Sources, Procedures, and Microeconomic Effects of Innovation, Part IV

Let’s shift our focus away from the madness occuring in oil and gas for a moment. It is a remarkable issue the producers resistance to rational thinking, if that is what I have and am doing with the Preliminary Specification. Producers will willingly slaughter themselves before they’ll consider taking any corrective action. They don’t even identify they have a problem. The price of oil and gas is the price of oil and gas. There’s nothing they can do about it. I suggest they stop financially destroying themselves by shutting in any unprofitable production and only produce profitable production. However People, Ideas & Objects are the odd man out and sit in absolute amazement at today’s actions. We continue with the next section of the paper “Sources, Procedures, and Microeconomic Effects of Innovation” by Professor Giovanni Dosi. In today’s post he defines the elements necessary for an industry and producer to achieve innovativeness.

Typically, the search, development, and adoption of new processes and products in non centrally planned economies are the outcome of the interaction between (a) capabilities and stimuli generated within each firm and within industries and (b) broader causes external to the individual industries, such as the state of science in different branches; the facilities for the communication of knowledge; the supply of technical capabilities, skills, engineers, and so on; the conditions controlling occupational geographical mobility and / or consumer promptness / resistance to change; market conditions, particularly in the bearing of interfirm competition and on demand growth; financial facilities and patterns and criteria of allocation of funds to the industrial firms; macroeconomic trends, especially in their effects on changes in relative prices of inputs and outputs; public policies (e.g., tax codes, patent laws, industrial policies, public procurement). It is impossible to consider here each of these factors in detail and the survey will focus upon the procedures, determinants, and effects of the innovative efforts of business firms; however, at each step of analysis, I will try to show how those broader factors affect the opportunities, incentives, and capabilities of innovating in different firms and industries.

With this quote I think we can see the structure that is necessary for the oil and gas industry and each of its producers to enhance their innovativeness. I would suggest that these are the areas of competitive differentiation in the future of all industries but most particularly within the oil and gas industry with its earth science and engineering competitive advantages being at the forefront of the producers success. There is no question in my mind that this structure will be necessary to both facilitate and enhance the innovativeness of the producer and industry. What we know today is that organizational structures are both defined and supported by the software that is in use by that organization. If oil and gas wants to enhance their future competitiveness to be innovative then they’ll need to make the changes to the structure of their organizations. Making the changes however is not enough. They must first establish the software that defines and supports the organization on the basis of what Professor Dosi establishes here. And that is what we have done in the defintion of the Preliminary Specification.

How do we continue on in oil and gas without an innovative framework driving our competitiveness? How do the consumers know they’re receiving value from the energy they consume? How do we undertake the significant tasks that are ahead of us? Where the proposed LNG exports by Canada will require so much capital, as well as in other areas. A better business proposition needs to be adopted by industry in order for the investors to return. With a $20 to 40 trillion capital expenditure program, the business proposition needs to be more than just the spending of this money. We certainly cannot continue to just spend money as the basis of competitiveness of today’s industry. The financial devastation of the industry is comprehensive and complete. Yet so much will be needed from it in such a short period of time. The reserves are there and they exist. None of which can be produced profitably and the business has no coherent direction. We have a resistant, abstinent and self serving bureaucracy that believes in magic and myths which will resolve everything on its own. With software taking such a defined role in our lives we have to understand its key implication to business. The producers muddling along and do nothing strategy is doomed. Active management is necessary to proactively deal with these issues and opportunities. Figure out how to deal with them, write the solution into the software in order to enable the changes in the organization to capture them. Spontaneous order can’t occur in a world where software seals the organization in metaphorical cement. When I first published this thinking in August 2003 the bureaucrats knew they’d discovered their gold at the end of the rainbow. If they never changed their software, they’d never be challenged in their franchise. Which is exactly how things have developed.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Sources, Procedures, and Microeconomic Effects of Innovation, Part III

One of the outcomes of the Preliminary Specification was the understanding that innovation can / is a defined and replicable process within organizations and industries. With that understanding we can see that Apple is not that lucky, but that skilled. A purpose built organization with high standards of quality and innovation in the consumer electronics marketplace could be a really valuable firm. It seems so easy when it’s set out as the goal and objective of an organization to undertake the possible and viable task that Apple has achieved. It does eliminate much of the magic and mystery to the story though. It was through Professor Giovanni Dosi paper Sources, Procedures, and Microeconomic Effects of Innovation that we learned this and what is required of an organization and industry in order to enable innovation. In today’s post we’ll begin to get into the detail of those specific requirements of an innovative oil and gas producer. With that we turn to the next quote from Professor Dosi’s paper.

It is not my purpose to review the whole body of innovation-related literature. Rather I limit my discussion to a selected group of (mostly empirical) contributions and focus on the microeconomic nature of innovation upon techniques of production, product characteristics, and patterns of change of industrial structures. The discussion will aim to identify

• The main characteristics of the innovative process, 

• The factors that are conducive to or hinder the development of new processes of production and new products, and

• The processes that determine the selection of particular innovations and their efforts on industrial structures. 

There are two major set of issues here: first, the characterization, in general, of the innovative process, and, second, the interpretation of the factors that for observed differences in the modes of innovative search and in the rates of innovation between different sectors and firms and over time. 

Oil and gas are well known for their claim to be highly innovative. With the recent developments in shale, the deliverability and reserves of oil and gas in North America have been substantially increased. Is this due to the innovations of the producers? Or is it a result of the developments made by the service industry in the areas of coiled tubing and companies such as Packers Plus? When we look critically at the success in the shale era was it as a result of the service industries perseverance in driving their ideas forward through decades in which the producers refused to consider their “new” technologies. Or was it as a result of the producers determined effort to solve the future shortages of oil and gas commodities? Knowing what I know about the difficulties in having the Preliminary Specification discussed and considered. Knowing what I know of the coil tubing providers begging producers for years to try their products. The difficulties that Packers Plus had. The developments made by the service industry are wholly responsible for the innovations that we’ve seen in oil and gas.

Harsh words that will most certainly put more noses out of joint. The fact is the industry refuses to accept anything from a “small” company. It refuses to accept anything from a company that has a technology that they don’t fully understand. And they refuse to accept the Intellectual Property rights of the service industry representative that provided the product or process. They prefer to call the service industry greedy and lazy when the activity level is high and the only field equipment available is scheduled for two years from now. And they expect that payment to the service industry will be made in 18 months when the producer has a difficult time with their cash flow. This is the true “innovative” environment of the oil and gas producer and as we have stated in the Resource Marketplace, Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification if this behavior is not corrected it will lead to the financial destruction of the industry, on top of all the other reasons, and it will ensure that only the bureaucrats are truly benefiting as a result of oil and gas exploration and production.

There is nothing further from the current oil and gas industry configuration and culture in terms of what is required from an innovation point of view. Based on the research of Professor Giovanni Dosi significant changes will be required. What I have described here is an ad-hoc approach in which producers cherry-pick the value add from the service industry and wash that Intellectual Property amongst the innovators competitors. All diplomacy aside the producers do not have much time in which to make the changes described in the Preliminary Specification. From an innovation point of view, and from the point of view of profitability. They believe they can continue in an industry where their costs are in the range of $150 and receive barely half of that value in sales on a pre-differential basis. The difference is made up by not recognizing the substantial capital costs involved in a capital intensive industry. Storing those capital costs for decades at a time on the balance sheet as property, plant and equipment. And then adding to those capital costs all of the overhead that they feel they can justify as “capital” in order to “build their balance sheet” that much larger. Meanwhile during the entire process the cash only goes out and rests on the balance sheet as property, plant and equipment where it will be recognized and consequently returned to the producer some decade from now. It is a ludicrous way to run an enterprise, and one that has failed spectacularly. It just doesn’t seem to ever be realized by those that are running the show.

Recently President Trump was promoting the oil and gas industry as the largest producer of energy in the world. He also took the OPEC cartel to task with accusations of stealing money from americans as a result of the high oil prices. Throughout the life of the oil and gas industry. It has only been a handful of years where they’ve received the political support of the american administration. This usually being expressed through a quiet, arms length approach. Having President Trump so supportive of the industry is an anomaly and a treasure that the industry needs to better manage than they are today. Should the industry be found to be unprofitable and incapable of supporting its own operations as a result of not charging enough for their products. It may be seen by President Trump and the american people as a fundamental betrayal of the rosy stories and positions that have been promoted in the past decades by these producers. Making it very difficult for any future administration to believe the industry but also to take anything but the safer and more secure confrontational and adversarial positions against the industry that we’re all familiar with. Then again, I am talking about credibility and what do oil and gas bureaucrats know about credibility and integrity?

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Sources, Procedures, and Microeconomic Effects of Innovation, Part II

Readers should strap themselves in we’ll be travelling at a much faster pace than we did on our first post of this series. Today we’ll be reviewing two paragraphs of Professor Giovanni Dosi’s paper Sources, Procedures, and Microeconomic Effects of Innovation. Bringing the sum total of our review so far to three paragraphs! The richness of the content of this paper is astounding. It was also very hard work to get through. Which is probably why I went through the entire document a number of times. Each iteration building on the knowledge gained in the previous pass. As with yesterday we have a broad scope of understanding captured in a small number of words.

It is the purpose of this essay to analyze the processes leading from notional technological opportunities to actual innovative efforts and, finally, to changes in the structures and performance of industries. 

Thus, I shall discuss the source of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search and the nature of the incentives driving private agents to commit themselves to innovation. pp 1120 - 1121

I wonder why it is that Professor Dosi raises the point about the “changes in the structure and performance of industries.” Just as the oil and gas industry and producer firm must reorganize themselves to enable profitability they also need to structure themselves to facilitate and enable the innovations in the sciences and technologies that make up the industry. Both profitability and innovation can be achieved through the decentralized production models price maker strategy. Where the service providers are created from the producers current administrative and accounting resources. I think this is intuitive, or it should be. Yet the battle rages between the producers vs. People, Ideas & Objects. Is it truly worth the destruction that is being realized in oil and gas to remain opposed to the changes required in the Preliminary Specification?

It is at this point that we meet the ultimate academic argument between Hayek’s Spontaneous Order, Schumpeter’s Creative Destruction and Giddens Structuration Theory. And we have chosen the best features of each one to fit our arguments throughout the Preliminary Specification. I consider that creative license. The weight of our argument however would go to Giddens Structuration Theory and most specifically to Professor Wanda Orlikowski’s Structuration Model of Technology.

Structurational studies of technology and organizations have been highly influenced by the social studies of technology. Initially arguing for a view of the "duality of technology," Orlikowski went on to argue for a practice-based understanding of the recursive interaction between people and technologies over time. Orlikowski (2000) argues that emergent structures offer a more generative view of technology use, suggesting that users do not so much appropriate technologies as they enact particular technologies-in-practice with them. The ongoing enactment of technologies-in-practice either reproduce existing structural conditions or they produce changes that may lead to structural transformation.

People, Ideas & Objects believes based on our understanding of all of these theories that software defines and supports the organization. It not only enables the “structure and performance of industries” as Dosi suggests, but in the case of oil and gas today, is a constraint on those structures and diminishes the performance of the industry and producer due to the inability to change the software as the industry and producer changes. This is why People, Ideas & Objects offer the user community, our service providers and the software development capabilities that are provided through Oracle developers as the means to not only accommodate the necessary changes but in certain instances to drive the changes to increase the profitable and innovative performances of the producer and industry.

With respect to that third paragraph that we quote from Professor Dosi’s paper. The oil and gas industry is currently configured in such a way that the oil and gas producer does everything for itself other than the field operations. Having a geographically diverse operating theater makes it impractical to maintain their own service industry operations, although some still do. In terms of control, all aspects of the producers operations, governance and administration are under the producers direction. In the 1950’s this was not only possible but probably ideal. There is probably no one from that era to check with regarding the validity of that statement. In the 21st century it is ludicrous to think that a firm can concentrate their entire domain of operations under one roof. It was through the research that we conducted of Professor Richard Langlois that we were able to determine that in the battle between firms and markets, markets would be the preferred choice in the 21st century. In yesterday’s post we mentioned the performance measurement in the Preliminary Specification of Revenue Per Employee. It is through a greater involvement of the market that a profitable and innovative producer will be able to positively increase their Revenue Per Employee trajectory.

The impetus of the Preliminary Specification is for the producer to produce all of their production profitably. Rarely would that involve their entire production profile. To attain the highest level of profitability the producer will seek to produce profitability throughout their production profile in order to maximize their profitability. That requires and demands that the producer innovate on the earth science and engineering capabilities that they’ve developed and deployed on their properties. To expand the sciences of geology and engineering is the frontier where they can expand their organization further with higher production volumes and profitability due to the innovations they deploy. At the same time striking an equally equitable balance between the consumers current consumption of the lowest cost, yet profitable oil and gas production, and the commercial conservation of energy for future generations.

I want to take a moment to comment on my concern for the financial health of the producers. In the second quarter I was surprised at the difficulties being experienced by our sample of 23 producers. I was expecting a very difficult second quarter to be reported and ended up thinking that there is a serious degradation of the financial foundation of the industry undergoing at that time. One based on the fact that, as we’ve stated here many times before, the only source of cash is production and most particularly new production. This was creating what I saw as enormous pressure on producers to increase production at all costs in order to increase their available cash. As we discussed in the second quarter the deterioration of cash and working capital was epic. In the third quarter I think it will have accelerated further as a result of this chronic overproduction creating differentials, particularly in Canada and to a lesser extent in Texas, that are higher than the commodity prices being realized. When over half of your revenue is going to be gone from the late third quarter and better part of the fourth quarter, this industry will have its day of reckoning before this year ends. The only choice is for the hamster to run faster…

People, Ideas & Objects puts forward our Preliminary Specification as the solution to the issues in the industry. It is designed to deal with the problems that are causing the producers so much financial distress. We believe that if the industry would adopt the Preliminary Specification investors and bankers could see a profitable and innovative future that would be of interest to them from an investment point of view. And may be motivated to carry the producers across to the point in time where the decentralized production models price maker strategy enables all production in North America to always be produced profitably.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Sources, Procedures, and Microeconomic Effects of Innovation, Part I

Lately we’ve noted some of the research that we reviewed of Professor Richard Langlois from the University of Connecticut. Research that we conducted during the writing of the Preliminary Specification. He was a rich resource in terms of determining the needs of the dynamic, innovative, accountable and profitable oil and gas producer. In terms of innovation we also had the work of Professor Giovanni Dosi, who at the time of this particular paper was with the University of Sussex and the University of Rome, and provides one of the key documents on the topic of innovation. This paper was published in September 1988 and is entitled “Sources, Procedures, and Microeconomic Effects of Innovation.” If you have access to a resource for the download of papers I highly recommend adding this paper to your library. You can download it here from JSTOR for $10 as well. I will caution my readers that I went through a lot of papers during the research for the Preliminary Specification. This paper generated significant volumes of this blogs text, contribution to the Preliminary Specification and is very rich in content. It is also unquestionably one of the most difficult papers that I’ve had to review in a comprehensive manner. Reading it briefly or skimming it may not be worthwhile as a result. What I think will be worthwhile is that we include a review of Professor Giovanni Dosi and Professor Richard Langlois on this blog to update everyone on some of the basis of innovation and other aspects of the Preliminary Specification that we’ve learned through these two researchers.

The first paragraph of this paper frames the purpose of innovation in oil and gas in a constructive manner. I immediately am flooded with ideas regarding the impact to the industry, the producer firm and supporting service and other industries and sub-industries.

This essay concerns the determinants and effects of innovative activities in contemporary market economies. In the most general terms, private profit seeking agents will plausibly allocate resources to the exploration and development of new products and new techniques of production if they know, or believe in, the existence of some sort of yet unexploited scientific and technical opportunities, if they expect that there will be a market for their new products and processes; and finally, if they expect some economic benefit, net of the incurred costs, deriving from the innovations. In turn, the success of some agents in introducing or imitating new products and production processes changes their production costs, their market competitiveness and, ultimately, is part of the evolution of the industries affected by the innovations. p 1120 

The Preliminary Specification was published in its final edited form in December 2013. In it we speak of imitation and the distribution of laggards and leaders within the oil and gas industry. We’ve even created a factor for comparison purposes and to determine the position that a producer would find itself within the industry. This factor is Revenue Per Employee that we generate within the Preliminary Specification. What we found is there is a large disparity between the values of a laggard and a leader in terms of Revenue Per Employee, and how the laggard firm would find it difficult to make the changes necessary to affect an upward trajectory of Revenue Per Employee. It is with this understanding of the Preliminary Specification that I find this first paragraph of the Dosi paper to generate the most thought around the idea of “imitation.”

A lot has happened in the industry since the publication of the Preliminary Specification. Yet nothing has changed other than the addition of the Blockchain Module. I think it will remain as timely throughout its intended 25 year usable life. When we look at imitation in oil and gas we have to ask ourselves what role it’ll take in the future? And although there were laggards present in the industry in 2013, will there be room for them in the future? Will they be able to rely on the capabilities that have been developed by others and “make it up as they go?” To be candid I don’t think so. The reliance on the leaders abilities and capabilities to be innovative and to move the science and technologies of oil and gas forward will be one in the same with that producers production profile. Most particularly I think is the heart of that quotation of Professor Dosi’s that puts into context that the role of laggards will be very difficult.

In the most general terms, private profit seeking agents will plausibly allocate resources to the exploration and development of new products and new techniques of production if they know, or believe in, the existence of some sort of yet unexploited scientific and technical opportunities, if they expect that there will be a market for their new products and processes; and finally, if they expect some economic benefit, net of the incurred costs, deriving from the innovations.

What is it that a laggard will be imitating, or be able to imitate in the future? When the development and deployment of ideas to the various Joint Operating Committees is done through the Research & Capabilities and Knowledge & Learning modules as we recently noted. At a velocity and throughput of an exponential volume. These will be the basis of the producers competitive advantage. The application and development of their distinct competitive advantages in the earth science and engineering capabilities upon their land and asset base. I see this as a far different producer than the one that exists today, as it has become a far different oil and gas industry. I wonder how the dynamic, innovative, accountable and profitable producer will come about? Muddling through as the strategy, and doing nothing as the operating procedure, which are the producers current position which has brought us to this state of financial crisis. Will the producers current strategic and operating position stumble upon this means to develop and deploy its capabilities on its own? Just as they’ll stumble upon the methodology for becoming the profitable firm society needs them to be. I think we should bank on it happening, just based on luck, what about you? As a matter of fact, right now I can see the software for this necessary industry infrastructure being written by itself with no human involvement and no producer cash! It’s a miracle!

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Stickiness and Leakiness

Within the Preliminary Specification we have an interesting dichotomy. On the one hand the capabilities of the producer firm are proprietary to the firm that develops them. Yet they are deployed to the Joint Operating Committee that the producer shares an interest in with many other producers. In today’s marketplace the operator acts on behalf of the members of the Joint Operating Committee. In the Preliminary Specification we have flipped the direction of the flow of knowledge to where the capability is generated in the Research & Capabilities Module and flows to the Knowledge & Learning Module for deployment. The concept of operator has been eliminated in the Preliminary Specification and replaced by the concept of pooling. The purpose of this is critical to the producer and Joint Operating Committee. Professor Richard Langlois provides us with the following.

The question then becomes: why are capabilities sometimes organized within firms, sometimes decentralized in markets, and sometimes coordinated by a myriad contractual and ownership arrangements like joint ventures, franchisees, and networks? Explicitly echoing Hayek, Jensen and Meckling (1992, p.251) who point out that economic organization must solve two different kinds of problems: "the rights assignment problem (determining who should exercise a decision right) and the control or agency problem (how to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective)." There are basically two ways to ensure such a "collocation" of knowledge and decision making: "One is by moving the knowledge to those with the decision rights; the other is by moving the decision rights to those with the knowledge." (Jensen and Meckling 1992 p. 253). p. 9

We have therefore reversed the flow of knowledge or capabilities within the Preliminary Specification by moving the producers capabilities to where the decision rights are held. We have done this as the Joint Operating Committee is the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer and industry. By identifying and supporting the legal, financial, operational decision making, cultural, communication, strategic and innovation frameworks of the Joint Operating Committee and then moving the compliance and governance frameworks of the hierarchy into alignment with the Joint Operating Committee we achieve a speed, accountability and profitability in our organizations. The decision rights are held by the Joint Operating Committee within the operational decision making framework. Whereas today having the decision rights moved to the producer firm creates a conflict between these two organizations that is inconsistent, we believe, with performance, accountability and profitability.

We need to recall the situation that oil and gas will be in a short period of time. Where today it takes one idea to generate a dollar, it will take ten ideas to generate a dollar in the not too distant future and one hundred ideas in no time after that. The volume of knowledge is going to have to be managed in a more effective way than it is today. The need to have the right knowledge to the right people at the right time and the right place will become more difficult if there are unnecessary conflicts and obstructions to the flow of that knowledge. On the other hand we are focusing the producer firm on their distinct competitive advantages which are their earth science and engineering capabilities and their land and asset base. The key here should be having these capabilities applied in a timely manner to their land and asset base. For what other purpose would the producer be creating these capabilities. In the Preliminary Research Report we learned an interesting point about the producers proprietary earth science and engineering knowledge, understanding and capabilities. It is here that we note once again from Professor Langlois paper entitled “Chandler in a Larger Frame: Markets, Transaction Costs, and Organization Form in History.”

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) p. 32

And from a common sense point of view we have this quotation from Winston Churchill “A lie gets halfway around the world before the truth has a chance to put its pants on.” We all know this leakage of knowledge to be inherently true. When someone discovers something that is “news” within the industry, it is generally well known within industry associations for the geologists or engineers as soon as it is known in the firm. It is either imputed through what is known, or the leakiness is as porous as it is. What is a producer firm to do to ensure that the knowledge they have does not leak? I think that the point lies in the meaning of “capabilities”; which is “an aptitude that can be developed” or “knowledge begets capabilities, and capabilities begets action.” Simply it is not possible to stop the leakage. The question therefore becomes, is it best to develop your aptitude by curling up with a text book or to participate in a marketplace. People, Ideas & Objects believes that innovative and profitable producers, instead of hoarding knowledge, will deploy the right knowledge to the right people at the right time through their use of the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Science, Innovation and Capabilities, Part III

Removal of the excess cost attributable to the surplus earth science and engineering capacity that is unused and unusable is similar to the removal of the excess overhead costs that the producer and industry incur. By reorganizing the administrative and accounting resources into service providers the costs to each of the producers in developing their own administrative and accounting capabilities, capabilities that are wholly similar to each and every other producer in the industry, capabilities that are currently unshared and unshareable, just as the earth science and engineering surplus capacity is unused and unusable. These excess costs are major contributors to the current lack of real profitability in the industry and without the Preliminary Specification in place, will be unacceptable costs in which the industry can incur. We have now identified three new classifications of excessive costs being incurred by the producer firms, the third being the burden of providing the full scope and scale of the specialized oil and gas related sciences. With People, Ideas & Objects Preliminary Specification in place the energy consumer will know that they are being provided with the lowest possible energy prices that consider a fair distribution of the value needed for the industry and all of those dependent on it to thrive and profit.

This therefore briefly defines the focus of the producers role of moving the science within the industry forward, innovating based on that science and deploying their capabilities through a defined process of development within the producer firm, and deployment to the producers Joint Operating Committees. It is within the Research & Capabilities module that we learn from McKinsey & Co in their article entitled The 21st Century Organization, what it is that will be required of organizations in the 21st century.

1) Streamlining and simplifying vertical and line management structures by discarding failed matrix and ad hoc approaches and narrowing the scope of the line manager's role to the creation of current earnings.

The process of using People, Ideas & Objects software will achieve these objectives. By aligning all of the Joint Operating Committees seven frameworks and the hierarchies compliance and governance frameworks, and having the financial interests of the producers drive the management of the Joint Operating Committee, we are “narrowing the scope of the line manager’s role to the creation of current earnings.” These are the focus of the Partnership Accounting, Accounting Voucher, Petroleum Lease Marketplace, Resource Marketplace, Financial Marketplace and Performance Evaluation modules.

2) Deploying off-line teams to discover new wealth-creating opportunities while using a dynamic management process to resolve short and long term trade offs.

These are the critical new roles that are being discussed in these “new” modules which include “Research & Capabilities” and “Knowledge & Learning.” Providing valuable insight to their users about the business that is above the day to day noise. Where the long term vision of the organization can be set, executed and realized through these two advanced software modules.

3) Developing knowledge marketplaces, talent marketplaces, and formal networks to stimulate the creation and exchange of intangibles.

Within the Preliminary Specification, if we include the Research & Capabilities and Knowledge & Learning Modules marketplace definitions, we have five marketplace modules. Participation in marketplaces are things that people will be doing more of in terms of their work in the future. Computers can assist, but again are generally very poor at making decisions, bargaining, knowing what to do, etc. The three primary marketplace modules in the Preliminary Specification include the Petroleum Lease, Resource and Financial Marketplaces Modules.

4) Relying on measurements of performance rather than supervision to get the most from self directed professionals.

The Preliminary Specification has the Performance Evaluation Module for the Joint Operating Committee, and the Analytics & Statistics Module to provide these capabilities to the producer firm. Handing the Performance Evaluation module to the team that is running the Joint Operating Committee will enable them to manage the property in the best possible fashion, profitably. They are going to be able to figure out what it is that makes the most sense in terms of value, and begin to generate more of it.

People, Ideas & Objects have presented our value proposition of providing the oil and gas producer with the most profitable means of oil and gas operations. There is more contained within the Preliminary Specification. Innovation is one of our key areas of focus. Adding value on an incremental basis throughout the industry, the producer firm and Joint Operating Committee. These are wholly dependent on the organizational structure of the producer firm and the industry. A role that is purpose built for an ERP solutions provider.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Science, Innovation and Capabilities, Part II

Knowledge that we can source from the Internet and from books is explicit knowledge. Therefore the ability to use this knowledge, to access and verbalize it is easily done. It can be thought of as expressive knowledge or text book knowledge. Tacit knowledge is more difficult since it can’t be captured and communicated to others. It is the knowledge that is acquired through learning by doing etc. Tacit knowledge most importantly is the knowledge about production. From Professor Richard Langlois paper entitled “Chandler in a Larger Frame: Markets, Transaction Costs, and Organization Form in History.”

Much knowledge - including, importantly, much knowledge about production - is tacit and can be acquired only through a time-consuming process of learning by doing. Moreover, knowledge about production is often essentially distributed knowledge: that is to say, knowledge that is only mobilized in the context of carrying out a multi-person productive task, that is not possessed by any single agent, and that normally requires some sort of qualitative coordination - for example, through direction and command - for its efficient use. p. 359

Therefore both tacit and explicit knowledge make up the knowledge of the organization, or producer firm in this instance. Now that we’ve defined what knowledge is we can state that capabilities are the skills, knowledge, experience and ideas of the producer organization. And not to diminish the role of direction and command, I would point out the technical infrastructure included in the Preliminary Specification that we call the Military Command & Control Metaphor. The need for this command and control to span multiple organizations is necessary when the Joint Operating Committee becomes the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer. We also have the definition of capabilities provided by Professor Carliss Baldwin’s giving us an understanding of why capabilities are important to producers and the industry, and that is “Knowledge begets Capabilities, and Capabilities beget Action.” Starting this discussion of capabilities with a clear definition of what they are. These are some of the definitions that were published in the Research & Capabilities module and are noted here for clarity purposes. Another is from Professor Richard Langlois paper entitled “Chandler in a Larger Frame: Markets, Transaction Costs, and Organization Form in History.”

Although one can find versions of the idea in Smith, Marshall, and elsewhere, the modern discussion of the capabilities of organization probably begins with Edith Penrose (1959), who suggested viewing the firm as a 'pool of resources'. Among the writers who have used and developed this idea are G.B. Richardson (1972), Richard Nelson and Sidney Winter (1982), and David Teece (1980, 1982). To all these authors, the firm is a pool not of tangible but of intangible resources. Capabilities, in the end, are a matter of knowledge. Because of the nature of specialization and the limits to cognition, organizations as well as individuals are limited in what they know how to do effectively. Put the other way, organizations possess a pool of more-or-less embodied 'how to' knowledge useful for particular classes of activities. pp. 105 - 106.

Therefore to capture, document and deploy these capabilities of the producer firm to their interests within their Joint Operating Committees. Access and deploy the capabilities of their partners within the Joint Operating Committee and access and deploy those capabilities that are acquired through contract to ensure that the full scope of the earth science and engineering capabilities that are necessary are acquired and deployed efficiently and effectively. This incremental coordination at first seems like a complex and unnecessary process to be undertaken. The need to cover off the full scope of the earth sciences and engineering capabilities needed will be beyond the commercial reach of each and every producer. The convenience of having all of these in-house will soon be, we believe, well beyond the financial capacity of all producers.

Within the Preliminary Specification we speculate that specialization and division of labor are needed in order to expand the sciences from the point they’re at today. Therefore this will require additional skills and therefore resources to be required by producer firms. Currently producers are acquiring all of their capabilities they need to cover off all possible contingencies that are presented by the properties that they operate. These contingencies need to be on hand and are not necessarily highly utilized. Therefore they are creating an overall earth science and engineering surplus capacity of capabilities within the producer firm, and to the greater issue, of the oil and gas industry as a whole, that is unused and unusable. Creating an uncontrollable cost that currently diminishes the profitability of the producer and industry. An additional cost above the demand for the broad scope and scale of earth science and engineering capabilities. Which we believe these two costs when combined will explode in the near future. The Preliminary Specifications Research & Capabilities module and Knowledge & Learning module seek to eliminate the surplus capacity of earth science and engineering capabilities by fully deploying them through specializations within the producer, the Joint Operating Committee and also in markets. Using the capabilities of the industry at much higher rates of utilization and therefore reducing these otherwise high and unnecessary costs as a result of the unused and unusable surplus capacity that is maintained today. And ensuring that the cost burden of maintaining the full breadth of earth science and engineering capabilities do not expand further on each individual producer as a result of a further specialization and division of labor of the sciences.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Science, Innovation, and Capabilities, Part I

We now begin a series on the interactions between the science, innovation and capabilities that exist within the oil and gas industry and the dynamic, innovative, accountable and profitable oil and gas producer. With an overall assumption that the Preliminary Specification is implemented, and therefore all production is produced profitably, which will provide for a prosperous industry and all those associated with it. Whereas today the investors, bankers, employees, service industry representatives, royalty holders and government tax jurisdictions are all having to settle for far less than what is equitable. Which describes the current situation the industry is in, and society needs to begin to question the rationale of producing oil and gas unprofitably and how we’ll be able to justify that to future generations. Today the consumer constantly complains about the cost of energy. Even with the massive discount in the form of the producers unrecognized capital costs of past production the consumers have received over the past decades. The issue therefore becomes how will the producers ensure they’re providing consumers with the lowest cost energy production that is also profitable and equitable to those involved in the industry? The simple answer is science, innovation and capabilities.

The dynamic, innovative, accountable and profitable oil and gas producer will be actively participating in moving the sciences of geology and applied sciences of engineering forward within the oil and gas industry. As we discussed yesterday these are elements of the Preliminary Specification that establish the foundation and organizational structure necessary for innovation to become a focus of the industry and producer firm. As these sciences expand they spin off new innovations that bring about new insights which in turn further develop the sciences. With the depth and breadth of these sciences as they stand today. With the diverse demand of a producers interests in their properties. The ability and capability for each and every oil and gas producer to have developed their organization to the point where they can handle the full scope and scale of these specialized professions within their domain, and to do so commercially, is believed to be slipping away from each and every producer as we speak. The need for each producer to use specialization and the division of labor to cover off all aspects of their organizations needs will incur too heavy of a cost burden on each one of the producers if they attempt to cover off the full scope of an oil and gas producers scientific, innovation and capability needs. Therefore the need to have the capabilities provided by the producer firm in terms of its unique specialization, then acquire the other available earth science and engineering capabilities from their partners within a Joint Operating Committee and then on a contractual basis from a market that doesn’t currently exist, however is created in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification.

The Research & Capabilities and Knowledge & Learning modules create the market for geological and engineering capabilities that fill what we call the bread and butter tasks of the producer firms. Freeing up much of the basic capabilities of the industry to be provided on a sub-industry basis similar to the service providers are a sub-industry for the administrative and accounting of the industry. This will enable the producer firms to focus on the higher, more technical capabilities that are the critical value add elements of the earth science and engineering capabilities that form the key competitive advantages of their producer firm. This is how the Preliminary Specification has resolved the critical shortage of these resources that are expected in the next decades. Shortages as a result of the anticipated retirement of the braintrust in these professions and the current lack of new recruits choosing oil and gas for their university studies. The demand for greater effort and science is evident in each successive barrel of oil that is produced. How are the current producers dealing with this situation?

We’ve discussed innovation in two blog posts recently, and we can all certainly understand the scientific aspects of the industry. With the interaction between science and innovation being codependent on each other. What are producers capabilities and how are they expanded. In the Preliminary Specification, capabilities are managed in the Research & Capabilities Module for the producer firm and then the deployment of the capability is carried out in the Knowledge & Learning Module to the specific Joint Operating Committees that producer has an interest in. In tomorrow’s post we’ll begin a more detailed discussion of capabilities.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our Solution Part VII

Now that we have established our accounting methodology is different from the status quo. I want to reiterate the value proposition we have in providing the oil and gas producer with the most profitable means of oil and gas operations. Through the decentralized production model, and the accounting methods we have discussed here this past week. We are able to generate $5.7 trillion in additional profits over what the bureaucracy will provide in the next 25 years. By accounting for the capital costs of the industry in the price of the commodity we are returning the capital that was used by the industry. Providing a return on investment back to the investors. If the expectation is that the industry will be spending $40 trillion in the next 20 years. Then the investors, under our methodology, can look for a return of those funds as well. Providing, at a minimum, $45.7 trillion more than what the bureaucracy have traditionally provided. And as we all now know, bureaucracies can’t, won’t, will not, ever change. As we have seen in the past few days. The price of oil has shown some strength due to the possible decline in U.S. production. This is the elasticity of supply and demand at work in the pricing. This however won't stop the bureaucrats. Expect more of the same of what we have been seeing the past few years to happen in the future.

Like most people I’m happy with our value proposition. Reading this blog and the Preliminary Specification shows that it is a valid model that will work within the industry. The thing is there’s much, much more. The basis of the Preliminary Specifications research was on innovation. How can an industry that is based on the earth sciences and applied science of engineering become more innovative in its makeup? What we learned in the publication of our Preliminary Research Report was that innovation can be a defined and replicable process. Therefore, what would be required within the industry in order to enable those people with the innovations to come forward and enable them? The answers to this question have been captured and implemented in the Preliminary Specification.

Take as an example our Work Order system. There are two key aspects of the system and the first is a means in which to capture costs within the producers organization. Having the earth science and engineering resources accounting for their time and efforts on a daily basis. And in turn having these costs charged directly to the Joint Operating Committee to which they are working. These people are not overhead. The overhead of the producer has been shifted into the service providers. These are the people who are working in the projects that are Authorized for Expenditure. It will be to the various AFE’s that the majority of the earth scientists and engineers time is allocated to. In the Preliminary Specification there will no longer be a cost associated with being classified with operatorship as the earth science and engineering resources will be charged directly to the Joint Operating Committee.

The innovative aspect of the Work Order is its ability to work within the industry across producers and service industry participants. The ability to organize an ad-hoc group of companies to research or study some idea or innovation. These types of activities have occurred occasionally in all producers. They are however an accounting and bureaucratic disaster awaiting the individual with the innovative idea. These bureaucratic disasters are the constraint to these individuals and producers and the reason they are not undertaken more often. In an innovative, science based industry such as oil and gas. Where the demands of the consumer will become more difficult for the oil and gas industry to supply. The need for high volumes of these research and study groups to be undertaken will be necessary. Significantly higher volumes. Therefore we needed to create a system that would enable the innovator to organize the like minds from within the industry, raise the resources, both cash and other means, and deploy those in a manner that was less onerous than raising an AFE, or the current bureaucratic ad-hoc approach. One that employed a system where the commitments of each producer could be obtained and employed. The bills incurred and paid and the results of the research shared by those participants. And this will be done through a simple interface that eliminates the bureaucracy from this process. And doesn’t question the innovators integrity with questions from accounting each quarter.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

A View From the Prototypical Producer

Imagine for a moment that you're a producer operating in the environment where the People, Ideas & Objects Preliminary Specification is operational. This has had a dramatic effect on your firm and your profitability has been soaring as a result. That’s just the first outwardly noticeable change that people see. Within the firm itself the difference is night and day. Gone are over half of the staff that used to occupy the many thousands of square feet that you were able to sublease back onto the marketplace. Those people are now part of the service providers who are providing their services to your firm and other producers on a service fee basis. Gone are the needs to concern yourself with the need to build the accounting and administrative capabilities necessary for an innovative and profitable oil and gas producer. These capabilities are now provided as a service to you from the service providers who provide these to their clients, the oil and gas industry.

As a result your CFO is able to focus on the priority of the firms relationships with the investment community and provide you with the financial resources necessary to fully develop your asset base. And it is your key competitive advantages of your land and asset base, and your earth science and engineering capabilities that you are able to dedicate your focus too. Due to the alignment of the compliance and governance frameworks with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks. Not only your organization, but your working interest partners are all focused on these competitive advantages. The conflicts and contradictions that were introduced by the old corporate model no longer exist and the speed, accountability and innovation that is as a result is surprising. You not only know of the innovation, you know who initiated the innovation.

The industry has exploded in terms of the research and development being undertaken in the earth science and engineering disciplines. Participation by your firm in many of these working groups and studies has been facilitated by the People, Ideas & Objects Partnership Accounting modules Work Order. This has enabled producers to work together to study various elements of the sciences involved in oil and gas. Participation in these groups are no longer the accounting nightmare they used to be as the focus on the partnership being the organizational construct is the way that the Preliminary Specification is structured. It is the Joint Operating Committee that is the key organizational construct of the innovative and profitable oil and gas producer. It is People, Ideas & Objects recognition of this that we are able to provide the Preliminary Specification. And as a result we are able to extend this organizational construct to the Work Order.

Another benefit that is not so obvious is that the compliance no longer drives the business. It is a result of the business. As the producer firm your concern is to the innovative and profitable pursuit of your key competitive advantages. Not the implementation of the appropriate Sarbanes Oxley compliance provisions, for example. Its not that these are no longer your concern, it’s that they are no longer your priority. The service providers have undertaken to provide these services on your behalf and have what they need in order to do so. It is their business to know intimately what the compliance requirements are. A benefit of the toolset of the division of labor and specialization. The service providers are specialized in their specific areas of expertise. And it will be the service providers who are able to implement the appropriate controls and methods in their process or the People, Ideas & Objects software in order to ensure your compliance. This division of labor is appropriate for the 21st century to ensure that the scope and scale of one organization does not become so broad as to become unfocused, untenable and unprofitable as the oil and gas producer of 2014 is.

The Preliminary Specification and user community provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

When Innovation is Implemented

One thing that we have not mentioned for a while is that the Preliminary Specification is designed to identify and support innovative processes for the innovative and profitable oil and gas producer. It is within the Preliminary Specifications DNA that innovation becomes the focus and drive of the producer. Innovation is at its greatest value when and where it is needed. And in the People, Ideas & Objects system innovation is needed where shut-in production exists. The ability to return the property back on to production will require some innovation that either materially expands the reserves and reduces the capital cost of each unit of production, increases the throughput of production to reduce the operational cost per unit of production or reduces the operational costs per unit in a material way. It is in this way that the Preliminary Specification is structured to provide the oil and gas producer with the capabilities to operate in this manner.

With the decentralized production model, which reduces the producer to the C class executives, the earth science and engineering resources, the land and legal with some support staff. The producers remaining resources are reallocated permanently to service providers who are focused on the process or subprocess and use the industry as their client base. These service providers are then able to charge for their services directly to the Joint Operating Committee for the administrative and overhead costs of the various services they provide. Then if the property is shut-in these service providers will have no work associated with that specific Joint Operating Committee and as a result no billing for their services will be presented for that month the property is shut-in. Allowing the producer to incur a null operation on the property, no profit or loss, saving the reserves for a time when they can be produced profitably and reducing the amount of the commodity on the marketplace, therefore placing a floor on the commodities pricing. This is how the industry becomes a price maker as opposed to a price taker. No production, other than profitable production is produced. A reasonable and fair means of allocating production discipline.

Once the property has been inventoried as a non-producing property. That is when the engineers and earth science resources of the firm, and associated working interest partners are able to engage in any number of initiatives that any of these producer firms have developed the specialized capabilities for. Conducting a complete review on the property, its opportunities and issues and determining what the best course of action is to either lower the cost of production, increase the reserves or deliverability, or just keep the property in inventory. These actions are taken in the Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. It is there that these people can see what the capabilities are that are contained within the many firms that make up the Joint Operating Committee. Selecting the most promising and innovative plans and programs and applying them to the inventoried property with the anticipation of returning it to profitable production.

It will be this overall process of applying innovation to the inventoried properties that identifies and develops the key innovations in the oil and gas and service industry. This overall process will have the net effect of reducing the overall costs of the industry. Both in terms of capital and operating. The incentive to move production onto the marketplace is one of the strongest that the company faces. Holding capital assets or capacity offline is costly. Moving the firm to produce at 100% of capacity is the pressure that each firm will experience. However, there will be market discipline to ensure that any unprofitable properties remain off the market. The punishment will be in the form of the investment community looking elsewhere for their investments.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

McKinsey, Translating Innovation into U.S. Growth

There has been much discussion about the role of the United States in the global economy since S & P downgraded their debt. This McKinsey article is an interesting discussion of where the country stands in terms of their influence on global innovation. Certainly the U.S. has been the global leader in innovation. And there are many issues that can be debated as to what that role will be in the future. This article puts a few of them on the table. And although I don’t necessarily agree with the findings, it may have some value to the community.

The difficulty that I have with the document is its reliance on clean energy and the belief that these investments are what will bring about innovations that will sustain the global economy. These ideas of running your car on electricity and saving the planet are about as good as making $1,000.00 a day from your home in your spare time. Well below the esteem of a McKinsey to be recommending them.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

S + B, Three Paths to Open Innovation

Strategy + Business published “Three Paths To Open Innovation” a few months ago and I thought that I would highlight it now. We recently discussed the Resource Marketplace module and how innovation at the service industry level, and within the producer needed to be handled within that module. This article helps to further define these needs.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

McKinsey, Edmund S. Phelps

It’s Saturday which means its time for some clearing of our McKinsey backlog. This is an enjoyable read from Edmund S. Phelps who won the Nobel Prize in Economics a few years ago. He is speaking on the topic of innovation, and although not specifically topical to what we are do here, it is worthwhile reading. The title of the paper is “Supporting Innovation: Why and How”.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Copyright License

On Wednesday of this week we discussed the copyright notice that was issued to the producer firms. This post deals with the politics of the copyright license and how the end users, developers, members of the Community of Independent Service Providers and those generally needing to be involved in the application have access to the Intellectual Property (IP) that makes up the research, copyright and software developments of mine, Paul Cox, as licensed to People, Ideas & Objects (PI&O).

Two key questions that have to be solved in this project is firstly, how is the greater community supported. And the second question is; how do we ensure that everyone is able to innovate without any legal impediment, and have free access to the intellectual property that makes up People, Ideas & Objects IP. Two difficult and important questions that this blog post will answer.

Answer to question 1
The answer to the first question of how this community will be supported is of course by money. That is the only way in which a long-term, difficult project such as this can survive. No one can be asked to put in the effort necessary on a volunteer basis as that will begin with a bang and fade at a critical time. Only with the appropriate means to source the financial resources to support the community through out the life of the project will this project be successful. And being successful is the only manner in which we will be able to attract the people that we need in order to make the project ultimately successful.

So the question remains how is the project sustained financially. I as the owner of the intellectual property have the sole right to assess the oil and gas producers the fees and penalties, as noted in the Revenue Model, that will sustain these communities. Payment of those fees by the producer is the price they pay for participation in the community. Individuals are free to participate as they wish. In fact they are paid for their approved efforts. Producers must pay their fees in order to participate and have their specific needs addressed, and ultimately use the software. I then in turn use that money to support the community and develop the software based on the budget that the community agrees to. If the community requires a larger budget, then the $ / barrel of oil equivalent assessment to the producers will rise or fall based on the size of the number of participating producers who have subscribed to People, Ideas & Objects.

Answer to question 2
As to how the innovation and creative solutions are developed within the community. This work can not be obstructed by the IP that is the basis of People, Ideas & Objects offerings. It is through the license provided to those that work within the community that provides them with the opportunity to work with the IP without concern for the legal consequences normally associated when dealing with IP.

This license grants unrestricted access to my IP and generates service fees for yourself, I only assess the producers for software and software development fees. In turn any innovations or developments of IP are added back to my IP which in turn then become available to everyone. This eliminates any potential cross licensing and trolling by individuals within the community, which would make the development and innovation of the software and services secondary objectives. Licensees within the community have a right to generate service revenues in an unencumbered fashion in a competitive marketplace. This provides producers, individuals and society with the optimal solution for dealing with the underlying intellectual property of this project.

The following is a general comment about the means of competing in the Information and Communication Technology (I&CT) marketplace. There is much discussion about the new versions of Apple software products and the stepping on some of their developers toes. The overt development of features that have been provided by small software providers, by larger vendors such as Apple is something we have seen many times before. The group with the fattest wallet usually wins these contests. To compete on the basis of a defined software feature set is a fools game. Unless of course you have the fattest wallet. What is needed to win in the 21st century is a new basis of competitive strategy, and that is on the basis of IP. You must have an idea that is unique that defines your product differently in the marketplace. With People, Ideas & Objects that of course is using the Joint Operating Committee. Licensees within the People, Ideas & Objects community have access to the IP that enables them to compete in services based on using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Professor Giovanni Dosi, Part XVII, a Conclusion

Our review of Professor Giovanni Dosi’s 1988 paper “Sources, Procedures, and Microeconomic Effects of Innovation” has provided us with the evidence that the Joint Operating Committee is the “innovation” framework for all oil and gas producers. Identifying the “innovation” framework as part of the Joint Operating Committee along with the legal, financial, operational decision making, cultural, communication and strategic frameworks. People, Ideas & Objects Draft and Preliminary Specifications identify and support the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. We provide this by moving the compliance and governance frameworks of the hierarchy into alignment with the seven frameworks of the Joint Operating Committee. Enabling a greater speed, accountability and innovativeness of the producer.

It is now time for producers to act. Review of our Revenue Model will inform producers how they can participate in the development of People, Ideas & Objects Preliminary Specification. Producers can contact me here for further information, or to begin the process of their participation.