Perez, Crisis and Innovation Part V

In this next installment of our review of Professor Carlota Perez' paper "The financial crisis and the future of innovation: A view of technical change with the aid of history". She paints a clear picture of where we're headed in terms of economic performance. And the financial situation as it stands at People, Ideas & Objects and associated communities. I recall that Milton Friedman once stated; "Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable."

People, Ideas & Objects have taken a good idea in using the Joint Operating Committee, developed it fully through application of academic research, and published a vision, the Draft Specification, of how the oil and gas industry could operate. When I look around for new ideas that might compete with People, Ideas & Objects I am unable to discover any. Since these are the only ideas that are being contemplated for the oil and gas industry I fully expect they will be taken-up by the industry. Otherwise, based on the financial crisis, our current debt crisis and the looming "capabilities crisis" in oil and gas, the industry will have to come up with its own ideas. The problem with doing so will be the time necessary to fully develop them and impart a vision in which people can rally around. This process took People, Ideas & Objects seven years to complete. We are at the point where the Draft Specification is almost two years old and the communities development has been undertaken since then. I don't believe the industry has the time to come up with its own ideas. They should therefore begin financially supporting People, Ideas & Objects and the Community of Independent Service Providers (CISP).

THE POLICY CHALLENGES: Taking the paradigm and the period transition into account

Professor Friedman's message is the same message that Professor Perez echos in this section of her paper. The presence of the beginning of the deployment phase is an opportunity that is available to anyone in oil and gas who wants to participate. Now is the time and People, Ideas & Objects is the opportunity.

Institutional restructuring is what would really unleash a healthy period of prosperity, fundamentally different from that of bubble times. Whether and how such a redesign is done on the national and supranational levels, the likelihood of a successful outcome is much greater if the debate is on the table from early on and if enough concrete and viable proposals and innovative solutions are there when the decision makers are ready to act. p. 25

The Joint Operating Committee is the industry standard means of operating in the global oil and gas industry. The geographical scope of the People, Ideas & Objects application modules will be determined by the CISP in their initial analysis. Producer firms representing specific geographical areas of interest should insure their participation in the CISP and People, Ideas & Objects is substantial enough to influence the scope decisions are made with those regions included. Waiting is unproductive.

Waiting is also unproductive for those people who want to participate in the CISP. Generating a service based offering at this time in many people's life is counter to the dreams of many. Retiring and living off of one's investments is clearly not going to happen to the majority of those working in the oil and gas industry today. It's here that Professor Perez picks up an interesting and valid point of what needs to happen in the deployment phase.

The motto of ‘don’t work for money, let money work for you’, so popular in recent time, needs to sound completely unrealistic in a world where economic policies, be they regulatory, fiscal, monetary or whatever, resolutely favour working for money –and making abundant profits– through innovation, investment and job creation in the real economy. p. 25

Things have changed, and that is represented in the volumes of debt that countries, companies and individuals are carrying. This debt was accumulated because the old ways were no longer working and carrying the weight of the economy. To keep the illusion rolling along therefore required that money needed to be borrowed. These are all symptoms of how these changes require us to look at the future differently.

The safest way to approach the financing of innovation in the deployment period is to assume that the instruments that worked in the installation period [1970 - 2000] may now be inadequate. p. 29

This discussion maps out a rather robust future. But we are not there yet. As our 2010 budget drive proved, the management in oil and gas will not fund these communities and software developments. These service based offerings are not going to form until there are the necessary resources to make these alternatives real. The investor / shareholder in oil and gas is being asked to fund the development of these communities and software developments. So that they, the investor / shareholder will have the infrastructure necessary to replace the current management and operate their assets in the most profitable manner.

The opportunities for innovation are manifold, both in existing companies and for new ones, if the potential installed in the territory (and in the minds) by ICTs and their organisational paradigm finds a favourable financial and regulatory atmosphere in which to flourish. p. 29

Of the things that we do know is that oil and gas is unique unto itself. No other industry is configured in the same fashion. To proceed with building the industries infrastructure requires that software be built to identify and support the Joint Operating Committee. This is a given in the advanced economies that we find ourselves in.

But innovating within a paradigm is much easier and less risky than doing so using the paradigm in another sector. This was learned by the venture capitalists in the 1990s when they tried to apply the same criteria and expectations to innovators in biotech as to those in ICT; both sides ended up frustrated and disappointed. pp. 29 - 30

Professor Perez introduced her SKIEs in our previous post. These accurately reflect the CISP in this discussion, and it is the CISP, as a subset of the SKIEs, that require the funding necessary to develop. If it is not the oil and gas investor or shareholder that supports these communities development, then whom. The bureaucracies have had the opportunity for the past seven years and have chosen to do nothing. Now these bureaucracies are beginning to fail, leaving the oil and gas shareholder / investor being the one who loses.

A large set of innovative opportunities is in the area of small knowledge intensive enterprises (SKIEs), where the intangible nature of the products and of the human capital involved presents complex issues for the traditional methods of the financial system. p. 30

The remainder of our review of this paper will focus on the development issues of the CISP and SKIEs. Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Perez, Crisis and Innovation Part IV

What is particularly interesting about Professor Carlota Perez' new paper "The Financial Crisis and the Future of Innovation: A view of technical change with the aid of history." Is her description of Small Knowledge Intensive Enterprises (SKIEs). In almost all respects they are the same as People, Ideas & Objects Community of Independent Service Providers (CISP). This post introduces Perez' SKIEs and we will also discuss them more extensively in a future post.

Due to the escalating efforts in the earth science and engineering contained within each barrel of oil. People, Ideas & Objects suggest the bureaucracies are too constrained to maintain their reserves and production profiles over the long term. We see symptoms of these in Encana's $5.5 billion loss, Shell's escalating costs and BP's inability to control their well in the Gulf of Mexico. Why are these incidents happening? The demands for energy, and the scientific demands of energy are beyond the strategies and capabilities of the bureaucracies. Shell recently noted their reorganization, that took several years, was recently completed. So why then have they lost control of their costs?

People, Ideas & Objects Draft Specification enables the producer firm to concentrate on the strategic needs of their asset base, at the Joint Operating Committee level, and their scientific and engineering capabilities. The producer firm is augmented by the marketplaces that support the innovative producer. The market includes the service industries and of particular interest to People, Ideas & Objects the Community of Independent Service Providers. These various communities are involved in providing many products and services that may have traditionally been done internally at the producer firm. This redrawing the boundaries of the firm is to enable the innovation in the earth science and engineering disciplines within the producer firm. And the communities to innovate in their area of expertise. Professor Perez notes;

A basic principle applied by corporations when disaggregating all their activities into separable components is distinguishing between core competences and complementary ones. The guiding idea is that the core competences are what gives the strength and the competitive edge as well as the long-term value to the company, while the other activities can in principle be outsourced without jeopardising the future. Yet, this notion of outsourcing is not about separating innovating activities from non-innovating ones. On the contrary, it is about deciding who will innovate in each area. p. 17

The net objective of defining the boundaries of the market and firm in this manner. Is that the individual Joint Operating Committee's, with their own unique strategies, are able to achieve higher throughput and innovation. Maximizing the reserves in place and optimizing their production.

The final result is that the whole network becomes an innovating machine with each part maximising its contribution and improving the whole at a much faster rate. p. 18

In this next quotation Professor Perez introduces her concept of the SKIESs. I find nothing in her definition that does not directly apply to the CISP. They are one and the same, and I assume that I was reading some previous paper of Professor Perez where the concept was developed. The only thing that I would add to her definition is that the CISP is a community that is focused on defining, building and deploying the People, Ideas & Objects application modules within the producer firms. They are dedicated to optimizing the profitable performance of the producer by using the development team and Information Technology resources made available to them. And would be considered a subset community of the greater number of communities within the definition of SKIEs

This practice of global corporations has very important consequences for the fabric of the economy. It induces the proliferation of small knowledge intensive enterprises (SKIEs) which are active innovators at the same time as they serve as a sort of technical infrastructure for attracting further user investment. The denser the fabric of SKIEs in an economy the greater will be the externalities for growth and competitiveness of the user firms. In addition, SKIEs themselves, in whatever field, are typically intense users of ICT services and of highly skilled human capital. They are also natural networkers with universities and other sources of information within and outside the country of operation. Finally, they are likely to participate in export markets, either through global corporations for whom they are suppliers or through their own efforts. That makes them key actors in the deployment of the knowledge society in each country. p. 18

It should be noted that I see many of the current producer firms employees forming SKIE's and CISP in the future. If you are an engineer or an earth scientiest I think it is fairly reasonable to assume that the producer will remain your primary employer. If you are not in those primary areas of the producer's domain of concern, employment in a SKIE or CISP is more likely. It should be clearly stated at this point that I don't see many of the CISP's being much larger then 5 to 25 people in total. Very specialized groups that are able to cater to the needs of a small hand full of producer clients. Professor Perez also sees these SKIEs as a subset of the Small and Medium sized Enterprises (SMEs).

A major consequence of this is a radical redefinition of the role of SMEs. Without ignoring the importance of the traditional small and medium firms, it would seem that the treatment of SKIEs and the catering to their support requirements, being fundamentally different from those of SMEs, will demand a different set of policies. p. 18

As we will see in a future posting, Professor Perez notes that the SKIEs need to be built in a dedicated fashion. Expecting them to spontaneously exist is dreaming. These capabilities have to be purposely set about to develop, much as People, Ideas & Objects software development capabilities, and sustained for the long term.

There is however a whole range of business-model and organisational innovations to be fostered in these sorts of services, the importance of which becomes greater the more advanced the economy. That is because they are stable employment creators (face-to-face services cannot be off-shored) and because they are possibly those that would most directly influence the quality of life in any particular locality. pp. 19 - 20

I would suspect that bureaucracies are now fully distracted by their escalating costs and flowing wells. The development of these communities and capabilities would therefore fall to the investor and shareholder in oil and gas who are expected to also support People, Ideas & Objects. BP's stock is down 15% and I would question their likely hood of being granted any future offshore leases in the U.S. With the precedent of the Exxon Valdez, this may cause serious damage to the firm. Such that the investor / shareholder might be the ultimate loser in this operational nightmare.

Thus, the hyper segmentation of markets, technologies and activities, is giving rise to an emphasis on the small business unit, be it as a direct part of a Global Corporation, as an independent or semi-independent supplier, as a start-up that can some day become a giant, as a franchisee, a member of a specialised cluster, a local provider of services or an independent expert unit in interaction with other global players in that particular niche. This not only implies giving particular importance to fulfilling the needs of SME innovation but truly paying particular attention to the different types of small companies and their specific requirements. This is part of what will be discussed in the final section. p. 20

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Chandler The Role of Business in the ...

Professor Alfred D. Chandler published a document entitled "The Role of Business in the United States: A Historical Survey" in the Winter 1969 version of "Perspectives on Business" from MIT Press. This paper chronicles how the economy developed. I find it surprising in many of the things that are not generally known or understood about the role and function of finance in the early years.

For a paper on the historical role of business in America to provide a solid foundation for discussions of the present and future, it must examine a number of questions: Who were the American businessmen? How did they come to go into business? How were they trained? How broad was their outlook? And, of even more importance, what did they do? How did they carry out the basic economic functions of production, distribution, transportation, and finance? How was the work of these businessmen coordinated so that the American economic system operated as an integrated whole? Finally, how did these men and the system within which they worked adapt to fundamental changes in population, to the opening of new lands, resources, and markets, and to technological developments that transformed markets, sources of supply, and means of production and distribution? The answers to these questions, as limited as they may be, should help to make more understandable the present activities and future capabilities of American business. p. 23

I want to highlight the role of what has to be the key determinant in the development of the economy, the Merchant. Specifically, the role of the merchants in financing business development and trade. This enabled much of the development of the corporation, the separation of ownership and management and the speed, scope and scale of the structured hierarchy. Without the critical skills and capital of the merchants, it is doubtful that the hierarchy would have been able to rise to such prominence.

The colonial merchant was an all-purpose, non-specialized man of business. He was a wholesaler and a retailer, an importer and an exporter. In association with other merchants he built and owned the ships that carried goods to and from his town. He financed and insured the transportation and distribution of these goods. At the same time, he provided the funds needed by the planter and the artisan to finance the production of crops and goods. The merchant, operating on local, inter-regional, and international levels, adapted the economy to the relatively small population and technological changes of the day and to shifts in supply and demand resulting from international tensions. p. 24

and

Only a few of the great landowners and leading lawyers knew the larger world. It was the colonial merchants who, allied with lawyers from the seaport towns and with the Virginia planters, encouraged the Revolution, brought about the ratification of the Constitution, and then set up the new government in the last decade of the eighteenth century. p. 24

The Merchants were the key to the development of the economy. In this paper Chandler documents how effectively the Merchants expanded economic activity to the point where the scale and scope was beyond theirs and their extended families reach. How this eventually created the "Manager" and developed the concept of the separation of management and ownership. It is noted the professionalism of the managers and their development during this time. Management replacing direct ownership as the means to effective management. Yet what is clear in the history, and is plainly clear today, is that management have no financial stake in the firm. Interestingly Chandler notes this is not the first time that this has been an issue.

In many ways, the managers were more of an elite than the earlier businessmen had been. Even though this elite was based on performance rather than birth and played a critically constructive role in building and operating the world's most productive economy, its existence seemed to violate basic American democratic values. At the same time, its control of the central sector of the American economy challenged powerful economic concepts about the efficacy of a free market. After 1930, the managers came to share some of their economic power with others, particularly the federal government. Nevertheless, they were forced to do so not because of ideological reasons, but because they failed by themselves to assure the coordination and growth of the economy, the basic activities they had undertaken after 1900. p. 35

In 2010 it is clear the division between ownership and management is as great as it ever has been. Management hold the reigns of power and have advanced their concerns over the shareholders. Leaving the ownership generally dissatisfied. Government, particularly the Obama administration, believes they are the natural progression to takeover from management. I think networks, and particularly People, Ideas & Objects and the Community of Independent Service Providers provide the best alternative to the innovative oil and gas producer.

The Depression clearly demonstrated that the corporation managers alone were unable to provide the coordination and adaptation necessary to sustain a complex, highly differentiated, mass production, mass-distribution economy. The coming of the Depression itself reflected population and technological developments. p. 35

I think the eight hundred pound Gorilla in the room is that management have no stake in this game. If failure occurs then shareholders and debtors will pay the price and management will fend for themselves. Whether it is at another firm, or their vested pension that provides them with their continuity, either is satisfactory. The point is that with no skin in the game, what is keeping management at the table.?

They have proven unwilling to fund People, Ideas & Objects software developments, why do the hard work when a new pension statement has just arrived? We are foolish to expect anything more of management, they are there for the good times and their history shows they are incapable of bridging critical economic changes such as what we are facing today.

Just as the Merchants began the whole process. Applying their capital and skills to the economy. Future development of our economy is in the investor and shareholder hands once again. Society dictates, and I hear it in the Tea Party movement, that this process be renewed.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Chandler on Decision Making

In the March 1973 Journal of Economic History Professor Alfred D. Chandler presented a paper entitled "Decision Making and Modern Institutional Change". A few days ago I commented on the velocity of productivity in the volumes and speed of decision making and idea generation in oil and gas. The origins of these comments were the Google video of CEO Eric Schmidt, and the term velocity as used by teams of Agile-Scrum developers. Velocity is the key metric in determining the through put of the software development team. In this paper Chandler also discusses the concept of velocity and attributes it as the key success of the large firms over the past 100 years. I think many of the points that Chandler makes can also be applied today. A time when the challenges to the large firm are significant. Chandler notes;

The potential of the new means of transportation and communications could only be fully realized through new methods of organization. The operation of the railroad and telegraph systems required the operation of a complex managerial structure to assure steady and continuing flows of information and orders essential to guide the movement of trains, traffic and messages. Because of greater speed and fewer trans-shipments, a railroad car could make in two days the round trip that required a stage coach or canal boat a week. By careful coordination of flow within and between the large railroad enterprises, the time involved decreased still more. As the rate of traffic flow increased, so did output per worker and per unit of capital and equipment used in the movement of goods. p. 6

The Information & Communication Technology Revolution (ICTR) is assumed to be beginning its long process of impacting businesses now. Although these technologies have facilitated enhanced speed in all organizations, new methods of organization are necessary to enable greater speed and velocity. The movement to new methods of organization has been resisted by the current management, as it conflicts with their established power. People, Ideas & Objects has had no success in convincing management of the need to change to the JOC. Theirs is a static world where, as we will begin to see in the current annual report season, is commencing on a period where their speed and innovativeness are inadequate to meet even elementary financial performance. Specifically I think that higher operating and capital costs will be directly attributable to their lack of speed. And their large balances of indebtedness are long term constraints to their viability. Particularly during times of interest rate increases. All that management have done is fully valued their debt and obligations. I have asserted on this blog before, as the financial performance of the current bureaucracies deteriorate, the innovative producer supported by the People, Ideas & Objects software application and the Community of Independent Service Providers will enable the innovative producer to purchase many of these assets from these bureaucracies. But the software has to exist first.

The briefest of historical sketches of the rise of large scale managerial enterprise in American transportation's, communications, distribution and production, emphasize that the economies of scale within the firm resulted far more from speed then size. It was not the size of an enterprise but the velocity of throughput that permitted economies that lowered costs and increased output per worker and per machine and so provided the classic, competitive advantage. Speed brought size, but size in no sense brought speed. p. 9

Clearly the bureaucracies size and lack of increasing velocity are the issues. Such were the advantages of size and speed that Chandler notes;

Once such economies were attained, the large managerial, multi-unit enterprise rarely disappeared. p. 10

Therefore the problem can simply be rectified by increasing their size and speed. If only things were so simple.

Increased velocity in turn intensified the need for complex managerial organization. p. 11

In a dynamic, connected and virtual world it is easy to focus on the problem of today. Our focus however needs to be on larger issues as we have little that we can do to influence performance by focusing on the short term. This change in culture from optimizing today to innovative will not be an easy process. It however begins by the investor / shareholder seizing the industry from management through the process mentioned above. The process of seizing the control of the industry begins by building the necessary software and communities that will ultimately support the innovative producer.

The senior executives at the top attempted to focus their energies on the critical decisions concerning present and future allocation of resources. p. 11

As we reflect on the performance of the industry over the past year. We see the economy beginning to show signs of real life. One that may be as a result of the enhanced efficiencies and innovativeness brought about by the ICTR . Demand for energy will begin to grow again. Energy prices will respond, and the reallocation of the financial resources dedicated to innovation will increase. We should look back on the history of the hierarchy and realize two things. One is the significant contribution it has made to society in terms of our quality of life.

The dominance of our society by this and other large-scale organizations is one characteristic of the twentieth-century that distinguishes it from all others. The enormously increased speed and volume of economic activity is another. p. 15

And secondly realize that we stand on the shoulders of several generations of giants. If the bureaucracy degrades as a result of the forces aligned against it. How far will society degrade. We need to act to begin to develop the new organizational methods necessary to carry us for the foreseeable future.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Lazonick on Chandler Part IV

Part IV of what has turned out to be a phenomenal paper, reviews Lazonick's "Part 3. Social Conditions of Innovative Enterprise" of "The Chandlerian Corporation and the theory of innovative enterprise". I indicated in an earlier post that the Joint Operating Committee and the application of the Draft Specification were consistent with Lazonick's Strategy, Organization and Finance; which make up his framework for "Social Conditions of the Innovative Enterprise". In this post I want to go into more detail as to how I see these three social conditions provide value for the investor / shareholder. Value in using the JOC through application of the People, Ideas & Objects Draft Specification and Community of Independent Service Providers (CISP).

Before we begin I want to make a quick note to highlight one attribute of the Draft Specification. In order to make the Draft Specification functional we needed to develop an alternative governance structure to replace the hierarchy. That is the Military Command & Control Metaphor (MCCM) used at the Joint Operating Committee to give the necessary structure for it to operate. Without this structure it would be difficult to implement any plans or to enable any actions. This MCCM replacement structure adopts a pooling of the resources available from the various producers represented at the JOC. This pooling of resources is further augmented by the objective (ie not affiliated with any one producer) and JOC focused pool of CISP that the JOC hires directly. All of these resources adopt a military styled command structure based on their education, experience, skills and the chain of command determined by the JOC representatives.

3. Social conditions of innovative enterprise

Lazonick provides in his social conditions a clarity in how the system is workable when strategy, organization and finance are aligned.

The theory of innovative enterprise provides a framework for analyzing the roles of strategy, organization, and finance in generating the competitive advantage of one firm over another within the same industry (see e.g., Carpenter et al., 2003; Lazonick and Prencipe, 2005; Lazonick, 2009a: ch. 2).... As I have shown in this work [for syntheses, see Lazonick (2003, 2004b, 2007)], the theory of innovative enterprise permits us to identify three social conditions that may support the transformation of strategy, organization, and finance into innovation across the industries and constituent enterprises that characterize the national economy. Even in the highly globalized world of the 21st century, the social conditions of innovative enterprise differ across nations characterized by distinctive economic institutions for governing the allocation of resources, employing labor, and financing investment. pp. 14 - 15

In the Preliminary Research Report it was noted financial interest at the JOC drove consensus and collaborative decision making. People, Ideas & Objects appeal is to the investor / shareholder in oil and gas. It is these individuals that we are attempting to provide an alternate organizational structure, the JOC supported by this software development capability and community, to manage their assets. I therefore see the participants who are sitting at the JOC the individuals that directly own the working interest or their designated proxy. With that in mind lets begin the review of Lazonick's social conditions of the innovative enterprise.

If the shareholder / investor is the one sitting at the JOC, representing their interests, based on the culture of the industry, they are endowed with the operational decision making authority for that property. These decision rights are critical to Lazonick's first social condition.

In the framework that I have developed, the social condition that can transform strategy into innovation is strategic control: a set of relations that gives decision-makers the power to allocate the firm’s resources to confront the technological, market, and competitive uncertainties that are inherent in the innovation process. For innovation to occur, those who occupy strategic decision-making positions must have both the abilities and incentives to allocate resources to innovative investment strategies. Their abilities to do so will depend on their knowledge of how the current innovative capabilities of the organization over which they exercise allocative control can be enhanced by strategic investments in new, typically complementary, capabilities. Their incentives to do so will depend on the alignment of their personal interests with the interests of the business organization in attaining and sustaining its competitive advantage. p. 15

In reading this I am struck by what Professor Carlota Perez said about "new" organizational constructs being "Common-Sense". Those with a reasonable understanding of oil and gas operations can see the nature of this ownership / control mechanism at work in the strategic control social condition. When a JOC is formed it is by agreement. Included within the agreement is an operating procedure with the means spelled out as to the decision making authority under the agreement for that JOC. Therefore the use of the JOC meets the first social condition necessary in Lazonick's framework.

This second social condition is not present in the oil and gas industry today. There is substantial conflict between the JOC and the bureaucracy. The bureaucracy, which represents the operator, conducts all or most of the operations as if it were their own. The JOC is relegated to a few ceremonious meetings to make decisions based on the agreement in hand. It is then the bureaucracy that essentially implements the will of the JOC within its annual operations. There is no pooling of human resources and the non-operator is relegated to spectator status for the better part of the year. This situation can not be sustained when the operators are required to develop their internal capabilities to deal with all of the individual possibilities and contingencies within the areas they operate in. There are not enough engineers and geologists available to meet the needs of each producer building redundant silo's of capabilities that may or may not be required. The Resource Marketplace Module deals with breaking down these silo's and the development of the means to dynamically pool the resources of the producers represented in the JOC. These resources are further augmented by the CISP and the service industries to develop this dynamic capability.

The social condition that can transform organization into innovation is organizational integration: a set of relations that creates incentives for people to apply their skills and efforts to organizational objectives. The need for organizational integration derives from the developmental complexity of the innovation process—that is, the need for organizational learning—combined with the imperative to secure high levels of utilization of innovative investments if the high fixed costs of these developmental investments are to be transformed into low unit costs. Modes of compensation (in the forms of promotion, remuneration, and benefits) are important instruments for integrating individuals into the organization. To generate innovation, a mode of compensation cannot simply manage the labor market by attracting and retaining employees. It must be part of a reward system that manages the learning processes that are the essence of innovation; the compensation system must motivate employees as individuals to engage in collective learning. This collective learning, moreover,cumulates over time, thus necessitating the sustained commitment of financial resources to keep the learning organization intact. p. 15

The Financial Marketplace Module looks to move the financial structure of the industry away from supporting the corporate entity and moves it to directly support the JOC. This implies that, within reason, the property represented would source their bank debt from one bank for all producers. This could be extended to include each working interest owner securitizing the asset on an exchange. (Please see the Compliance & Governance Module for further information on this point.) The point being that strategy and finance need to be aligned. Producers at the JOC are currently conflicted by varying degrees of financial flexibility based on the size of the producer and its financial situation. The size of the producer has no bearing on the innovativeness at the JOC or its upside. A small producer may be more inclined to drag its feet if left to fund their commitments through general bank assignments on the corporation, whereas, the bank representing the JOC could be better positioned to mitigate its risks through a general assignment of the specific JOC.

The social condition that can transform finance into innovation is financial commitment: a set of relations that ensures the allocation of funds to sustain the cumulative innovation process until it generates financial returns. What is often called “patient” capital enables the capabilities that derive from collective learning to cumulate over time, notwithstanding the inherent uncertainty that the innovation process entails. Strategic control over internal revenues is a critical form of financial commitment, but such “inside capital” must often be supplemented by external sources of finance such as stock issues, bond issues, or bank debt that, in different times and places, may be more or less committed to sustaining the innovation process. pp. 15 - 16

Lazonick is talking about more then what the Financial Marketplace Module of the Draft Specification considers. The financing mechanisms are one of the key areas where additional value, flexibility and innovativeness can be generated from. But what Lazonick notes here as the social condition is the role of the CISP . These people are not affiliated with one individual supplier or one individual producer. They are independent as their name reflects. They have not been constrained by the Exxon or Schlumberger way. And I am not stating that those firms ways are wrong, the CISP is independent of that. Their focus is on the needs of the JOC and the ability to be innovative and support this software development capability as well as the JOC.

In yesterday's post I offered the "Velocity of Productivity" as a new concept to consider for the future. This is the domain of the CISP in terms of ensuring that the value of the industry, the JOC and the software development are all consistent with social conditions that Lazonick correctly asserts are necessary for Strategy, Organization and Finance to be in alignment.

Lastly as I indicated in the first part of this post the Military Command & Control Metaphor is a critical concept in making these "Social Conditions for the Innovative Enterprise" work. Without structure there will be failure. What is needed is a means to extend the structure of the JOC to include the producers represented, the CISP and the suppliers who make the industry function. The broadening of the scope outside of the current "operator-only" methodology is a necessity due to the resource constraints, particularly the engineering and earth science resources of an innovative oil and gas industry. What we need to do is introduce a different means of organization in order to expand the potential output of the oil and gas industry. The MCCM and Lazonicks "Framework for Social Conditions of the Innovative Enterprise" are the means to do that.

People, Ideas & Objects and the Community of Independent Service Providers need to see this financial commitment from the oil and gas investor and shareholder. We are offering a more effective manner in which to manage the oil and gas resources of the producer firm, and this effectiveness will not come about without the commitment's from these producers. Management have proven time and again that they will not fund these developments. There's is a situation that compromises the separation of management and ownership to the benefit of management. Why would they support an effective means of managing oil and gas assets.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Lazonick on Chandler Part IIIb

This is our third post from Lazonick's paper "The Chandlerian Corporation and the theory of innovative enterprise." In our past two blog posts we have learned some interesting things that are directly relevant to People, Ideas & Objects. In the first post we noted the three generic activities that require alignment; strategy, organization and finance. How the Draft Specification provides for these three activities. And the differences between two corporate strategies defined as "optimizers" and "innovators". Noting that Lazonick defines optimizers as non-innovators. In the second post we determined that the business of the oil and gas business required substantial investment to attain the necessary innovative strategic footing. How today the current bureaucracies are unwilling and incapable of making these investments. And that the investors / shareholders in oil and gas have the opportunity to form their own new and revised organizational ways and means around using the Joint Operating Committee as the key organizational construct, and the People, Ideas & Objects software development capability.

In the Preliminary Research Report it is noted that the higher commodity prices are a reallocation of the financial resources to support innovation. It is the product revenues from oil and gas sales that fuel the innovations. Financing of innovation through debt, equity or profits would be too costly and would generally be inadequate in terms of affecting the performance of the industry. A much larger source of funding is required to fuel the type of innovation that the oil and gas needs. Innovation is a profit generating activity. This fact becomes clearer in today's review of Lazonicks paper.

2. The theory of innovative enterprise cont

In the first quarter of 2010 People, Ideas & Objects attempted to fund its budget needs for the calendar year. As we are aware, the total sum of these activities generated $0.00. This in direct contrast to the 30 compelling reasons supporting why we should be funded. I have pointed to this funding failure as a fact that proves the bureaucracy will never fund these developments. The point is that this environment needs to be created and supported. As Schumpeter noted "innovation drives economic development."

The optimizing firm may calculate, on the basis of prior experience, the risk of a deterioration of current market conditions, but it has no way of contemplating, let alone calculating, the uncertainty of returns for conditions of supply and demand that, because innovation is involved, have yet to be created. The fact, moreover, that the optimizing firm will only finance investments for which an adequate return already exists creates an opportunity for the innovating firm to make innovative investments that, if successful, can enable it to out compete optimizing firms. Indeed, in the future optimizing firms may find that the cause of the “poor market conditions” that they face is not the result of an exogenous shift in the industry demand curve but rather the result of competition from innovating firms that have gained competitive advantage while their own managers happily optimized (as indeed the economics textbooks instructed them to do) subject given technological and market constraints. p. 9

Therefore I see the existence of two fundamentally different oil and gas industries for the next 10 years. Those that are optimizing and atrophying, and those that are innovating and growing. A key difference is the use of the People, Ideas & Objects software that supports and defines the innovative oil and gas producer. The critical role of the Community of Independent Service Providers (CISP) in enabling oil and gas innovation. And the direct investments in innovation that are needed.

An innovative strategy, with its fixed costs, results from the assessment by the firm’s strategic decision-makers of the quality and quantity of productive resources in which the firm must invest to develop higher quality processes and products than those previously available or that may be developed by competitors. It is this development of productive resources internal to the enterprise that creates the potential for an enterprise that pursues an innovative strategy to gain a sustained advantage over its competitors and emerge as dominant in its industry. p. 10

Lets be clear, the costs of these software developments are minuscule to the costs of developing the innovative oil and gas industry. The global oil and gas industry is currently a $3.8 trillion / year industry. I see a significant portion of those annual revenues being dedicated to the processes of innovation. A critical enabling resource within the industry will be the Community of Independent Service Providers, they are the ones that will have the skills and resources necessary to support the innovative oil and gas producer. They are how the energy industry evolves and matches or supports the innovations made at the producer level. Achieving the CISP's overall objective of providing their producer clients with the most profitable means of oil and gas operations. What is needed for both the software and communities to develop is to have access to these financial resources.

Such development of productive resources, when successful, becomes embodied in products, processes, and people with superior productive capabilities than those that had previously existed. But the high fixed costs that such investments entail mean that in and of themselves these investments place the firm at a competitive disadvantage until such time that, by developing and utilizing these investments, it can transform the technologies and access the markets that can generate returns. An innovative strategy that can eventually enable the firm to develop superior productive capabilities may place that firm at a cost disadvantage because such strategies tend to entail higher fixed costs than the fixed costs incurred by rivals that choose to optimize subject to given constraints. p. 10

I can not for the life of me see the energy industry as it exists today changing to the one described in the previous quote. It isn't in their organizational DNA. The process of creative destruction, or as I have detailed the two oil and gas industries, one optimizing the other innovating, is the only means that change of this scale can take place. As the optimizing firms atrophy and their earnings decline, assets will be sold to the innovators, creating a substantial opportunity for the innovative producer through this process of renewal.

If the size of investments in physical capital tends to increase the fixed costs of an innovative strategy, so too does the duration of the investment required for an organization of people to engage in the collective and cumulative—or organizational—learning that is the central characteristic of the innovation process. p. 10

and

The revenues (and not just the profits) that the innovating firm generates can be critical to maintaining its organization intact. When the innovating firm generates revenues, it has financial resources that can be allocated in a number of ways. If the gains from innovation are sufficient, the firm’s revenues create the possibility for self-financing....For the innovating firm, financial resources not only fund new investment but also enable the firm to keep its “learning” organization intact. The innovating firm can use the gains of innovative enterprise to reward its employees for their application of skill and effort to transforming technology (unbending the cost curve) and accessing markets (shifting out the demand curve). p. 13

We have commented on this blog many times before about the mechanical leverage that man has achieved over the past century. 18,000 man hours of labor is contained within each barrel of oil. To convert this factor into the number of man years of physical effort that is offset each year for each American, that number is 385. That is; each American receives the equivalent benefit of 385 man years of physical effort per year. Truly surprising and something that has to be maintained by ensuring that the oil and gas is available to continue to provide the offset. The point in raising this is to ask the question, at what point in time do we achieve an equivalent level of leverage in terms of intellectual thought? And as importantly, how do we get there? I know the first two steps are to gain a software development capability and secondly begin the development of the Community of Independent Service Providers.

The innovation process, that is, can potentially overcome the “constrained-optimization” trade-offs between consumption and production in the allocation of resources as well as between capital and labor, and even between enterprise and society, in the allocation of returns. It is for this reason that innovation can form the foundation for equitable and stable economic growth, or what I have called “sustainable prosperity” (Lazonick and O’Sullivan, 2002; Lazonick, 2009a). p. 14

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Focused on the Value

Number eight of eight in our "Focused on" series looks at the value proposition of People, Ideas & Objects. Noting how the costs of ERP systems have escalated. Where the business models in which they are sold provides People, Ideas & Objects with the opportunity to provide substantial competitive advantages.

The People, Ideas & Objects Value Proposition

Big ERP application costs have soared in the past few decades. Based on selling a generic solution to each producer, the business of selling big iron applications have been lucrative for the chosen few vendors. On the other hand producers are frustrated by the extensive one-off costs associated with customizing, supporting and operating these applications within their firms.

What if the software development costs associated with customization were aggregated for their use over the entire industry. People might argue that a producers competitive advantages would be diminished by everyone having access to the same software. I argue that the innovative oil and gas producers competitive advantages are based on their earth science and engineering capabilities applied to their asset base. Each producer holds a unique and mutually exclusive asset base to all other producers. As a result of this argument, the costs of custom development, although large in terms of aggregate, are infinitesimal in terms of a specific producers production base. This is the future of software and the value that People, Ideas & Objects is designed to provide.

In the marketplace today support costs are substantial as each producer must attain a capability to deal with any and all contingencies. Does the quality of a Java programmer have a direct impact on a producers reserves or production profile? Of course not, then why does the innovative oil and gas producer need to employ the Java programmer directly?

People, Ideas & Objects offers a compelling and competitive value proposition. Our funding is based on the software development and cloud computing costs, plus an element of profit for People, Ideas & Objects. A fundamentally different business model to the big iron ERP vendors. A business model that deals with the two critical conflicts in software, those conflicts being the source code and the software developers customers. Traditionally as more customers use the software, the costs to change the software code become progressively larger, and the costs to deploy the changes more difficult. People, Ideas & Objects eliminates these two conflicts by providing a software development capability and service based on cloud computing. If users determine that an application function is redundant and should be replaced, they won't get an argument from us.

As a result of the Information & Communication Technology Revolution (ICTR), software defines and supports organizations. It can be the glue that holds things together, it can be the cement that stops any change or innovation, and it can be the tools oil and gas investors need to develop their own organizational definitions. An organizational definition that provides enhanced ownership control, compliance and governance over the current bureaucracies methods. A software development capability as defined by People, Ideas & Objects is a necessity to operate in the dynamic and innovative oil and gas industry.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Focused on the Opportunity

During our first quarter budget drive, we documented 30 compelling reasons for industry to financially support People, Ideas & Objects software developments. These 30 compelling reasons are now codified into eight "Focused on" entries explaining our priorities and values. This is the fifth entry in this series and attempts to codify the opportunity that the Information Technology & Communication Revolution provides. Particularly through the lens that Professor Carlota Perez provides.

The Opportunity

There's more at play in terms of business opportunities then the insatiable demand for energy and high(er) energy prices. As energy producers see the long term prospects for oil and gas being quite lucrative. We also find ourselves at a period of time in which the economy is restructuring around the Information & Communication Technology Revolution (ICTR). Since 2005 we have closely followed the writings and ideas of Professor Carlota Perez. A summary of her work would show that now is the opportunity that provides for a revolutionary restructuring of all industries based on ICTR.

So if you are an earth science or engineer in oil and gas, or, in the business, economics and administration of oil and gas there are substantial opportunities for people to establish not only a career, but also a service offering based on defining and supporting the People, Ideas & Objects software developments. It is my opinion that people should view this opportunity as a complete and new beginning of oil and gas. One in which everything has to be invented and developed.

Highlighting the key points of Professor Perez' work is best left to a review of this blog's archives and her papers. (Note: Professor Perez has a new paper published that I will be reviewing soon. It can be downloaded from here.)This is the fiftieth article of ours on her work. Perez' research makes up a substantial body of work that provides real value for people who want to take advantage of these once in a lifetime opportunities. Posts highlighting her work can be aggregated under the Perez label.

Two areas that we have not covered in enough detail are the effect of the .com meltdown and the general maturation of the underlying Information Technologies. As Professor Perez states, revolutionary technologies are introduced through two phases, Installation and Deployment. Between these two phases is a period she calls the "Turning", in which the ICTR begins to lift all boats. The "Turning" was the .com meltdown. Reality is that now is the beginning of a potentially thirty year Deployment phase where Information Technology will remake all industries, and particularly oil and gas.

To the second point of the maturation of the underlying technologies. Everything from a technological point of view is in place to drive innovation. Companies like Oracle and Apple are not innovating off new architectures or technologies. They are combining the existing infrastructure in new and innovative ways that bring value to consumers and businesses. People, Ideas & Objects use of the Joint Operating Committee to identify and support the innovative oil and gas producer is the same thing. Providing architecture and technology to drive innovation.

If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Focused on the Product

Continuing on with our review of the eight focus areas of this project. Today I want to highlight the key benefits around the actual software application. These focus areas are compiled from our first quarter's, 30 compelling reasons that People, Ideas & Objects should be funded and developed.

The Product

People, Ideas & Objects is a customer of Oracle Corporations products. With the acquisition of Sun Microsystems, Oracle now provides the hardware and software that we will use in building and providing our software solution to the oil and gas marketplace. In the past number of years Oracle has spent greater then $39 billion in research and acquisitions to make their products the best in the marketplace. With the closing of the Sun Microsystems acquisition, Oracle's offering is now in place and will be used to develop the People, Ideas & Objects application modules and deliver the solution in the cloud computing paradigm.

Today there is also a revolution in terms of the performance of software developers. Agile / Scrum / Lean based software development methodologies are enhancing team performance by metrics of 500 to 1,000 percent. Impressive yes, but more importantly they are eliminating the issues of waste in terms of the excessive cost, chronic lateness and off specification types of issues that have plagued software development for decades. This isn't the end of the problems in software development, just the first of many steps in making the customer focus the primary concern.

One of the many things that we have learned in this blog, and seem to be discovering from many different perspectives. Is that tacit knowledge, the collective understanding held by the users in the oil and gas industry, drives software definition. To preclude the user from the developments would preclude success, literally. Tacit knowledge can't be captured. The user has to have the tools developed to enable them to use their tacit knowledge in the most effective manner. That is the product focus of People, Ideas & Objects.

People, Ideas & Objects, although not a "pure" Open Source project provides the innovative oil and gas producer with open access to the software code that makes up the application. This provides the producer with access to the software code to ensure the application is performing as it should. I foresee the energy industry hiring a member of the CISP to verify the software code for audit and other purposes. This "openness" ensures that the use of the software is consistent with the needs of the innovative oil and gas producer.

Normally I would include the Costs associated with this development as part of the Product Focus. Although our total costs are high, early projections for development of the Draft Specification are in the range of $800 to $1 billion. These costs are allocated based on a low dollar per barrel of oil equivalent per year basis. (Just $1.00 per boe / year for 2010, potentially generating $10 million in the U.S. alone.) Making subscribing producers total ERP costs a small percentage of what those firms pay today. Importantly, as we are learning in our review of Alfred D. Chandler, "Strategy follows Structure". By using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. People, Ideas & Objects enable the producer to focus on their key competitive advantages, the development and application of their earth science and engineering capabilities to their asset base.

Lastly I want to point out that the Apple iPad was released this past weekend. I think the product is a major turning point in the use of technology in business. Chaining one's self down to a desk became all the more ridiculous as a result of Apple's iPad. The ability to conduct your business anywhere and at anytime is now very real. Those producers who subscribe to People, Ideas & Objects will have direct benefit of products such as this. I recently noted some of the innovative ways that we intend to develop to these types of platforms, and have already documented some of the advantages of working with that platform.

If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Focused on the Issue

Continuing on with a series of quick blog posts that summarize the 30 compelling reasons we developed during our 2010 budget drive. Compelling reasons for getting involved in People, Ideas & Objects. I have summarized these 30 reasons into eight "Focused on" summaries that started with the post Focused on the Energy Business. This will be our third post, with our second post, Focused on the User, being published yesterday.

The Issue

Since 2005 global oil and gas production has stalled. Energy prices reflect this fact, and are reallocating the financial resources to the innovative oil and gas producer. Each barrel of oil produced requires progressively more earth science and engineering effort. This trend in the increase in the scientific and engineering effort for each barrel will continue. Science and engineering is where the value in the industry is generated, and the capacity of the bureaucracy to keep up has failed.

We live in advanced societies where man has leveraged mechanical effort through the use of energy. We recently confirmed the calculation that each barrel of oil offsets 18,000 man hours of effort. This can also be restated by saying that we stand on the shoulders of several generations of giants. Energy is the lifeblood of our global economy. Any challenge in sourcing the required energy has a direct impact on our quality of life, and society will have far to fall if there is an energy shortfall. The bureaucracy in oil and gas assures us that there is plenty of oil, yet our production remains the same as in 2005. Resolution of this conflict may be as simple as management suggest, or it may be tragic.

Through research reflected in the Preliminary Research Report, the Draft Specification and this blog. The industry standard Joint Operating Committee (JOC) provides the innovative oil and gas producer with the necessary organizational construct to identify and support innovation in the earth science and engineering disciplines. The JOC includes the legal, financial, cultural, communication and operational decision making frameworks of the global oil and gas industry. Building the systems to define and support these activities is the necessary first step in beginning our approach to solve this issue.

Exxon has estimated that to meet the demand for energy, capital investments of $20 trillion will be required over the next 20 years. I believe we should approach a problem of this scope by first organizing ourselves. Otherwise we risk throwing money at the problem and getting no where. I believe we are beginning to see the beginnings of this issue affect the performance of the producers. Reporting that reserves and production continue to decline is the start of this process. After realizing the increases in prices for oil and gas, why would declines in production and reserves occur? Recently in the Calgary Herald, the Canadian National Energy Board predicts that Alberta's natural gas production will decline by 34% in the next two years. Clearly our organizations are failing society, and as the conflict reflected in our 2010 budget drive shows, bureaucrats are in control.

If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Proof

Our 2010 budget campaign is now over. We've raised the total of $0.00 and documented over 30 compelling reasons that People, Ideas & Objects should be funded. Yesterday we saw that management have many alternatives at their disposal, all of which distract their focus from the issues facing the business. Shell's CIO accurately reflecting how lost management has become.

I feel the evidence that we have provided in this web-log, over just the past 90 days, proves that management will never fund these developments. Their situation is comfortable, therefore People, Ideas & Objects shares many of the same complaints about management as the directors, investors and shareholders in oil and gas.

It is therefore in our best interests that we cultivate this community and establish a long-term funding, and mutually beneficial, relationship with directors, investors and shareholders. The stated purpose of doing so should be to eliminate the type of self-serving management and bureaucracy that is the source of our mutual difficulties.

Getting back to the business of the oil and gas business is an urgent requirement of society. Management feel they have the capabilities to raise the global production profile at will and that is their stated position. I believe there is money to be made in the energy business and the need to organize ourselves for the task at hand is our first priority. Organizing ourselves in the manner as defined in the vision of the Draft Specification.

So with this post, I want to formally recognize the director, investor and shareholder as forming a community that we represent here at People, Ideas & Objects. With this post I will aggregate all the discussions around the label Ownership-Community. As we focus on the process of building the User, Community of Independent Service Provider and Ownership-Communities for the remainder of 2010. It is with regret that we can not fund any developments until we have sourced adequate funding, however, there is still much that can be done.

It is reasonable to ask if this is a new form of economic organization? Yes, it most definitely is. And therefore, we begin to look at the works of Alfred D. Chandler. With the hope and understanding of determining new research and ideas from a review of corporate history and its development, we will continue onwards.

If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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