Diamond made unprecedented capex cuts, including investments for the future. Industry-wide, 2015 saw global upstream capex fall by more than 25% with further double digit declines expected during the next two years, according to Deloitte.

Tighter E&P budgets took a toll on service companies. Moody’s Investors Service downgraded the entire offshore drilling sector during the first quarter of 2016.

“We had to take the company from one that was very successful, very comfortable in its success and prepare it as early as possible for the train wreck which has since arrived,” he said.

Through the turbulent times, Diamond Offshore has retained the highest credit rating among its peers.

The Mission

One of the first things Edwards looked at in 2014 was the company’s mission, vision and values, which he called “pretty uninspiring.”

“As you progress from a downturn, having a future and a vision of the future is very important to people that remain in the organization,” he said.

Edwards wanted the employees of Diamond Offshore hungry to come to work and face their fiercest competition—themselves.

“When my employees are putting on their makeup or shaving in the mirror, what they see in the mirror is actually their competition. It’s not the other drilling companies out there. It’s for us to go and set the agenda, innovate in our space,” he said.

With Edwards at the helm, Diamond Offshore’s mission began to focus on “responsibly unlocking energy” and “innovation with impact.”

The transformation provided the company with a map to navigate the future, as well as the rough seas they were already facing with one of the worst downturns Edwards had seen. For him, that meant building a structure that guided employees, no matter who was in charge.

“If I get run over by a bus tomorrow, Diamond Offshore will still be extremely successful because our vision is in place… That will drive success,” he said.

Innovate With Impact

Innovation doesn’t have to focus on a product, Edward said. For Diamond Offshore, it ended up being the way the company began to do business.

In February, the company struck a new deal with GE Oil & Gas that transfers full accountability for BOP performance to GE. The 10-year agreement includes GE purchasing the BOP systems aboard Diamond Offshore's four drillships, currently located in the U.S. GoM, for a total of $210 million.

Under an arrangement termed the pressure control by the hour model, Diamond Offshore will compensate GE only when the BOPs are available. The deal incentivizes GE to keep things up and running since the company is paid by the operational hour.

For Diamond Offshore, transferring the maintenance and service of well control equipment to GE Oil & Gas simplified operations and optimized time between well maintenance, reducing the frequency and duration of downtimes.

Edwards said Diamond Offshore is also looking to reinvent deepwater rigs by bringing in lean manufacturing processes, taking a chapter from Ford Motor Co.’s operations.

“We got back to square one and we’ve got some new designs and concepts that are coming to reality in a space that is hugely oversupplied with rigs,” he said.

Edwards said the robotics’ model could also be borrowed from the car manufacturing industry and applied to offshore drilling. Robots could eliminate some of the repetitive tasks oil workers currently perform. Edwards said people will still be needed on rigs, but with a different set of tasks.

Decide And Design

In a company’s journey to something new, inevitably that means identifying the people who can flow with the change and those that can’t.

Edwards said a death by the thousand cuts is likely not the way to go for personnel matters. Rather, “take an axe to the organization and make sure that the people that remain understand that this it and this how you have to take the company forward,” he said.

Following Edwards taking the job, Diamond Offshore made some swift changes to its executive team in 2014 with Ronald Woll joining as COO and David L. Roland as general counsel and secretary.

During first-quarter 2015, the company also reduced its headcount at onshore bases and corporate facilities, including its Houston office, where both corporate and support payroll costs were reduced by 20%, according to a Seeking Alpha transcript of an earnings call on May 4, 2015.

Edwards said when making hard decisions, especially regarding people, it’s important to treat them with respect.

“When we went through the decision of cutting the organization that was one thing that I did insist—that every departure was done face-to-face and we treated people in the manner that I … would like to be treated,” he said. “I think it just made it more palatable and easier for the organization to put [the transition] behind us and move forward.”

Advice

Even though he was already had his plate full at Diamond Offshore, Edwards said he initially felt like an outsider to the deepwater drilling space.

Prior to joining the company, Edwards spent 30 years with Halliburton (NYSE: HAL). In 1984, he was far removed from the water as he began working as a field engineer in Kuwait. Most recently he served as senior vice president responsible for the completion and production division.

“Perhaps the best piece of advice that I could give to anybody that comes across a similar situation—it doesn’t matter whether it’s at the top of a S&P 500 company or just a department within a private company—the first thing you have to do is listen,” he said.

Listening will lead to building trust within an organization, which is what leadership is about, he said.

“Listening is actually harder than speaking… But don’t feign interest, don’t blow off. Stop and listen because one in a hundred times they might have a really good idea,” he said.

Edwards said his philosophy while leading the offshore driller with one of the oldest fleets is simple—no troublemakers.

“It’s true—create an organization where there’s no [troublemakers] and you’ll be surprised how successful that organization will be,” he said.

Emily Moser can be reached at emoser@hartenergy.com.