Showing posts with label Hagel. Show all posts
Showing posts with label Hagel. Show all posts

Wednesday, February 15, 2006

Plurality Business Attributes of Web Services

Note to Reader. I am publishing the "Plurality" document I frequently refer to in this blog. This will enable searching based on the text within the entire document. The word count is approximately 35,000 words and is provided as background for the discussions.

A number of technology changes have occured since it was originally published in 2004. IBM has chosen not to support this effort, and as a result I am replacing the components of the technology architecture as the opportunities and needs require. We are moving to the Sun strictly for their support of Java, and the synergies of the visions. As I recently noted, Ingress would be the database that we will use. Other then that, I have chosen to host the entire development and operating environment on Sun's Grid and as funds become available we will secure those resources.

References are to the literature noted in the bibliography. So here it is, warts and all. I hope you enjoy it, any and all comments are welcomed and appreciated.

Thank you

Paul Cox



The past number of years has seen Dr John Seely Brown and John Hagel III as the primary proponents of the web services paradigm for business. Much of their writing and consulting is done in this area and the effect of web services on management and business in general. Their efforts have recently focused on Web services almost exclusively and they have prepared a number of comprehensive writings on the subject.

A good summary of their opinions about the scope and magnitude of the changes are as follows. This quotation is from the article Orchestrating business processes – harnessing the value of web services technology. This article can be downloaded from their website

Hagel & Brown (2002) “The buzz is spreading. There’s a new set of technologies on the horizon. Web Services offer the potential of low cost, flexible connections across applications operating on diverse technology platforms. The pay-off: substantial, near-term reduction in operating costs and improvement in asset leverage for businesses.” (p. 1)
Hagel & Brown (2002) “Not so fast. True, businesses do have the potential for substantial savings in an increasingly demanding economic environment. But put the emphasis on “potential”. Realizing these savings is not simply a question of injecting a new set of technologies. To fully realize the economic potential of web services technology, senior mangers will need to adopt very different approaches to managing business processes. This article describes why different management approaches are required.” (p. 1)
Hagel & Brown (2002) draw an excellent analogy in describing web services. An international meeting with 5 participants, each speaking a different language, would require up to 10 interpreters in order for any communications to occur. Web services are described as a parallel to the English language in this situation. The ability to conduct business is far simpler when everyone speaks the same language and can communicate with a shared meaning, glossary of terms, data structures, process management and other ERP style standards across multiple trading partners.

Hagel & Brown (2002) “Of course, exploiting these growth opportunities will require much more than a new technology architecture. Very different organizational capabilities must be developed, including new skills, performance measurement and reward systems and organizational learning approaches. Even more fundamentally, business managers will need to adopt a new mindset – embracing shaping opportunities by helping to define and deploy standards, rather than simply hoping to adapt to a rapidly changing environment.” (p. 19)
Hagel & Brown (2002) also state “However, none of this will be possible within the confines of existing enterprise architectures. To capture the largest business value creation opportunities on the horizon, management will need to “break on through to the other side” by embracing new technology architectures – and associated organizational forms – in a sequenced manner, driven by a clear understanding of, and demand for, real business value at each stage. (p. 20)
This provides unequivocal support for the reorganization of an oil and gas operation on the basis of the joint operating committee. The need to reorganize is based on the effect that web services will have on an enterprise, and as both Hagel & Brown, and this paper have stated the alternative is hope for the ability to adapt to the changes associated with what this research calls the “integrated networked cluster”. In taking both their analogy of communications where no one speaks the same language, and the one articulated in this paper in which the networked effect over the last 10 years on individuals will be paralleled in the corporate environment, the impact of web services regarding the ERP systems can no longer remain an island of information.

In addition, and of particular support for the reorganization to the joint operating committee, is the fact that Giddens and Orlikowski’s theories and models of Structuration reflect that the organizational structure is defined by legal agreements, industry norms, ownership, operational and other fundamental criteria that make it, literally the only viable organizational alternative. Alignment is currently the buzzword in the technology arena. Any initiative attempting to achieve alignment therefore requires the SJOC as its organizational basis. In addition to the aforementioned comments, a reference is provided from

Dr. Rebecca Henderson (2002), who is the Eastman Kodak Professor of Management at the MIT Sloan School of management. She asks: “How can you manage these technologies and their inherent issues strategically? Will you be aware of the changes as they happen? Have you thought through how your organization will respond while simultaneously maintaining a “conventional” business? I venture to predict that the ability to answer these sorts of questions is likely to be the critical factor that will determine the business winners of tomorrow.”
Her comment is made in reference to technology in general, however, it is a rather salient point and reflects the nature of the times we live in and the diligence that managers must pay to technology and is a further extension of this paper’s title “Plurality should not be assumed with necessity”. (p. 6).

In Brown & Duguid (1998) they make the following observations: “The leakiness of knowledge out of and into organizations, however, presents an interesting contrast to internal stickiness. Knowledge often travels more easily between organizations than it does within them. For while the division of labor erects boundaries within firms, it also produces extended communities that lie across the external boundaries of the firms. Moving knowledge among groups with similar practices and overlapping membership can thus sometimes be relatively easy compared to the difficulty in moving it among heterogeneous groups within the firm. Similar practice in a common field can allow ideas to flow. Indeed, it’s often harder to stop ideas spreading then to spread them.” (p. 102) This certainly reflects the significance of the risk of having the IBM Workplace toolset introduced without the explicit support of management.

In their document Compendium Overview Hagel & Brown (2002) state the following:
“Changes in management practices, Control vs. Trust – mastering a different management approach discusses the fundamental shift in management practices required to realize the potential of Web services technology. Managers have perfected control-based techniques to ensure performance of business processes within the enterprise. When these techniques are extended across enterprises, however, they tend to limit the potential for collaboration, rather than enhance it. Control-based techniques may work if there is a clearly dominant business partner dealing with much smaller companies. Even here, though, the smaller companies will over time tend to migrate to work with business partners who have adopted a different management approach. A trust-based management approach focuses on the role of economic incentives in shaping and deepening collaboration. Rather than relying on market power to impose practices on business partners, this approach creates appropriate incentives to ensure coordination of activities in the most flexible and least expensive way possible.” (p. 4)
This is where the Genesys® proposal addresses a key point. The need to have a third party negotiate and solve many of the inter-company issues regarding systems integrations needs to be handled effectively, and is part of the study period as proposed in Genesys®, February 2003 proposal. Another aspect of concern is the level of collaborations that are introduced and the level of collaboration that currently exists within the industry. Collaboration is not necessarily easy and I would suggest to fully explore and understand the concepts, opportunities and responsibilities requires much thought and training on the part of each individual.
These comments are further defined in Hagel & Brown (2002) Control vs. Trust - Mastering a Different Approach.
“By focusing on end products, rather than the detailed activities required to deliver the end products, the trust-based approach creates the basis for a very different management model. Rather than supporting tightly coupled business activities, trust based approaches encourage much more loosely coupled business activities. Participants can be added and removed much more easily. More specialization can occur because loosely coupled relationships can accommodate more participants. Rapid innovation can occur in all areas of business activity because the loose coupling allows participants to change the way they operate without disrupting the operations of others.”
In this article Hagel & Brown (2002) define many of the components of trust that need to be developed. That trust is not something that, once established is not required again, it is something that must be maintained as well. The four components of trust that need to be developed are as follows:
“Expectations must be shared by all parties”.
This is why the components of the joint operating committee best facilitate the collaborations and developments. Developing a shared vocabulary, shared understanding and / or shared meaning will facilitate the means to innovate based on that shared understanding. This is difficult, if not impossible to achieve in the control-based environment. (p. 3)

“All parties must be sufficiently motivated to deliver against expectations.”
Like-minded producers are interested in the same outcomes. Sharing of that objective between the companies represented in the joint operating committee is consistent with the trust fundamentals of Brown and Hagel. Brown and Hagel go on to suggest that individuals can be motivated in a collaborative forum through knowledge incentives. This is a particularly effective motivation as the learning of one can enhance the learning of others in the collaborative process. The indirect benefits to the capacity to innovate, or the appropriability as Dosi defines the term, would be long lasting and sustainable as a competitive strategy through this knowledge based incentive structure. The use of monetary incentives appears contrary to the collaborative process and would not be recommended as an individual motivation. (p. 1122)
“All parties must have the requisite capabilities to deliver against expectations.”
As in the above item, the knowledge-based incentives would help to further the natural capability of the individuals participating in the collaborations. (p. 1122)
“Notification mechanisms must be in place to provide early warning of any potential shortfalls in performance or abuse of privileged access.”
In Genesys Software Corporation February 2003 the Internal Audit role was highlighted as the area in which much of this solution may fall under. I would assume that a greater role for the internal controls would be the result, and an understanding of those controls be better implemented to facilitate a higher component of trust. Hagel and Brown assert that through collaboration “more is better”. The tendency to want to limit the resources deployed to a project in the control model can have the effect of limiting the capability. This is contrary in the collaborative environment, and this comment is based on this author’s experience in earning his MBA from Athabasca through Lotus Notes, namely that the broader and more diversified the level of participation is, the greater the collaboration which leads to significantly greater results. This also indirectly demands that the knowledge within the collaboration must be higher, with a greater specialization of each individual participant. As an aside, the Workplace tool has developed and offers the person to person, person to process, process to person and process to process notification systems enabling a very diverse and “automated” method of establishing communications and notifications. (p. 1122)

The trust method and its associated changes naturally take long lead times in order to implement effectively. This fact coincides with the long development times of Genesys Software Corporation’s February 2003 proposal, the time required to learn to collaborate, the management changes necessary etc. Hence the importance that is placed on the timely and dedicated move to effect these changes that is required. How can companies undertake this level of orchestrated change if they permit the Workplace tool to enter their organizations uninvited?

Asynchronous communications.


This paper cannot stress enough the value of asynchronous communications. Occasionally this research has noted and reflected on the areas where asynchronous has been effective. I feel a better description and application of why this method is of such value lies in the proposed SJOC.
Asynchronous communication denotes that there is not the requirement of an immediate response. A telephone call is synchronous, and a letter or document is asynchronous. There is time to reflect and consider other points of view and accurately research and discuss the answer provided. This elevates the quality of communication above the chat room and provides real value in today’s business. It is also self-documenting and available to all the immediate team members of the joint operating committee to see how their discussion unfolded, and is available for search and reference in the years to come.

Of note and interest, with 1,200 students and 1,200 graduates of their MBA program, Athabasca University has a database of all the asynchronous discussions of its students. (7,200 man years). This provides significant codified knowledge that was formerly only tacitly available. The ability to search and garner further information is valuable in determining research projects and program development for their soon to be announced Doctorate in Business Administration (DBA) program. This capability is also what Google is attempting to achieve through their new Gmail system. Privacy experts are concerned about the resale of unsuspecting users data, codified into valuable information regarding consumer trends and then sold to advertisers. The potential users response to Gmail is very interesting, in that their complacency reflects the extension of the ubiquity of the network in their lives.

Asynchronous communications are critical to the facilitation of problem solving, innovation and overall communications. It is a concept that the IBM Workplace and WebSphere tool sets have ingrained in their structure as well. At this time particular mention of the WebSphere tool and its application of asynchronous functionality and process management is required. As stated elsewhere WebSphere is a collection, package or framework of IBM written Enterprise Java Beans. By implementing WebSphere with the ability to provide asynchronous functionality and process management, the same concepts that have been so effective in communications can also be brought to process management. Where the software manages the process, and collects a variety of input from different users, (and in the future users from other organizations.) whether it is in the processes optimal sequence or not. It is this author’s opinion that the asynchronous model’s process management is the key attribute and real value of web services.

A possible scenario.

You are the chairman of the SJOC and in this instance, as a member of the committee, you have always shared de facto operational control. In addition there was the financial accountability but that was more tacit then explicit prior to this revised Genesys® organizational structure. You therefore now have the tools and resources to effectively be accountable for the financial performance and specific attributes that are agreed to by the committee members.

You have a particular difficulty in discussing and maintaining lease access to your facility due to the surface rights leaseholder. Incidents with him are few and far between but he has clearly made it evident that he will not tolerate any interpretation of the lease agreement beyond what is understood at this time. His lawyer issued notice of this to you last year. You were also recently granted a reduced spacing and expect to fulfill the gas gathering and processing facilities to 100%. Surplus compression is available immediately due to some changes made by the committee in the operations de-bottlenecking. This opportunity combined with the revision in gas pricing reflects the opportunity to maximize the long-term investment made in the facility over the past few years.

The application for reduced spacing was made due to the decline in production owing to a belief that the level of competitive drainage that is occurring from the adjoining leases. These leases are excluded from the area of mutual interest (AMI) of the committee, and are owned by a member of this committee. This type of problem could now be openly discussed in the joint operating committee, and with the variety of participants, the Chairman in this instance would collaborate in order to begin dealing promptly with the surface rights holder. The structured hierarchy would not have time to respond to the decline in deliverability attributable to the adjoining properties as quickly as the Chairman can by opening discussion of the issue both internally and externally.

In this instance the engineer is faced with a technical, political and legal issue that is possibly affected through the collaborations at the joint operating committee. The direct participation of the other committee participants is augmented by the legal, accounting and other technical and professional discussions that are able to join the discussion from each of the companies. Instead of having only the Chairman of the joint operating committee dealing alone with another issue that will cost time and money in a busy schedule, the entire resources of the firms represented in the joint operating committee can be brought to bear on the problem in a virtual and rapid fashion, as required. What could not have been discussed and considered, let alone implemented and resolved in a timely manner, can now effectively be resolved in as little as weeks or months upon identification of the problems. This scenario reflects only the collaborative tool at work. Eventually the entire accounting, production, land, and legal forms processes and procedures, including electronic forms such as mail ballots and daily-drilling reports could be populated to the databases contained within the collaborative environment. This scenario accurately reflects the difficulties in dealing in the prairies, in the frontier areas of oil and gas, this scenario may best be represented by replacing the surface rights holder with either Greenpeace or The Sierra Club. Other software applications such as Accumap and 3D seismic interpretations could be presented and invoked by the toolset. With the potential of the entire ERP systems functionality, as described in the Genesys® ERP Proposal.pdf being invoked to support and align the SJOC, society and human resources.

The need to clarify that holding the SJOC accountable is not, and should not be, construed as a capitulation of the innovation process and its inherent benefits to the four winds. A study was undertaken at Chrysler to determine why the changes to “teams” were successful in product development, as reflected in their cab forward design, yet the overall engineering and technical capability of the company declined. The Chrysler study reflects that the accountability of the committee (team) needs to be augmented by an internal management system that provides an overall focus and direction to the innovations. Management needs to create and guide the internal innovative science and engineering capability that is unique and a key competitive advantage.
Review of Dr. Brown and John Hagel III’s writings has direct and pertinent value to this research and its associated proposals. The opportunity to better understand the Web Services paradigm can best be attained through a comprehensive review of their offerings and the IBM WebSphere website's. A distributable copy of their article “Does IT Matter, an HBR debate” is provided as part of this report. Particular attention should be paid to Dr. Brown and Hagel’s comments regarding Webservices.

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Plurality Bibliography

Bibliography

Brown, J., Duguid, P., (1998, Spring). Organizing Knowledge. California Management Review Vol. 40 No. 3 pp. 90 – 111

Christensen, C. M., (1997). The Innovators Dilemma. New York, Harper Collins Publishers. Inc.

Davenport, T., Beck, J., (2002 March / April). The Strategy and Structure of Firms in the Attention Economy. Ivey Business Journal, pp. 48 – 54

Dosi, G. (1988). Sources, Procedures and Microeconomic Effects of Innovation. Journal of Economic Literature Volume XXVI: pp. 1120 - 1171

Farrell, D., (2003, October). The Real New Economy. Harvard Business Review, pp. 104 – 112

Giddens, A. (1984). The constitution of society: outline of the theory of structuration. Berkeley, University of California Press.

Hagel, J., Brown, J., (2002). Break on Through to the Other Side: A Missing Link in Redefining the Enterprise pp. 1 – 23. Retrieved November 20, 2003, from http://www.johnhagel.com/

Hagel, J., Brown, J., (2002). Compendium Overview pp. 1 – 7. Retrieved November 20, 2003, from http://www.johnhagel.com/

Hagel, J., Brown, J., (2002). Control vs. Trust – Mastering a Different Management Approach pp. 1 – 10. Retrieved November 20, 2003, from http://www.johnhagel.com/

Hagel, J., Brown, J., (2002). Orchestrating Business Process – Harnessing the Value of Web Services Technology pp. 1 – 13. Retrieved November 20, 2003, from http://www.johnhagel.com/

Henderson, R., (2002). The Next Tech Boom. MIT Technology Insider Newsletter September 2002 pp. 6 Retrieved September 18, 2003 , from the MIT Enterprise Technology Review World Wide Web: http://www.technologyreview.com/

Knoop, C.-I., Valor, J., & Sasser, W. E. Case 2: Information at the World Bank: In search of a technology solution (A). (Sept. 17, 1997). Harvard Business School Case 9-898-053.

Orlikowski, W. J., (1992, August). The Duality of Technology: Rethinking the Concept of Technology in Organizations. Organization Science (3:3), pp. 398 - 427

Porter, M. E., (1998). On Competition. Boston, Harvard Business School.

Porter, M. E., (1998) Competitive Strategy Techniques for Analyzing Industries and Competitors. New York, The Free Press.

Tichy, N. M., (1983) Managing Strategic Change: Technical, Political and Cultural Dynamics. John Wiley & Sons

Volkoff, O., Using the Structurational Model of Technology to Analyze an ERP Implementation. Richard Ivey School of Business pp. 235 – 237

Yergin, D. and J. Stanislaw (1998). The Commanding Heights. The Battle Between Government and the Marketplace that is Remaking the Modern World. New York, Simon & Schuster.

I wish to formally thank Dr. Elizabeth Moxley-Paquette for her supervision of this thesis. Her guidance and contribution is much appreciated. I also want to thank all the professors and staff of Athabasca University’s Centre for Innovative Management that have helped me to realize the value and significance of this high quality education.


Appendixes


Appendix “A” Genesys Software Corporations February 2003 proposal entitled. “Developing ERP Systems for Oil and Gas Users.”

Appendix “B” Harvard Business Review, June 2003 “Does IT Matter, An HBR Debate” distributed without copyright protection.

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Plurality Background

Note to Reader. I am publishing the "Plurality" document I frequently refer to in this blog. This will enable searching based on the text within the entire document. The word count is approximately 35,000 words and is provided as background for the discussions.

A number of technology changes have occured since it was originally published in 2004. IBM has chosen not to support this effort, and as a result I am replacing the components of the technology architecture as the opportunities and needs require. We are moving to the Sun strictly for their support of Java, and the synergies of the visions. As I recently noted, Ingress would be the database that we will use. Other then that, I have chosen to host the entire development and operating environment on Sun's Grid and as funds become available we will secure those resources.

References are to the literature noted in the bibliography. So here it is, warts and all. I hope you enjoy it, any and all comments are welcomed and appreciated.

Thank you

Paul Cox



In Dr. Daniel Yergin & Joseph Stanislaw’s (1998) book The Commanding Heights, the economic malaise that consumed most of the European countries in the period prior to WW2 was attributable to the capitalist’s comfort with the status quo.

This status quo, and a well-defined class system, particularly in Britain, enabled capitalists to reap the benefits of their companies’ economic activity without the need for further investment or, more importantly, innovation. Yergin et al (1998) attributed the decline of this economic malaise to the majority of the European countries moving toward economic reforms in the form of government nationalization, planning and control of the commanding heights of each countries core market requirements. This level of planning initially spurred the European economies and was widely believed to be the appropriate role and responsibility of governments. These theories were supported by John Maynard Keynes “Keynesian” economic theories and thinking, and the fact the centrally planned industrial complex of the Soviet Union appeared to be more prosperous than western-based systems.

This economic thinking coupled with market reforms in Europe led many countries to pursue various forms of communist, nationalist style governments and even in the United States, high levels of regulation. This Keynesian economic period began in the immediate post war period and continued into the late 1970’s and led to the fundamental reforms of the Reagan - Thatcher era. Based on Friedrich von Hayek’s economic theories, Reaganomics led to comprehensive market reforms adopted by Russia and China that now have the opportunity and economic structure to compete effectively in the global economy.

During the 1990’s we began to see capital flow into the more risk-oriented areas of the global economy. This risk orientation was at the expense of what was considered the “old economy” and resulted in a feverish over expenditure in speculative and corrupt business models. This precipitated large-scale global economic fallout. This fallout being symptomatic of the occurrences of what this paper will describe as a global manufacturing capacity overhang, which is cited by this author for the purposes of this paper, as the cause of the current global deflationary pressures. However, was this capital orientation to risk incorrect? Or, did this level of capital investment form the basis of a third “revolution” in business and economics comparable to Keynesianism and Reaganomics? The thinking from the Reagan-Thatcher era now presents new issues, and begs the question: does the new economic revolution, or globalism, present a new basis for companies competing on a global basis?

Over the past ten years we have seen a comparable revolution in thinking of all forms of international governments, western based or communist. This presents new competitive threats and opportunities for firms operating in this new global environment. Today companies need to make difficult choices.

Do today's companies atrophy under the guise of harvesting during the regular business cycle? And is history repeating itself by North America being challenged by a potential new global leader, just as the United States challenged Europe after WW2? Or, does management actively invest in their organizations on the basis of new competitive advantages and take the appropriate risks to enable their organizations to evolve and adapt in this rapid, change-oriented environment.

History reflects that in the period after WW2, companies involved in investing in market share and growth were rewarded with larger and more profitable organizations. This model of “growth” has become so systemic in most of western management’s thinking that it is easy to confuse an organization’s growth orientation with their purpose of maximizing shareholder return. (Enron and WorldCom.) With unending supplies of human resources in the Asian and Eastern European countries, this growth strategy only exacerbates deflation.

Capital deflation presents two unique and difficult issues, which include:

  • Deflationary cycles are difficult to stop. Witness Japan’s difficulty through the 1990’s and currently.
  • During deflationary cycles no one “wins”.
Consumers, companies and countries find their holdings in a never-ending spiral of decline in value, which is only contrasted by the never ending upward spiral of debt, and commitments valued at prior periods higher valuations. Capital deflation must be avoided at all costs. The never-ending economic decline can become permanently entrenched in the minds of consumers and make the situation only worse as time passes. Witness the approach of the Japanese to their economy. The government, acting on the response of their citizens, after 12 years of deflation and recession, has not implemented the necessary market reforms to deal with this deflationary economic phenomenon. The Japanese people are generally well off and continue to accept that they need not invoke any measures to deal with problems that are not evident to them.

A new means of international competitiveness needs to be adopted by all companies operating in the global economy. The standard operational strategy (growth) is now limiting, and possibly exposing major societies to economic decline. It is this researcher’s opinion that innovation is a key economic driver and operational strategy that can augment a firm’s other strategies for the future. Innovation is an operational strategy that augments the other operational strategies of marketing, operations, financial, and human resource. Focusing on innovation will lead North America to continue with its present influence and global position.

Some choices in this environment are simple to make, but for companies such as Air Canada, built on the thinking that consolidation of market share was the key to prosperity, change is difficult to consider, let alone implement. What basis of competitiveness can provide western economies with sustainable competitive advantages? How does a firm expand its capacity to innovate? What are the necessary tools and methodologies that enable a firm to augment their capability to ensure that their competitiveness continues to accelerate throughout their product life cycles? Is innovation capable of supporting the western economies in such a competitive environment? With Vietnam and China taking the most advanced telecommunications and other products of the West and employing them, their economic infrastructure are immediately competitive.

The risks of not changing to a new economic model in North America are significant. Will organizations be able to stay in business? Is innovation the competitive advantage for the future of our western economies? What can a firm do to augment their innovativeness, and is there a method of implementing the appropriate procedures and policies to become innovative? Or are we destined to rely on the competitive nature of the entrepreneurial methods of creative destruction?

What are the ethical dilemmas for a firm that chooses not to pursue an innovative path? With the inherent loss in value, standard of living and employment, the ethical dilemma is clear and should be articulated to the managers to ensure that these tools and methodologies are clearly understood and implemented.

Theoretical Basis of this Research.

Listed in descending order of importance to this paper, are the following theories:

The first is Dr. Giovanni Dosi’s theory and his 1988 article “Sources Procedures and Microeconomic effects of innovation”. Dr. Dosi’s article provides a critical level of thinking and introduces many tools necessary to implement innovation.

Secondly is Dr. Wanda Orlikowski’s Model of Structuration for Technology and Dr. Anthony Gidden’s theory of structuration, which states that society, organizations and people need to move in lock-step in order for successful advancement to occur. Dr. Orlikowski’s model asserts that a fundamental component of society is technology, that technology provides a duality and therefore is a constraint or inhibitor to successful advancement of society, people and organizations. It is this paper’s hypothesis that the hierarchical organizational structure is an impediment to advancement of the oil and gas company and society in general.

Thirdly Dr. Michael E. Porter’s work in “On Competition” and “Competitive Strategy” and his strict application of competitive strategy. A further movement away from the focus on growth needs to be further emphasized and acted upon in oil and gas. Dr. Porter’s work has emphasized that growth is not a successful strategy since the late 1970’s, and the methods and tools that Dr. Porter has developed, which include the definition of clusters, provide a sound basis for reviewing critical components of an organization’s underlying strategy.

Fourth, Dr. John Seely Brown and John Hagel III recent and comprehensive work on implementation and management of Web Services technologies. Dr. Brown is the former Director of Xerox PARC and has written extensively with John Hagel on the risks, opportunities and threats of the Web Services paradigm.

Fifth is Dr. Noel Tichy’s management of strategic change and the definition of change agents. How leadership is a necessary component of change management. Where leaders engage and align the people within their organizations through technical, political and cultural dynamics.

Globalization requires companies to stop investing for market share and growth through increasing capacity; rather, innovation is the way to increase value for organizations, people and society. Emphasis on growth has lead to over capacity in all the western economies and now runs the risk of a protracted deflationary depression as witnessed in Japan over the past decade. Businesses must maintain their competitive offerings by innovating.

Implicit in this research project’s hypothesis is the capacity for the “old” system to provide growth is failing to increase shareholder value. This has presented a very precarious situation for large organizations in which errors in judgment, ethical behavior or market structures have the detrimental effect of being fatal to the health and independence of the organization. We have consistently seen large companies that have erred, and fail as a result. In a ruthless and unforgiving North American market, where do the companies move to mitigate or avoid these effects?

Of note: participants in the Japanese economy have not taken any risks, live in an environment where protection of companies mistakes is mitigated by government policies, and no innovation, failure or economic growth occurs. Conversely, why have Apple and 3M, companies built on innovation, fared better then their competitors? Apple has demonstrated resilience and has come back from near death experiences, and 3M has consistently outperformed others in value generation, on the basis of innovation, for decades.

One of the reasons cited for the former Soviet Union’s economic demise was the inability for the economic system (that propelled them to alleged greatness in the 40’s, 50’s, and 60’s) to accommodate change or innovation. Things were done because that was the way they were done. The lack of questioning and process inefficiencies continued until the system began to collapse upon itself. Are large organizations incapable of reforming and embracing innovation as a means of competitive survival? Enron lead the way with what was heralded as organizational innovation, only to be found criminal and eventually bankrupt. Since then the all time top three corporate bankruptcies have occurred in the United States and many CEO’s have been arrested and organizations shut down due to fraud and other inappropriate actions, a key example being the former accounting firm of Arthur Anderson. What is the cumulative effect of these occurrences, and are these parallel to the experience of the former Soviet Union?

During the past 15 years we have also seen a fundamental change and understanding in the individual’s role within organizations. The trust and commitment of people in their organizations has diminished through systemic and chronic downturns, layoffs, early retirements, pension revocations and brutal downsizing. The emergence of the superstar CEO and escalating pay scales for senior management has had the dual effect of recognizing the value of intellectual talent, and, further eroding the trust and commitment of the staff within those organizations. Today we see Disney, which was one of the greatest companies built on the basis of intellectual property, challenged by key employees and contractual relationships with suppliers and partners. Pixar Entertainment, Jeffrey Katzenberg and the Current CEO are collectively more profitable then the entire capital and intellectual property base of Disney. This dissection of value continues unabated, and essentially unidentified as a detrimental trend to the health of large organizations. Is this the beginning of the identification of this capital dissection, and the beginning of the legal remedies necessary to mitigate insidious devaluation of shareholder trust and value?

Microsoft faces it’s greatest challenge in the form of open source developed software. Independent, self-organizing teams working together, electronically, collaboratively, to build what they consider to be better software than that which is offered commercially.

Dr. Orlikowski’s model requires that the organization, society, technology, and people move in lock step with one another. Our society appears to have embraced market reforms on a global basis with outstanding success. Technology is being developed that could only be imagined a decade ago, and is readily available throughout the world. People are reaping the economic benefits of their increasing capabilities and monetary value. These benefits have placed enormous stress on the traditional organization with the ability for the organization to adjust appears limited.

Dr. Giddens states that failure occurs if the components get out of lock step with one another. It certainly appears likely to this author that it could be asserted today’s organizations are beginning to parallel the difficulties that the former Soviet Union experienced in its last decades. Does that mean companies must atrophy until the end is clearly presented to them, as is the case with Air Canada? The inability to innovate has stalled these organization’s growth, which was their overall purpose for existing.

Research Objectives

This researcher’s objective is to build an innovation model for Genesys Software Corporation (Genesys®) to use as a means to consult to organizations that desire to move away from the structural difficulties articulated above and become an innovative leader in their industry. Development of the innovation model will be based on the determination of key success factors and application of the success factors within the oil and gas industry. It is expected that this will be developed through a consulting role that is supported by producers.

What makes a company innovative? What tools, methods and procedures, implications for management, and leadership are available within an organization to define and implement innovation? Innovation is certainly a topical point in business conversations, everyone can clearly identify a new innovative idea or product, but how are these innovations initialized, developed, financed and created? Who can benefit from a consulting role that is specifically designed around a model for innovation? Where within an organization can innovation come from? How long can it take before the innovations begin to provide the expected returns, and what are the expected returns?

Key to the development of this innovation model will be an underlying reliance on project management’s role in the future of organizations. This author believes fundamentally in the ability to invoke change as fundamental as what is facing organizations today is a role best assumed by the project management methodology.

Research Questions.
  • Can the scope and understanding of the process of innovation, be reduced to a quantifiable and replicable process?
  • How are innovation leaders able to instill in their people the drive to attain the innovative needs of the organization?
  • What role does leadership play in an innovative firm? What corporate, operational and marketing strategies and methods do leaders use to assert their leadership?
  • Can the definition of innovation be expanded to include finance strategies, human resource strategies as well as products and processes and therefore be a critical component that compliments each operational strategy an organization employs?
  • What role does information technology and information strategy play in the innovative firm? Collaboration is a key component for the future but is it an enabling technology for innovation within organizations? How can collaboration be implemented to facilitate the work required in implementing innovative procedures, thinking and capability?
Hypotheses.

Implicit in this research project’s hypothesis is the capacity for the “old” organizational system to provide growth is failing. The current oil and gas hierarchical structure is inappropriate for the future of internationally based, innovative organizations.

This research can facilitate and affect a trajectory change in organizational performance through the development of the SJOC and by introducing collaborative tools and systems to facilitate innovation in production, process and organizational capabilities.

Research approach

Summary of this descriptive research design and methodology

This research provides a base of understanding to assert that the method of competition for a large sector of the senior independent producers has changed. Where these independent producers are collectively contemplating the internationalization of their asset bases. Producers who need to consider a broader definition of what their competition consists of and consideration that they are now several of the largest of 100 oil and gas companies in the world. To compete in this new environment requires a different mindset of what their competition is and how to adopt a manner of cooperation and competition with other producers.

The selected methodology of research for this project’s approach is descriptive. Using a descriptive research approach provides a basis of research that is more speculative and tentative in nature, where the research questions and hypothesis are not necessarily based on causation and effect.
The purpose of this research is to determine the validity of the hypothesis that current oil and gas companies’ organizational structures are inappropriate for the future and lack the innovative capability of internationally based organizations. Employing Dr. Giddens and Dr. Orlikowski’s theory and model in this situation shows that the inappropriateness of current organizational structure is an impediment to societal and human developments. Technology, which forms the duality of societal structures, employed in the fashion of this research, will provide a tangible opportunity for producers to innovate and progress.

In February 2003 Genesys Software Corporation published a proposal for the oil and gas industry to consider a revised methodology of securing the Enterprise Resource Planning (ERP) style of software. This February proposal contained several innovative new methods for companies in “niche” markets to secure the ERP styles of software necessary for their future. Genesys®, February 2003 software development proposal is provided as an Appendix to this preliminary research report. This February 2003 proposal provides a unique value proposition for producers to consider.
Collaboration defined.

Consistent with a revised understanding of competitive forces, there is a need to better understand the attributes of collaboration. Dr. Dosi lays the fundamental groundwork for how industries need to deal with the types and methods of competing in an innovative manner. In this definition Dr. Dosi clearly raises the point that collaboration is key in raising a firm’s capability to straddle several business cycles and increase their long-term viability and competitiveness in a global environment.

Collaboration provides firms with the ability to achieve a collective learning. In the competitive environment of today where each company could be considered a competitive silo within an industry, errors and issues arise that are learned within each silo over and over again. The learning from these mistakes are not shared and therefore, based on a firm’s capability, incurred again and again by each silo.

Collaboration seeks to share the learning experience over a broader base. Whether internal or externally, this “sharing” attitude is inconsistent with the industries’ past and current culture. Hence, it may be a major impediment to their ability to move forward in the global competitive environment.
Research methodology.

How this organizational structural change can be orchestrated is through a relatively new development in a well-established technology. Lotus Notes has provided a collaborative environment for many companies that have effectively used the features of Notes beyond its email functionality. The change in Notes functionality was the upgrade to Lotus Notes 6 and release of Lotus Workplace in which users can be administered (a timely and costly task) remotely. The primary issue that Lotus Notes R6 and Lotus Workplace mitigate is the elimination of the need for the Lotus Notes style “big bang” approach to implementation. A company no longer needs to make the dedicated roll out of Lotus Notes on an enterprise wide level. Workplace moves the technical difficulties from the user and centralizes it to where it belongs. This facilitates the ease of having several individuals from each company “tied” together in a “sharing” style of technology, easily and affordably.

Some of the initial uses of Workplace for this research project are as follows. The following are considered basic components of Workplace and are available immediately. Please note that all communication and access is controlled through IBM’s extensive use of encryption keys and certificates.

1) Libraries of documents.

The Construction, Ownership and Operation Agreement, with associated mail ballots, Joint Venture agreements with associated AFE’s, lease documents and other agreements that have been counterpart executed by members of the joint operating committee. Of note Workplace can invoke what is referred to as a CVS (Concurrent Version System). These were developed originally for programmers to enable the use of one code base as the “library” of all versions of their software code. Control and updates of these documents can be made subject to user-defined criteria. For example, if an amendment to the CO&O was considered, this could be proposed, edited, approved and managed through Workplace. This would provide a means to review the current existing CO&O and the evolution of the agreement over time.

2) Discussion databases.

For anyone who is familiar with Lotus Notes and the use of databases in that application Workplace is precisely the same thing, however available through a browser, and hence from anywhere with https (secure internet connection). These discussions are unique in that they provide an asynchronous discussion of the issues. Many discussions may take significant time and are added to by the participants as the collective thinking advances. These discussions being asynchronous provides time for the user to think and consider other points of view and issues.
The other advantage is that these discussions are provided to all team members’ whether they contribute or not. This facilitates team learning and discussion, which is key to innovation, risk taking and sharing of costs. A noted by-product of these discussions is the direct documentation of the tacit knowledge of the staff and contributors, leading to the ability to capture and manage the knowledge of the organization.

The motivation to contribute to these discussions comes from the fact that the staffs thoughts, ideas and contributions are made explicit, noted by their peers and stamped with the time they were made. Recognizing the contributions of the specific staff member is a significant method of motivation.

3) Synchronous messaging with team members.

Lotus’ implementation of instant messaging has many advantages over their competition. Firstly, these discussions are logged and posted within the databases for all the other team members to review thereby cutting the time for team learning down. Secondly, communications are encrypted and secure and are not a port for viruses or security breaches.

What this facility could be used for is innumerable. The oil and gas industry has been built on several basic principles that require “joint ventures”. These are:

  • The co-operative sharing of risk. Capital risk is shared systemically.
  • Provincial environmental concerns of having too many gas plants.
  • The areal extent of many of the producing fields.
As a result of these principles rarely does an oil and gas company participate in 100% ownership of both physical facilities and producing assets. This is systemic and culturally ingrained in the industry. Consistent with the cooperative management of these facilities is the Standard Joint Operating Committee, which is comprised of members from each producer with a monetary interest in a facility or property. The committee, consisting primarily of engineers, is responsible for many of the decisions regarding the management of the facility and producing assets. Budgets are established; programs are developed, agreed to and approved collectively.

Most companies are active and use the operating committee as a means of managing their interests but other companies may, due to a relatively small financial interest, or non-core area participate only in annual meetings. The range of participation runs the gamut of possibilities.

Consistent with the authority of the committee, there are a number of forms, legal and other documents that represent the committee’s legal, environmental and cultural requirements. Each form requires counter-part execution by the committee members duly authorized officers. A current issue with respect to the management of oil and gas organizations is that the committee is not charged with the financial performance of the property. This task is left to the remaining organization to attempt to finance, produce and operate these assets in a profitable manner. This financial responsibility, generally, does not fall within the scope of the operating committee. What would happen if the joint operating committee or SJOC participants were charged with the responsibilities of attaining increased volumes, better financial returns or any of the other measurement criteria that are traditionally the domain of the hierarchy? Where the hierarchy has no direct influence in the manner of operational control. This anomaly between the hierarchy and joint operating committee forms a dichotomy or contradiction that this research project will attempt to further identify and resolve.

It is therefore asked in this research, is the Operating Committee the basis of an Open Source style of organizational formation? Is it where like-minded groups meeting formally, informally, online, and in person to manage, in all aspects, the strategy, management and financial performance of a certain property? Should this be the basis of how the ownership, operation and construction of the oil and gas industry be organized? Is the addition of financial performance, accountability, full authority and responsibility at the operating committee a means to enhance a producer’s innovativeness? An accountability that would include the financial reporting, tax planning and other requirements of management traditionally managed by the hierarchy? Is this revised method of accountability consistent with the requirements in the Sarbanes Oxely (SOA) legislation or Canadian Institute of Chartered Accountants (CICA)? Will collaboration at the operating committee level facilitate the opportunity to innovate based on the criteria of Dr. Dosi’s as defined in this research project? Will collaboration at the operating committee align and instill the accountability, performance orientation, innovation, shared risk and provide the organizational structure for the future of the global oil and gas producer?

Key success factors of this research

Based on the technical and organizational changes that are being introduced, assessments will be made on how collaboration has affected team performance, innovation, leadership and accountability. These and other measures of performance will be the criteria used to define and determine the key success factors. Key to this research will be the outcomes of the analysis built on the primary theories introduced. Specifically, Dosi’s methods in determining how innovation is developed, Orlikowski’s structuration model and the interactions between human, organizational and societies with particular emphasis on technology’s role in structuring institutional properties and human agents. And finally, leadership based on Tichy’s methods and models of managing strategic change. Significant technical and organizational changes are being introduced to an informal team environment with specific responsibilities. The potential for increased team performance exists, however, how these changes are implemented, supported and instituted will be of particular importance towards measuring and assessing the current and future benefits.

In Orlikowski’s structuration model in addition to the duality of technology, where technology is a product of human interaction that in turn assumes structural properties, there is the concept of interpretative flexibility of technology, which asserts that institutional properties influence humans in their interaction with technology.

Dr. Tichy asserts that key to leadership is the role of teaching. Citing examples of how Navy Seals teach new recruits what it is that they know, for survival, as an example of the role a leader needs to assume. This point may be one of the critical underlying motivations behind the open software movement and its success. Where the collective good outweighs the harboring and control of information and knowledge. The leadership role in this research and in the operating committee will be critical to the success in that, just as in the examples of the Navy Seal and Open Source contributor, will the operating committee member be motivated on the basis of what the facility should and could be, and can that attitude be extrapolated across the producer population represented in the operating committee? Dr. Tichy’s book “Managing Strategic Change: Technical, Political and Cultural Dynamics”, will form much of the underlying base of understanding how to introduce the changes this research project presents.

This research reports delivery and implications.

This proposal’s method of research in innovation will be concentrated on the SJOC of those Genesys® clients that subscribe to this research project. The Workplace software facilities will be provided and prepared by Genesys Software Corporation. This research is being facilitated and monitored through Genesys Software Corporation and will form the basis of innovation.

Innovative tools and techniques are for the collective good of Genesys Software Corporation and supporting producers. Copies of all data will be held confidentially and made available, upon request, and review, to ensure the confidentiality. Producers subscribing and sponsoring this research will receive copies of the final report based on the following outline:
  1. Background and executive summary.
  2. Literature search results.
  3. The Genesys® Model of Strategic Innovation.
  4. Generic results of the research. The basis of results will be across at least three producers complete with specific analysis for each sponsoring producers organization.
  5. Managerial implication of this research.
  6. Next steps. Opportunities and issues from this research.
This research should be considered in conjunction with Genesys®, February 2003 ERP proposal and the issues identified therein. It is explicitly stated this research project should lead to the development of an ERP system based on the proposed organizational structure of this research and Genesys®, February 2003 proposal.

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Thursday, February 09, 2006

Research

One of the most interesting and difficult attributes of this blog, both as a reader and writer, is the broad scope of the information contained within the topics covered. Research is one of my favorite activities and something that needs to be discussed in order to bring all the issues up before the development of the actual Genesys code begins. I am also attempting to appeal to the engineering and earth sciences to show there is a better way.

Dr. Jurgen Habermas developed the Theory of Communicative Action and Discourse Ethics. A good summary if you can stay awake is located here. What I understand from these theories is as follows. That research takes place only in the areas that forces such as society, economics and people influence it. Pure research is really driven by agenda's that are consistent with the needs of society, economics and people.

The purpose of this entry is to apply the theories that I use to support the thinking that systems developments define and constrain (Giddens & Orlikowski) organizations. It is therefore easy to change the oil and gas industries innovative performance. All that is required is the systems be developed to define the organization. I have selected the organizational focus around the joint operating committee (JOC) in order to align the accountability of the hierarchy with the legal, financial, cultural, and operational decision making frameworks that reside with the JOC.

This innovative oil and gas theory is based on a variety of others theories and has significant support from those. This entry will list those authors and their theories and is intended to introduce these here now and for future discussion. And as Habermas' theories denote, I have a bias and agenda to ensure these theories are fulfilled.

If there are any additional topics or areas of interest that you feel should be raised, please join in and will add them to this extensive list of topics.

  • John Nash
  • The unauthorized biography of Dr. John Nash brought fame and recognition in the movie a "A beautiful Mind" by Sylvia Nasar. The movie and book provide excellent entertainment and also provide a sound understanding of the "Nash equilibrium." Dr. Nash was the first to receive the Nobel prize for economics in the category of "Game Theory" ISBN 0684853701
  • Thomas C. Schelling
  • Dr. Schelling is the Nobel prize winner in 2005 in economics, also in the category of game theory. Dr. Schelling has been key in forming the development of the strategy of conflict. The book he wrote in 1960, "The Strategy of Conflict" which makes for a great handbook on this key attribute of a leaders toolbox. ISBN 0674840313
  • Giovanni Dosi
  • One of the finest and most respected leaders in the area of innovation. Dr. Dosi has written many excellent articles that identifies the process' of innovation, that are measurable and reproducible. Dr. Giovanni Dosi's landmark 1988 paper "Sources, Procedures and Microeconomic Effects of Innovation". This was the main document of my "Plurality should not be assumed, without necessity" Masters thesis, and the source of the thinking behind what an innovative oil and gas producer will be. Dosi sets himself apart from the rest with his writings and books. Based in Europe he is not heard of much in North America. I highly recommend sourcing his works. Anyone interested in reading my application of Dosi's theories can email me for a .pdf of my "Plurality" document.
  • Anthony Giddens
  • Dr. Giddens wrote the "Constitutions of Society", the Theory of Structuration in 1984. This theory documents that societies, people and organizations need to progress together, without the consistent movement of all three, failure will occur. In my thesis I suggested that people and society have moved as a result of technology, and organizations based on the hierarchy have failed to keep pace. The need for change or failure are the two options. This blog is about taking the change option. Dr. Giddens is now a trusted advisor to British Prime Minister Tony Blair.
  • Wanda Orlikowski
  • Dr. Orlikowski builds on Dr. Giddens theory with a "Model of Technology Structuration" in her document "The duality of technology : rethinking the concept of technology in organizations. Most of Dr. Orlikowski's work centers on collaborative environments that existed in the 1990's, that being Lotus Notes. (This document is available at the link of her name). These are published on DSpace a joint venture between MIT and Hewlett Packard and available to anyone. She also introduces the motivational and cognitive paradox as constraints.
  • John Seely Brown and John Hagel
  • on the organizational and business implications of moving to the paradigm of the web services model and its disruptive application. Dr. Brown was the head of the famed Xerox PARC and Hagel was a Mckinsey consultant. Their understanding of these topics is very strong and are leaders in many of the business areas regarding web services.
Oxford, MIT and Stanford have all released major portions of their intellectual property on the Internet for public consumption. I highly recommend these areas of excellent search and discovery. As I stated earlier, if there is any other items that may be of interest to the many readers, please indicate so.

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Saturday, December 31, 2005

Web 3.0

Web 3.0 has been declared and I have to say that reading these should be done with the understanding that for oil and gas producers in the world, this site is the "where" Web 3.0 has started for the oil and gas industry.

No one knows how this will develop, and therefore relying on the copyright of the original idea that I published in May 2004 is the strength of this offering.

John Seely Brown and John Hagel were key individuals in describing the web services paradigm. I used their papers extensively in my thesis. Their documentation of the concept is located here and is based on this blog and this other blog that should be included in your RSS feed no matter what industry you are active in.

I made the sarcastic point in my thesis of:

"The only requirement for the technical revolution to continue is for the coup to trigger the signal. Metaphorically speaking, of course."
I reiterate these words with the one change, the leader is dead.