Showing posts with label Brown. Show all posts
Showing posts with label Brown. Show all posts

Wednesday, October 13, 2010

Hagel & Brown on Leadership

John Hagel and John Seeley Brown are two authors that we follow closely here at People, Ideas & Objects. In a Forbes article entitled “Today You Can Only be a Leader by Creating Leaders” they bring up the topic of leadership and how it’s changing.

In a world where automation of transactions and business processes increases, and escalates, particularly with the development of the Draft Specification, leadership is one of the key human actions and skills that can not be automated. A short list of the types of work that people will be involved in in the future is as follows.

  • Leadership
  • Issue Identification
  • Issue Resolution
  • Decisions
  • Design
  • Ideas
  • Search

This is to name just a few of the key human activities that will be needed. When we talk about leadership, we note the size and scope of the task that People, Ideas & Objects is focused on. It is the enormity of this task that will require many leaders. Whether its a Product Owner who will work to capture the users demands in the software, or a member of the Community of Independent Service Providers leading a system integration at a producer firm, leadership will be a key skill that will be needed. Hagel & Brown note the somewhat simple process in which this starts.
Leaders can flip these perceptions of risk and reward if they can paint compelling long-term views of the future. This is completely against the grain for most business and political leaders today; they study quarterly numbers to carefully craft a short-term view of the road ahead. Leaders in the big shift will be those who can peer ahead and paint compelling views of opportunities--and not just opportunities for themselves or their institutions but for all kinds of people. If they can help us to make sense of the long-term future, they'll be able to inspire bold action and investment in support of their initiatives, while everyone else sits on the sidelines.
People interested in getting involved with People, Ideas & Objects should contact me here to begin the process of joining this project. People who are interested in building and providing the systems and services the innovative oil and gas producers will need to meet the market demand for energy. We should also take note of the following.
But there will be another even bigger change in leadership. In the past, leaders were measured by how many people followed them. In the era ahead, they will be measured by how many other leaders they can cultivate. We are moving from a world of push, where people are expected to follow detailed scripts to accomplish specified tasks, to a world of pull, where everyone must master the techniques of drawing out people and resources when needed to address unanticipated opportunities and challenges. In the world of push, followers were prized. In the world of pull, everyone must figure out how to become a leader in their own domain.
This makes intuitive sense. With the systems handling the majority of the business, the remaining tasks are not going to be distributed by some all knowing greater power. The more that can be initiated by the leader, the higher the value that is generated for the producers.
Rather than using persuasion to get others to follow predefined programs, the new generation of leaders will use persuasion to help people more effectively draw out their own individual potential. The really effective leader will be one who can persuade emerging leaders to join forces toward common goals and develop faster than they could on their own.
I can’t think of a more exciting place to work. People, Ideas & Objects, the Community of Independent Service Providers offers leaders a place where their skills are needed.
The bottom line: Leaders will no longer be defined by the number of followers they have, but rather by the number of other leaders they have cultivated and mobilized across institutional boundaries. That is a profound shift.
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.

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Tuesday, September 08, 2009

A call to action.

John Hagel and John Seely Brown are two authors who's work I reviewed in the Preliminary Research Report. They have consistently shown the direction that business should be moving towards. Their message has been somewhat controversial due to the focus on technologies impact. With the luxury of time we can see they are in tune with the needs of business and have added value to those that listen.

Finding those that will listen may be the difficult part. I see their message being broadcast over the heads of management to the people who are in the know, that things are not working quite right anymore. In a blog post, John Hagel has itemized a call to action for those people to deal with the situation they are in. I think they are on message and add some value to those that will listen.

It's important to remember that this situation is unique in terms of it's point in history. We have reviewed Professor Carlota Perez work that says the economy today is the result of a long term trend that has shown a consistency in each of the five previous events over the past 300 years. The old is being replaced by the new. The new is being facilitated by the Information and Communication Technologies (ICT) which enable new ways of organizing.

Professor Perez has documented the changes that have happened in the prior 300 years. In addition to the industrial revolution we saw affordable and abundant steel impacting the strength and capacity of ships. How the canal system in Europe provided an increase in trade. All disrupting technologies that brought prosperity to the world.

This blog post of Hagel & Brown intimates the future is ready, waiting and looking for the people who are needed to take it too the next level. I recommend you review this post closely, and if your involved in the oil and gas industry, please join us here.

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Tuesday, June 23, 2009

Hagel & Brown, Shift Index.

Tonight I am in possession of an interesting paper that I'll evaluate in a future post. I felt it best that I point out this new paper so that others could get an early view of it as well. John Seely Brown and John Hagel are two authors that I covered in the Preliminary Research Report. There work is in the area of Web Services and its impact on business. 
The topic of the paper is the development of an index called the "Shift Index". I'll leave you with a quotation from Professor Scott Page who wrote the Forward.  
The Shift Index can be thought of as a new economy analog of the Composite Index of Leading Indicators, an old economy index that considers hours worked, unemployment applications, orders for capital goods, new building permits and the like. The Composite Index has its place, but its indicators don’t respond until months if not years into a shift. Walk through an innovation sequence: Bandwidth increases creating space for new social media. Entrepreneurs formulate ideas. Venture capitalists finance projects. Proposals prove viable. Finally, mezzanine funding spurs a ramp up in employment. Only then, in this last stage, does the Composite Index identify the shift. Using the Composite Index to track shifts is like driving a car by staring into the rear-view mirror. In contrast, the Shift Index lets us look out the front windshield. 
As important as the index may prove for strategic applications, it may have more impact in how it changes our conception of the economy. Interpreted through the lens of neoclassical economics, the Shift Index captures shifts in fundamentals, particularly on the cost side where technological changes allow firms to do more with less. But, the Shift Index, by name alone, calls into question the neoclassical mindset that focuses on re-equilibration.
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Thursday, February 08, 2007

John Seeley Brown on MIT Video

John Seeley Brown talking about "Re-learning Learning - Applying the Long Tail to Learning" on MIT Video. The video is on the longish side at 1:43 minutes, however, it is time well spent. Along with John Hagel III, John Seely Brown was instrumental in defining the web services paradigm for business. I wrote about their thinking at the time on the subject.

Speaking in the context of change, Brown suggests the "speed of acceleration" of change means that little or no skills will be able to sustain their value over a moderate to long period of time. A new approach to learning requires people to adopt the attitude that an inventory be conducted to determine where new skills are needed, each year. In support of new skills Brown also suggests that we find successful learning models. Differentiating between "learning about" and "learning to be" with the latter being the more difficult of the two.

Dr. Brown notes that a good example of "learning to be" is the open source software development model. I have to agree with his comment as it is a strong model of organizational learning. Brown calls it a "distributed cognitive apprenticeship platform". The most popular culture in the digital generation has come back to a "building, tinkering and participatory culture". This last comment in line with Sun Microsystems and its CEO talking about the "Participation Age". In the future I will discuss in-depth the methods that software is developed under these open source models. It is what we will be using on this development and it is rather complex and interesting development model in terms of its methods and processes.

Brown comments that this "learning to be" is usually more amateur then professional with the point that passion is what drives the people in the open source model to build better systems. This passion leading to the rise of the Amateur Class. For almost no amount of money users can participate at high levels in science and business ideas. Professionals and amateurs are working together today. The tools by themselves are not sufficient. What is needed is the passion of the users to make things happen.

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Thursday, December 14, 2006

The attention economy.

John Hagel III has written a fascinating series of articles on what is being called the "Attention Economy". His comments are located here, here and here. I highly recommend my readers to view these articles thoroughly. Hagel picks up from the quotation of Professor Herbert Simon, Nobel Laureates quote,

"...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of the information sources that might consume it."
I think that Hagel is picking up where Simon's comment left off and introduces some current research that Michael Goldhaber is doing in this area. Goldhaber's best articles are here, here and here. Attention is not a commodity, in that it is fixed and Hagel discusses both the scope of your own attention and the attention that ideas can garner and sustain. I wanted to comment on the important impact of this thinking and relate the significance of what I think is being said.

For myself I find the demand to keep enhancing my information systems requires daily diligence of what, where and who I spend my attention on. If I am not vigilant I become satisfied with the status quo and that is a dangerous attitude to have these days. There is enough justification and supporting information to ignore and belittle the overall and global changes that are occurring today. Many prefer to refer to their BlackBerry's and consume their lives in the day to day grind of mindless activity. We need to focus our attention on what and where we are going with these technologies. If we loose sight of the road that we are travelling on we could be lost for a sizable amount of time.

An important point of view to maintain is the technology works for me to meet my needs, I do not respond in any way to the demands of the technology. Needless to say I have no BlackBerry and I ensure that at least 80% of my synchronous time is spent in person, with limited amount of time being spent on phone calls. I communicate asynchronously, or at my time, on my schedule and my agenda. Many things fall off the table as a result, and I am best able to prioritize what is necessary.

The other aspect that is important is the speed at which things are viewed. I like to spend as much time as I can per day on reviewing and writing what I am researching about. With three blogs and two major topics it is something that requires a focus that is difficult to sustain. So there are two modes, quick and summary where little is available for immediate recall, yet some of the more important aspects are recalled many days later, or as required. Here is where Google is an invaluable tool in that I am then able to re-find that reference almost immediately. And then there is the reading and reviewing at the pace that is necessary to take notes and assimilate the complex topics that demand my time and efforts. These can take a goodly amount of time, but that time is afforded to me as I know nothing otherwise will be lost.

I frequently look at it from the point of view that Google has provided me with at least 7,000 of the smartest people in the world, working to make my information better. Google also provides me with the supercomputing power necessary to index and make available that information that is the most important to me. Such power in the hands of every user will make the majority of the major issues in the world more solvable. The most surprising element of this tool is that Google is making a billion dollars a quarter doing this. The attention economy operates on a different premise.

So what is it that I am trying to do here. In a nutshell I am trying to create and sustain the necessary attention of my readers to ensure that their time is most effectively spent on reading, sharing and conversing through this blog. There ability to be fully informed through a high quality filter is what I am preparing and providing to them in this blog format. The recent changes that I have made to this blog are designed to increase the value and usability. And include;
  • Use of Labels, as well as Technorati tags, providing my readers with a variety of ways to aggregate items that I and others write about.
  • I installed three custom search engines;
    • Oil and gas custom search reviews the highest quality journals and sites that cover the global oil and gas business. As I find more high quality documents and sites I will add them to that search engine.
    • Innovation search engine reviews the quality documents and sites that I discover and use in my research regarding innovation.
    • Academic search engine that provides the best academic sites available. Oxford, Harvard, MIT, London School of Economics, University of Chicago, Berkely, Princeton, Yale and Stanford to name just a few. Other sites like DSpace and most of the universities that provide their course offerings and videos online.
  • I have installed not only the del.ico.us articles that I read and find of value, but now have included the tag cloud that these articles and tagging provides. Readers are encouraged to fully explore the referenced articles and tags, they are there for your reading enjoyment and to act as a filter to get to the quality stuff first. Please don't hesitate to join my del.ico.us network while visiting.
  • I have also provided 50 of the most recent blog posts and readings that I discover through my RSS reader, Google Reader. These url's can be seen by going to the website where these ideas are hosted. These provide my readers with the best of the best.
  • And finally a financial summary that caters to the oil and gas market activity. And a summary of the Sun Microsystem Aquarium which is where the J2EE server that we will be using is summarized.
If I am able to provide quality reading material and idea generation for my viewing public, focused on innovation in the oil and gas industry globally. With a strong focus of my writing regarding the revolutionary use of the joint operating committee, I think that I am spending my time as effectively as I can. I believe that this enables my readers to focus their attention a little clearer on the issues and opportunities we all face in the oil and gas industry.

I hope you enjoy this as much as I do. As I have mentioned here before, there is no better job in the world from my point of view. I will be writing more on the topic of the attention economy and work hard to focus my readers attention as finely as I can.

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Wednesday, December 13, 2006

Some books I like.

104 Titles of some of the best books that I found.

The Strategy of Conflict
Thomas C. Schelling

Classical and nonclassical logics : an introduction to the mathematics of propositions
Schechter, Eric, 1950-

Winning at collaboration commerce : the next competitive advantage
Collins, Heidi.; Gordon, Cindy.; Terra, Jose Claudio Cyrineu.
August 23, 2005

Computational Economics
David A. Kendrick, P. Ruben Mercado, Hans M. Amman
December 15, 2005

The Constitution of Society: Outline of the Theory of Structuration
Anthony Giddens
January 11, 1986

Execution: The Discipline of Getting Things Done
Larry Bossidy, Ram Charan, Charles Burck
June 15, 2002

Extreme Competition: Innovation And the Great 21st Century Business Reformation
Peter Fingar
January 31, 2006

The fast forward MBA in project management
Verzuh, Eric.

Freakonomics : a rogue economist explores the hidden side of everything
Levitt, Steven D.; Dubner, Stephen J.

The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life
Thomas W. Malone
April 2, 2004

Genome
Matt Ridley
October 3, 2000

Happy Lives and the Highest Good : An Essay on Aristotle's "Nicomachean Ethics"
Gabriel Richardson Lear
January 5, 2004

Human accomplishment : the pursuit of excellence in the arts and sciences, 800 BC to 1950
Murray, Charles A.

Ideas Have Consequences
Richard M. Weaver
September 15, 1984

Income Distribution in Macroeconomic Models
Giuseppe Bertola, Reto Foellmi, Josef Zweimuller
December 1, 2005

Innovation, Organization and Economic Dynamics: Selected Essays
Giovanni Dosi
September 23, 2001

It's About Time : Understanding Einstein's Relativity
N. David Mermin
November 1, 2005

The Java programming language
Arnold, Ken, 1958-; Gosling, James.; Holmes, David (David Colin)

Java: An Eventful Approach
Kim Bruce, Andrea Danyluk, Thomas Murtagh
July 29, 2005

Leading with questions : how leaders find the right solutions by knowing what to ask
Marquardt, Michael J.

Learning the bash Shell
Newham, Cameron.; Rosenblatt, Bill.

Lecture Notes in Microeconomic Theory : The Economic Agent
Ariel Rubinstein
December 16, 2005

Max Plus at work : modeling and analysis of synchronized systems : a course on Max-Plus algebra and its applications
Heidergott, Bernd.; Olsder, Geert Jan.; Woude, J. W. van der.

On Adam Smith's Wealth of nations : a philosophical companion
Fleischacker, Samuel.

The only sustainable edge : why business strategy depends on productive friction and dynamic specialization
Hagel, John.; Brown, John Seely.

Philosophy as a Humanistic Discipline
Bernard Williams, A. W. Moore
January 2, 2006

Politics and Vision : Continuity and Innovation in Western Political Thought
Sheldon S. Wolin
May 3, 2004

The Politics of Good Intentions : History, Fear and Hypocrisy in the New World Order
David Runciman
May 5, 2006

Producing security : multinational corporations, globalization, and the changing calculus of conflict
Brooks, Stephen G., 1971-

Radical evolution : the promise and peril of enhancing our minds, our bodies--and what it means to be human
Garreau, Joel.

The Singularity Is Near : When Humans Transcend Biology
Ray Kurzweil
September 22, 2005

The State of Democratic Theory
Ian Shapiro
August 18, 2003

The Strategy of Conflict
Thomas C. Schelling
June 26, 2003

The Success of Open Source
Steve Weber

Swarm creativity : competitive advantage through collaborative innovation networks
Gloor, Peter A. (Peter Andreas), 1961-

The Theory of Corporate Finance
Jean Tirole
December 15, 2005

Understanding institutional diversity
Ostrom, Elinor.

The West's last chance : will we win the clash of civilizations?
Blankley, Tony.

Wicked cool Java : code bits, open-source libraries, and project ideas
Eubanks, Brian D.

Winning at collaboration commerce : the next competitive advantage
Collins, Heidi.; Gordon, Cindy.; Terra, Jos©♭ Cl©Łudio Cyrineu.

Winning the Knowledge Transfer Race
Michael J. English, William H. Baker
October 25, 2005

The World Is Flat: A Brief History of the Twenty-first Century
Thomas L. Friedman
April 5, 2005

Infrastructure: A Field Guide to the Industrial Landscape
Brian Hayes
September 26, 2005

It's Not What You Say...It's What You Do: How Following Through at Every Level Can Make or Break Your Company
Laurence Houghton, Laurence Haughton
December 28, 2004

Knowledge Accumulation and Industry Evolution : The Case of Pharma-Biotech
Mariana Mazzucato, Giovanni Dosi
March 9, 2006

The Nature and Dynamics of Organizational Capabilities
Giovanni Dosi, Richard R. Nelson, Sidney G. Winter
January 15, 2001

Technology, Organization, and Competitiveness : Perspectives on Industrial and Corporate Change
Giovanni Dosi, David J. Teece, Josef Chytry
May 21, 1998

Technology and Enterprise in Historical Perspective
Giovanni Dosi, Renato Giannetti, Pier Angelo Toninelli
August 1, 1992

The Economics of Technical Change and International Trade
Giovanni Dosi, Keith Pavitt, Luc Soete
March 23, 1991

Technical Change and Economic Theory (Ifias Research Series, Number 6)
Giovanni Dosi
October 23, 1990

Technical Change and Industrial Transformation
Giovanni Dosi
August 23, 1984

Technical change and survival: Europe's semiconductor industry (Industrial adjustment and policy)
Giovanni Dosi
February 23, 1981

Sisomo: The Future on Screen
Kevin Roberts
November 15, 2005

An Army of Davids : How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths
Glenn Reynolds
March 7, 2006

The Prepared Mind of a Leader : Eight Skills Leaders Use to Innovate, Make Decisions, and Solve Problems
Bill Welter, Jean Egmon
October 24, 2005

License to Harass : Law, Hierarchy, and Offensive Public Speech (The Cultural Lives of Law)
Laura Beth Nielsen
August 30, 2004

Plato's Fable : On the Mortal Condition in Shadowy Times (New Forum Books)
Joshua Mitchell
March 3, 2006

China the Balance Sheet: What the World Needs to Know about the Emerging Superpower
Institute for International Economics, Center for Strategic & International Stu
April 10, 2006

A Machine to Make a Future : Biotech Chronicles
Paul Rabinow, Talia Dan-Cohen
April 7, 2006

Dynamic Models in Biology
Stephen P. Ellner, John Guckenheimer
March 31, 2006

Information Science
David G. Luenberger
February 15, 2006

Information Revolution : Using the Information Evolution Model to Grow Your Business
Jim Davis, Gloria E. Miller, Allan Russell
January 9, 2006

Managing in the Next Society
Peter F. Drucker
July 24, 2002

The Long Tail : Why the Future of Business Is Selling Less of More
Chris Anderson
July 11, 2006

A New Kind of Science
Stephen Wolfram
May 14, 2002

The Second Cycle: Winning the War Against Bureaucracy
Lars Kolind
April 24, 2006

Competing on the Edge : Strategy as Structured Chaos
Shona L. Brown, Kathleen M. Eisenhardt
April 15, 1998

The Innovation Killer: How What We Know Limits What We Can Imagine... And What Smart Companies Are Doing About It
Cynthia Barton Rabe
June 30, 2006

A Whole New Mind: Moving from the Information Age to the Conceptual Age
Daniel H. Pink
March 24, 2005

Schumpeter on the Economics of Innovation And the Development of Capitalism
Arnold Heertje, Jan Middendorp
March 24, 2006

Infrastructure: A Field Guide to the Industrial Landscape
Brian Hayes
September 18, 2006

Choice and Consequence
Thomas C. Schelling
April 4, 2006

Micromotives and Macrobehavior (Fels Lectures on Public Policy Analysis)
Thomas C. Schelling
October 23, 1978

Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages
Carlota Perez
April 23, 2003

Innovation, Organization and Economic Dynamics: Selected Essays
Giovanni Dosi
September 23, 2001

Evolutionary Economics and Creative Destruction (Graz Schumpeter Lectures, 1)
J. Metcalfe
January 28, 1998

Knowledge, Institutions and Evolution in Economics (The Graz Schumpeter Lectures)
Brian Loasby
September 23, 2002

Schumpeter and the Endogeneity of Technology : Some American Perspectives
N. Rosenberg
June 23, 2000

Joseph Alois Schumpeter
Wolfgang F. Stolper
August 8, 1994

Democracy, Education, and Equality: Graz-Schumpeter Lectures (Econometric Society Monographs)
John E. Roemer
January 9, 2006

Invisible Engines: How Software Platforms Drive Innovation and Transform Industries
David S. Evans, Andrei Hagiu, Richard Schmalensee
October 1, 2006

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
Matthew R. Simmons
June 10, 2005

iWoz: From Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It
Steve Wozniak, Gina Smith
September 25, 2006

Mavericks at Work: Why the Most Original Minds in Business Win
William C. Taylor, Polly G. LaBarre
October 2, 2006

America Alone: The End of the World as We Know It
Mark Steyn
September 16, 2006

Power, Speed, and Form: Engineers and the Making of the Twentieth Century
David P. Billington, David P. Billington Jr.
October 2, 2006

Painting outside the Lines: Patterns of Creativity in Modern Art
David W. Galenson
January 18, 2002

Old Masters and Young Geniuses: The Two Life Cycles of Artistic Creativity
David W. Galenson
December 27, 2005

Capitalism and Freedom: Fortieth Anniversary Edition
Milton Friedman
November 15, 2002

The Road to Serfdom Fiftieth Anniversary Edition
F. A. Hayek, Milton Friedman
October 15, 1994

The Constitution of Liberty
F. A. Hayek
October 15, 1978

Law, Legislation and Liberty, Volume 1: Rules and Order
F. A. Hayek
February 15, 1978

Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice
F. A. Hayek
October 15, 1978

Law, Legislation and Liberty, Volume 3: The Political Order of a Free People
F. A. Hayek
March 15, 1981

Individualism and Economic Order
F. A. Hayek
June 1, 1996

Capitalism and Freedom: Fortieth Anniversary Edition
Milton Friedman
November 15, 2002

Free to Choose: A Personal Statement
Milton Friedman, Rose Friedman
November 18, 1990

A New Kind of Science
Stephen Wolfram
May 14, 2002

The Emotion Machine: Commonsense Thinking, Artificial Intelligence, and the Future of the Human Mind
Marvin Minsky
November 7, 2006

Organizations,
James G. March
June 5, 1958

Lectures on Economic Growth
Robert E., Jr. Lucas
February 15, 2002

The Attention Economy : Understanding the New Currency of Business
Thomas H. Davenport, John C. Beck
June 6, 2001

Change or Die: How to Transform Your Organization from the Inside Out
M. David Dealy, Andrew R. Thomas
November 30, 2005

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Sunday, November 26, 2006

Another McKinsey survey.

This survey is reported by Dr. Nicholas Carr on his Rough Type web log. (Click on the title of this entry to go there.) Noting that large percentages (61%) of companies in North America are on the verge of adopting SaaS (Software as a Service). Their motivation being, and it is a subtle point, that companies are moving closer to Dr. John Hagel lll's idea that industry will need to restructure as either;

  • Infrastructure Management (Firms like Genesys providing SaaS solutions.)
  • Innovation Management (The key role of the producer (Based on capabilities and oil and gas leases.))
  • Customer Management (The down stream business of refining and marketing.)
As I move to secure some of the residual budget allocation for 2006, I will be highlighting these points to the industry, I only hope they are listing to the volume of people that are speaking to these issues.

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Monday, October 16, 2006

A different approach.

It could be argued that the focus of this research is a software product that falls within the classification of vaporware. And it does. However I would put some spin on the classic definition of vaporware and call this a clean slate approach to oil and gas systems. The category that this "product" is in is difficult to define and therefore difficult to build without the express support of the oil and gas industry. This final research report is an attempt at communicating these concepts far and wide within the oil and gas industry in an attempt to find an audience. The strength of the concept of using the Joint Operating Committee requires that every data element, every relationship, and every process be revisited and rewritten. New modules and marketplaces will be built to eliminate the old software classifications.

I am attempting to articulate a vision of what a new approach could do in the systems area. It certainly is vaporware as no group or company has ever approached the joint operating committee as the central organizational focus. How can I, as one individual, do all this work in order to make a viable system exclusively for the producers? The clean slate approach has to be communicated in a way that the system could and should be built in order to accurately describe its features.

I have identified several points that present future difficulties in oil and gas systems. Partnership Accounting, Human Resource Marketplace module, Petroleum Lease Marketplace module and the Genesys Technical Vision are the foundation of this final research report and are unaddressed by the competition. All these aspects of future software systems have to be addressed and neither SAP, Oracle or IBM have a solution or vision that is as compelling as shown in this research report.

To be more specific, the perspective of using the joint operating committee brings new and better ways of managing an oil and gas enterprise. From a systems point of view oil and gas has ignored and avoided the joint operating committee as it conflicts with the underlying purpose of the bureaucracy. Significant contradictions and conflict have crept into the oil and gas producers’ operations that results in the Joint Operating Committee being precluded from the systems used.

This project was originally proposed to the industry in 2004 as an $85 million software development project. The producer must ask itself,: isn't it more appropriate to keep your options open ? What if SAP and Oracle continue with their current offerings; will those be adequate in the future? A future with IPv6 capability? A further question that needs to be asked, and based on the work of John Hagle III and John Seely Brown, is : Are the proposed industry stratifications changing to be reflected as either innovation management, infrastructure management or customer management?
Is there an expectation or belief that the bureaucracy and its use of last century’s technologies can hold a candle to this vision? These technologies and the forces of change in all areas of the economy have to be addressed. Oil prices are up almost 300% will result in the reallocation of financial resources to support innovation. Organizations are constrained in their speed and innovativeness due to the bureaucracy and its refusal to accept the joint operating committee as the explicit form of organization. Constraints in human resources, field capacities and speed to market are real issues that jeopardize the industry.

We have consistently seen successful companies that were able to integrate technology into their strategy and form strong competitive advantages. A company such as HSBC. Homogenization on SAP is not a competitive strategy. I have now counted 12 calls to action from Harvard, Oxford Analytica, MIT, McKinsey, John Hagel III and John Seely Brown, Secretary Bodman, SEC Chairman Christopher Cox and a variety of others. Add to these calls the demands of the consumers. The time to act and put these software developments into play is now.

Ray Lane is a partner at Kleiner, Perkins, Caufield & Byers and a former president of Oracle Corporation. He knows what he is talking about. This entry will take you to a Business Week article that documents many important points. Two of these points I want to discuss in this entry, they are:

"The traditional method of selling big corporate software applications as multi million-dollar packages that take years to implement is broken."

"The 70% of startups out there that are trying to do what the big companies do, only better, faster and cheaper - it's a fools errand. The customers would like to buy that from a large company, so they’re going to lose out." Ray Lane

Surprisingly, perhaps, I think he is right on both counts. The large multi year, multi million dollar packages are the dinosaurs of the software world. Even Petro Canada tried to implement SAP and after $14 million gave up. It’s fallacious to try to retrofit the company to the software.

On the second point of Ray Lane's, stating that the startups will fail, is something that I struggled with at the beginning of this process and something that I think I can also prove is not valid in the oil and gas sector. The two points that I would assert in my defense is that I am the copyright owner of the methods and processes discussed in this research, and in the preliminary report. I published my thesis in May 2004. I have tangible evidence that the state of the art thinking was not as advanced as what I proposed in September 2003, and earned in the publication of the Plurality document.

Back in 2003 I concluded that the software vendors could consume themselves competing with new offerings and no one would have been able to secure a competitive hold in the market. The only manner in which to establish a competitive offering, I felt, was to own the intellectual property as the key competitive advantage. The copyright, and other forms of intellectual property are the only sources of value in this new age.

Secondly, if anyone thinks that a large vendor is going to be able to write the code for the Partnership Accounting, Human Resource Marketplace, Security, Petroleum Lease Marketplace module that I have spoken about in this report I think they would be mistaken in their expectations. What is needed is a clean slate approach and the heavy involvement of potential and future users. The day and age when the software innovations were brought to the industry’s door through the cottage software industry has ceased. The involvement of the industry in its software development needs is mandatory, and become an inherent capability

So on that basis I would agree and disagree with Mr. Lane. Intellectual property is the only method of securing any kind or competitive advantage in this new day and age. Those that attempt to build systems without their differentiation being codified and protected are in my opinion wasting their time. What is required to compete with this software is some fundamentally different basis of organizational structure for the software to define and support just as I have outlined here.

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Monday, October 09, 2006

Tacit organizations and creation nets.

More from the editor.

McKinsey Consulting, John Hagel III and John Seely Brown have published a series of articles which touch on "Creation Nets" and "Tacit Organizations". This is a summary of the articles as they apply to this research proposal. Much of what is said is a direct call to action and I have selected this article to stand on its own with respect to how the industry could and should be re-organized.

"Tacit interactions are becoming central to economic activity. Making those who undertake them more effective isn't like tweaking a production line."
This article states that tacit interactions, consisting of collaborative and complex problem solving, are the primary means of future economic value. The majority of these interactions are found in western-based economies and are conducted by those that earn higher salaries. The article goes on to say;
"During the next decade, companies that make these activities - and the employees most involved in them - more productive will not only raise the top and bottom lines but also build talent based competitive advantages that rivals will find hard to match."
and
"But building these advantages won't be easy: companies must alter the way they craft strategies, design organizations, manage talent and leverage technology."
Today the technology exists to collaborate at a basic level. In the next ten years the development of collaborative applications will enable those firms that choose to increase these tacit interactions, with "competitive advantages that rivals will find hard to match."

McKinsey goes on to better define what is meant by tacit interactions noting "the searching, coordinating and monitoring activities required to exchange goods, services and information". The developed economies are finding the volume of tacit interactions are growing faster than in any other category or job description. Increasing to the point where they are taking up almost half of the resources in certain industries. The developing world is not far behind and has opportunities that could match the developed worlds pace in a very short period of time.

Automation of the business process, or transactional activities, does not augment the performance of tacit interactions. How a firm may increase those tacit interactions and increase performance is not well known or defined at this point.
"But that must now change. Executives will have to learn to innovate, and manage in era when tacit interactions dominate and drive performance."
Facilitating the opportunity for people within your organization to increase tacit interactions requires the management to provide the tools for people to do their jobs. In oil and gas, I would suggest that direct participation of all members of the joint operating committee, collaborating in a virtual environment is a part of the Genesys application being developed. Each engineer, geologist, administrator and developer are there to represent their companies' interest in the area. Collectively the groups are able to collaborate and have the software support their thinking and decisions with tools that handle the business end of these interactions. For example, if it is determined that a sand frac is to be used on the well the following processes would be invoked:
  • the contracting firm is chosen
  • a purchase order is created
  • a contract is made
  • the invoicing and payment for those services are completed
These are all as a result of the decisions made by the joint operating committee (JOC). This frees employees to conduct a greater volume of tacit interactions and innovations that are necessary to meet the market demands for energy.
"Workers engage in a larger number of higher quality tacit interactions when organizational boundaries (such as hierarchies and silos) don't get in the way, when people trust each other and have the confidence to organize themselves, and when they have the tools to make better decisions and communicate quickly and easily."
McKinsey has conducted a survey of 8,000 companies and determined that certain sectors had higher levels of tacit interactions. Within each industry the number of tacit interactions was widely variable and appears to have a direct correlation to the overall performance of the firm! McKinsey goes on to say;
"The need to move forward is both substantial and urgent."
High levels of tacit interactions were consistently shown to have built substantial competitive advantages. These advantages were difficult to be replicated by competitors as their "power lies in the collective company specific knowledge that emerges over time."

McKinsey goes on further to state that these require a;
"New Management Science"
and
"Require changes in every facet of business, from hatching strategies, to organization, to managing talent, and leveraging IT."
The Genesys systems will be developed with the joint operating committee as the organizational construct and focus. This will enable high levels of tacit interactions and collaboration throughout the enterprise, the partnership in which the JOC is represented, the industry as a whole and the individual professional groups.

Consistent with the need to revisit all aspects of the firm, McKinsey believes the role and purpose of strategy and its development take on a higher importance than they once did. This becomes the critical task of senior management to provide the overall scope of interactions and their derivative innovations. This implies that innovations occur at the front lines of the business, not in the management ranks. The means that companies use to enhance the volume and value of tacit interactions is captured in the following;
"Tacit interactions reduce the importance of structure and elevate the importance of people and collaboration. Some of these changes are already underway. In many companies people now come together in project teams, address an issue, and disassemble to start the process again by joining other informal teams. In fact this approach is common in certain professional services and engineering firms, so their organizational charts rarely reflect what is really happening in them. Hierarchy busting has been a theme in the business press for years, but the pace of change has been slow and its effectiveness questionable."
The technology that companies will need to employ is fundamentally different from those used today. In addition to the enhanced communications, these technologies needs to be brought into context for the next ten years that McKinsey suggests these changes will occur. This proposal provides a technical vision that is necessary for these interactions to grow in unpredictable ways. Key will be the asynchronous process management and its ability to mirror the unpredictability of events as they occur.

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Saturday, September 09, 2006

Calls to Action

More text that will make up the soon to be published proposal to industry.

There have been a variety of what I refer to as "Calls to Action" regarding the organizational structure of companies. Suggestions are made for companies of all sizes, but particularly for larger firms. These calls echo the message that I published in the preliminary research report "Plurality Should not be assumed without necessity."

Harvard Publishing

The expiration of the use and function of the organizational hierarchy is being discussed by members of the academic community. Harvard has published a book "Winning at Collaborative Commerce" (ISBN 0750678178) which addresses the need for organizations to use the collaborative tools currently available to eliminate the negative attributes of the hierarchy. Here is a summary written by a Harvard editor:

"More than ever, companies are sharing data, processes, and even employees with their customers and vendors to increase speed and efficiency. So what is collaborative commerce? The authors, who first introduce the concept in this book, suggest that just sharing information is not enough—new business models and organizational structures must be built around this open-door policy to reap maximum benefit."
Harvard's book is directly on topic with its introduction of what they define as "collaborative commerce". They note that the speed of innovation, and increased competitive advantages are at hand for the companies that implement these systems and procedures. they also note that collaborative commerce provides long term sustainable competitive advantage.

Harvard notes the need for:
"commitment and change across a number of areas: governance, strategy, process design, information technology infrastructure, people management, culture and change, and measurement."
The Harvard Book summary is available here. http://hbswk.hbs.edu/book-review.jhtml?t=organizations&id=5108&wkrss=y

McKinsey Consulting

McKinsey Consulting have published an article which is right on point with its focus on systems. Entitling the publication "The Next Revolution in Interactions" this ties into the "Enterprise 2.0" discussion which many people have branded the concept, and is consistent with Harvard's "Collaborative Commerce". Providing the entire article in a down loadable podcast was a good idea and I highly recommend listening.

On topic comments include:
"Technology and organizational strategies are inextricably conjoined in this new world of performance improvement."

"This shift toward tacit interactions upends everything we know about organizations. Since the days of Alfred Sloan, corporations have resembled pyramids, with a limited number of tacit employees (managers) on top coordinating a broad span of workers engaged in production and transactional labor. Hierarchical structures and strict performance metrics that tabulate inputs and outputs therefore lie at the heart of most organizations today."

"But the rise of the tacit workforce and the decline of the transformational and transactional ones demand new thinking about the organizational structures that could help companies make the best use of this shifting blend of talent. There is no road map to show them how to do so. Over time, innovations and experiments to raise the productivity of tacit employees (for instance, by helping them collaborate more effectively inside and outside their companies) and innovations involving loosely coupled teams will suggest new organizational structures."
These selected excerpts provide support for using the Joint Operating Committee as the organizational focus in oil and gas. The comments by McKinsey were written in December of 2005 and were the first to discuss these formerly taboo subjects. One interesting difference between what McKinsey writes about, and the oil and gas industry, is that the Joint Operating Committee can fulfill the objectives they note in this article. Unlike some industries that need to take a clean slate approach to the organizational construct, the oil and gas industry already has the joint operating committee to provide all of this value.

McKinsey - The next revolution in interactions. http://www.mckinseyquarterly.com/article_page.aspx?ar=1690&L2=18&L3=30&srid=17&gp=0

Massachusetts Institute of Technoloy

MIT Video records MIT's president Susan Hockfield as calling for this prestigious university to lead the charge to solve the global energy problems. This frames MIT's role as not dissimilar to what their role was during World War II. Stating that Energy has entered a "perfect storm" in which demand is rising, supply is constrained and environmental concerns continue as issues for the industry.

Although during the video there was a belief that generating sufficient supply of renewable or bio-fuels was part of the solution. the video’s focus is on sustaining the energy demands of the world throughout the 21st Century and ensuring that economies were able to source the volumes of energy demand. MIT is forming an Energy Research Council to guide the various faculties in their research.

Link: http://mitworld.mit.edu/stream/349/

The Oil and Gas Journal
The next call to action is from The Oil and Gas Journal. The article is entitled "Innovation lacking in high-tech world of oil: New technologies needed to develop unconventional resources." They have identified the demands of quarterly performance as the reason why the energy industry has not resumed its role in addressing supply and pricing issues. Nonetheless they are stating that the demands for more energy are significant and it is critical for the producers to innovate. I consider it a must read article.

On page six the authors summarize many of the areas they suspect that innovation will be of value. They also point to the potential of higher prices leading to a reduction in demand. Nonetheless the scope of the suggestions covers all areas of conventional and unconventional oil and gas. They effectively state what is needed, but are lacking in the article as to how it is to be provided.

It is necessary for the industry to re-organize themselves for this challenge. A revised organizational structure that addresses the performance of an innovative producer is needed. That is why selecting the joint operating committee as the key organizational construct around which systems are to be built. By joining the hierarchy’s accountability framework with the four frameworks of the joint operating committee, performance will increase. Software defines the organization, and changing the organization requires that software be built to define the new organization.

Link http://ogj.pennnet.com/Articles/Article_Display.cfm?Section=HOME&ARTICLE_ID=229822&VERSION_NUM=2&p=82
Oxford Analytica.

Their website reflects;
"Oxford Analytica is an international, independent consulting firm drawing on a network of over 1,000 senior faculty members at Oxford, and other major universities and research institutions around the world. Founded in 1975 by Dr. David R. Young, Oxford Analytica has built an international reputation for seasoned judgment on and analysis of the implications of national and international developments facing corporations, banks, governments and international institutions."
Oxford Analyticas explicit conclusion to this article is stated as:
"Technological lead will prove critical in the efficient exploitation of frontier oil provinces. Upgrading portfolios means majors will divest assets that provide material opportunities for small and medium-sized independents.
Link http://www.alacrastore.com/storecontent/oxford/DB126086

Securities and Exchange Commision.


The Wall Street Journal contained an excellent article regarding the accountability framework of the Securities and Exchange Commission (SEC). This article is about the relatively new SEC Commissioner Mr. Christopher Cox discussing a revised method of compliance to the SEC's accountability framework. By using XML (Extensible Markup Language) and specifically XBRL (Extensible Business Reporting Language) he is defining the meta data necessary for automation of the accountability framework.

The preliminary research report stated the purpose was to build software to manage the accountability framework. Then by using the Joint Operating Committee as the organizational construct, this would achieve an alignment with the financial, legal, operational decision making and cultural frameworks. The report noted that these four frameworks are defined and constrained by the Joint Operating Committee, and that when accountability and operational decision making were separate, administrative difficulties creep in. Therefore when accountability is in line with the financial, legal, cultural and particularly the operational decision making framework these administrative issues would subside and innovativeness would increase.

Chairman Christopher Cox is interested in doing the same for the entire world's financial trading markets, which as SEC commissioner is his responsibility. By making the types of comments that Commissioner Cox states in the WSJ article it is clear to me that he is not only on the right track but will resolve the largest administrative nightmare, that being Sarbanes-Oxley, of the public company reporting process.

It would generally be concurred that the legislation known as Sarbanes-Oxley is too onerous for companies to comply with. How this issue gets resolved from here is difficult due to the mixed messages any revisions would send. To make any major amendment to Sarbane's Oxley would make it appear as the framework has become unmanageable and invite the Ken Lay's and Jeffry Skillings back for more hollowing out of investor’s wealth.

How the Sarbanes-Oxley legislation, in addition to the other SEC requirements, are maintained and the difficulties are removed from the process is by eliminating the need for the 800 plus forms and replacing them with a handful of standard tags in the Extensible Business Reporting Language. I can only thank that the Commisionner understands the technological capabilities and can apply it to the SEC.

The demise of the bureaucracy is what the Commissioner is saying here. He is laying the groundwork and infrastructure of how investors will be able to manage their assets in the future. Genesys, through this research has adopted the SEC's XBRL tag library and therefore will be compliant with the SEC's regulations. In August 2006 the SEC has issued an RFP to build this system.

http://www.opinionjournal.com/editorial/feature.html?id=110008404

Mr. Olivier Appert, Chairman and CEO of IFP.

Mr. Appert has written a fine conclusion that leads me to a subsequent comment.
"In order to meet the world's needs and demands for energy, while simultaneously observing our current energy supply and protecting the environment, the oil and gas industry will have to solve many complex technological problems in the coming decades and continue to innovate as it has done since its inception."

"Recent scientific and technical advances, the fruits of collaboration between the worlds of research and industry, have led to a profusion of promising emerging technologies and represent key assets for preparing for the future, particularly in terms of managing the energy transition from oil and gas to new energy sources."

"In the face of increasingly fierce competition, it is imperative these new challenges become integral to our research and innovation strategies. Developments will play a crucial role in guaranteeing genuine sustainable development for the world."
It is imperitive that the oil and gas industry does not fail in this critical task. That new and more innovative organizational forms are required for the 21st century. The joint operating committee being the global cultural manner of the oil and gas industry, is also the financial, legal and operational decision making framework as well. As noted, SEC Chairman Christopher Cox understands that the way to redefine the accountability framework is through the Extensible Business Reporting Language, and the SEC's tag library. What the oil and gas industry therefore need to do, first and foremost, is build the software to define and support the joint operating committee as the natural form of organizational structure. Until we do this, these calls to action are only words that will soon fade in their meaning in the face of the angry energy consumer who wants to know why they can not drive their car or heat their home.

Link http://www.worldenergysource.com/articles%2Ftext%2Fappert_WE_v9n1.cfm

Mr. Murray Edwards

Mr. Edwards of Calgary, at 46 years of age he has amassed a fortune of several billion dollars and is currently holding down the following roles.

President, Edco Financial Holdings Ltd.Vice-Chair, Canadian Natural Resources Ltd.Chair, Ensign Energy Services Inc.Chair, Magellan Aerospace.Owner, Resort of the Canadian Rockies Inc.Co-Owner, Calgary Flames.Mr. Edwards is quoted in the May 2006 issue of Alberta Venture, in which he is the cover story "Who Cares About Respect"
"We're really big proponents of flat organizations where people have a sense of ownership."
The Calgary Herald

A further call to action was contained in an article in The Calgary Herald. The article states that the junior oil and gas producers and royalty trusts are having difficulty making money. Peter Knapp of Iradesso Communications states
"Everybody thought it was going to be easy to make a lot of money and that just isn't the case".
With natural gas prices down almost 50%, they are also finding their costs are too high. They also clearly and unanimously feel that the gas price will rise after June 2006.

So how is this a call to action? The suggestion is that a solution to this problem is to innovate and move with the science. Not that this hasn't or isn't being done, it is just that we have hit a critical period in which the science is changing quickly. The capital being generated from higher prices is a reallocation of societies’ resources to fuel innovation. In the future a profitable energy firm will collaborate with a greater population of all resources to determine the most effective ways and means of exploration and production.

This is the role and responsibility of the joint operating committee. And for the "business" end of the oil and gas business to continue to ignore the joint operating committee in its organizational structure and systems, the industry I suggest, will begin to fail in making money. A subsequent failure will also occur in that the industry will be unable to deliver the appropriate amount of oil and gas to the market.

Institute for International Economics

In an article entitled "Accelerating the globalization of America" the authors made two interesting comments in the Executive Summary.
"Innovations not implemented because resources cannot adjust forfeit some of the potential of the economy." p.xviii

"Two additional links between productivity and international trade are that trade in technologically sophisticated products is associated with higher productivity and the industries that have invested heavily in IT have a greater propensity to export." p. xxi
The bureaucracy is slowing us down, (a given) and innovations that would otherwise benefit the economy are now having their value forfeited. The market demands for energy continue to outstrip supply. Whether we are at the peak of production or not is not the question. The question should be, how much are we giving up economically by not proceeding with this Genesys Software development project?

I highly recommend downloading the entire document. It is a substantial work in terms of its findings.

Link: http://bookstore.iie.com/merchant.mvc?Screen=PROD&Product_Code=3900

Energy Secretary Samuel W. Bodman on MIT video.

This video is on MIT World and is at almost 60 minutes but is time well spent. Recall that MIT has declared that energy is the great challenge of the next 50 years and describes it in terms that are best summarized as a "perfect storm". MIT has arranged as part of their Energy Research Council, U.S. Energy Secretary Samuel W. Bodman to speak on "Our Energy Future: Why American Science and Technology Must Lead the way."

Many of the things that Dr. Bodman speaks of are directly pertinent to the topics and thoughts within this research. Quoting liberally from his speech:
"Science and Engineering can and should be used to advance the public good. To solve complex problems and to help our society and economy to adapt in a complicated global environment."
and
"A time for breaking down the walls that could limit our future economic growth. And in many cases the tools that we use to do this will be found in breakthroughs in science and engineering."
and
"At a time of increasingly aggressive global competition America must do what we have always done best. We have to take risks, we have to lead, we must invent, we must innovate."
That last quotation is directly in line with the justification for using the joint operating committee, and direct support for these software developments. Today science and technology are constrained by the organizational conflict and bureaucratic interference that limit speed and innovation.

Bodman notes that the majority of his funding for the scientific research and technology has been as a result of a reallocation of resources under the Presidents "American Competitive Initiative"(ACI). He goes on to state that the:
"scientific disciplines are increasingly being linked."
And that the effort of the energy department and the ACI go to the
"future economic well being and security of our country".
Also noting that he is expecting more than just the development of new knowledge from these government funded research programs.

Although the research that he mentions in his "Advanced Energy Initiative" is on ethanol, hybrids, fuel cell, solar, wind, nuclear and clean coal. It is fair to assume that he is fully aware of the demand of the U.S. for gas and oil is, and will remain high. His approach currently seems to be limited to establishing some of the alternatives as viable enhancements for the long run in the U.S. and he noted as such the expectations of the market makeup of energy sources.
"Science and Technology must lead the challenge to provide good, clean and abundant energy."
Some noted targets, facts and objectives: Ethanol production = 5% of the current U.S. supply and uses 14% of the U.S. corn crop. The department of energy expects that Ethanol supply will grow to 5 million barrels / day in 20 years. Needless to say based on these projections the expectation of the US is to continue to use fossil fuels as its primary source of energy. Secretary Bodman sees the parallel between these energy related difficulties as similar to those in the cold war inspired space race. Having the Secretary of Energy making these types of comments adds some real urgency to the issues at hand.

Link: http://mitworld.mit.edu/video/364/

Energy Secretary Samuel Bodman in Calgary.

U.S. Energy Secretary Samuel Bodman was in Calgary recently. After a quick tour of the heavy oil facilities in Fort McMurray Secretary Bodman stated that;
"The U.S. is ready to work with Canada to remove roadblocks facing Alberta's oil sands sector."
and
"Suppliers of oil in the world have really lost control of the market."
The question that seems to be answered by Secretary Bodman's visit is that the oil sands are a critical part of the U.S. energy security. Declaring the oil sands a "world resource" certainly puts the energy issues into context, and puts their development on a higher priority.

If it was only so easy. The problem comes in the area of infrastructure. There are not the basic necessities to support the current $100 billion in investment being made in Fort McMurray. The mayor of Fort McMurray has stated that the ability to sustain the current pace of development is in jeopardy. There are not enough people, 75,000 in Fort McMurray, to assess as a tax base to begin to even address the current issues, let alone the future oil sands developments. By all measures this is a pretty serious situation for any city to handle.

What we need from Secretary Bodman is help with our problems here. There were indications that the kind of help that may be provided from the U.S. was the U.S. based refineries and pipelines be upgraded to handle the oil sands output. First, that is not the problem, and secondly Alberta, irrespective of our leaders opinions of the situation, is not a hewer of wood and drawer of water. Now is not the time for our leaders to suggest that foreign groups develop the infrastructure necessary for heavy oil development. Invest here in Alberta where the problems exist. Don't move the raw material into the final market, essentially ignoring Alberta as a second class citizen.

The areas that we need help in are in the development of the appropriate civic infrastructure in Fort McMurray. What we need is engineering and knowledge on how to build the super refineries, pipelines and associated infrastructure for full development. Let’s work together to solve the energy needs of the continent. That is what is possible and that is what we are ready to do with our very good friends, the U.S., however, we will not limit the market for our production to the North American continent exclusively, why would we?

Sir John Browne Group Chief Executive BP p.l.c. on MIT video

Another MIT video, this one of Sir John Browne, Group Chief Executive BP p.l.c. An excellent speech entitled "The Purpose of Business".

Sir Browne developed his meaning or purpose of business as:
"We are fulfilling our purpose by supplying goods and services at a price people can afford and in a manner in which makes the activity sustainable."
In his speech Sir Browne documents the long lead times in oil and gas operations. In Azerbaijan BP has spent $15 billion and over 15 years to bring on production. Although it took this long to develop these assets in Azerbaijan, BP probably would not have been able to accomplish what they did in Azerbaijan in North America any sooner! The scope and scale of this business is such that the lead times are ridiculously long.

Sir Browne talks at length about the time in which BP went into Azerbaijan in the early 1990's and developed their offshore resources. These Offshore resources probably would have still been untapped if it wasn't for the perseverance of Sir Browne and BP. To invest $15 billion over 15 years without seeing any revenue, and to have the investment risked due to the political instability of the region shows the lengths that producers have taken in order to access the commercial fields. As he notes, supplies of oil and gas are concentrated in Russia, The Middle East and Africa.

Sir Browne talks about the things that he has to do for the future.
"And perhaps most important of all we need new ideas and knowledge, we need the advances in sciences which we as engineers can apply."
Again comments that are consistent with the objectives of this research, and the use of the joint operating committee as the organizational focus. How can it be expected that the bureaucracies will be able to keep up to the demands of the changes in sciences. Layer on the political risks and operational difficulties and one can see the complexity of the business is systemic in all areas of operation. The bureaucracies are doing the job today, but at what speed? Is it fast enough to provide the market with their demands for energy?

Link: http://mitworld.mit.edu/stream/363/

John Hagel III and John Seely Brown

I was able to incorporate much of Brown and Hagel's research within the preliminary research report. This was the culmination of much of Hagel and Brown's work up to the time of the preliminary research publication. Since then they have compiled further work that helps establish their leadership position in the business impacts, opportunities and issues of technology. Dealing with the "edge," both are asking some particularly challenging questions of management. Such as this from Seely Brown's website.
"It is not just corporate training that is important but rather rich participation with partners who are at the edge. Ask: how do you learn as much from a partner as you learn from creating something yourself? How does distributed collaboration around the world become a critical strategy for survival? What are the most effective ways to convert your existing global supplier networks into new nodes of innovation?"
Today they have published one concept that I want to mention here as a call to action. The idea addresses the three types of businesses that fall within this new classification system of theirs.
  • Infrastructure Management Businesses.
  • Customer Management Businesses.
  • Product Innovation Businesses.
How I foresee the future application of this thinking in oil and gas is: companies such as this software development proposal will fulfill the role of “Infrastructure provider business”. Secondly, the "Customer "Management Business will fulfill the requirements of the downstream marketing and refining businesses. And finally the traditional oil and gas industry will be seen as the "Product Innovation business". A business that is something that the traditional upstream oil and gas industry needs to and eventually will fulfill.

Links to John Hagel http://www.johnhagel.com/index.shtml
Links to John Seely Brown http://www.johnseelybrown.com/

Newt Gingrich in the Wall Street Journal.

The Wall Street Journal published an editorial written by Newt Gingrich entitled "Bush and Lincoln". An article that parallels the strategic mistakes that both presidents appear to be making regarding the war's they were dragged into.

The particular points in the article that I see as a call to action are these quotations:
"The president should insist upon creating new aggressive entrepreneurial national security systems that replace (rather than reform) the current failing bureaucracies. For example, the Agency for International Development has been a disaster in both Afghanistan and Iraq. The president should issue new regulations where possible and propose new legislation where necessary. The old systems cannot be allowed to continue to fail without consequence. Those within the bureaucracies who cannot follow the president's directives should be compelled to leave."
"We see these first two factions today. The Kerry-Gore-Pelosi-Lamont bloc declares the war too hard, the world too dangerous. They try to find some explainable way to avoid reality while advocating return to "normalcy," and promoting a policy of weakness and withdrawal abroad."
"Most government officials constitute the second wing, which argues the system is doing the best it can and that we have to "stay the course"-- no matter how unproductive. But, after being exposed in the failed response to Hurricane Katrina, it will become increasingly difficult for this wing to keep explaining the continuing failures of the system."
and,
"The first and greatest lesson of the last five years parallels what Lincoln came to understand. The dangers are greater, the enemy is more determined, and victory will be substantially harder than we had expected in the early days after the initial attack. Despite how painful it would prove to be, Lincoln chose the road to victory. President Bush today find himself in precisely the same dilemma Lincoln faced 144 years ago. With American survival at stake, he also must choose. His strategies are not wrong, but they are failing. And they are failing for three reasons. "
"We have to be honest about how big this problem is and then design new, bolder and more profound strategies to secure American national security in a very dangerous 21st century. Unless we, like Lincoln, think anew, we cannot set the nation on a course for victory. Here are some initial steps:"
System failures, bureaucracies that need to cease, muddling along as a strategy. These points are all music to my ears. It strikes me as odd is that here is a candidate to be the next president of the United States expecting the bureaucracies to do the honorable thing and fall on their sword. If the U.S. government is actively debating these points, the time for the energy industry to act surely must be at hand.

http://www.opinionjournal.com/editorial/feature.html?id=110008905

Summarizing these calls to action.


These calls are coming from a variety of academic, business, government and other voices. These voices have now been heard. The time for action in dealing with these issues and opportunities is now. This proposal makes the first in many steps that the industry needs to take to approach the tasks and difficulties ahead. The only thing that is missing, in my opinion, is the industries sense of urgency about these points.

In the Wall Street Journal article of Newt Gingrich's, he noted the three possible avenues that can be taken to solve a problem.
  1. To cower from the effort necessary to achieve victory.
  2. Muddle along and get through it.
  3. Approach the problems with new thinking.
Muddling along is not an option, as it appears to me that this is the strategy that the energy industry has employed. It is time to start anew with fresh thinking about the problems that the industry faces.

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Sunday, August 27, 2006

Executive Summary

It was in May 2004 that I published the preliminary research report entitled “Plurality should not be assumed without necessity”. (Readers are encouraged to revisit the preliminary report to assist in the context of this report.) The main thrusts of that document were its two primary research findings. The first finding was that the key organizational construct of the oil and gas industry is the joint operating committee. The joint operating committee is the legal, financial, cultural and operational decision-making framework of the industry. If the industry were to move the accountability framework in line with the four frameworks of the joint operating committee it would achieve greater organizational speed and innovativeness. The other research finding was that the software the firm uses defines the organization. Noting “SAP is the bureaucracy” it is apparent that to change the organizational construct requires that systems be developed to support the proposed organizational change.

The preliminary report also contained a project management proposal to build these systems around the joint operating committee. This budget was in the $70 – 85 million range and would require four years to complete. The budget of that system may remain within that scope; however, this final research report recommends that the industry pursue a proof of concept. This proof of concept is to build a Petroleum Lease Market application to start the organizational transition to the joint operating committee. This application’s scope has been budgeted at $2.6 to $3.5 million.

The four cornerstones of a technical vision.
Critical to the success of any prospective software development would be the impact of any future Information Technologies (IT). I am including a technical vision consisting of four key technologies, and describe how the future may be affected by these technical changes.

IPv6 (2 to the power of 128 in terms of addressing space.) enables the elimination of the technological model known as client – server. Replacing it with static IP addresses that can identify anything and everything. Enabling any electronic device that is connected to the Internet to be monitorable and controllable. I believe the engineers and geologists can and will do with this level of static addressing is unlimited.

The second element of the vision involves Java and the incremental nature of typed, object oriented programming languages. Where the predictability and control of systems is achieved through the strong implementation of strict typing.

Java is also enabling the exception handling capabilities and asynchronous process management that is critical to handling intra-partner transactions and interactions.

And finally wireless Internet through Wifi and soon Wimax, enabling electronic devices to be connected at low costs and high speed and in turn eliminating the “last mile” issues of technological access.

These four technologies will be revolutionary when applied over the joint operating committee as the organizational focus. This technical vision provides the industry with the organizational capability to facilitate rapid innovation in a controlled and managed environment.

Partnership Accounting.
I will then go on to discuss "Partnership Accounting" and how an algorithm can capture the unique and demanding accounting and reporting needs of the producers represented in the joint operating committee.

A new accounting dynamic is introduced by using the joint operating committee. This accounting dynamic enables the interactions to be quantified in an algorithm that although complex, addresses the accounting related issues that traditional ERP systems can’t handle.

The Partnership Accounting difficulty comes when all participants of the joint operating committee have been contributing people, financial and technical resources, and direct costs on behalf of themselves, and / or, with other members of the joint account. Through the JOC each producer’s collective resources are pooled to attain the highest level of technical capability, management and tactical deployment, which is sourced from the partner companies.

These costs and resources are being incurred on each producer’s behalf and may not be shared, but may be eligible to offset their obligations to other partners, be distributed equally among the producers interests, or need to be recognized by the joint operating committee irrespective of their source and nature. This is further complicated by the fact that many of the internal charges and overhead allowances that have traditionally been charged to the joint account also become redundant. These overhead styles of costs are replaced by the specific costs that were directly incurred by the producer, as represented in the joint operating committee. The system will capture these components as they are incurred by the employee / worker / investor / consultant / producer in an active job costing state as the user is logged on.

The nature of the oil and gas business is unique in many ways and this Partnership Accounting discussion will capture many of the issues that an oil and gas system needs to address. For example:

  • Daily and monthly production volumes.
  • Differing currencies of producers.
  • Differing currencies of operations.
  • Currencies that relate different accounting issues based on the criteria of one being balance sheet vs. income statement accounts.
  • Spec vs. raw products and by-products.
  • Processing and gathering fees based on (non) ownership,
  • Imperial vs. metric reporting standards.
  • Nominations and or commingling of gas.
Providing an unlimited set of possible reporting scenarios for each working interest owner. The partnership Accounting module’s algorithm needs to capture and deal with these nuances within this system.

Military Command.
I then by way of analogy, will note the traditional military command structure of corporals to generals as a replacement to the regular hierarchy. It is foolhardy to eliminate the hierarchy and lose some of the attributes of a control structure. I discuss how a similar military command type of structure can be used to enhance and augment the managements’ control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as represented by the JOC as their employers.

This military command structure will draw a parallel to the interactions of various military groups interacting under NATO. Where an army major of a branch of the U.S. military may have Canadian, French and / or British soldiers under his direct command. With these military personnel changes happening in a fluid, dynamic and ad-hoc basis.

Linear historical perceptions vs. the logarithmic and exponential future possibilities.
Stanford University Economist Dr. Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. The use of ideas has potentially logarithmic or exponential value creating capabilities. Progress and growth can be better attained through application of intellectual property within an industry.

Innovation is the beginning of this process. And to attain the highest level of innovativeness, the Joint Operating Committee has been proven by this research to be the ideal organizational model for the producers. This will not happen however, until such time as the systems are developed and in place, and the system developers’ capability becomes an inherent part of the capability of the industry.

Genesys value proposition.
In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is similar to Google's, where the costs of development are allocated over a larger base of users. Each user benefiting from the collective users purchasing power, demands and capabilities.

Google is proving this is the nature of software. The value of this proposition is something that I don't believe has been fully implemented or realized by the producers. It is my supposition here that the Oracles and SAPs realize this latent value. It is therefore my assertion that the oil and gas industries overall costs of systems development would decline under this proposed model.

Who would Henry Ford hire?
I also want to ask a question of the people who work within the oil and gas industry. That question is, whom today, would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago.

Just as Ford needed a new "type" of worker for his assembly line invention, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment? What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Calls to action.
Last if not least this proposal will note and discuss the numerous calls to action from:
  • Oxford Analytica.
  • Harvard University.
  • MIT.
  • Energy Secretary Bodman.
  • McKinsey Consulting.
  • SEC Chairman Christopher Cox.
  • Sir John Browne of BP.
  • John Hagel III and John Seely Brown
  • and many others.
These have become predictable in their message and their frequency. Many of these messages noting the time to act is now. And that is this proposal's message to industry.

This proposal is a clean slate proposal. There are no constraints in terms of existing code or client base to deter from the focus of these developments. The attainment of this type of software and software development capability must be built from the start. It is therefore expected that this proposal will be accepted and funded as required.
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Tuesday, August 08, 2006

The plan

With the 200+ entries into this blog, I see that a theme has developed. Two articles that I read last week were the trigger to realizing this theme, and now a plan has emerged. Senator John McCain in Fast Company wrote on the subject of courage. Stanford Economist Paul Romer writing on the topic of economic growth. It is clear to me now, the time in which the oil and gas industry builds these systems is now.

In the next month I will be writing a new proposal that incorporates the plurality document as its appendix. This new proposal will take a number of themes that I have written in the past six months, relate them all and publish them for distribution to the industry to consider and act upon.

This proposal will of course focus on the joint operating committee as the central organizational focus of the software. This is a theory that deserves to be fully tested through its adoption by industry. It is an idea that provides a sound foundation for the effective management of oil and gas assets. An idea that is based on facilitating the earth science and engineering disciplines greater innovativeness. An idea that can augment a producers capability and speed in this difficult time for oil and gas.

I will also be including the four cornerstones of the technical vision. How the impact of these technologies will affect the oil and gas market. IPv6 enabling the elimination of client - server and replacing it with static IP addresses for everything including your toothbrush. What I believe the engineers and geologists can and will do with this level of static addressing is unlimited. The incremental nature of typed, object oriented programming languages like Java, our chosen language. Java enabling the exception handling capabilities and asynchronous process management that is critical to handling the intra-partner interactions. And finally, Wifi enabling everything to be connected at low costs and high speed. These four technologies will be revolutionary in the oil and gas industry when layered over the joint operating committee as the organizational focus.

With this technical vision layered over the joint operating committee, I will then go on to discuss this blogs entries regarding "Partnership Accounting". How an algorithm can capture the unique and demanding accounting and reporting needs of the producers as represented in the joint operating committee.

I will then note the military command structure as a replacement to the regular hierarchy. It is probably foolhardy to eliminate the hierarchy and to loose some of the attributes of a control structure. In this blog I have discussed the military command type of structure to augment the managements control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as their employers. This military command structure will draw a parallel to the interactions of various military groups interacting under NATO.

I will then want to highlight the historical perception of linear thinking and contrast it to the logarithmic and exponential futures. Stanford University Economist Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. That the use of ideas have potentially logarithmic or exponential value creating capabilities.

In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is not dissimilar to Google's. Where the costs of development are allocated over a larger base of users. Where each user is able to benefit from the purchasing power and capabilities of the entire population of users. This is the nature of software and the value of its proposition is something that I don't believe has been fully implemented or realized by the producers.

I also want to ask one of my favorite questions of the people within the oil and gas industry. That question is, who would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago. Just as Ford needed a new "type" of worker, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment. What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Today's news that BP has shut in their Alaskan production due to pipeline leaks is evidence of the tight balance between supply and demand. The market demands for energy can not sustain too many large fields being shut in. Companies are already being questioned by the cynics and those that can least afford the higher prices.

Last if not least this proposal will note the 12 + calls to action. Oxford, Harvard, MIT, Energy Secretary Bodman, McKinsey Consulting, SEC Chairman Christopher Cox, Sir John Browne of BP, John Hagel III and John Seely Brown and others. These have become predictable in their message and their frequency. Many noting the time to act is now. And that will be the proposal's message to industry.

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