McKinsey on Global Rebalancing

McKinsey have published an article that I think provides a good understanding of how our economy will be functioning in the near term. Entitled “Globalizations Critical Imbalances” it talks about the necessary adjustments in world trade and their implications. Coming from the point of view of the energy industry, I think this document shows the demand for energy will continue to increase substantially in the near term. Prices will be the means of allocating these finite energy resources and therefore the rewards to the innovative oil and gas producer will be substantial. McKinsey notes.

To some extent, the rebalancing of global economic activity from developed to emerging markets simply reflects economic laws of gravity. In a world where ideas can flow freely and countries are at different stages in adopting modern modes of production, communication, and distribution, less developed nations should grow more rapidly than their counterparts in the West as they catch up.

China, India, Brazil and others are providing substantial increases in the quality of life for their citizens. This naturally imputes greater volumes of energy will be consumed by these countries. Competition for energy resources will be extreme. How much of an increase in consumption and energy pricing is reflected in this next quotation.

The structural issue facing developed-world nations is that the amount of high-quality, high-productivity labor that will be mobilized over the next decade in Brazil, China, and India (not to mention Mexico, the Philippines, and Thailand) is likely to be measured in the hundreds of millions of people. By comparison, the entire US labor force comprises 150 million people. This is a wonderful trend for humankind and would be a boon for everyone in the world if emerging-market employment were directed largely toward production for domestic consumption. The challenge for developed-world governments and citizens seeking jobs, however, is that a significant fraction of this emerging-world labor displaces jobs that would otherwise be created in Europe, Japan, and the United States. This may be the underlying reason why unemployment in Europe, Japan, and the United States is becoming more structural rather than cyclical and may get worse over time no matter how much public stimulus is provided. Certainly, the job losses of the Great Recession look quite different from those of past recessions.

We are clearly not out of the woods in terms of the Great Recession. One of the best indicators of the world economies health has been the Baltic Dry Index. The costs to ship dry goods has fluctuated wildly during the last few years. Although the index has stabilized over the past few quarters, it remains substantially below the highs recorded prior to the beginning of the recession. (Note the recent decline in the index has been substantial.) McKinsey notes the difficult situation these global imbalances will cause various governments.

It is very difficult to say how these issues will play out. The global rebalancing that is needed is obvious: developed-world countries need to save more, consume less, become more fiscally disciplined, and run current-account surpluses (or at least be neutral). Emerging-world countries need to let their currencies rise until PPP rates are closer to financial-exchange rates. They need to consume more, save less, run current-account deficits (or at least be neutral), and continue investing, with some of the capital provided by outsiders. If major national governments work proactively together to rebalance and coordinate their fiscal, monetary, trade, and foreign-exchange policies, the adjustment process could be gradual.

The implications of this “rebalancing” may appear dire to those in the developed economies. I think the opportunities will be substantial and the challenges significant. Those that are able to innovate, and particularly the oil and gas producers, will realize many benefits. Realization that we are no longer in the “low cost” era of the energy industries past. Changing from this past mindset to one that can profit from these types of economic forces requires the changes that are contemplated in the Draft Specification.

The underlying global economic processes under way are very powerful, and the profit opportunities will be enormous as four billion people in emerging markets triple or quadruple their incomes and wealth over the next 20 years.

McKinsey are specific on how companies should position themselves for these changes. Oil and gas firms need to adopt these and other recommendations. It is foolhardy to think that these economic challenges and opportunities can be handled by the existing bureaucracies. Innovative oil and gas producers need to begin the process of addressing these opportunities by acquiring the software development capability of People, Ideas & Objects and begin the development of these software applications.

These suggestions represent specific applications of the more dynamic management approach I have urged companies to adopt in the past. The hallmarks of that approach—heightened awareness, greater resilience, more flexibility, and the timely alignment of leadership around needed adjustments—will be invaluable for companies as they navigate the choppy waters of global economic rebalancing. This process will continue and perhaps even accelerate in the years ahead, not despite, but because of the structural adjustments that are needed to put the global economy on a more sustainable trajectory.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's McKinsey Economics Change China Innovation Strategy

The Division of Labor

The question has been asked, how does the Draft Specification implement a renewed division of labor and specialization? This is a good question, and one who's answer is not fully described in the Draft Specification. I want to be mindful that I don’t interfere in the development of the Preliminary and subsequent specifications. These developments are user driven developments, for me to interfere by commenting on certain aspects would have serious consequences. Users need to know it is they who have the power to make the changes they need. I see this question as being a further clarification of the Draft Specification, and since there are no developments currently being conducted, I do not see any risk in answering this question at this point in time. I will however mention that my perspective may be limited, that the community will be able to add substantially to these points.

To revisit why the division of labor and specialization are important to the oil and gas industry. It simply is the sole source of any economic development. As time passes and the reorganization of industries continues, a further division of labor through greater individual specialization increases the economic output of fixed resources. Therefore to increase the volume of oil and gas production, it is necessary to reorganize the industry based on a more defined division of labor. In this globalized economy, the need to employ software to manage the division of labor is a necessity. The energy industry therefore needs a software development capability, such as that offered here by People, Ideas & Objects, to expand its output.

In our recent review of Professor Langlois we stumbled upon the solution to this difficult question. Recall his words were “gap-filling” in terms of Industrial Districts and Business Groups. The filling of gaps is the process of identifying areas where work needs to be done. The process of going about and filling those gaps is how the division of labor is expanded.

The primary People, Ideas & Objects software modules that enable the identification of gaps is in the Resource Marketplace, Knowledge & Learning, Research & Capabilities modules and the Military Command & Control Metaphor. The Draft Specification is silent on this capability and as I mentioned earlier, this posts content should be considered clarification and possibly an addition to the spec.

Imagine for a moment that the Joint Operating Committee (JOC) has a distribution of the people that are assigned specific tasks to be completed. These can be seen as within the Military Command & Control Metaphor (MCCM) that details the organization and the roles and responsibilities of the people involved. Imagine for a moment that the makeup of the MCCM in the JOC can be compared to a “template” of the optimal distribution or known division of labor. A software driven comparison of the two charts, the MCCM to the template, shows the “gaps” that need to be filled. This same analysis could also be applied in the same fashion for the roles and responsibilities of an individual producer.

How much of this analysis is unique and confidential to the applicable JOC or producer is unknown at this time. It is reasonable to assume that their might also be prototypical industry division of labor templates that are developed within the Community of Independent Service Providers. Where members of the CISP have specialized in increasing organizational output through analysis of the division of labor of JOC’s and producers.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Langlois Organization Community Military-Command Specification

Positions, positions and more positions.

First of all, let me note for the record, we are not in a position to hire anyone. We have no financial support from the industry and expect no one to have to incur any risk in the development of these systems. There are times when writing this blog seems like I have become completely delusional, this is one of those posts. The purpose in mentioning these positions is to provide the readers of this blog with an understanding of where and how they may be able to fit into the developments, when they are funded.

In past blog entries we have been able to list a small number of positions that are involved in the development of the application. These previously noted positions are as follows.

Product Owner

When we begin development, we will be looking for these somewhat new and interesting positions. With the number of development teams approaching the low twenties, each with their own Product Owners, we will be looking for a large number of people to fill these positions.

In a previous blog post, we documented some of the work that is carried out by Product Owners.

Account Manager

A little bit of chaos never hurt anyone. Too much chaos and we run the risk of disrupting the communities involved in this development. That’s what the Account Manager position is designed to deal with. Ideally these people are seconded from the producer firms that they will represent as an Account Manager. In a previous blog post, we documented the work of the Account Manager.

Agile Team Business Analyst

We highlighted the Agile Team Business Analyst position in another recent blog post.

We also have the following executive positions available, when we are funded that is.

Chief Financial Officer

As all good firms have, financial management is an inherent part of success. As someone who has been a CFO, I have a strong perspective on the position. The CFO of any firm has to be the one that is ultimately responsible for the financial success. And they have the power necessary to make this so.

A difficult task of this position will be the compensation provided to the Community of Independent Service Providers. That is to say with so many participants in the development and the CISP, managing the work flow of these communities will be an important aspect of the success of this position.

Chief Operating Officer

Keeping all the balls in the air is the skill that these people provide their firms. COO’s have the ability to anticipate the needs of the organization and prepare the way for the smooth implementation of those capabilities.

Vice-President Development

Heading the software development effort of People, Ideas & Objects will be the responsibility of this position. From managing the “Agile” development team, which is expected to grow to 300 developers, to maintaining the development tools. This position is responsible for anything and everything to do with the software.

Since we are an Oracle customer, this person will need to be well versed in those technologies. Recall that our strategy regarding Oracle is that we use their technologies from stem to stern. It would therefore be incumbent on this position to use the Oracle resources to the utmost. Having a large team of Oracle developers and consultants would therefore be expected to be employed by the Vice-President Development of People, Ideas & Objects.

Vice-President Community Development

Working with the resources as presented by the Community of Independent Service Providers. This person will need to ensure the CISP develops in the best interests of the innovative oil and gas producers. The Account Manager positions noted earlier in this post will also report to the Vice President Community Development. Therefore there will be a large emphasis on policies and procedures to ensure these large populations of people are prepared, motivated and capable of meeting the demands of the innovative producers.

Vice-President Business Development

We are committed to the oil and gas industry as software developers. We are not, and will not entertain the thinking that we can provide service to other industries. With this in mind, the Vice-President Business Development is seen more as a resource that is available to the executive team. Added bench strength in areas of issues and opportunities will serve the firm and the innovative oil and gas producers well.

Vice-President Infrastructure. 

I had previously detailed the hardware policies and procedures of People, Ideas & Objects. The oil and gas industry is expected to provide the individual to head the hardware infrastructure to run the People, Ideas & Objects software applications. This is done to ensure they have the means to have their applications run in a manner that is consistent with their compliance and governance needs.

The president of the hardware firm is also the Vice-President Infrastructure for People, Ideas & Objects. As a member of the team this individual will have to have an intimate understanding of the software and its needs.

Director Research

When you look at the organizational chart in this post. The position of Vice-President of Research is held by myself. The Director Research position therefore needs to be capable of working with me to guide the firm on its long term path.

Members of the Community of Independent Service Providers

And one’s imagination is the only limit to the types of work that can be done as a member of the Community of Independent Service Providers.

One of the attributes of the work at People, Ideas & Objects is the range and scope of understanding. We need to know the business of the oil and gas industry, the advanced hardware and software technologies and the academic sciences of organizational economics as well as other disciplines. A very challenging and rewarding group of positions in these fast paced times.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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Scope of the Preliminary Specification

We have therefore established January 1, 2011 as the commencement of the development of the Preliminary Specification. What does this involve and what are the objectives of the specification? This post will provide a general outline of the work that will be done during 2011.

Firstly we should establish what a “collaboration” is. In many instances the terms collaboration and consensus get confused. I see these as two distinctly separate terms. What I feel happens is a group will define what a consensus is by determining what the majority will agree to. On the other hand, a collaboration is the hard work of determining what is the optimal solution. Collaboration is a process that achieves breakthroughs and discoveries.

The Preliminary Specification is a consensus of the producer community. It is important to have the input of subscribing producers to define the overall scope of the application. If a producer has operations in the Gulf of Mexico, extensive NGL or heavy oil operations they should ensure that the Preliminary Specification’s scope captures those requirements. If they don’t actively participate to define their needs within the application, at the commencement of this development, it will be significantly more difficult to assert their needs in subsequent iterations of the development.

The Preliminary Specification is a collaboration of the end user community. These are the people who will need to use the application. They are the best resource to define the application process and functionality that they need to do their jobs. It is their tacit knowledge that is and will be employed in the oil and gas industry. Tacit knowledge can not be captured and employed by computer systems. What users can do is build the software tools they need to deploy their tacit knowledge. Collaborating to define and discover what tools would work best is therefore their responsibility. No one else can do this critical definition for the user community.

The Preliminary Specification is a collaboration of the Community of Independent Service Providers (CISP). This group of individuals, teams and firms are the glue that holds the developers and the users together. They are resources that provide the users with the delivery of their software tools.

The Preliminary Specification has been previously defined as 100 People years of effort. The population of users, producers and CISP participants in making up this 100 People years is very large. In the several thousands. The larger the participation, the better the output of the specification will be. In essence we are trying to capture as many of the ideas that are available in the various communities, the needs of the producers, determining which are the breakthrough discoveries and settling on a scope of functionality of the application. A quotation of Version One defines this as breadth of the application.

To effectively deal with scope on an Agile project, specifications must be considered in two dimensions: breadth first and then depth. It is essential that we understand the breadth of what we want to build early in the project. Dealing with the breadth of the solution helps the team understand scope and cost and will facilitate estimating and release planning. The breadth of a project begins to frame the boundaries of the project and helps to manage the organization’s expectations. Looking at the breadth of the requirements is a much smaller investment of time and resources than dealing with the entire depth. The details are most likely to evolve as we progress through the project so defining them early has less value.

The two constraints placed on the Preliminary Specification are they must use the Draft Specification as it's starting point and be focused exclusively on the business of oil and gas. Technology is not part of this specifications deliverable. The depth of the application will be determined during the Detailed Specification.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Agile-Scrum Budget Collaboration Development Preliminary

Energy demand in 2030

An interesting comment is made on the BBC regarding the projected 2030 demand for energy.

Oil found in deep waters is needed because the world will need 45% more energy by the year 2030, BP's chief of staff, Steve Westwell, earlier told the World National Oil Companies Congress.

The past five years has seen the global production of oil stall at around 85 million barrels per day. And in 2010 we know that global oil production has declined by one million barrels. Therefore it would seem this comment appears rather optimistic.

How will producers increase production by 45% in the next 20 years when they haven’t been able to sustain 2005 production volumes. Is it expected that the bureaucracies will suddenly begin to substantially outperform their recent past?

The appropriate thing we need to do is to begin the development of systems that define and support the innovative oil and gas producer.  Systems that use the Joint Operating Committee in the manner that is described in People, Ideas & Objects Draft Specification.

To approach a problem of this magnitude, of meeting the markets demand for energy, without first organizing ourselves for the challenge will only lead to disaster.

Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Energy, failure, Innovation, organization

Start Date

It might be reasonable to establish a start date in which we could look forward to beginning the next step in our developments. That being the development of the Preliminary Specification. Therefore, you should mark your calendars for January 1, 2011. That is when the development of the Preliminary Specification will begin. People who are interested in becoming members of the Community of Independent Service Providers (CISP), and participate directly in the Preliminary Specification, should begin the development of your proposal as soon as possible. We will begin accepting applications August 31, 2010.  


It would be ideal to have as many people as possible involved in the development of the Preliminary Specification. Therefore, special emphasis should be placed on the marketing aspects of your proposal, as all the other CISP members, users and producers will be able to view the wiki, where they are stored with the specifications deliverables, starting January 31, 2011. Users and producers would then be able to contact CISP members to have their ideas, participation and needs defined through the CISP membership.


Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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Phase Two

It has been an interesting June so far. What I see happening in the marketplace is quite remarkable. Discussion of the financial difficulties that oil and gas producers are having can be cited daily. Margins are thin, and in some instances, negative. Reserves and production profiles are in decline, while capital expenditures are ever increasing. The basis of this project has always been the volumes of earth science and engineering effort in each barrel of oil equivalent has and will continue to increase. To approach this issue, producers need to reorganize the fixed volume of human resources in order to achieve greater output and capabilities. Organize around the Joint Operating Committee as suggested in People, Ideas & Objects Draft Specification. The time for this project to be fully funded and begin developing the Draft Specification is near at hand. This is why we now need to shift to phase two of this project.


Phase one has been the research and development of the Draft Specification and associated attributes. In the first half of 2010 we have been fortunate to be able to conduct a fairly comprehensive review of the research that went into the Draft Specification. This review for all intents and purposes has ended. Academically proving the basis of the Draft Specification was valuable, now we need to shift gears and get on with the business of People, Ideas & Objects.


After a two week hiatus, I have posted a number of entries that intimate some of the changes that need to be made. This is the beginning of the “commercialization” of the Intellectual Property (IP) contained within this project. Although I am hesitant to prepare a budget and plan for how this project proceeds, these may be possible in the fourth quarter of 2010. The majority of the material being developed for that budget and plan generated from the entries that are written here in the next few months.


What is necessary now is for the producers to begin actively supporting this project. To sit back and wait until someone delivers a software application that meets your needs will be a long and lonely waste of time. To suggest that you can have systems that meet your needs without your direct involvement is foolish. The industry has to financially commit and actively participate in the communities that are an inherent part of these developments.


I don’t expect this transition from Phase one to two will necessarily be easy. It would be of great assistance if those that read this blog were to begin their own action plans. Plans on how they could participate and encourage the firm they work for to join in these developments. One of the difficult aspects of this second phase is the scope of the effort is very large. Not much will happen unless everyone gets involved.


Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so require the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.


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Approaching regulatory issues

Many of the ways that problems are solved in the Draft Specification might lead to issues with the current regulatory frameworks. This should be expected. We are building a system that is designed and intended for the 21st century. Retrofitting 20th century regulatory frameworks into these systems is going to create some friction. Where conflict and contradiction exist, creative and innovative solutions can begin.

We have a variety of ways to deal with these issues, if and when they arise. We can take the literal interpretation and implement the compliance feature in much the same way they would be implemented today. We can design new and innovative ways in which compliance can be achieved and alternatively we can influence and change the compliance framework itself.

Of these three different approaches we should aspire to attain better compliance and governance of the producer and market firms. This clean slate approach is one of the advantages that we acquire, we should optimize it. Sounds like a job for the Community of Independent Service Providers.

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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We are an Oracle Customer

Cloud computing is a paradigm shift. The consequences of moving to that new platform are substantial for all concerned. As software developers, we are not immune to these changes. Viewing cloud computing, as developers, from the same perspective as that used in the past would eliminate many of the benefits of this new dynamic. This post seeks to highlight how People, Ideas & Objects, as cloud computing software providers to the oil and gas industry, approach the use of Oracle technologies and services.

The overall strategy that I have used with respect to Oracle is that we are perceived as a customer. In today's environment, Oracle's business is based on selling technology directly to the oil and gas firms. People, Ideas & Objects now represents the oil and gas firms interest by providing the cloud computing services, and therefore we are Oracle's customer.

Usually, as developers, we would be classified within Oracle's developer network. Providing People, Ideas & Objects with a discount on all of their products. As a result of being a "customer" as opposed to the traditional "developer", People, Ideas & Objects will have to pay the full list price for Oracle's technology. This premium being paid entitles us to perceive Oracle as we noted in the second paragraph of this post. This is also wholly consistent with how the innovative oil and gas producer is focused on their key competitive advantages of their asset base, and earth science & engineering capabilities.

Many of Oracle's technologies are the preferred choice in most markets. That is to say that we will use Oracle technology and services at every opportunity. Hardware, operating systems, database, middleware, applications, consulting and services. The only area of conflict in our policies is regarding the Community of Independent Service Providers (CISP). If a member of the CISP and Oracle are providing similar services, we will defer to, and support the CISP.

People, Ideas & Objects as providers of a software development capability and cloud computing provider. Are in partnership with Oracle in bringing this technology to the innovative oil and gas producer. One thing that can be said about Oracle's technology, is that it is the best. When we look at the difficulties in increasing the market supply of oil and gas to the global economy. It is challenges such as these that Oracle is prepared for.

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

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Independence of the CISP

The past few months have provided a review of many of the attributes of the Community of Independent Service Providers (CISP). One of the key attributes that we have not been able to discuss or highlight is the independent nature of the people who are part of the CISP community. By independent we simply mean that the people are not affiliated with one producer firm. They are oriented to the Joint Operating Committee (JOC), and therefore do not bring any of the bias that people affiliated with one producer might.

This independence is of importance, particularly in the administrative areas of the oil and gas industry. What is central to the administration of the JOC is the bias towards all of the producers that are represented in the property. For example, it is assumed that most accounting personnel will be affiliated with certain JOC's as opposed to being employed by one firm. If people are affiliated with more then one JOC, which is highly likely, they may be associated with certain geographical regions or producing zones as their specialty. It is the JOC that is their employer / client, not the operator or any single firm that may have hired them.

This discussion precludes any of the administration that would be associated with the compliance and governance related areas of the individual producer firm. Administrators will also be engaged on a producer by producer basis. I will however note that the Compliance & Governance of the firm is mostly oriented to the decisions that are made at the JOC level, therefore, they are more a fallout of the decision process, as opposed to the all consuming activities they appear to be today.

The accounting for the JOC that is done in the People, Ideas & Objects Draft Specification is handled primarily in the Partnership Accounting Module. This module seeks to account for the JOC and the contributions that are made by each participant firm. Effectively eliminating the concept of having one firm designated as the operator, each producers resources are pooled through the Military Command & Control Metaphor. And those resources are costed to the JOC on the basis that they are either chargeable or non-chargeable to the other partners within the specific JOC. The resources that are provided by the CISP , and for that matter any service sector firm, are engaged contractually through the JOC and therefore are independent of any specific producer firm.

As an example, lets consider the manner in which production accounting allocations are handled under the proposed People, Ideas & Objects application. Lets first assume that the entire history of the properties development has been handled by People, Ideas & Objects application and the independence of the CISP . The overriding concern of the production allocation is to ensure that the methods of allocation be consistent with that which is captured in the spirit of the governing agreements. Because the CISP is oriented to the JOC and not one individual producer, interpretation of that agreement is consistent with the spirit. (Not to suggest that this is not the case in current oil and gas production accounting. ;))

Applying this same example to a property who's history has codified the production allocation process. This production allocation process would be adopted "as is" within the Partnership Accounting module.

Action to fund these developments is required. But action can also be taken by those that are employed in the oil and gas industry. Participation in the development of this software, either as a user or member of the Community of Independent Service Providers, is open to all those that may be interested. Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are.

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production . Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here. 

Technorati Tags: People's CISP Community Development
 

The CISP is a marketplace.

If we were to have name tags on each of the birds in this picture. The mother bird of course would be the oil and gas industry. And the others would be PriceWaterhouse Coopers, IBM, Delloitte & Touche, EDS, Accenture, CapGemini etc. To sustain this type of "environment" would not be in the best interests of the innovative oil and gas producers. I see many of the types of services that are provided by these vendors to be in direct conflict with the members of the Community of Independent Service Providers. It is in our best interest to ensure that we don't replicate this relationship in the future. This post explains how the CISP will replace these service providers with value adding services to the innovative oil and gas producers.

Please note that I see the CISP providing much more then the services that are provided by just these firms. Recall some of the key areas where members of the CISP will be providing value include software definition and development with People, Ideas & Objects developers, software installation and integration using Oracle Application Integration Architecture, Accounting Service Provider, Representatives of user group, and conference planner to name just a few. To detail the list of services that are provided by the CISP runs the risk of limiting the imagination of what they can provide the innovative oil and gas producers.

What we are creating in the CISP is a market of self organizing individuals, groups and firms. Participation within the CISP is not limited to anyone, and is open to whomever wants to join. The only requirement is to follow this procedure. Once the license is signed and the summaries are posted, then the individual is free to develop their firm in the best interests of the People, Ideas & Objects software and the innovative oil and gas producer. This membership process would also be open to the named groups at the beginning of this post, if they desired to and believed they could make some money at it.

To eliminate the possibility that the CISP or market of self organizing individuals, groups or firms are precluded from the oil and gas firms business. (As reflected in the above picture.) People, Ideas & Objects needs to implement a policy change in the license that is granted to those licensees of the CISP . That change is to assess a royalty of 40% on any revenues in excess of $5 million to be payable to People, Ideas & Objects. Revenues that are subject to this royalty calculation are those that are derived from working with the People, Ideas & Objects developers and the associated CISP client producer firm.

We are doing this to provide any member of the CISP with an unconstrained $5 million revenue stream. Companies such as those named above, far exceed that threshold and therefore would find the royalty too onerous to be able to compete. This royalty is being implemented to ensure that the members of the CISP remain a market of self organizing individuals, groups or firms.

We have seen the level of innovation and ideas being generated from those named at the beginning of this post. Little if nothing has been generated in terms of implementing new and value adding ideas or technology to the oil and gas industry. Having a market of providers, that is unlimited in terms of who can participate, and financially penalizes the large firms is in the best interest of the innovative oil and gas producers.

Firms that are generating $5 to $10 million in gross revenues (net revenues of $5 to $8 million)  will still be able to generate significant value for their owners. That assumes they are able to build value for their clients, the innovative oil and gas producers. Instead of focusing on quantity, they can focus on the quality of the services they provide and continue to accelerate the specialization of the services provided and the industry division of labor.

Our policies are designed to motivate the members of the CISP to enter and prosper in building value for the innovative oil and gas producer. To develop this resource it is necessary to ensure that these people are free to pursue their business without the risk that they will be eliminated from the market by those mechanisms that are in play in the picture that is reflected above.

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: Community CISP Ideas Innovation Organization Value-Proposition
 

Intellectual Property Management

On Monday we noted the overall decline in global oil production. As we proceed with the commercialization of the Intellectual Property (IP) that defines this software development project. It is important to point out the nature of the Intellectual Property that is part of the People, Ideas & Objects^TM software development capability and offering. There are two critical areas of concern where the producers should focus on.

1. Ensuring that they are participating within the authorized industry initiative as represented by this IP. As these provide the consolidation of the industry initiative and represent an investment by each producer firm.
2. Ensure that they are not dealing with an un-licensed and non-authorized software development team or community. As these avenues offer no future for the producers investment.

Participation with an unauthorized firm is at the producers sole expense. Producers concerned with the validity of an individual, group, community or firm may email me for further clarification. Every attempt to identify any individual, group, community or firm that are un-licensed will be made by People, Ideas & Objects. Licensed providers are clearly listed on our internal wiki.

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production . Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here. 

Technorati Tags: People's IP Management
 

World oil production has declined.

Within this post I discuss the current situation with respect to how global oil production has declined. I assert in this post that management must now act to avoid the perception of conflict, and must act to fund People, Ideas & Objects.

In May 2004's Preliminary Research Report I proposed we research the following hypothesis.

• The corporate hierarchical organizational structure is an impediment to progress and most particularly, innovation.
• Determine if the Industry Standard Joint Operating Committee, modified with today’s information technologies, provides an oil and gas concern with the opportunity for advanced innovativeness.

It was through the research of this hypothesis that it was implicitly held that the bureaucracy would cease to provide the market with adequate energy. That day is now closer then we expect, and the time in which to act is upon us. If we do not act in a reasonable period of time, then the economy that we know today, will truly be history. Our first action is to prepare to organize ourselves for the challenge of turning around the productivity in world oil production, and then increasing it substantially to meet the prospective needs of all people.

The Issue.

After five years of static oil production, the U.S. Energy Information Administration (EIA) are reporting that global oil production has declined in 2010. In the chart below, 2010 production can be seen to have declined. This is a significant event in the history of the petroleum industry. As most would predict, I see this decline in production as a direct result of the systemic failure of the bureaucracies in oil and gas, and tacit support for our hypothesis.

It might be argued that the recession is having a detrimental effect on energy demand, however, I think that is an incorrect conclusion. I think it is fair to assume that the prior five years of static oil production was the cause of the run up in the price of oil. Add to this the world economies have resumed a reasonable level of growth, therefore demand would be growing, not in decline. What the chart reflects is an approximate one million barrel drop in production. I believe this is the beginning of the downturn in global oil production. To say that I have a vested interest in selling this system to the oil and gas industry is correct, and that therefore I am biased is also correct. However this fact is perceived, I think action is necessary to begin the developments of People, Ideas & Objects software.

Seizing the Moral High Ground.

I believe the management of oil and gas companies are conflicted. The less they do about the expansion of oil and gas deliverability, the higher the oil and gas prices, and the better they appear as managers. This conflict has been in play for the past five years. With the overall decline in production now upon us. It is time for the management to assume their moral and ethical responsibility to increase global production. This can only be done by expansion of the industry through the proven economic principles of a further division of labor and specialization. Economic principles that we have used in the development of the Draft Specification. Organizing around the Joint Operating Committee, and in a manner for the industry to expand its output.

Management are now being called to do the right thing. Eliminate their conflict and financially support People, Ideas & Objects. During the past five years the bureaucracies that operate the oil and gas companies have stated that the static nature of oil deliverability was not their problem. Their focus was on their own business domain, and that was all that they could consider. Now this situation has changed in a fundamental way. If it is not the oil and gas industries problem, as to how to deliver the market demand for energy, who's is it? The need to move the industry from the perspective of "minding your own business" to the moral and ethical issues associated with a real decline in energy production must begin.

Our recent past has shown that oil and gas companies have chosen not to participate in these software developments. Effective April 1, 2010 our appeal had been re-directed towards those oil and gas shareholders and investors that know there is a better way. Effective today this too has changed. As of today, we are focusing our funding efforts on the bureaucracies management. Invoking their moral and ethical duty that everything be done to ensure the world has adequate energy supplies.

Adam Smith and the Division of Labor.

Funding is required to begin the developments of the software and communities that are part of the People, Ideas & Objects initiative. If we continue to just throw money at the bureaucracies, we will not get anywhere. Our approach to reorganizing the industry must be based on the proven techniques and economic principles of Adam Smith's division of labor and specialization. Just as Adam Smith was able to prove his theories by reorganizing a pin factory, and in the process increase pin production by 250 times. Through use of these same principles, by way of the development of People, Ideas & Objects software, the industry can increase its deliverability of oil and gas.

Build the Software.

Why we need to build software to solve this problem is due to the fact that organizations in our modern economy are defined and supported by software. To state that People, Ideas & Objects is the software that identifies and supports the innovative oil and gas producer, and is counter to the argument that SAP is the bureaucracy. Within the Draft Specification we are moving towards the culture of the industry, the Joint Operating Committee, which is the legal, financial, operational decision making, cultural and communication frameworks of all global oil and gas producers. By recognizing these facts and aligning the hierarchies compliance and governance to the JOC, innovation and speed of operations are the results.

We need to begin the funding of these software developments. Initial development costs have been budgeted in the $700 million to $1 billion range. The method for funding these costs is based on an annual levy of $x / barrel of oil equivalent. That levy has been set at $1.00 for 2010, potentially (conceptually) raising $120 million in one year. Further information on how to participate is located here.

I see these developments as an important turning point in the history of the oil and gas industry. Seeing that our hypothesis has been proven correct. Producers that subscribe to these developments would gain an operational and financial performance benefit from being involved in this software development project. Action to fund these developments is required. Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. 

In Summary

Society is put in peril when world oil production declines. There is evidence that the worlds oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As has been proven, this reorganization could achieve far greater oil and gas production. Management of the industry are conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags: People's Funding Leadership Management Failure