McKinsey on Governing Joint Ventures

As I promised yesterday, this McKinsey article on governing joint ventures has to reside in any one's top ten list of favorites. The work that we are doing in People, Ideas & Objects (PI&O) is moving the compliance and governance frameworks of the hierarchy into alignment with the Joint Operating Committee’s legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. To do so provides us with greater speed and accountability from an organizational point of view. This has been difficult to tangibly quantify and qualify. That is until this McKinsey article.

Comparing the governance of both the standard corporate model and a generic joint venture. McKinsey provides a strong contrast of the opportunities and issues that we face in aligning the innovative oil and gas producers nine frameworks under the PI&O software. Noting in the paper that we not only attain greater speed and accountability but;

Despite the differences between wholly owned businesses and joint ventures, many of the basic tenets of good corporate governance can—and should—be applied to both. The principles discussed here might be seen as the minimum needed to promote accountability, speed, transparency, and, ultimately, performance.

The article recommends specific actions be taken to enhance the governance of joint ventures. These include;

• Appoint at least one outside director.
• Designate lead directors or a strong chairperson.
• Review and reward the performance of board members.
• Sponsor an external audit.
• Create a real challenge process. (Rigorous reporting and review process.)
• Let the ventures CEO run the business.

These are all excellent points of discussion on how the governance of the Joint Operating Committee could be handled in the Preliminary Specification. The community will need to take recommendations like these and determine what specific actions and processes need to be included in the specification. I could see the governance model being somewhat of a checklist of functionality and process management that the partners could agree upon. The PI&O software then providing that level of governance for the JOC. These are the decisions that the community has to make and why the producers are such a critical part of the discussion.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Comments From Shell's CEO Peter Voser

The Financial Times were reporting on Shell’s quarterly earnings which were robust to say the least. They noted a comment from Shell’s CEO Peter Voser that I found resonates with the work that we are doing here at People, Ideas and Objects.

The time of low-cost oil and gas is at an end and the world is entering a stage where finding resources will be more “complex” and require more money and investment, according to the head of Europe’s biggest oil company. 

Peter Voser, chief executive of Royal Dutch Shell, said the longer-term trend was for higher costs. “In the longer-term, you will clearly need higher oil and gas prices, or energy prices.”

I believe the transition from the low cost era to this new “complex” era is a fundamental change in the oil and gas business. One that requires we reorganize to focus our efforts on the difficult aspects of finding and producing oil and gas. This change demands that we look at the business and determine the best way in which to organize it for this new challenge. To suggest that the ways and means that provided profitable operations during the low cost era will serve us during the complex era is incorrect.

People, Ideas & Objects suggests we build the systems that identify and support the industry standard Joint Operating Committee. By doing so we are able to align the hierarchies compliance and governance frameworks with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee. This alignment provides an enhanced speed, accountability and innovativeness that is necessary in this new “complex” oil and gas era.

Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Budgets, Technology and Leverage

In businesses such as People, Ideas & Objects we have three main risk categories to deal with. We have financial, market and technical risks that must be addressed in order to succeed. This post is going to briefly address some of the technical risk that we face and how that risk impacts our budget needs. Embarking on a multi-billion dollar project without addressing these technical risks would be like bungee-jumping without the rope.

Firstly we should point out a decision that we made a few years ago that mitigates much of our technical risk. That is, the use of Oracle Fusion as the base ERP application at the core of People, Ideas & Objects (PI&O) applications. Our products will be built on Oracle's RDBMS, Java and Fusion Middleware which provide us with further ability to mitigate our technical risk by using best of breed in those product categories. The costs of these Oracle products are incremental to the software development budget we have been discussing in this and recent posts.

People, Ideas & Objects is based on a Technical Vision that uses existing technologies in ways that the oil and gas industry will need to implement them. One that sees technology being ubiquitous, always on, secure, asynchronous and dynamic. An environment where the oil and gas industry is supported by a software development capability in addition to the People, Ideas & Objects applications that will be provided. This environment has to be purpose built and that is what PI&O is setting out to do. The technical risks of bringing this environment to the producers that subscribe to this community are mitigated through the ability of controlling the various technical, financial and market risks through the Intellectual Property that holds these disparate parts together.

At the same time we are not pushing the technical envelope. All of the technologies and their proposed deployment are proven time and again capable of the job that we are asking of them. There is a maturation of the technologies in the past ten years that provides an assurance that they are up to the task. I also expect that in the next ten years they will continue to provide greater levels of confidence and assurance of their capabilities.

What can only be described as a revolution in development tools and methodologies has occurred in the past decade. These tools and methodologies have reduced the time and budget requirements of software development projects, while at the same time increased the quality of the deliverables. People, Ideas & Objects have adopted these tools and methodologies and will implement them to reduce the time required for developments, the budget for developments and increase the quality of our developments. Ten years ago when compilers had to be purchased for several thousands of dollars per developer; have now been replaced by free IDE’s that exponentially accelerate the developers productivity. Methodologies who’s user focus is a religion. And build on frameworks and middleware (like Oracle Fusion Middleware) that provide an architecture and building block of work already done. Developers today are far more productive which reduces our risk.

Our approach to developments also mitigates much of the technical risks associated with a project of this size and type. The Draft Specifications use of the Joint Operating Committee imputes a scope of operations that involves the entire producer firm. Little of the unique characteristics of the applications Marketplaces and MCCM exist in current legacy systems. Therefore we are limiting the involvement of legacy system requirements to data only. As such we are unconstrained by existing requirements of systems limitations based on prior technologies. Ours is more of an engineering approach of identifying and resolving problems.

Transitions, accounting integrations, training, and the variety of tasks related to software’s use are not part of People, Ideas & Objects business model. We are focused on software development. We defer the remaining businesses and opportunities to the Community of Independent Service Providers to fulfill the needs of the producers in these areas. This is the only reasonable means in which to approach the hands-on and large scale necessary to complete these activities.

It is these opportunities that I see mitigating the technical risks that we face in this software development project. Although our budget is large, it would have been impossible only a few short years ago. The technologies are sound and capable, ready to carry the load. We have only our imaginations holding us back in terms of how this industry could be managed more efficiently.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Budgets and Canadians

I’ve titled this post “Budget and Canadians” because it is the best example of this unique budget situation that I can highlight. The situation may occur in other jurisdictions, I an not aware of any other specific cases, and those cases will be a determination of the community through the development of the Preliminary Specification. This specific Canadian situation is something that I am intimately aware of and generally am able to predict the outcome of what will happen. Therefore I am writing about what I know and am reasonably sure what the community will decide in developing the Preliminary Specification.

There are two unique development requirements that are required for the Canadian marketplace. The first is a unique royalty regime and the second is the oil-sands developments. If we assume these two unique software developments cost in the area of ~ $100 million. And the Canadian marketplace produces approximately ~ 3.5 million barrels of oil per day. As a result of these facts, when the time comes for the community to decide the geographic scope of the People, Ideas & Objects application (a deliverable of the Preliminary Specification) Canada’s unique development needs will be an issue that needs to be resolved.

Looking at the issue critically from the communities point of view. $100 million in development costs divided by 3.5 million barrels per day is $28.57 / boe of a subsidy that Canadian producers would receive from the general development “pool” in order to meet these unique Canadian software development needs.

What I think needs to happen is the Canadian producers need to pay the basic fees that all producers are assessed in order to participate in the community. Then in order to ensure that the decision is made to include Canada as part of the geographical scope of the People, Ideas & Objects Preliminary Specification. Pay the additional $100 million in additional software development costs allocated over the base of subscribing Canadian producers. That is the Canadian producers, assuming you could achieve 100% subscription rates, would provide an additional $28.57 per barrel of oil equivalent in additional fees to offset these unique Canadian development costs.

Another alternative would be for Canadian producers to discuss with the Alberta and other governments to fund the costs of their unique royalty requirements. I have had discussions with the Alberta government on this point and I wish the industry luck in this endeavour.

It may be considered unreasonable for the community to undertake the unique development costs of any jurisdiction during the Preliminary Specification. As we can see these costs skew the total development costs materially, and as such will need to be addressed separately. I believe jurisdictions like Canada need to address this point prior to subscribing to the Preliminary Specification and have the commitments in hand to fund the unique development costs before they begin their participation. Otherwise they may be surprised at the decisions regarding the geographic scope of the application by the community.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Budgets, Fees and Penalties

Part of our fee structure may not be obvious to most producers on first glance. People, Ideas & Objects Draft Specification was completed in 2008 and the majority of the discussion around its use was conducted in 2009 and the first half of 2010. It was at that point in 2010 that we determined the developments off the Draft Specification were ready to commence. And therefore, started the “clock ticking” at that time, January 1, 2010.

One of the fundamental aspects of our revenue model is that we don’t become “blind sleep walking agents of whom ever will feed us”. Systems development can be easily controlled by closing off the budget during critical points in the development. With an application such as People, Ideas & Objects we need a Revenue Model that deals with this reality and provides us with a means to control the development by controlling the means of production, or budget. Review of the discussion of the Revenue Model will help to provide a better understanding of our point of view.

By starting the clock ticking on January 1, 2010 we have begun “controlling the means of production” by raising the budget for developments. Although the point in time when we have generated revenues has not yet happened. We have pending revenues from the industry when the time comes that the overall proposed solution becomes compelling enough for industry to act. Another aspect of this “controlling the means of production” is the 300% late penalties that we assess for any late payments past March 31, of the assessment year. Producers that take issue with the penalty scheme have two alternatives, to not participate in the community, or pay their fees in a timely manner.

Non-payment of the fees carries the additional penalties of non-use of the software and non-participation in the communities. If in 2015 a producer decides to begin using the software they will face the same fees and penalty structure from 2010 onward. However, the probable steeper penalty will be the inability to have had their organization represented in the community during development. This participation is not a one way participation where the producer tells the developers what their needs are. It is a creative and collaborative process that will involve many decisions and developments that will create solutions that might look foreign to an outsider looking in. I think these points eliminate the motivation for a producer to become a “Free Rider” on the People, Ideas & Objects software developments.

But there’s more. Those producers that are willing to participate early are able to earn what we call the “Participation Bonus”. This bonus is earned when other producers who may have been free riders subsequently decide to join, and pay the fees and penalties back to 2010, offsetting the current years budget, relieving the earlier subscribing producers some of their costs of development.

We have tried to motivate and establish a fair and reasonable Revenue Model that deals with the issues we face in this software development. For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Budget, Copyright and Success

Adding to last weeks discussion of how the copyright is used to support the assessments to the producers and enables the users to innovate freely within the community. Today I want to talk about the benefits of the copyright with respect to the budget. With a $1 - 2 billion budget for software development. Producers should seek comfort in the fact that only one software development will be licensed. People, Ideas & Objects will not have look-alike software development projects springing up and diluting our effort. Multiplying the industries software development costs with multiple instances of the same developments. This post explains how the copyright ensures the resources of the industry remain focused on one solution.

The basis of competition in the software development business, as I have stated here before, has to be on Intellectual Property (IP). To provide a solution that initially provides unique functionality lasts only minutes in terms of a competitive offering. This limited form of competitiveness ends up diluting the original investors financial investment, their innovative-ness in bringing a solution to the market, and has become the sole basis of how most of the software developers try to compete in the oil and gas marketplace today. This may seem like a benefit to the oil and gas producer, however, I would suggest they have a good look around.

Nothing substantial in terms of scope or investment has been undertaken in the ERP software development for oil and gas for almost 30 years. To approach the oil and gas market on the basis of an enduring competitive advantage would be the only reasonable approach to the market. That is why I have taken the strong position, in terms of Intellectual Property, that I have. However, as we can see, there are advantages to taking this strong position on IP for the producers themselves. That advantage is the focused software developments on one solution producing highly engineered solutions that meet the needs of the marketplace, and are not diluted by multiple demands for the types of resources that a software development project of this scope and scale demands.

I am not suggesting that there won’t be solutions that compete with People, Ideas & Objects in the marketplace. What I am asserting is that there won’t be any based on using the Joint Operating Committee as the key organizational construct. To compete, what someone would have to do is to generate their own research, outside the areas of where I have conducted my research, and develop their own solution. This process took me 8 years and if someone where to start today they could probably finish this research by 2020.

The fact of the matter is that the oil and gas producers have fewer choices in the future as to who provides their ERP software systems. One thing is for certain, software providers will have to ensure that the copyright and IP that is provided is as sound and secure as that which is provided by People, Ideas & Objects. To successfully compete in the marketplace today demands this level of commitment to the marketplace, and eliminates the fly-by-night providers who ultimately only siphon off the energy industries focus and financial resources on software development.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Software Development Budget

Last week we had the opportunity to briefly discuss some of the budget issues around People, Ideas & Objects. The budget for the Preliminary Specification has been set at $100 million which represents 5 - 10% of the total initial commercial releases costs. Suggesting that the costs of People, Ideas & Objects software development costs, in its first commercial release would be in the area of $1 to 2 billion. The next few weeks we will have the opportunity to more fully engage in these budget discussions and learn why these costs are necessary.

First of all I don't want to get into a detailed line by line discussion of the budget, but discuss the overall scope and the type of application that is needed in the marketplace and how that type of application could not be developed in any other manner other then through a budget of this substantial size. These budget discussions also assume that I have not underestimated the scope of the undertaking, a very real possibility.

Having an oil and gas application that meets the needs of the users and producers, that is based on the Draft Specification will provide efficiencies if it is built properly. That assumes that it is built with the appropriate budget in place. A $1 - 2 billion software development budget for an application that is on top of the costs for Oracle Fusion applications is larger then anything the industry has attempted before. Add in the producers unique costs of integration, our hybrid cloud computing investment requirements; the producers costs of funding this project, all in, are substantial. This is the reason that we have turned to industry for our funding. Expectations that investment capital would fulfill these capital requirements are misguided.

The integrated nature of using the Joint Operating Committee, and the level of change that is introduced requires that we approach this project with this scope of application and budget in mind. What makes this possible today is the People, Ideas & Objects Value Proposition. Where we allocate the costs of these developments over a large subscription base of producers. Costs of developments are disbursed through to the producer base mitigating these costs as incidentals to each producer. On the other hand, with our potential ability to aggregate a large budget, our capacity to highly engineer software development solutions will provide real value in terms of software development costs per barrel of oil equivalent.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

McKinsey, Dan Ariely on Irrationality

Another short McKinsey article to fill out our first week back. This article provides a different perspective on some every day points of view in business. Its a little light hearted but I think you’ll enjoy it.

http://www.mckinseyquarterly.com/Dan_Ariely_on_irrationality_in_the_workplace_2742?pagenum=1#daninteractive


For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

McKinsey, Five Misconceptions About Productivity

One of the benefits of a six month sabbatical is that we have aggregated many articles from McKinsey and others that pertain to the work we are doing at People, Ideas & Objects (PI&O). These articles are ideal for weekend postings and will enable us to fill out several months of weekends blog posts. In this first post McKinsey have an article entitled “Five Misconceptions About Productivity”

In oil and gas we are primarily concerned with the productivity of earth scientists and engineers. Specifically their ability to find and produce more oil and gas. These people’s ability to produce more energy is challenged today by steep decline curves and the challenge of finding the reserves. Since 2005 the world’s oil production has remained somewhat static and its unknown what influence OPEC may have been able to impact the market. Nonetheless the valuable energy resources require significantly greater volumes of science and engineering per barrel of oil produced. These science and engineering resources are somewhat limited in their volume and the capacity to increase them is very difficult, therefore we are left with the need to increase their productivity.

In today’s marketplace we thankfully have the means at our disposal to significantly effect the productivity of our organizations. In 1776 Adam Smith determined the division of labor was able to lead to higher productivity. Division of labor is the source of all economic output. That is to say that through successive reorganizations and application of the principles behind the division of labor we have been able to reach the level of economic activity we enjoy today. Therefore to expand the output of the oil and gas industry, which we can all agree is required, will require that we reorganize ourselves to achieve a higher level of economic output.

As the industrial revolution had a significant impact on our quality of life, the coming Information & Communication Technology revolution will have a significant impact on the output of our organizations. This is the opportunity that this community has in hand with PI&O. In this McKinsey article they point out a number of misconceptions about productivity, the one that stands out for me is;

Productivity is only about efficiency and is designed to bolster corporate profits.

Productivity can come either from efficiency gains (such as reducing inputs for given output) or by increasing the volume and value of outputs for any given input (for which innovation is a vital driver). The United States needs to see both kinds of productivity gains to experience a virtuous growth cycle in which increases in value provide for rises in income that, in turn, fuel demand for more and better goods and services.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of PI&O. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining PI&O can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Copyright License

On Wednesday of this week we discussed the copyright notice that was issued to the producer firms. This post deals with the politics of the copyright license and how the end users, developers, members of the Community of Independent Service Providers and those generally needing to be involved in the application have access to the Intellectual Property (IP) that makes up the research, copyright and software developments of mine, Paul Cox, as licensed to People, Ideas & Objects (PI&O).

Two key questions that have to be solved in this project is firstly, how is the greater community supported. And the second question is; how do we ensure that everyone is able to innovate without any legal impediment, and have free access to the intellectual property that makes up People, Ideas & Objects IP. Two difficult and important questions that this blog post will answer.

Answer to question 1
The answer to the first question of how this community will be supported is of course by money. That is the only way in which a long-term, difficult project such as this can survive. No one can be asked to put in the effort necessary on a volunteer basis as that will begin with a bang and fade at a critical time. Only with the appropriate means to source the financial resources to support the community through out the life of the project will this project be successful. And being successful is the only manner in which we will be able to attract the people that we need in order to make the project ultimately successful.

So the question remains how is the project sustained financially. I as the owner of the intellectual property have the sole right to assess the oil and gas producers the fees and penalties, as noted in the Revenue Model, that will sustain these communities. Payment of those fees by the producer is the price they pay for participation in the community. Individuals are free to participate as they wish. In fact they are paid for their approved efforts. Producers must pay their fees in order to participate and have their specific needs addressed, and ultimately use the software. I then in turn use that money to support the community and develop the software based on the budget that the community agrees to. If the community requires a larger budget, then the $ / barrel of oil equivalent assessment to the producers will rise or fall based on the size of the number of participating producers who have subscribed to People, Ideas & Objects.

Answer to question 2
As to how the innovation and creative solutions are developed within the community. This work can not be obstructed by the IP that is the basis of People, Ideas & Objects offerings. It is through the license provided to those that work within the community that provides them with the opportunity to work with the IP without concern for the legal consequences normally associated when dealing with IP.

This license grants unrestricted access to my IP and generates service fees for yourself, I only assess the producers for software and software development fees. In turn any innovations or developments of IP are added back to my IP which in turn then become available to everyone. This eliminates any potential cross licensing and trolling by individuals within the community, which would make the development and innovation of the software and services secondary objectives. Licensees within the community have a right to generate service revenues in an unencumbered fashion in a competitive marketplace. This provides producers, individuals and society with the optimal solution for dealing with the underlying intellectual property of this project.

The following is a general comment about the means of competing in the Information and Communication Technology (I&CT) marketplace. There is much discussion about the new versions of Apple software products and the stepping on some of their developers toes. The overt development of features that have been provided by small software providers, by larger vendors such as Apple is something we have seen many times before. The group with the fattest wallet usually wins these contests. To compete on the basis of a defined software feature set is a fools game. Unless of course you have the fattest wallet. What is needed to win in the 21st century is a new basis of competitive strategy, and that is on the basis of IP. You must have an idea that is unique that defines your product differently in the marketplace. With People, Ideas & Objects that of course is using the Joint Operating Committee. Licensees within the People, Ideas & Objects community have access to the IP that enables them to compete in services based on using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

S + B, Stop Blaming Your Culture

Over the past few years of this blogs discussion around the impact of the Draft Specification, and the use of the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. And how these changes would have an impact on strategy at the producer firm.  We have discussed many specific points that include;

• a firm is able to employ different strategies for individual JOC’s based on the optimal strategy for each property. 
• each producer within a JOC can pursue their own individual strategy irrespective of the strategies used by the other participants. 
• the strategies are unique to each firm and are mutually exclusive, based on the unique asset makeup of each individual producer. 

What today’s post realizes, suggests or otherwise makes known is that the Joint Operating Committee is also the Strategic framework. So when we state that we are moving the compliance and governance frameworks from the hierarchy to the legal, financial, operational decision making, cultural, communication and innovation framework of the Joint Operating Committee, we can and should include the strategic framework as the seventh framework of the Joint Operating Committee.

Booz & Co’s periodical Strategy + Business have an article entitled “Stop Blaming Your Culture” that pairs the cultural and strategic frameworks.

Leaders like Gray understand the value of an organization’s culture. This can be defined as the set of deeply embedded, self-reinforcing behaviors, beliefs, and mind-sets that determine “how we do things around here.” People within an organizational culture share a tacit understanding of the way the world works, their place in it, the informal and formal dimensions of their workplace, and the value of their actions. Though it seems intangible, the culture has a substantial influence on everyday actions and on performance.

The Joint Operating Committee is culturally systemic throughout the oil and gas industry. It establishes the basis of the culture for the legal, financial, engineering, geo-technical and every other individual that works within the producer firm. The partnership, which is the JOC, has the rights and opportunities embedded within the culture of how the industry operates. People, Ideas & Objects is using this culture, capturing it within the software we are proposing to build in the Preliminary Specification. But the question is how does this affect strategy?

Importantly Booz & Co make the following statement.

When a new leader’s strategy puts the culture of a company at risk, the culture will trump the strategy, almost every time.

Therefore, the Joint Operating Committee, being the cultural framework of the industry has significant influence on the strategic framework of the oil and gas producer. This is in addition to the JOC being the strategic framework itself. This would imply that the global or overall corporate strategy, since it may not recognize the culture of the partnership or JOC, will fail when it does not consider the JOC’s culture.

What I am suggesting here and is being enabled in the Draft Specification may seem unreasonable. Having a unique strategy for each participant in each JOC seems to be inconsistent with efficient and effective management of the oil and gas resources of the producer firms. I would argue that each producer needs to focus on the optimal strategy for each JOC in order for the property to be optimized from an innovation and financial return point of view. Nothing short of this strategic focus will provide the producer with the ability to mitigate the risks and realize the opportunities of the oil and gas business.

The alternative open to the producer would be to change the culture of the firm. Which would involve removing the JOC from their operations, which I would wish them the best of luck.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Copyright Notice

Politics, can’t live with it, can’t live with out it. This post is about the political realities around the use of copyright in the oil and gas industry. Specifically the copyright that I hold in the research around using the Joint Operating Committee. There are two key points that need to be considered, again, as there seems to be some belief in the marketplace that actions taken by industry members are not subject to the political or legal realities of copyright law.

First of all let me restate the copyright notice. Look at any and all blog posts and knols that contain any of my writings and you will see the copyright for these published works. These are all based on the original idea of using the Joint Operating Committee which originates in my September 2003 research proposal to industry. Now on with the politics.

Producers management and specifically the C class executives, will not wish to "break the (copyright) laws" by using any other software that does not comply with my copyright. This isn’t in a producers best interest due to the fact that it could be financially costly for them to proceed with the development, implementation or use of any other software that violates this copyright and therefore would be unusable. The financial costs of these activities, the time lost in implementing them and the potential loss of further time when the software would not be available for use could be severely detrimental to the producer firm. The software marketplace could be an organizational graveyard for the unaware or careless management.

The second area where intellectual property can be politically disruptive to a producer is when dealing with the hardware, software and services of major vendors like SAP, IBM and Oracle. They have no interest in diluting the legal value of their assets by belittling or diluting their assets by contaminating them with software that is not supported by associated research. That is to say they live and die by the value of copyright and have as much interest as I do in seeing that my copyright is upheld. It in fact supports their copyrights indirectly. They also have no interest in contaminating their IP with IP that may be in direct breach of someone else’s IP, and therefore indirectly becoming party to a breach. It was with this in mind that I informed these firms of my copyright, based on the Preliminary Research Report, in an email dated October 15, 2004 and cc’d to many of the CEO’s of the major Canadian producers.

On a related point. Oracle recently was awarded $1.3 billion in litigation with SAP for their breach of Oracle’s IP. Two very clear points are noted as a result of this. As I noted in the previous paragraph, no software vendor will violate another vendors legitimate claim. And secondly, this is now being extended so that customers don't want to be party to illegitimate use or violation of others IP.

Customers of People, Ideas & Objects can rest assured that the clarity and pristine nature of our IP is impeccable. The value of the idea of using the Joint Operating Committee as the key organizational construct is immense, and the development of that idea is evident and available for anyone to review through this blog and the referenced knols. There are over 800,000 words, 6 good sized text books, that support the work that has been done and that is reflected in the Draft Specification. This effort has been undertaken to ensure People, Ideas & Objects customers of our ability to compete in this marketplace.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

So What is Phase-Two

As we begin Phase-Two we see People, Ideas & Objects move away from our heavy focus on research. And turn our attention to the commercialization of the Intellectual Property (IP) contained within that research and this communities development. This is done with the objective of completing the Preliminary Specification and ultimately building the software that is defined there. With this blog post I have now updated the knol where the Preliminary Specification is listed. There is now a thorough understanding of the requirements of what people will need to see in order to participate, and the key deliverables of the Preliminary Specification. It’s still brief, but that’s the point, it has to be.

One of the key points noted is the budget for the Preliminary Specification has been set at $100 million. The controversial nature of the size of this budget will lead to much discussion. However, the more time and energy spent at the beginning in these tasks the less that will be spent in the long run in terms of actual development. These Preliminary costs also represent as little as 5 - 10% of the total software development budget. I don’t want to pollute this blog or the knol with discussion about the budget and therefore ask if you have comments to direct them to my email here.

The source of these funds for the Preliminary Specifications budget is based on the 2010 and 2011 fees and penalties that have been assessed at $1.00 per year and $3.00 per year, per barrel of oil equivalent, per year. Please see our Revenue Model for more information. Therefore if a producer was producing on average 40,000 barrels of oil per day over the past two years, the costs for them to participate in the development of the Preliminary Specification would be (2010 $160,000 and 2011 $160,000) = $320,000 for the two years. These costs are for the software development; and provide the producer with the opportunity to have their needs specifically addressed in the software development process. Today its not enough to own the oil and gas asset. You must also have access to the most efficient software systems that make the oil and gas assets profitable. Having direct participation in the development of that software will be an additional competitive advantage for the producer. That's what People, Ideas & Objects are offering.

One key change in the Phase Two proposal is that we have centralized all of our operations in Houston. The President, COO, CFO, VP Community Development, VP Development, and VP Business Development will be based there as will all of their teams. (Previously the development team was to be in California). Houston provides the ideal location if during the Preliminary Specification the scope of the application is determined to be an “Americas” based or “Global” based solution. (P.S. Now would be a good time to start thinking about the many positions discussed in the proposal. People, Ideas & Objects (PI&O’s) will consider people for direct hires and those that are seconded from participating producers.)

In an April blog post we noted that management were too conflicted to participate in the financing of this project. That we were instead turning to the ownership class to fund our capital needs. Phase Two is not a development term but a business term of moving to a more mature foundation. It is not that we're seeking to source our funds directly from the ownership class but to have the ownership class direct management to participate. Doing "something" comes down to industry supporting PI&O's Revenue Model. Only then will anything substantial begin. People, Ideas & Objects revenue is based on a producers reasonable share of the costs of software developments, not on PI&O's cash balances.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Where we are at, Phase-Two Begins

The sabbatical is over and its time to get back to work. It’s been a restful and worthwhile break to recharge the batteries to make the crucial transition from phase one of the project to begin the second phase. It’s therefore best to start off with a quick summary of where we are at in terms of how we left things before the sabbatical.

Most importantly is the Draft Specification which was published in July 2008 and forms the basis or foundation of the second phase of our software developments, the Preliminary Specification. This eleven module system description defines what a producer firms systems would look like when we use the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. It is radically different and provides an overall vision of how producers would manage their assets in the most profitable manner. The Draft Specification is available for review on two pages located here.

From the period of time between August 2008 to May of 2010 we undertook a detailed discussion of how and what the Draft Specifications impact would have on an oil and gas concern. Taking issues and opportunities of the day and applying them to the specification. Providing real life testing and understanding of these ideas. We also had the opportunity to take McKinsey’s and others research and apply it to further broaden the overall understanding of the Draft Specification. These blog posts can be sourced through the archive during the period noted, or through the McKinsey label.

Although we continue to promote the Draft Specification from time to time we began to move the project forward with some specific deliverables in 2010. During the period June - August 2010 we developed the Phase Two proposal that forms the framework of the second phase of the work that is now ahead of us. These blog posts can be aggregated by selecting the Phase-Two label in the blog. One important difference between what is stated in that period and now is that I will be clearer on the budget requirements of the Preliminary Specification. So stay tuned for that.

Lastly during the time frame of August 2010 to January 2011, or the beginning of our sabbatical, we reviewed the key points in the Preliminary Research report. Our special emphasis was on Professor Giovanni Dosi’s paper “Sources, Procedures, and Microeconomic Effects of Innovation”. These blog posts can be aggregated by selecting the “Review” or “Dosi” label. I highly recommend reviewing this work thoroughly. Professor Dosi’s work is very pertinent and applicable to using the Joint Operating Committee in the manner that the Draft Specification suggests. In fact the Draft Specification is designed using the research of Dosi’s and many others research and therefore makes the understanding of his work critical.

It is on that note that we say so long to the heavy emphasis on research. I expect that the primary focus on research will fade from this blogs pages. We are moving to a commercial forum and one that focuses on building software. Research has provided us with a broad base of understanding and a foundation of almost 800,000 words of how the Joint Operating Committee builds real value for the innovative oil and gas producer. Now we turn to a new a focus that builds on that foundation. We are now focused on building the software that makes that value real. Value that recognizes that it its not just ownership of the oil and gas assets; but also access to the most innovative software to provide the most profitable means of oil and gas operation.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

We're on Google+

In what has to be considered perfect timing. The public debut of Google+ has just been announced. Google+ is Google’s new social network tool that is available to anyone that has a Google Account. (If you need an invitation to Google+ please email me here.) This is perfect timing in the sense that we are returning from our sabbatical to begin the development of the community, and Google+ is the tool to help us make that happen.

What’s different about Google+ in comparison to Facebook and Twitter is that it provides both services in one. That is to say you can broadcast a simple message to everyone that follows you, just like Twitter and Facebook does. Or your able to control the messages you send to just the Circle of people that you want. Two additional features are that you can set up “hangouts” which provides video chat with up to ten people at the same time, and Sparks which can search and deliver content on different topics.

What Google+ provides us with is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Please email me here if you need an invite to Google+ and lets get started.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.