Wednesday, November 30, 2011

The Preliminary Specification Part CI (PLM Part XVI)

In yesterday’s post we documented the “Strategy Interface” of the Petroleum Lease Marketplace module of the Preliminary Specification. This being a simple collaborative interface that documents the unique strategy of each and every Joint Operating Committee the producer has an interest in. This blog post will deal with the positive attributes of the Strategy Interface, and the difficulties that it will impose on the bureaucracies that are unwilling to consider the option of individual property strategies.

In oil and gas the business cycle is more dependent on the reserve life of new reserves. With rapid three-year declines, especially in gas, the question becomes: is this a product of the cumulative innovative-ness in exploiting the technologies that have developed? Or, is the use and application of oil and gas technology yet to be tested against a more exploration style mindset consistent with the risk - reward of the current market pricing of the commodities. Asked another way, would there be longer lasting, more prolific reserves in the frontier regions of oil and gas? Natural gas is experiencing a unique situation with the prolific nature of the shale gas discoveries. And oil continues to experience high global demand with nominal supply growth.

Either way it appears that the exploration and exploitation of oil and gas reserves has and always will be a function of the technology based on the underlying sciences. This is undeniable, and may also be the cause of the shorter-term life cycle and diminished size of new reserves, which is agreed by most to be a trend that will continue. This reserve size and deliver-ability is paralleled in Professor Giovanni Dosi’s discussion of how innovations in industrial companies have been diluted by demand prediction and lower production volumes. Generic corporate strategies are therefore an impediment to the value realization of these short reserve life indexes. Even an innovative posture is going to bring about different strategies in terms of timing of the investments. Professor Dosi notes;

Finally, empirical studies often show the coexistence, within the same industry and for identical environmental incentives, of widely different strategies related to innovation, pricing, R & D, investment and so on. Specifically with regard to innovation one notices a range of strategies concerning whether or not to undertake R & D; being an inventor or an early imitator, or “wait and see”; the amount of investment in R & D; the choice between “incremental; and risky projects, and so on (see Charles Carter and Bruce Williams 1957; Freeman 1982 and the bibliography cited therein). Call these differences behavioral diversity. p. 1157

Changing the innovative behavior of one producer carries a scope of change that is as broad and as diverse as is contemplated in the business world. Change at this scale in many instances can not be managed within the organization but needs to be managed through the forces of creative destruction in the greater economy. A time of dynamic change driven by the organizational changes focused around the innovative Joint Operating Committee. How can a firm that has been developed in an era of cost control transform themselves into an innovative, dynamic, earth science and engineering capability focused producer. In many cases the will to do so might exist, however, with the speed and unforgiving nature of the business cycle, not much time will be provided to those that attempt the transformation. We see in this world the capital markets reflecting many interesting phenomenon since 2008. To suggest any trend or definitive result from these would be premature. Its just a different world in terms of being an oil and gas CEO then it was before 2008.

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.

Tuesday, November 29, 2011

The Preliminary Specification Part C (PLM Part XV)

What People, Ideas & Objects is undertaking in developing the Preliminary Specification is the simple process of moving the compliance and governance frameworks of the innovative oil and gas producer into alignment with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. This blog post will deal with the strategic framework and how the Petroleum Lease Marketplaces “Strategy Interface” works to communicate the unique strategic direction of each of the Joint Operating Committees the producer has an interest in.

With the demands of the earth sciences and engineering necessary in each property. The ability for producers to apply generic corporate strategies to all of their properties is quickly expiring. The need to address each properties unique characteristics and accommodate those needs with the properties own unique strategy is a necessity. Each properties unique strategy will be a result of the collaborations among the participants in the Joint Operating Committee and will be subject to change from time to time.

Placing the Strategy Interface in the Petroleum Lease Marketplace is the logical location for this information. Along with the agreements, leases, AFE’s, and other partner related data that shares several things in common with the “Strategy Interface”. Those common threads are the collaborative nature of the development of the documents, and the access privileges that will be used to access the information. Each producer having read / write access to each property that they have an interest in. Where they can collaborate within the partnership as to the overall strategy and tactical direction of the property. Where individuals who are authorized to work within the property through the Security & Access Control module are able to read access the document to determine their actions are in line with the strategic intent of the property.

From the producers perspective they have a database of strategic documents that are unique to each property. They are able to determine quickly what the strategy is for any property and engage the specific people responsible for further information. Although each property is following its own unique strategy, the producer firm is not without its input and is able to quickly determine the details of the properties key strategic direction.

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.

Monday, November 28, 2011

The Preliminary Specification Part XCIX (PLM Part XIV)


Within the Petroleum Lease Marketplace of the Preliminary Specification we have established two new interfaces. The first is what we have called the "Revenue Per Employee" listing that details the various calculations of revenue per employee by producer within the industry. These calculations are broken down to provide variances based on the commodity prices, volumes and number of employees. Further calculations are conducted on each of the Joint Operating Committees that the producer firm participates in. These calculations are broken down by the variances noted above and are confidential to the producers who are participants in the Joint Operating Committee. Recall we are looking for the trajectory change in the variable over a period of time.

The second interface that has been developed in the Petroleum Lease Marketplace is what we should start calling the "Capabilities and Commitments Report". This was first discussed in the November 25, 2011 blog post. It details the capabilities that are provided by agreement in the various joint venture agreements the producer participates in. This report also details the commitments that the producer has undertaken to provide in terms of its capabilities under those same agreements. This report enables the producer to fully leverage their partners capabilities and focus on developing their capabilities while contractually meeting their requirements.

These reports add value to the producer and the Joint Operating Committees that use the information that are contained within them. They are unique and provide information that can be used in innovative ways. Of note I think that someone could be assigned the task of occasionally verifying the producer data on an industry wide basis. That way only one individual would need to verify the industry wide producer related information. However, there is more to the use of these reports when they are used in combination. And what we could provide is a hybrid report that sorts the information based on the Joint Operating Committee, having both the Revenue Per Employee calculation and the determination of the Capabilities & Commitments together.

In our review of Professor Dosi’s paper, he begins by summarizing that businesses commit to innovation stemming from “exogenous scientific factors and endogenously accumulated capabilities developed by their respective firms.” His general point is that “observed sectoral patterns of technical change are the result of the interplay between various sorts of market-inducements, on the one hand, and opportunity and appropriability combinations, on the other”. p. 1141

Recall that “appropriability” for the purposes of the producer include lead times and learning curves as more effective ways of protecting process innovations. Therefore appropriability and opportunity are clearly reflected in the Revenue Per Employee report. What the Capabilities and Commitments Report is reflecting are the “market-inducements”. The result of the “interplay” between these reports would be “patterns of technical change”. That might be a bit of leap for some to make on an industry wide level, and that I would agree, however, the devil would be in the details. On a Joint Operating Committee basis, which we have the data for, both the capabilities from the partners, the producer and the revenue per employee, the information would be valuable.

Any “pattern of technical change” would be triggered by the trajectory changes in Revenue Per Employee. Most probably by any trajectory change in the volume variance. Therefore what was the reason for the change and was it as a result of any change in the capabilities of a producer due to any “patterns of technical change” or “market-inducements”. Maybe I am being too analytical and reaching to extend the value of innovation within the enterprise.

Highlighting what is effective within your organization, from an innovation standpoint, will be a difficult and important task. These reports will be able to highlight any success or failure within the current month. I think that provides ample time for the producer to determine the viability of the operation of either their or their partners innovative capabilities. Making these reports critical to 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.

Sunday, November 27, 2011

The Preliminary Specification Part XCVIII (PLM Part XIII)


Our third pass through the Preliminary Specification has an innovation focus. It would be difficult to review the Petroleum Lease Marketplace without discussing the enhanced emphasis that specialization and the division of labor need to take in this module. These next few posts will therefore deal specifically with those topics.

In a blog post dated October 16, 2011 we documented how the division of labor might affect the lease rental process. It was in there that we discussed the specialization of 20 individuals who were processing the lease rentals for all of the producers who might use People, Ideas & Objects (PI&O). These people were actively improving the process by identifying “gaps” where they could improve or enhance the process, and were supported by a PI&O software development team to amend the software to accommodate the changes they made to their processes.

The Petroleum Lease Marketplace is an area that is rich with processes like lease rentals. All of these processes would be subject to similar changes as those that are documented in the October 16, 2011 post. This module deals with the administrative details of the producer firm and the Joint Operating Committee. Both of which are undergoing significant changes as a result of innovation in other areas of the business. What has been a rather constant area in terms of its activity level may take on a more dynamic feel for the business. When the producer and Joint Operating Committee are actively innovating, Professor Giovanni Dosi notes that two separate phenomenon are observed.

  • First, new technological paradigms have continuously brought forward new opportunities for product development and productivity increases. p. 1138
  • Secondly “A rather uniform, characteristic of the observed technological trajectories is their wide scope for mechanization, specialization and division of labor within and among plants and industries.” p. 1138

This only makes sense. The dynamism of the Research & Capabilities process, documented elsewhere, must rely on the Petroleum Lease Marketplace for information and resources. The need for it to be responsive to the Research & Capabilities changing needs is a necessary requirement of the Research & Capabilities innovative-ness.

Looking to model the management of this process across all producers within all geographical regions would seem to be a difficult task. To capture this process within the People, Ideas & Objects software, an even more difficult task. However, Professor Dosi notes that there are other serious concerns that need to be taken into consideration.

The appearance of new paradigms is unevenly distributed across sectors and so are (a) the degrees of technical difficulties in advancing production efficiency and product performance, and (b) the technological competence to innovate, embodied in people and firms. pp. 1138 - 1139

Simply not everyone will be working off the same page when it comes to the types of innovation, the scale of their application and degree of complexity. In this next quotation it becomes clear that the process under management by the software is the means in which to be able to deal with these underlying paradigms and trajectories. Therefore, in order for the producers to begin the path of innovative-ness requires that we resolve these process design issues, and build the software before they are implementable.

These distributions of opportunities and competence, in turn are not random, but depend on (a) the nature of the sectoral production activities, (b) their technological distance from the “revolutionary core” where new paradigms are originated, and (c) the knowledge base that underpins innovation in any one sector. p. 1139

As the Preliminary Research Reports research question asked, can innovation be reduced to a quantifiable and replicable process, the answer was an unqualified yes. This last quotation is one of the reasons why. Having the process defined at the “revolutionary core” and at the “knowledge base that underpins innovation” are the requirements that we capture in the software. That does not mean that each and every producer will fully appreciate or understand the full scope or scale of what the system provides. Only those that are at the revolutionary core will be able to fully exploit its resources. That however, does not preclude the systems use by everyone within the industry.

People, Ideas & Objects believes that if we engineer a software application to deal with these issues, we can accelerate the performance of the producer and the industry. From a systems engineering point of view this has been beyond the scope of one software development team working with one producer. For any producer to undertake the required analysis, let alone development of the systems, is beyond the scope of what was possible or desirable. It is well beyond the scope of any software developer to undertake on their own, in a speculative manner, and therefore has been beyond the imaginations and possibilities of the industry. I would also argue that, in the past, automation of this business process would have generated limited value. Today we can define a more specific division of labor and specialization and therefore, provide a more profitable means of oil and gas operation.

To state this point differently, we can focus the resources of the industry on the comprehensive engineering of these processes. Allocating these costs over the entire energy producing base presents opportunities to undertake the detailed development of software that has not been attempted before. This is the approach that is necessary to deal with the issues associated with the producers meeting the market demands for energy. Management of these processes is the key to enabling the organizational performance, technological paradigms and trajectories that Professor Dosi notes in this paper.

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.

Saturday, November 26, 2011

The Preliminary Specification Part XCVII (PLM Part XII)


In an October 21, 2011 post we made a point about the accounting for the joint account in the Partnership Accounting and Accounting Voucher modules that used data from the Petroleum Lease Marketplace module of the Preliminary Specification. In that blog post is the assumption that the data was centralized amongst the partners in the Petroleum Lease Marketplace. This centralized data is as a result of the proposed research that the user community will undertake for that module. This blog post will discuss the centralization of the information in the Petroleum Lease Marketplace and why that assumption was made.

When we discuss the centralization of the information, what I mean is that each of the producers that are party to a Joint Operating Committee are accessing the same central data elements. There are not separate individual data elements stored within each of the firms databases. If you review the data that is stored within the Petroleum Lease Marketplace it is of the type that is “owned” jointly by the participants in the JOC. Whether that be agreements, leases, AFE’s or other data, each participant is provided with their own access to these one off types of documents.

What benefits are achieved by centralizing the data? Simply everyone is working from the same page. There should be no more confusion as to what the document states if the documents have the appropriate change management controls placed upon them. These document control procedures exist, its only a matter of implementing them appropriately within the systems on an industry wide basis. Something that is proposed here in People, Ideas & Objects and should be part of the scope of the proposed research project.

The logistics of the systems management would become complex. The access privileges and the storage access would be unique. For example a producer would have unique access to a multiple number of data elements based on the number of Joint Operating Committees that they participate in. However, there is a maturation of the systems infrastructure that provides us with new opportunities to look at these issues from a business point of view first and ignore the technical issues. I would caution you that we are ignoring the technical issues, which is the point of the Preliminary Specification, we are only concerned with the business issues.

So in reference to the October 21, 2011 post the check and the balance between the systems was a simple mathematical calculation to verify the validity of the working interest calculations as they were known. Any variance would be material in that their understanding of the working interest distribution was somehow different then what was calculated. This might occur if there was a significant systems or user error during the month that was not captured in the regular checks, balance and routines throughout the producer or other working interest partners.

And that is the point of the October 21, 2011 post that is not well reflected in the text. With a highly integrated and collaborative ERP systems such as People, Ideas & Objects the simplest of mistakes can occur. What may seem to be a rather redundant check and balance can become a valuable tool in determining if the system is maintaining the appropriate balance. We will need to develop more of these checks and balances throughout the Preliminary Specification in order to ensure that the producers are accounting for their properties in the correct manner. What we are providing is a means for the innovative producers to develop their businesses, and as a result, that will require that we sharpen our pencils in terms of our accountings accuracy and timeliness.

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.

Friday, November 25, 2011

The Preliminary Specification Part XCVI (PLM Part XI)


Continuing on with our discussion from yesterday regarding the selection of potential partners for Joint Operating Committee’s. Today I want to discuss some of the key factors that enable innovation and how they need to be sought after and developed. And how the Petroleum Lease Marketplace of the Preliminary Specification can develop an interface that will help producers to understand their capabilities, with respect to what their partners in the Joint Operating Committee may be contributing.

Our discussion so far on the capabilities that the producer holds has documented a number of processes through the Research & Capabilities, Knowledge & Learning and Resource Marketplace modules. These are comprehensive processes that enable the producer to develop and maintain their unique and valuable competitive advantages in terms of their earth science and engineering capabilities. These capabilities should be actively marketed to other producers as a potential partner in terms of the value add that could be contributed to a potential Joint Operating Committee.

We are in a period where the “easy energy era” has passed and it is generally agreed that the complex energy era has begun. The demand for earth scientists and engineers is substantial and challenges the ability for each producer to build the capabilities they need to operate all of their properties. Therefore the need to pool their capabilities with their partners in the Joint Operating Committee is not a nice to have but a necessity. This pooling can take on an ad-hoc disorganized mashing of two or more producers or can be a deliberate construct as a result of the meeting of minds at the beginning of a joint venture. People, Ideas & Objects Petroleum Lease Marketplace assumes the latter is the preferred choice and is providing the tools to develop these joint capabilities.

In Professor Giovanni Dosi’s paper he notes the following factors involved in the development of innovation.

The search, development and adoption of new processes and products in market economies are the outcome of the interaction between:

  • Capabilities and stimuli generated with each firm and within the industry of which they complete.

and

  • Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc.

We are assuming for the purposes of these writing that the key stimuli is the commodity prices which are reallocating the financial resources to fuel innovation. Throughout the Preliminary Specification we have focused on the capabilities of the producer. What the producer must now learn to do is to leverage the capabilities of their partners in their Joint Operating Committees.

Within the Petroleum Lease Marketplace there needs to be an interface that lists the areas where the capabilities of other producers are being leveraged. These listings need to be based on the agreed to and documented exchanges of capabilities that are part of the CO&O or other agreements that make up the Joint Operating Committee. This same report could detail the commitments that the producer firm has made in terms of its capabilities to the partners in future years. This "Capabilities & Commitments" interface would of course be organized based on the Joint Operating Committee.

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.

Thursday, November 24, 2011

The Preliminary Specification Part XCV (PLM Part X)


In yesterday’s post we talked briefly about revenue per employee and how the Petroleum Lease Marketplace module of the Preliminary Specification should have an interface for various calculations of that factor. In today’s post I want to talk about the Revenue Per Employee interface of the Petroleum Lease Marketplace and what should be included in that interface.

First we should ask ourselves does the calculation of revenue per employee provide a reasonable comparison of the innovativeness that exists in a producer? Or would this calculation reflect the quality of assets, the size of the firm or its actual innovativeness? That is the question that is hopefully being answered in this post.

Clearly the factor of revenue per employee would reflect many factors other then the innovativeness of the firm. However, would the comparison of revenue per employee over multiple periods be a determining factor of innovative-ness? I think it would. That the increase / decrease in the factor would be as a result of an increase or decrease in price and volume, with the volume being particularly affected by the changes and innovations that occurred over the period in the firm. The one other critical determining factor is the number of employees the firm employs. Unreported changes in the number of employees would skew the results significantly.

If the Revenue Per Employee interface in the Petroleum Lease Marketplace module calculated revenue per employee for the participants in Joint Operating Committees of the producer. And calculated the factor for prospective producers there could be value in determining whom would be a good prospective match as a partner in which to deal with in the future. The report could also calculate the trajectories on the basis of the volume, price and employee variances during the periods under comparisons by the user.

So what have we got. We have run some elaborate calculations that “might” prove that one producer is innovative. What does that prove. That depends on what is imputed by being innovative. Professor Dosi states “In very general terms, technological innovation involves or is the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Solutions to technological problems involve the use of information derived from experience and formal knowledge. It is the specific and un-codified capabilities, or tacit-ness” as Professor Dosi describes “on the part of the inventors who discover the creative solution.”

Running this factor against the general population of producers within the industry provides value to the user. The ability to highlight who is solving the problems in the industry on an innovative basis and then partnering with them is positive for all concerned. However the real value in the Revenue Per Employee calculation would be the ability to run the report on the basis of the individual Joint Operating Committees that you are a participant in.

This is a more difficult task due to the calculation to determine the number of employees that worked on each property. That is it was a problem until the People, Ideas & Objects Military Command & Control Metaphor and Work Order system were implemented. These have been recording the hours of the people from all of the various producers who are authorized to work on the JOC’s. Therefore the calculations that were run on the basis of the producers, can then also be run against any and all of the Joint Operating Committees that you have an interest in. This would also include the calculation of the volume, price and employee variances of the trajectories over the periods being compared. Providing an understanding of where the innovation within your firm may be coming from.

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.

Wednesday, November 23, 2011

The Preliminary Specification Part XCIV (PLM Part IX)


We now move on to our third pass through the Petroleum Lease Marketplace module of the Preliminary Specification. The theme of this third pass is innovation, and how the Preliminary Specification enables the innovative producer and Joint Operating Committee. In today’s post I want to discuss the role the Petroleum Lease Marketplace module could have in forming the Joint Operating Committee, its agreements, the partnership itself and the factors that make for the innovative-ness of the partnership. Recall two of our four Preliminary Research Reports research questions were to determine if the processes of innovation are able to be reduced to a quantifiable and replicable process, and, does the JOC facilitate the means to innovate. Therefore the formation of the Joint Operating Committee within the Petroleum Lease Marketplace is a critical point in which to begin the process of innovation.

What would be ideal would be if there was a factor that could be used to evaluate if a partner was appropriate in terms of a match to your capabilities. In the Preliminary Research Report we developed just such a factor that details the overall capability of the firm. That factor is revenue per employee. If you calculate revenue per employee you will find rather dramatic differences in terms of the different factors for producers. Special consideration has to be given for the integrated firms to ensure that you preclude the downstream operations and the smaller producers as the factor unfairly reflects their capabilities. Given the disparity in the independents this factor I think is a valuable tool in determining the appropriate partner to select in a property.

After the selection of the partners the development of the agreements to include the innovative elements needed to operate the property. This would include the general assignment for the banking in the Financial Marketplace module, and the adoption of the Military Command & Control Metaphor for the management of the facility. Pooling of the capabilities for the targeted zones in the Knowledge & Learning module. These additions, and others, to the standard agreements would be necessary to adopt the innovative standing that is possible through the People, Ideas & Objects Preliminary Specification.

Professor Giovanni Dosi’s paper “The Sources, Procedures and Microeconomic Effects of Innovation” discusses the role of innovation in the market economy and assumes companies in a free market are willing to invest in science and technologies to advance the competitive nature of their product offering or internal processes. The key aspects of Professor Dosi’s theories that make them directly applicable to oil and gas are the innovation theories application to earth science and engineering disciplines. These disciplines are key to the capability and success of oil and gas firms search, and production of, hydrocarbons. The investment in science and technologies is with the implicit expectation of a return on these investments, but also, to provide the firm with additional structural competitive advantages by moving their products costs and / or capabilities beyond that of the competition. Ensuring that your partners in the Joint Operating Committee are of the same mindset and capability is a critical component to your future innovation strategies. Professor Dosi note:

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation.

A meeting of the minds with regards to innovation needs to be established in the Petroleum Lease Marketplace module and captured in the agreements and associated modules. We will be discussing the revenue per employee factor in the Analytics & Statistics and Performance Evaluation modules in this third pass through the Preliminary Specification. Maybe what we need to do in the Petroleum Lease Marketplace module is find a place where we can compare the various producers revenue per employee factors to determine their appropriateness / suitability in terms of an innovative partner. A simple listing of the revenue per employee of your partners and potential partners on its own interface within the Petroleum Lease Marketplace module.

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.

Tuesday, November 22, 2011

The Preliminary Specification Part XCIII (RM Part XVI)


Today I want to discuss the results that producers and suppliers will obtain from the collaborations that they undertake in the Supplier Collaborative Interface of the Resource Marketplace module of the Preliminary Specification. If we assume that the industry participates at the level that has been imputed in the Preliminary Specification to date. That is to say that there would be a vigorous and unconstrained debate of the issues and opportunities that the producers were experiencing with the service industries products and services. And those discussions were available for the entire industry to review. Would there not be a large leakage of proprietary information from those discussion from one producer to the next? And would this fear of a leakage reduce the participation to something far less then the unconstrained debate that is assumed in the Preliminary Specification?

These are very good questions and appropriate concerns. However, just as people who read People, Ideas & Objects Preliminary Specification find different things then other people who read it. It very much depends on the individuals experience in oil and gas, career choice and educational level. This same situation applies to organizations. The capabilities of the producer will dictate what is gleaned from the discussion. Advanced innovative producers will be able to determine the most from the conversation whereas other laggard producers may not fully comprehend the meaning of certain nuances. It will depend very much on the capabilities of the producers and the suppliers that are holding the conversations.

Professor Dosi (1988) notes a study conducted by Richard Levin et al 1984, in which they studied “the varying empirical significance of appropriability devices of (a) patents, (b) secrecy, (c) lead times, (d) costs and time required for duplication, (e) learning curve effects, (f) superior sales and service efforts.” Professor Dosi (1988) observed, “that lead times and learning cures are relatively more effective ways of protecting process innovations, and patents a more effective way to protect product innovations.” Dosi concludes. “Finally, there appears to be quite significant inter-industrial variance in the importance of the various ways of protecting innovations and in the overall degrees of appropriability”. (p. 1139)

Its important to note that there are different objectives being pursued by the producers and suppliers in terms of their innovation strategies. Oil and gas producers are focused on process innovations, industry suppliers on product innovations. Recognizing this division of labor is how the Preliminary Specifications Research & Capabilities, Knowledge & Learning and Resource Marketplace modules processes provide and facilitate greater interaction between producers and suppliers. Each group is concerned with securing their innovative capabilities without creating any conflict with the other. (The producer looking to lead times, learning curves while suppliers using patents to protect their innovations and capabilities.) The fact that these are published in the Supplier Collaborative Interface across the industry brings depth to the discussion but only to the extent that the producers capabilities are able to assimilate the information. In a period of rapidly expanding trajectories, where the shelf life of information is limited, it is appropriate that People, Ideas & Objects Preliminary Specification has enabled the producer to focus their competitive advantages on their earth sciences and engineering capabilities, its land and asset base. The supplier having secured their competitive advantages through the Intellectual Property laws available to them.

Tomorrow we will move on to the Petroleum Lease Marketplace module.

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. 

Monday, November 21, 2011

The Preliminary Specification Part XCII (RM Part XV)


It is in the Resource Marketplace, Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification that we have mapped complex innovation processes of the innovative oil and gas producer. These processes reflect the dynamic nature of both the producer and the service industry during this highly complex era of oil and gas exploration and development. We have noted in the last number of posts, in our discussion of the "Supplier Collaborative Interface", the interactions that will need to occur to complete the last parts of the innovative processes. But there is more for the Supplier Collaborative Interface as it works with the other interfaces in these other modules that have been mentioned.

In today’s post we will be continuing on with our look at technological paradigms and the effect they have on scientific and innovative trajectories in oil and gas. When discussing these points on innovation, it is important to remember that the sciences, the trajectories they are on, and the opportunities they generate for a producer, are accelerating and will continue to do so. Recall too that the low costs of knowledge and collaboration were the trajectories that are being exploited in the Supplier Collaborative Interface. Professor Giovanni Dosi points out two critical points.

  • First, new technological paradigms have continuously brought forward new opportunities for product development and productivity increases. p. 1138
  • Secondly “A rather uniform, characteristic of the observed technological trajectories is their wide scope for mechanization, specialization and division of labor within and among plants and industries.” p. 1138

It is the second point that I want to deal with today. The discussion of the Supplier Collaborative Interface about new innovative products and services is inevitably going to lead to “gaps” in products and services that need to be filled. Recall in our research of Professor Richard Langlois that the process of expanding the division of labor and further specialization is through “gap filling”. That when someone sees that a gap is needed to be filled, and is subsequently filled, that is how the division of labor is expanded. So these discussions in the Supplier Collaborative Interface are going to identify the needs to fill a significant number of “gaps” within the Resource Marketplace.

We had discussed this point directly in the Research & Capabilities module in two posts on October 30th and 31st. However, I think that the more natural area for these “gaps interface” is in the Resource Marketplace modules Supplier Collaborative Interface. The actual location is one of the points that need to be determined by the user community once the full review of the Preliminary Specification is undertaken by them.

Management of these innovation processes is the role that People, Ideas & Objects Preliminary Specification is undertaking within the producer and Joint Operating Committee. Without the software to define and support these processes the ability for the producer to attain these capabilities is suspect. What the innovative oil and gas producer requires in the 21 century is a software development capability as proposed by People, Ideas & Objects in order to obtain the organizational efficiencies that are of the scope and scale as defined here in the Preliminary Specification. Leaving your innovative strategies to chance have not worked. Innovation is too dependent on multiple organizations working together. These spontaneous collaborations have also not occurred. What we have learned in the Preliminary Research Report is that the processes of innovation can be defined and deliberate. And just as Apple consistently shows the world how to do it, doesn't mean that everyone can.

Its one thing to have the process properly managed by the software. Its another to have the capabilities maintained in-house. And its another to have the innovations developed and applied. Just because the ingredients are there doesn't mean that the producer will be innovative. I can assure you however, based on the research that has been conducted here at People, Ideas & Objects, there will not be any real innovations developed without the processes properly managed by the software first and foremost.

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. 

Sunday, November 20, 2011

The Preliminary Specification Part XCI (RM Part XIV)


Staying with the Supplier Collaborative Interface of the Resource Marketplace module, however relating what is said here in this post to the full scope of the Preliminary Specification. I again want to discuss the reasoning why People, Ideas & Objects is so involved in the operational areas of the oil and gas business. This is an ERP system designed to handle the business aspects of the oil and gas concern. However as we see in this post we can’t separate the business from the science, and when we do we lose our innovative capabilities and innovation becomes just a bad science experiment.

Lets be clear, uncertainty resides in both the scientific and business realms. I am not of the opinion that the two can be separated, as is done in other systems such as SAP. This is maybe why the industry has been poorly served, in my opinion, by the business systems that operate today. They don’t recognize the innovative and science basis of the oil and gas business. By separating them SAP takes away the dynamic that is needed to ensure that the science remains grounded in the business of oil and gas.

Using the Supplier Collaborative Interface will enable the Joint Operating Committee to maintain a focus on the scientific and business uncertainties of the innovations they are implementing. In many cases the people within the JOC will be implementing the technology or innovation for the first time. The supplier and vendor may be still trouble shooting aspects of the technology. The need to be able to collaborate at a high level during this process will be essential through this period of both business and technical risk and uncertainty. Professor Giovanni Dosi notes;

However, even in the case of “normal” technical search (as opposed to the “extraordinary” exploration associated with the quest for new paradigms) strong uncertainty is present. Even when the fundamental knowledge base  and the expected directions of advance are fairly well known, it is still often the case that one must first engage in exploratory research, development, and design before knowing what the outcome will be (what the properties of a new chemical compound will be, what an effective design will look like, etc.) and what some manageable results will cost, or, indeed, whether very useful results will emerge. p. 1135

So with respect to all of the interfaces that are in the Research & Capabilities, Knowledge & Learning and Resource Marketplace modules regarding the development of new technologies and capabilities. The actual implementation of the technologies from a business and technical point of view is done predominately by the JOC in the field at the time it is first used. Having this Supplier Collaborative Interface available to deal with the risks and uncertainty in an innovative JOC is a must have requirement for an ERP systems provider to include in their systems.

I suggest that, in general, innovative search is characterized by strong uncertainty. This applies, in primis to those phases of technical change that could be called pre-paradigmatic: During these highly exploratory periods one faces a double uncertainty regarding both the practical outcomes of the innovative search and also the scientific and technological principles and the problem-solving procedures on which technological advances could be based. When a technological paradigm is established, it brings with it a reduction of uncertainty, in the sense that it focuses the directions of search and forms the grounds for formatting technological and market expectations more surely. (In this respect, technological trajectories are not only the ex post description of the patterns of technical change, but also, as mentioned, the basis of heuristics asking “where do we go from here?”) p. 1134

Separation of the business from the science and the operations was maybe something that could happen in the past. Today and in the future, with the high costs of innovation, the ability to troubleshoot the innovation from a science and business perspective seem to be more of the same thing. I certainly can’t foresee how we can continue to parse the two perspectives from the operation and send the respective “departments” their section of the operation. There has to be a better way and that begins with the Supplier Collaborative Interface. Where the users within the JOC are able to deal with the risks and uncertainties at the time they can be resolved, both from a business and science perspective.

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.

Saturday, November 19, 2011

The Preliminary Specification Part XC (RM Part XIII)


I want to continue on with our discussion of the Supplier Collaboration Interface from yesterday’s post. Today’s post will focus on the collaborative manner in which producers and participants in the Joint Operating Committees will engage with the suppliers and the importance of the interface in the innovative oil and gas industry. This process is complex and I hope that I’ll describe it well enough that it reflects how critical this interface is.

Oil and gas is a business that is based on the earth science and engineering disciplines. Everything in the field is derivative of these facts. Innovation is based on the understanding of the sciences and in turn will lead to further advances in the sciences. As the industry becomes more innovative the need to be mindful of these facts becomes more common in the approach that is taken. The understanding that is required to undertake the most basic of operations requires significant educational and work experience to do it safely and correctly.

The innovative changes in the industry are mapped through the People, Ideas & Objects software application modules in the following manner. People with the ideas for new products and services write about them and earn the rights to them by publishing them in an industry wide blog in the Research & Capabilities module. And as “knowledge beget capabilities beget action” producers develop their capabilities around their land and asset base. Capturing these capabilities within the capabilities interface of the Research & Capabilities module. This then is organized based on geological zone and the Joint Operating Committee which has certain producing geological zones, has access to its producers capabilities from their Research & Capabilities modules, for those zones. The JOC is then able to learn from the producers what has and hasn’t worked through the proceeding process and are able to apply the process successfully and document it in the lessons learned section of the Knowledge & Learning module.

This process has been documented in the Preliminary Specification in the modules to date. The issue that we are concerned about is with the last sentence. The part where it says “able to apply the process successfully” will undoubtedly require the interactions with the supplier. Recall Professor Dosi notes that innovation is developed through the interactions between the “capabilities and stimuli” and “broader causes external to the individual industries such as the state of science”. Working within the science and innovative products and services of the oil and gas industry as they develop demands this interaction. The interactions between you and the supplier are important but just as importantly are the interactions that all the producers have had with the supplier. To have these interactions reviewable makes it substantially less risky for the producer and provides a forum where he / she can have their concerns aired.

Why are we developing the Supplier Collaborative Interface. I think that most people understand that doing the same thing over and over is easy. Making the organization change its routine is difficult and when the change is introduced is when the trouble begins. If we could just leave things the same then we would be better able to produce the oil and gas that we need. Unfortunately those days are gone and the routine in oil and gas is anything but. Professor Dosi notes the following point about this difficult situation.

Organizational routines and higher level procedures to alter them in response to environmental changes and / or to failures in performance embody a continuous tension between efforts to improve the capabilities of doing existing things, monitor existing contracts, allocate given resources, on the one hand, and the development of capabilities for doing new things or old things in new ways. This tension is complicated by the intrinsically uncertain nature of innovative activities, notwithstanding their increasing institutionalization within business firms. p. 1133

Tension and the uncertain nature of innovative activities says it well. The ability for the producer to mitigate these through the Supplier Collaborative Interface is the reason for this critical interface of the Resource Marketplace module.

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.

Friday, November 18, 2011

The Preliminary Specification Part LXXXIX (RM Part XII)


In today’s discussion regarding the Resource Marketplace module of the Preliminary Specification I want to talk about the interface that the suppliers will use to get their message across to the producers. Many of the vendors will have web sites in which they maintain a host of information regarding their products and services, however, these are mostly static and provide little opportunity for the supplier and the producer to interact. The alternative that provides for that interaction is contained in the Resource Marketplace module and for purposes of identification we will call this the “Supplier Collaboration Interface”.

In our review of Professor Giovanni Dosi paper “The Sources, Procedures and Microeconomic Effects of Innovation” we learned that technical trade-offs facilitate the ability for industries to innovate on the changing technical and scientific paradigms. Crucial to the facilitation of these trade-offs is a fundamental component that spurs the change and is usually abundant and available at low costs. For innovation to occur in oil and gas, People, Ideas & Objects assert that the ability to seek and find knowledge, and to collaborate are two “commodities” that are abundant today. With their inherent low direct costs, knowledge and collaboration are the triggers for a number of technical paradigms which will provide companies with fundamental innovations.

I want to be clear that I see this interface as being completely different from any of the others that have been listed here before. The one that may seem to be the most similar would be the blog in the Research & Capabilities module where people are authoring “new” ideas and technologies on a stand alone basis. That blog is not done on a collaborative basis but is based on the research efforts of a few individuals or groups. What is being proposed in the “Supplier Collaboration Interface” is a collaborative interface that will invite the entire producer community to participate with the specific vendor to discuss that vendors products and services. These discussions will build on the whole communities involvement and define the vendors offerings in a collaborative manner.

The wiki style of this interface will cut down markedly on the volumes of email that are generated between vendors and producers. Much of this email being of the same context. Finding the knowledge that is needed is the key to resolving the problem, and if the producer knows that a centralized wiki format exists in the People, Ideas & Objects Resource Marketplace module that will be their first choice to turn to. It will pay the supplier to invest their time and energy in maintaining the collaborations with the producers in this Supplier Collaboration Interface style wiki, as that will be the first line of customer service. Complaints as well as accolades will show up and be evident to those that visit the site and therefore the response to those comments will be of concern to all of the producers.

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.

Thursday, November 17, 2011

The Preliminary Specification Part LXXXVIII (RM Part XI)


Yesterday’s post documented the different interfaces that related to and would source their data from the Resource Marketplace module of the Preliminary Specification. In today’s post we want to discuss how that data is input and maintained, and most importantly who is responsible for that data.

The data in question is the plain generic contact data that is used in business every day. There are other attributes such as the information needed for processing of payments into the vendors bank account. The majority of this data can be sourced from the suppliers web site, except it won’t be sourced by anyone. That is to say the supplier will maintain their own records in the Resource Marketplace module of People, Ideas & Objects software application.

Since we are a “cloud” based offering we have centralized the processing for the producer clients of People, Ideas & Objects in one location. The need for each producer firm to have detailed records of each vendor that they have worked with will be unnecessary as each supplier will maintain their own record within the Resource Marketplace module. This will save immeasurable amounts of time and errors made in inaccurate records and in duplicating the same information from producer to producer. Each supplier is motivated to ensure their data is correct. If a supplier makes a change of address, then they’ll know the best time in which to make the change to their Resource Marketplace records.

What will need to be done is for the People, Ideas & Objects user community to identify and document the various data elements that are needed in this Resource Marketplace “Supplier Interface”. This will need to include the data and information needs of the interfaces that were documented in yesterday’s post. Which will also include the ability to quantify and qualify the role the supplier and the producer can play when designing transactions.

Recall that the supplier will have many of the same accounting and processing needs as the producer. The objective of People, Ideas & Objects is to ensure that the producer attains the most profitable means of oil and gas operations. That involves the service industry, and therefore we need to have the ability to provide some of the same services to the service provider in terms of processing and accounting as the producer. This processing for the service provider will ultimately lead to lower the costs for the producers.

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. 

Wednesday, November 16, 2011

The Preliminary Specification Part LXXXVII (RM Part X)


Within the Resource Marketplace module we have detailed what we have called the Actionable Information Interface. This being a central location for producers and vendors to post actionable information about their firm for others to respond to. In terms of the other interfaces that have been detailed in the Preliminary Specification so far, how does this interface fit in, and what role does it fill in terms of the other activities that are taking place in other modules. This blog post hopefully will clarify some of the different perspectives on the data and information that passes through, and is generated in the Resource Marketplace module.

The next interface that would follow the Actionable Information Interface would probably be the blog posts which is part of the Research & Capabilities module. Recall that these blog posts are authored by the people in the Resource Marketplace who are developing new and innovative products that they are working on. The act of publishing these ideas on this site provides the author with the opportunity to earn the copyright and other Intellectual Property rights. I see these ideas being a development of the actionable information contained in the Resource Marketplace module. The ideas being a codification of the market demand for new and innovative products.

The Accounting Voucher module has the interface for designing transactions. The ability to design the transaction to achieve the greatest organizational efficiencies for both the Joint Operating Committee and the vendor will provide significant value add for those in the oil and gas industry. Determining which vendor conducts which operations, when, where and how and then having the system automate as much of the process after the design is completed.

Lastly there is the interface for the processing of payments. This processing is part of the Accounting Voucher module and as we can see with all of the interfaces in this post today, all have a strong interaction with the Resource Marketplace module. What we need to capture in the Resource Marketplace module is the data and information that allows these other modules to operate. That is a critical function of the Resource Marketplace module. This point is what we will cover in the next few days 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.

Tuesday, November 15, 2011

The Preliminary Specification Part LXXXVI (RM Part IX)


In today’s post I want to point out two small items that should be reinforced and then go on to the main point of today’s discussion regarding the Resource Marketplace module of the Preliminary Specification.

The first item to note is that the Resource Marketplace module is both a producer and Joint Operating Committee facing module. That is to say it will be used in the producer organization for human resources, payroll and for securing the resources that the producer needs. And will be used by the JOC for the field products and services that are needed there. It may be obvious to some that this is the case however, I am stating this for the purposes of clarity.

The other item pertains to the all of the modules in the Preliminary Specification and that is by right clicking the mouse will bring up a contextual menu of options that the user can select an appropriate action from the People, Ideas & Objects software application. Whether this is a Work-Order, a Purchase-Order, AFE, or any of the other documents that are managed in the system. This will be available to the user through this facility.

Now on to today’s topic. Yesterday we discussed the posting of actionable information in the “actionable information interface” of the Resource Marketplace module. A place where service industry providers and producers were able to post actionable information in a centralized, search-able and analyzable database. Most importantly we noted that this was an important starting point of the process of innovation. It is an underlying assumption of People, Ideas & Objects that high commodity prices are financing enhanced innovation at the producer level. Therefore the need to stimulate innovation between the producers and the service industry starts with this actionable information.

In addition to the funds necessary to finance innovation there are what Professor Giovanni Dosi calls “technical trade-offs”. These trade-offs facilitate the ability for industries to innovate on the changing technical and scientific paradigms. Crucial to the facilitation of these trade-offs is a fundamental component that spurs the change and is usually abundant and available at low costs. For innovation to occur in oil and gas, People, Ideas & Objects would assert that the ability to seek and find knowledge, and to collaborate are two “commodities” that are abundant today. With their inherent low direct costs, knowledge and collaboration are the triggers for a number of technical paradigms which will provide companies with fundamental innovations.

Professor Dosi states “In very general terms, technological innovation involves or are the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Solutions to technological problems involve the use of information derived from experience and formal knowledge. It is the specific and un-codified capabilities, or tacit-ness” as Professor Dosi describes “on the part of the inventors who discover the creative solution.”

This is the point that I wanted to make in this follow on post to the “actionable information interface”. Where will the innovative solutions come from? Who will solve the problems? It will come down to the person who first sees the problem. And that person may be situated anywhere within the industry. He may be the vice-president of production at mega production company. Or he might be like Steve Jobs who starts out in his parents garage. The point is for the industry to be all inclusive and to have the problems being identified by those who can see them and resolve them with their innovative solutions. I wonder what reading the actionable information interface of 200 producers would provide in terms of seeing what and where the problems were?

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.

Monday, November 14, 2011

The Preliminary Specification Part LXXXV (RM Part VIII)


Our main objective in the People, Ideas & Objects software application modules is to identify and support the innovative oil and gas producer. It is within the Resource Marketplace module that I continually run into the conflict that is currently in the marketplace between the producers and the service industry. This conflict is the issue that the Resource Marketplace module must therefore seek to resolve by first opening up and developing the actionable information that is available within the marketplace.

This actionable information can be captured in an interface that is similar to any contact database. The actionable data can be plans and aspirations of the service industry provider in the short to mid term. For example, if they were a small drilling rig company looking to acquire a new rig they could post within the actionable information area of the database, that they were actively looking for producers within a certain geographical region to contract for drilling in the third quarter of 2012. Producers seeing this could then see this opportunity and evaluate it on the basis of further discussions with the vendor. The drilling rig company, having contracts in hand from the producers is then able to secure the financing and purchase the rig they have specified.

Actionable information can also be from the producer who might be approaching the start-up of a large project and will be looking to staff up to meet the demands. Or a producer may be wanting to develop in a new remote area and needs to have more infrastructure in place. Expressing a need is the first part of having the solution provided. As simple as it may sound this is the beginning of the process of innovation. Professor Giovanni Dosi notes.

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation.

Centralizing this information within one location will help to provide the users of it with its ease of use. Lets face it, this information is available on the web in some form if you dig through each companies web site and impute what they mean from their plans. By stating clearly what their actionable plans are within a central database will make it easier for the users to access. The innovation comes about when the plans are not set and the ideas and opportunities are able to flow. Secondly People, Ideas & Objects can throw some processing power at this information and give the user some tools in terms of analyzing this information. Using the Google Appliance to aid in search. Analytical tools to analyze the data.

I want to make clear that this actionable information interface will be different from the interface that is in the Petroleum Lease Marketplace module. Recall there is an interface that takes the capital expenditures of the firms for the next few years, primarily from the AFE and reserves reports, scrubs any proprietary information from it, aggregates all of the producers data and publishes it based on general geographical region. This provides the marketplace with a general understanding of the size of the marketplace in the next few years. And is different from the detailed and producer / vendor specific information that is contained within the actionable information interface. Also recall that this interface is the critical part of the process that begins here and continues through the Research & Capabilities and Knowledge & Learning modules.

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. 

Sunday, November 13, 2011

The Preliminary Specification Part LXXXIV (RM PartVII)


We begin now on our third pass through the Preliminary Specification. Starting once again with the Resource Marketplace module. The one area that I think there might be some confusion is the area where people earn their rights to Intellectual Property (IP). I think we have documented in fairly good detail how people can earn their rights in both the Resource Marketplace and Research & Capabilities modules of the Preliminary Specification. What I want to discuss in this blog post is, why is this a good thing for the producers?

As a review we noted that the big problems in oil and gas were not going to be solved until the incentive structures were aligned towards those that solved the problems. Today, in the service sector, the oil and gas industry exploits the lack of identifiable Intellectual Property (IP) by more or less ignoring it and passing it around to other firms in the service sector and its competitors. This lack of respect to those that developed the ideas has brought about a situation where the service providers have ceased to innovate or sponsor any new start-up firms as competition. The producers are the ones that are losing as they are unable to have their needs met by a diminishing capacity in terms of the service industry.

The situation has become so dire as their is little to no research being done and no start-up opportunities in the oil and gas service sector. The exact reverse of what you would think would be needed at a time like this. The oil and gas producers are reputed to be so difficult to work for that securing staff makes it all but impossible to start a firm, and even if you could start a firm, the producers would only look down their nose at you and scoff. Such is life in the rarefied air.

Nonetheless, whats in it for the producers to accept that the IP should pass from their hands to those that will take the time, energy, financial and intellectual risk to solve the producers problems? If we go back to one of the base assumptions that the People, Ideas & Objects software is operating under. We find that the competitive advantages of the producer firm are its physical assets and land base, and its earth science and engineering capabilities. Where in this competitive advantage does any product or service of the oil and gas service industry provide any value to the producer?

The means to acquire, explore, exploit and produce oil and gas reserves are how the producer makes money. That should be pretty obvious, but on the basis of how producers currently manage IP in the industry, they seem to think that drill bits and drill rigs are their future competitive advantages. What the producer needs is the most advanced and dynamic service industry marketplace that is innovative and productive and fiercely competitive in order for it to achieve its optimal productive output. What the producers should ask themselves is what the hell have they got themselves now?

A cultural change of this scope will be difficult to implement. Add this cultural change to the numerous other cultural changes that parallel this scope and you have an idea of the difficulty that lies ahead. These are the difficulties for the management of the producer firms themselves. They are the ones that have to change. And I can’t see that happening. Its a matter for Schumpeter’s creative destruction to sweep out the old and bring in the new. The new being of course the eleven module Preliminary Specification that deals with IP in the manner that will allow for the difficult problems to be solved. Until then we continue to write and grow.

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. 

Saturday, November 12, 2011

The Preliminary Specification Part LXXXIII (General Part I)


We have now made two full passes through the Preliminary Specification generating 82 blog posts. Ultimately how many posts will be generated through this process is unknown at this time, however, I think there is significant value being generated for the user community. Therefore we will continue on for a while longer. I want to take some time today to talk about the general nature of the Preliminary Specification and the comprehensive nature of the solution. This I am sure is on every ones mind and these are my thoughts on the topic.

Whether we are talking about the possibility of a multi-billion dollar software development budget or the scope of the eleven modules, People, Ideas & Objects is big. Or dealing with multiple jurisdictions and many geographic regions adds a layer of complexity that is difficult to quantify. Making the application bigger, more complex and costlier then anything that has been contemplated before in oil and gas. It seems in many ways to be all things to all people.

It’s important however to remember that it is not all things to all people. One of the purposes of the Preliminary Specification is for the user community, of which the oil and gas producers are a critical member of, to determine the scope of the application in its initial commercial iteration.

What I am providing by initiating the discussion in these blog posts of the Preliminary Specification is to detail a vision of what is possible based on the research conducted to date. This vision could ultimately be used by the user community, however may not be available in its initial commercial release. That is for the user community to decide.

Lastly to address the scope of operations of the application I would ask, how successful have the alternatives been working out for you? That cobbling together that the bureaucracy has been doing should be ready for an upgrade soon, should it not? What’s the vision of your current ERP systems. The fact of the matter is that IT should never be about the technology. It should be about your business. And that is what we have focused on at People, Ideas & Objects.

The fact of the matter also remains that as soon as we recognize the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer the systems infrastructure has to be this way. Recognizing the partnership demands certain assumptions are given. Assumptions such as the role of operator will fade, organizational participation will increase, etc. As soon as you adopt the logic of building a system for the innovative oil and gas producer you end up with a suite of functionality that is the eleven module Preliminary Specification.

Can this be done? I don’t see any alternative. The ability of the industry to take what we have today in terms of its productive output and move it to a higher level of performance is a difficult task. What we have today is deceptively sophisticated and if we aren’t careful we could lose some of that capability without realizing it. Using a higher level of specialization and division of labor are a necessary part of the next level of performance. Does anyone believe that that level of performance will arise from spontaneous order and appear with out the role of software defining and supporting it?

We have a big job to do. Lets get it done. Tomorrow we start on our third layer of the onion, the third pass through the Preliminary Specification.

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.