Another MIT Video. This one presented by Dr. Rebecca Henderson, MIT's Eastman Kodak professor. She prepared an excellent paper "The Next Tech Boom" in 2002 that I referred to in my Plurality, May 2004 document. If you can source her document, I would highly recommend it in combination with this presentation.
Dr. Henderson's presentation talks about the open standards vs. closed proprietary systems or soft standards. Answering why the push for public open standards, and why most markets have, or will, move toward public open standards. This is a particularly interesting discussion when taken in the context of the open source software development models.
Of particular interest, the XML ontology or metadata for the Genesys portal will be a private open standard on a basis that is derived by, and similar to that of the Java programming language and its associated community and environment.
Pros and Cons of open standards.
Here in Canada many of the government initiatives have embraced "open standards" over the history of the oil and gas industry. This openness provides an understanding of the value of open standards and their commercial application, but mostly it's benefits in terms of competitiveness.
Oil and gas wells drilled in the province of Alberta are the commercial interests of the individual oil and gas producers. The information regarding the well that has been drilled is publicly available. The data contained within this information is comprised of the work completed down-hole, access to the engineering methods that were used are public domain. When a well is classified as an exploration well, it can obtain tight hole status for a reasonable amount of time after rig release, to ensure that no valuable secrets are disclosed to soon. For the majority of the development wells, I can review the methods of completion, the footage drilled, casing set and all manner of data and information about what was done down-hole. I can also review the production, its history, on a consistent and updated monthly basis.
What I am discussing in this entry is an extension of these concepts and associated data models of a producer. Note we are talking about data models and ontologies, not actual data, that remains proprietary and is never published.
It is my understanding that in other regions, the information is unknown by anyone other then the producer and the government of the jurisdiction the well was drilled in. Has this provided any benefit to the producers that operate in the "open standards" of Alberta? I think it has, and as a result much of the associated risk in drilling within a certain region can be mitigated by the amount of public domain information. Learning from others mistakes, building off what was successful in the past and being innovative are easier with the availability of this information.
The access to this public information has sponsored a less secretive mindset in the culture of Alberta vs. what operators in other countries experience. Many American firms have come to Canada's oil and gas industry to determine how this fundamentally different system operates. Of note, many of the foreign firms fail!
So open standards do not on themselves provide the ultimate competitive manner of operations. It helps, and I have to say that the amount of information that is shared in the engineering and geo technical areas are always subject to, and will be so in the future, a vale of secrecy. The amount of sharing in the Genesys portal environment will require a higher level of collaboration then what is currently done, that is a given.
Future competitiveness will not reside on what one individual or producer can do, but on the basis of what a cluster of companies can do in order to attain greater reserves and deliverability. There is too much information and specialization in the sciences of engineering, geology and physics to keep ones cards to close to the vest.
These changes are cultural and the industry needs to understand that there really is not too much value in maintaining a secretive position. As much as we need to progress in terms of our innovation based on the science, we have to deal with this cultural issue of sharing of information.
It is ironic to me, that to a large extent the majority of the oil and gas industries technical advances are not learned through the organizations where the scientist works. Most of the discoveries are learned through the associations within the industry, journals and word of mouth. Little outside the manner of how the process of drilling and completion within the firm is learned within the firm. The majority of what is learned is how to get the things you want to do in the "business" environment of the organization.
It is this business environment that needs to change. The copyright act only provides authors protection for works that are published. A secret is useless to any scientific discovery. The journals that are used for peer review and publication are used by the scientists to attach the copyright to the overall concepts developed. Firms that have unique methods of discovering oil and gas should also realize for anyone to copy their methods, overall they will learn very little. This cultural secretiveness is counterproductive to the future of the oil and gas innovations and needs to change. It is the business environment that holds on to these myths and the business environment that has to change. The scientific community has been at the forefront of copyright law since its beginning. The freedom to access others concepts provides the real scientific discoveries today.
One of the immediate advantages of the commercial open standards is the different competitive offerings can inter-operate effectively. Although I can foresee the entire energy industry using the Genesys system, the reality is that other systems, based on different organizational models will be developed. Producers using either system need to inter-operate in this new scientific frontier. The need for the commercial system to understand the information in other systems is critical to the overall progress of the industry. Sharing within the scientific communities is not a cultural issue, I don't think, as much as it is a business requirement. Scientists are well attuned to the value of sharing of information, it is the business people that need to learn the value of scientific sharing. Hopefully the Genesys system will be the beginning of the understanding and application of this concept. Otherwise both this system and / or the industry may fail. These failures not necessarily being mutually exclusive.
Dr. Henderson notes that one of the things that Moores law is making possible is the transactions and interactions can maintain their uniqueness, yet still maintain elements of commoditization. Operating in the future will require a somewhat "standard" means of interaction from a business point of view.
To discuss this point further I want to put the topic in the context of how I see the future oil and gas worker. An engineer logs into the Genesys portal, and is available for work on one of many of the open projects she is responsible for. The interaction volumes are tremendous. Operating for a variety of producers the engineer has specialized in completions of Viking sand formations in southern Alberta. Working for the majority of the producers that operate in the region and zone, the engineer has been able to successfully develop her own capability of completing the well's more successfully then others. Working for over 50 different producers and operators, the engineer is able to access the information on over 200 joint operating committees, representing almost 1,000 wells. The hand picked group of service companies are familiar with the engineers methods and have also specialized in servicing these completion concepts throughout the province.
This volume of theoretical interactions needs to be managed as effectively as possible. How, with the current demand for drilling activity necessary to sustain the production deliverability, is the engineer able to communicate effectively with all the producers, suppliers and others in this environment without standards. If the expectation that the need to alter the methods in order to meet the needs of one special producer, the requirements of dealing with one exception has created the proverbial stick, and has broken the first of many spokes. All efficiencies are lost due to the inability of one producer to be on the standard. Dare we begin to discuss the implications of non business standards within the renewed focus on exploration?
When standardized, the scope of interactions grow exponentially. This was noted in Sir Tim Berners-Lee's discussion on MIT video. As I also stated in my earlier entry entitled Sir Tim Berners-Lee, I will license the ontology, or metadata, of the interactions and make the standard open. This will ensure that all competitive parties will be available and able to interact with the Genesys system.
Private ownership of the standard is maybe an unforeseen consequence of copyright law. I certainly am not going to renounce the copyright or do what many would assert as the "right" thing to have the ontology as a standard. I have spent to much time and money, and the costs are too high, both past and prospectively, to take that road. However, as I mentioned in the Berners-Lee entry, I am not a troll and the license will provide the effective "public" face on this private standard. Openness of the ontology and the source code are not debatable. Access will be provided for security and most importantly for standardization of the XML metadata, this will be done.
The efficiencies of doing this are financial as well. For Genesys to be the focal point of the W3C standard reduces the industries costs of membership to the W3C. As the soon to be released monthly budget and wish list note, the $6,500 cost of basic membership is realized by each of the producers.
Both Java and Genesys are open private standards that are modeled on the Java programming languages environment. Encouragement of the ecosystem, embracing and extending public standards is the Genesys business model being used here. I will ensure that any user of this system can innovate on the engineering and earth sciences, as a business oriented system that is our key competitive strategy.
Having an open and public standard does not eliminate our competition, based on other organizational structures, from interacting in these data items. In fact it would actively encourage the different competitive offerings to interact on the data producers data elements. It also doesn't in any way permit an encumbrance against the copyright that I have earned.
Some of the other highlights and take-aways of the presentation that should be noted are as follows.
Exploring Soft (private) Standards:
- A "soft" standard is a specification that is completely compatible with current public standards but offers enhanced functionality and performance. What is stated here is workable and functional and largely irrelevant regarding ownership of the standard as far as a producer is concerned.
- It offers customers the security of knowing that they have avoided being "locked in" and an upgrade path to the public standard exists. Achieving the similar objectives from the producers point of view, without the need for me to "give up" anything.
- Making available the functionality and performance of a more finely "tuned" technology. Someone, Genesys in this instance, will have the power and authority to act in the best interests of the industries metadata needs.
- It may permit significant premium pricing and the generation of customer loyalty :-).
- The move from "product" to "system" competitions raises both strategic and organizational issues. Addressed in the proposed solution of the Joint Operating Committee.
- And increases the force behind the push for open standards.
- Not all markets tip: but as network effects (connectivity, complementary services, tools, product) become more important, more and more will.
- Fortunately there are ways to make money in an open world - either through "complementary assets" or through "soft" standards.
- Everyone wins.