Showing posts with label Orlikowski. Show all posts
Showing posts with label Orlikowski. Show all posts

Wednesday, July 28, 2010

Our Revenue Model Part II

In this our second instalment that details our Revenue Model, we apply and extend Professor Jurgen Habermas’ 1960’s theory of different knowledge interests. Building on yesterdays discussion of People, Ideas & Objects value proposition, and targeting the oil and gas producers as the sole source of revenue, this post will delve into the difficult question regarding what we need these systems for.

We need to ask ourselves what we need these systems for. Are we developing systems that manage the commercial operations of an oil and gas producer? Of course we are, but that does not address the societal and individual needs of these systems. If we continue to look at just the needs of the producers, then we are leaving many needs unaddressed. Society and individuals are critical elements of a successful oil and gas industry. For example society benefits by having producers and the service industries efficiently interact and develop profitable operations, and individuals create innovative solutions to the demand they see for their services. Overall organizations, individuals and society benefit by an increased and expanding division of labor and specialization.  In today’s globalized, high technology workplace, an expanded division of labor and specialization can be more efficiently created through a software development capability like that described by People, Ideas & Objects in its Draft Specification.

When we concern ourselves with the economic output of the oil and gas industry. To expand that output requires that we organize based on greater levels of specialization and a further division of labor. The responsibility for increasing output does not fall to society, individuals or organizations in isolation but to all three. Therefore it is reasonable to state that what we need these systems to address society, individuals and organizations needs. I do not foresee the further development of the division of labor occurring without the active involvement of systems development. In a somewhat deliberate manner where all groups are represented.

If we look critically at the division of labor, and eliminate some of the constraints to expanding it further. Constraints like the limitations of working within one firm or one Joint Operating Committee (JOC). If an individual has the capacity to apply their skills to a task for a geographical region that includes 100 producers and 200 JOC’s, the efficiencies could be substantial. The ability to manage a task in this fashion doesn’t exist within our current organizational context. Maybe it should.

Following on the logic of the previous post, where the producer firms are the sole source of the revenue for People, Ideas & Objects and associated communities. Sharing the input of these systems development across society, individuals and the organizations might appear to be inconsistent with the reality that 100% of the funds are coming from the producers.

That’s why the People, Ideas & Objects revenue model shares the one time development costs across the subscribing producers. Just because the producer firms receive 100% of the proceeds of oil and gas sales, doesn't mean that they earn 100% of the revenues of the oil and gas sales. Individuals and society have a role and responsibility in these systems and therefore, these need to be considered irrespective of the desires of the producer firms. We’re not going to develop systems that address the needs of society, individuals and organizations when producers have a disproportionate influence due to their control of the revenue stream.

To sustain this software development requires that we cease being subjected to the individual decisions of one or more producers. A company that chooses not to proceed with the development or implementation of these technologies can not hold up the greater benefit of all concerned. Essentially I am stating that the decision to support these communities needs to be made where appropriate representation considers the needs of all concerned. Looking at the cost benefit analysis of supporting this software from the point of view of only one producer misses the benefits to society and individuals.

Habermas theories deal with the issues of power, influence and most importantly emancipation.

But when it comes to using science or computers to change the relations of power in our society, when emancipation is put forth as a knowledge or development interest, then the question of values becomes more controversial. Who is to be emancipated, and from whom? Who is to loose power, and who is to gain? And how can it be the business of scientists or computer professionals to take part in a political struggle for power?
Society is put in peril when world oil production declines. There is evidence that the world's oil production has declined. Therefore the world needs to have the energy industry expand its production. To do so requires that we reorganize to enhance the division of labor and specialization within the industry. As economic development has proven, reorganization would achieve far greater oil and gas production. Management of the industry is conflicted in expanding the output of the industry. The less they do, the higher the oil and gas prices and the better they appear to perform. This managerial conflict must be addressed and the performance of the industry unleashed. To do so requires the current management of the industry to fund People, Ideas & Objects and build the systems as defined in the Draft Specification. Please join me here.

Technorati Tags:

Tuesday, May 18, 2010

Langlois, Economic Institutions Part III

We continue with our review of Professor Richard N. Langlois July 2009 "Economic Institutions and the Boundaries of the Firm: The Case of Business Groups". Today's post will deal with similarity and complementarity as they relate to gap filling. In the example provided by Langlois, LG Groups former chairman cited how the need to have "gaps" filled launched new lines of business to fill a need "At the time, no company could supply us with plastic caps of adequate quality for cream jars, so we had to start a plastics business". And the new lines of business were then used to expand into areas that were related "This plastics business also led us to manufacture electric fan blades and telephone cases".

It has been suggested in my recent blog posts that the capacity to "gap fill" is non-existent in the oil and gas industry. The collaborations between suppliers and oil and gas companies is best represented by BP blaming TransOcean and Halliburton for the problems in the Gulf of Mexico. To move forward based on innovation and further development of the sciences will require the oil and gas producers to begin to work together with the service sector. Blaming them and calling them greedy because the cost structures are escalating are symptomatic of the bigger issues. These all stem from the fact the oil and gas companies are only reaping what they've sowed. And I would also suggest that these costs are increasing due to the limited, if any, real innovation being conducted at each and every Joint Operating Committee. People are unwilling to offer any suggestion for fear of the repercussions. Why bother doing anything above and beyond when the status-quo will be accepted.

Management of the bureaucracies have reigned over the service sector with the grace of a Roman Emperor. Putting thumbs up or down on an innovation on the basis that they have immediate need for it or not, and expecting solutions to spontaneously exist when problems do arise. This entire process of development has devolved to the point where little is being done and ranks on par with the oil and gas companies suggesting to the service industry to "let them eat cake."

The point I am trying to make here is that the ability to change from this type of mindset is difficult if not impossible. After all where are the Romans today? The transition in cultures that will build on the gap filling similarities and complementarities is under way, in my opinion. What this process needs is to develop the market supporting infrastructure that will support these types of innovation. That means the Draft Specification is the crucial first piece of infrastructure.

Langlois notes two important points. 1) "Economic historians, especially those of what we might call the Stanford School (David 1975, 1990; Rosenberg 1976), have long stressed the importance of such complementarities for the pace and direction of technological change and economic growth". 2) "But that doesn’t explain why and when other institutional structures like markets or multidivisional firms arise to solve the same kinds of problems".

So how do we analyze this and change it...
A satisfying explanation, I argue, will have to be a contingent one, an explanation that takes into account the facts on the ground of markets and institutions. With only a little oversimplification, we can think of the these contingent facts as falling on three levels.
• The level of markets. How extensive are markets for complementary resources? How easy is to marshal the necessary complementary capabilities (or their outputs)?
The creativity and innovativeness of the oil and gas industry is clearly missing in the Gulf of Mexico. Gone is the can-do attitude that built the business. Today one is more likely to overhear the management openly discuss their pension benefits. The oil and gas industry is a bureaucratic nightmare.
• The level of market-supporting institutions. How well developed are the institutional structures that help markets function well – that reduce the costs of coordinating complementary activities through relatively anonymous exchange among legally separate entities rather than through internal coordination within an organization? Such institutions would run the gamut from technological standards (Langlois and Robertson 1992) to legal and organizational innovations like double-entry bookkeeping (Rosenberg and Birdzell 1986) or the anonymous limited-liability corporation (Hansmann and Kraakman 2000).
Here we have seen the capacity of the industry to employ up to 11,000 people working on the well and the flow of oil in the Gulf of Mexico. Yet no one seems to have an idea as to what to do! The thinking for the solutions to cap the leaks is at its most basic level. This is representative as to why the companies cost structures have gotten out of control. Throwing more money is the first and only instinct of management.
• The level of political institutions. What is the character of the state, the organization with a territorial monopoly on the use of force? How well protected are property rights? In what ways does the government intervene in the economy? What is the nature and degree of corruption? pp. 11 - 12
Politics in oil and gas are at a truly global scale. These forces will undoubtedly increase as the pressures from consumers and environmentalists escalate.

I think these three institutions (markets, market-supporting and political) accurately captures the tone of business in the industry. It is a do-nothing, cover yourself and make sure you get lots of cash type of operation. Other then building the Draft Specification, what other market-supporting institutions are necessary and how do we build them? What type of organizations and institutions do we need to build? How far will the sciences advance in the next 10 years, and how will the industry keep up?
So when would we expect the problems of coordinating complementary activities to be solved by the emergence of market-supporting institutions (and thus by markets, broadly understood) and when by vertical integration? This is a crucial — and, in my view, under-researched — question. Clearly, issues of cost matter, as in the grain example. Such issues include neoclassical economies of scale; Williamson-style transaction costs; the costs of diversifying into activities requiring capabilities dissimilar from those one already possesses; and the costs of setting up and maintaining market supporting institutions (Langlois 2006). Once again, these costs are contingent: they depend on the nature and level of capabilities and of market-supporting institutions already in place. And this suggests two related hypotheses (holding other things constant, of course). pp. 16 - 17
The first is that the processes involved are likely to be path dependent and linked to the passage of time. p. 17
The second hypothesis, which has resonances at least as far back as Gerschenkron’s famous “backwardness” thesis (Gerschenkron 1962), is that the way an economy responds to the problems of coordinating economic development depends not only on its own institutions and capabilities but also on institutions and capabilities elsewhere. It depends not only on an economy’s own history but on the history of other economies as well. The force of this observation is that an economy at the frontier of economic development (however we care to define that) is likely to respond to the coordination problem differently than an economy lagging behind that frontier. Specifically, an economy at the frontier is arguably more likely to rely on decentralized modes of coordination. This is so because uncertainty is greater at the frontier — uncertainty about technology, organizational form, market direction. p. 18
For the purposes of this post I want to exclude discussion of the first hypothesis. Since we are assuming that these bureaucratic nightmares are failing, we need not rely on them. The second hypothesis suggests that depending on the degree of "frontier of economic development" will determine the level of decentralization. The world produces 120 million barrels of oil equivalent per day. Dealing with an industry of this size on a centralized basis, as the bureaucracies are attempting to today, is foolhardy. What I am suggesting is that we not only pool the producers resources represented in the Joint Operating Committee (JOC), but include the service sectors in the definition of the market-supporting infrastructure. The solution that is being suggested is represented in the Draft Specifications Military Command & Control Metaphor, Resource Marketplace and Research & Capabilities modules.

If we go back to the Preliminary Research Report we will find the work of Professor's Wanda Orlikowski and Anthony Giddens on Structuration. We will find that structuration states the organizations, society and people move together or there will be failure. In Professor Orlikowski's Technological Model of Structuration, technology identifies and supports societies. Technology is both an enabler and an inhibitor. If society and people demand more from our organizations, which clearly they are demanding of the oil and gas industry. Then technically a failure has occurred. And particularly we can see the current situation in oil and gas being inhibited by the technologies that are employed. Therefore to change organizations and culture, structuration requires that we change the technology that identifies and supports the industry, to resemble the institutions that we desire.

To Langlois' point about the frontier. The industry is transitioning from a banking mentality of earning guaranteed returns on investments. This is born of the cheap energy era where survival was the key to financial success. Now as a scientifically based industry, the two cultures are clashing and the industry is not structured to operate on this frontier. Expectations that this transition will happen naturally is incorrect.

Langlois also notes Gerschenkron's backwardness as a precursor to the second hypothesis. In The Capitalist & the Entrepreneur (Free download available here.) by Professor Peter Klein, I find this quote that better exemplifies the current status of the energy industries efforts.
Indeed, traditional command-style economies, such as that of the former USSR, appear to be able only to mimic those tasks that market economies have performed before; they are unable to set up and execute original tasks. The [Soviet] system has been particularly effective when the central priorities involve catching up, for then the problems of knowing what to do, when and how to do it, and whether it was properly done, are solved by reference to a working model, by exploiting what Gerschenkron . . . called the “advantage of backwardness.” ... Accompanying these advantages are shortcomings, inherent in the nature of the system. When the system pursues a few priority objectives, regardless of sacrifices or losses in lower priority areas, those ultimately responsible cannot know whether the success was worth achieving. The central authorities lack the information and physical capability to monitor all important costs—in particular opportunity costs—yet they are the only ones, given the logic of the system, with a true interest in knowing such costs. (Ericson, 1991, p. 21).
Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

Technorati Tags:
 

Saturday, February 27, 2010

Pisano Science Based Businesses Part II

In our first post on this paper we introduced the scope of Professor Pisano's research in Science Based Businesses. It is reasonable to assume that everyone that is familiar with the processes of exploration and production would agree that it qualifies as a science based business. In this second post we will focus on the influence of Professor Alfred D. Chandler in Professor Pisano's work.

II. Chandler’s Core Propositions

Professor Pisano reintroduces us to Professor Alfred D. Chandler and his work on organizational capabilities and what Pisano calls "Chandler's core proposition". People, Ideas & Objects needs to build the software necessary to support and identify the industry standard Joint Operating Committee. This is in order for the earth science and engineering disciplines to be the driving force in what happens in oil and gas. Innovation on these sciences will be the source of value generation in the industry. Up until recently, innovation was focused on the management discipline and the desire to conduct "best practices" and balance some score-cards. Thankfully those days are over.

Through his studies of the rise of the modern corporation and managerial capitalism in the United States, Chandler advanced three core propositions: 1) technological innovation and organizational innovation are interdependent; 2) new forms of business organization and institutional arrangements are invented to solve specific economic problems; and 3) organizational and institutional innovation is an evolutionary process—nothing guarantees “we get it right” every time. Together, these propositions constitute what might be called a “Chandlerian perspective” on the structure and organization of economic activity. p. 5
1) The Interdependence of Technological and Organizational Innovation

It has been argued that moving the compliance and governance of the hierarchy into alignment with the JOC's cultural, legal, financial, operational decision making and communication frameworks will provide enhanced performance. When we identify and support these changes within the People, Ideas & Objects application modules. Innovation on the earth science and engineering disciplines will be facilitated and advanced. Chandler teaches us that technological innovation does not occur without organizational innovation.
A sub‐set of the innovation community, starting with the work of Nelson and Winter (1982), has long recognized that the “right” institutional arrangements play a critical role in facilitating technical advance and the diffusion of innovations. p. 5
These concepts were reinforced on this blog with recent posts from MIT Professor Wanda Orlikowski and Harvard Professor Carliss Baldwin. Orlikowski's Structurational Model of Technology was used in the Preliminary Research Report to identify technologies influence in organizations. Summarizing her work in the statement that SAP is the bureaucracy. Professor Baldwin's Mirror Hypothesis also identified similar points.

2) Organizational and Institutional Innovation as the Product of Human Invention

The Draft Specification deals with a variety of problems that exist in the industry. One of these problems is the redundant building and rebuilding of capabilities within each producer firm. The ability to resolve any and all possible issues needs to be handled by the firm, and therefore, these capabilities are created within each producer. In the integrated producers we see the same technical capabilities being built within Exxon, Shell, BP, Chevron and others. These are duplications and have reached a size and scope that they can no longer be independently developed and maintained. The underlying sciences are advancing too quickly, and the population of human resources are reaching their limits. What the Draft Specification does is pool these capabilities within the Resource Marketplace Module to enable each and every Joint Operating Committee the ability to dynamically generate the capabilities that they need.
Today, it is easy to take for granted such things as separation of ownership from management, hierarchical organizations, multi‐business corporations, capital markets, accounting and control systems, and other scaffolding of modern economies, as if they were somehow “natural.” Chandler teaches us that there is nothing natural about them. They were inventions. Indeed, virtually every aspect of the business world around us—every organizational form, every management technique, every formal and informal institutional arrangement, every principle of management, and every management function—is the product of human invention. Chandler also helps us understand that often‐but not always‐‐these inventions were made in response to very specific economic problems. pp. 6 - 7
To have this dynamic capability available to those within the industry requires the new organizational models, the JOC, and the People, Ideas & Objects software necessary to identify and support the JOC and the Resource Marketplace. Spontaneous order will not work when we are standing on the shoulders of so many generations of giants. We need to act!

3) Organizational and Institutional Innovation As an Evolutionary Process

We have many significant trends converging at the same time. The Information & Communication Technological Revolution, the transformation of the oil and gas industry to a more complex scientific footing, the boardroom power shifts, and the economic forces that are creating issues and opportunities for all concerned. The last thing we need to do is to sit back and wait for the eventual day when all these forces are correctly aligned and the world breaks out in peace. It doesn't happen that way. We have to act!
The first two points above provide a false impression that economic need and organizational / institutional innovation mesh tightly. But Chandler teaches us that such a strict functionalist interpretation is flawed. Economic needs arise, but the response of organizations is slow, uneven, and not always perfect. p. 7
I would assert that the slow industry response to People, Ideas & Objects is attributable to the fact that it is the bureaucracies that are dictating the pace of change. They know that if they don't sponsor these software developments, they won't get built. I know they know this because I told them in the Preliminary Research Report. Their interpretation is wrong, however, they don't see it that way. That is why the appeal of these software developments are focused on the ownership class of the oil and gas industry. The bureaucracy has it pretty good right now, why change.
The notion that novel institutions and organizations always arise to enhance economic efficiency does not stand the test of historical analysis. p. 8
We must act. This muddling along is heading the oil and gas industry into a situation where the energy consumer will not be able to source their energy. Energy is oxygen to advanced economies. To restrict the volume of available energy limits the potential of man kind.
There are many potential transformative forces shaping business organization in the 21st century. The one I would like to focus on in the remainder of this essay concerns science, and in particular, the way in which business participates in and shapes science. Recent decades have witnessed intensive organizational experimentation in the way science is generated, diffused, and commercialized. Advances in the sciences of life, energy, and materials offer huge promise both to drive economic growth and improve welfare. Yet, to believe that promise will be realized without organizational and institutional innovation would be to ignore the lessons of Chandler. pp. 8 - 9
March 31, 2010 is the deadline for raising our 2010 operating budget. After which a variety of consequences, such as financial penalties and a loss of one years time will occur. Our appeal should be based on the 21 compelling reasons of how better the oil and gas industry and its operations could be handled. They may not be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are.

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

Technorati Tags:
 

Friday, January 22, 2010

McKinsey, A Conversation With Jim Wallis

In the Preliminary Research Report Professor's Anthony Giddens Structuration theory was reviewed alongside Professor Wanda Orlikowski's Structurational Model of Technology. These suggest that organizations, people and society move together or there is failure. In May of 2004 this appeared to me that the organizations were failing both people and society and that as a result, failure of one of the three components (people, society or organizations) would occur. The financial crisis is the failure of the organizations. They have failed in so many ways it is difficult to list them all. Until today.

McKinsey have an unbelievably good video that deals with this topic. People are angry and do not want to see things continue in the fashion that they are. This is captured in this video very elequently. Enjoy!



Technorati Tags:

Thursday, January 21, 2010

McKinsey, Competing Through Organizati...

This is a follow on post to Professor Don Sull's video. Scroll down to the blog entry for December 21, 2009 entitled "McKinsey, Strategy Through Turbulence". My apologies for the continued technical difficulties. I have opened the root page of the blog to show the last 100 posts. Individual posts will not render. I believe it has something to do with changes that Google made to Blogger-in-Draft which appear to be on their radar. Until this is fixed please use only http://innovation-in-oil-and-gas.blogspot.com.

In the closing two paragraphs of this document, Professor Sull states the following.

A downturn brings hard choices into stark relief, provides an external rationale to justify difficult decisions, and offers “air cover” with external stakeholders (including investors and directors) to reverse previous decisions. In the current market, senior executives should consolidate their major initiatives into a single list and make the hard choices needed to select a handful that are truly critical. To ensure that everyone gets the message, they should communicate the priorities throughout the entire organization, along with a list of initiatives that are no longer key objectives, to ensure that people do not waste resources on unimportant matters.
To suggest that the oil and gas industry hasn't changed in the last decade would be a fairy tale. Revenues have escalated to 400% currently, and peaked at over 700% of what they were a few short years ago. Now costs of oil and gas operations and capital investment are following the same pattern. Those that are able to remain agile and innovative are being rewarded with higher cash flows and most importantly higher profits. We will soon see what the earnings of the bureaucratic firms look like for all of 2009. I think then the writing will be on the wall to do something about it.

In many ways doing "more" has failed. Drilling more wells then the previous year did nothing to increase the reserve life index. Its time to take stock of what the approach will be for the next 20 years. If Exxon is correct that there will be an extra $20 trillion in capital invested in the next 20 years, then this time horizon is what we should focus on. Addressing the systems that identify and support the Joint Operating Committee are proven in this research to provide the value necessary for producers to succeed in this harsh environment.

As Professor Don Sull notes this economic downturn provides "air cover" to the management to do something to affect the culture of the company. Realigning the Tax, Royalty and SEC frameworks of the bureaucracy with the cultural, financial, legal, operational decision making and communication frameworks of the Joint Operating Committee. This change will increase accountability and innovation which I believe is why management have fought so hard to eliminate People, Ideas & Objects from the marketplace. Why work when the revenues are so handsome and we look so good. I think these "good old days" are ending and they may need the cover that Professor Sully talks about.
One final thought: economic crises can provide an ideal opportunity to invigorate the cultural transformation that is often needed to cultivate operational agility. For example, in the transition from good South Korean player to great global company, Samsung Electronics made most of its progress during the global recession of the early 1990s and the “Asian contagion” of 1997. Senior executives used these crises to renew a sense of urgency, justify unpopular decisions, and overcome complacency or resistance to change. Focusing on culture is critical because outexecuting rivals time and time again requires constant injections of urgency, effort, and enthusiasm. A performance-oriented culture helps induce such effort.
In my January 10, 2010 post I documented the comments of Mr. John Bogle, Professor Carlota Perez and Professor Wanda Orlikowski. These people were making the same point as Professor Sull is in the above quote. These also mirror the experiences that I have had in People, Ideas & Objects. Strong academic and sound business advise for management to get out of the way. The longer they take to begin these difficult processes the harder it will be for them to change. If your a shareholder or investor in oil and gas and believe that the industry would be better served by having the Draft Specification and Community of Independent Service Providers built, please join us here. And if your a user, please join us here.

Technorati Tags:

Tuesday, January 19, 2010

John Bogle on Accountability

The Wall Street Journal has an op-ed written by John C. Bogle, Founder and Former Chief Executive Officer of Vangaurd Group.

In a recent post covering Professor Wanda Orlikowski's paper, I documented the difficulty I have had with management of oil and gas companies. Suggesting in the Preliminary Research Report that they used the knowledge that software defines and supports organizations, therefore, you need to build the software first. As the means to ensure that they would never be challenged by never sponsoring software of the nature of People, Ideas & Objects. This was also intimated by Professor Orlikowski, will be documented in an upcoming post of Professor Carlota Perez and mentioned in the Wall Street Journal article today.

Professor Orlikowski states:

Confronted with synthetic worlds, these researchers will in all probability focus their attention elsewhere. And this choice has consequences for the value of organizational scholarship: "to the extent that the management literature continues to overlook the ways in which organizing is critically bound up with material forms and spaces, our understanding of organizational life will remain limited at best, and misleading at worst' (Orlikowski and Scott, 2008, p. 466).
Professor Carlota Perez states:
Organizational inertia is a well known phenomenon of human and social resistance to change. In the market economy, however, inertia is overcome by competition, which, by showing the direction of success, serves as a guide to best practice and as a survival threat to the laggards.
And Mr. Bogle notes
In short, far too many of our corporate and financial agents have failed to honor the interests of their principals—the mutual fund investors and pension beneficiaries to whom they owed a fiduciary duty. The ramifications were widespread—for the failure of money managers to observe the principles of fiduciary duty played a major role in allowing our corporate managers to place their own interests ahead of the interests of their shareholders.
All of these points are related and mirror my experiences in People, Ideas & Objects over the past six years. It is time for the energy investors and shareholders to get behind this software development project for their own purposes. People, Ideas & Objects provides a means for the energy shareholder to manage their oil and gas assets. Management are wrong and conflicted in making these decisions to support their personal positions. Mr. Bogle suggests the time is now "Then, I found few allies. Today, perhaps, this is an idea whose time has come." They have a fiduciary duty to their owners to do what is right. As Professor Perez notes, competition eventually solves this problem. It is therefore time to choose if your oil and gas company will be a leader or a laggard. 

If you are interested in People, Ideas & Objects, please consider funding our 2010 budget. If you are a user who knows there is a better way to organize in oil and gas, please join me here.

Technorati Tags:

Sunday, January 17, 2010

Professor Wanda Orlikowski's Technology in Management

A recent post suggested that there was a hesitancy in detailing too much about the user interface to be used in the People, Ideas & Objects application modules. Firstly, this design process that we are undertaking in the Preliminary Specification is about the oil and gas business, not about the new(er) technologies that have been developed. And this post is not so much about the technologies but how the user will interact with the modules being developed here. The interface, as Apple & Google have shown us time and again, is the critical piece in how people use their technologies. [Please stay with me for the full post as this requires some reader faith.]

Back in the dot com bubble much was made of the "Exchanges" that were being built. The market cap for these companies were in the billions and they would prosper through building the technology to facilitate exchanges of documents etc. Thankfully that era ended and we never saw these technologies get picked up. However, today the concept of exchanges is developing again. And they will fail. That is why they do not appear anywhere in the Draft Specification. What does appear are Marketplaces. Places where the people and technology live together in perfect harmony. Creative license is a treasure.

The hesitancy in posting about this is due to the fact that I see the People, Ideas & Objects user interface being exactly like the World ofWarcraft (WoW) user interface. Now that the non-believers have left we can speak to the advantages of this. If you've never seen WoW ask a teenager, actually any teenager, to look at their version of the game. It's brilliant. Note how the environmental variables, and pretty much anything can be accessed through small groupings of control panels. Each provides the user with the control needed to operate the game.



and



Just search YouTube for World of Warcraft and you'll be able to see the analogy I am trying to make here. Professor Wanda Orlikowski defines a term in her paper "Synthetic Worlds". In the Draft Specification there are at least four "Synthetic Worlds" that I want to quickly mention.

  1. Any and all Joint Operating Committees oil and gas assets.
  2. Petroleum Lease Marketplace Module
  3. Financial Marketplace Module
  4. Resource Marketplace Module

Each of these are Synthetic Worlds populated with the User defined environment. Each facility or oil and gas property is populated with a virtual representation. If a rig was drilling a new well, then the Synthetic World would emulate the actual activities on the rig. [Look to the Technical Vision of this project to understand how that happens.] Importantly, the interactions between people and their avatars, and other avatars, are supported by the design elements that can negotiate a contract, and design a transaction to have a fracing company come in and double the number of horizontal fracs based on what was discovered down hole.

The Petroleum Lease Marketplace might appear like an old "exchange" [bad word] where people are buying and selling. But in this instance it's oil and gas leases. And maybe their not buying or selling but pooling their interests with their neighbors to ensure they get approved for the gas plant they want to build. A producer may be selling off it's none core assets. A young engineer is looking for support to fund his dream of turning the Basal Quartz into the most prolific zone ever. These, all being in real time with people in the marketplace.

The Financial Marketplace module will handle the financial resources of the producers. If you don't like the billing you received from the previously mentionedfracing company, engage them in a virtual private meeting regarding resolution. Interestingly so, since were emulating real life virtually, we are also recording it, making it easy for the producer to show why thefracing costs are incorrectly billed.

The Resource Marketplace module where an oil and gas producer can find any type of service operation from the Community of Independent Service Providers, the service sector vendors like the fracing company mentioned, the employees the firms want to hire. All provided in a Synthetic World. 

Now that I have provided full and complete certainty to my detractors, is this possible? Here we have Dr. Eric Schmidt who was the president of Sun Microsystems at one time, also CEO ofNovell at one time and has been the CEO of Google for the past 10 years has to say about Synthetic Worlds.
Everything in the future online is going to look like a multi-player game,” said Schmidt to this international audience. “If I were 15 years old, that’s what I would be doing right now.
In answer to those questions is it possible? Please refer back to the videos earlier. That rich of an environment has been in the game players world for the past number of years. Critically here is where Professor WandaOrlikowski pick up her research. Note that her discussion is based on the Sun Microsystems "Java" (imagine that) environment known as Project Wonderland. An "Open Source" (imagine that) development framework for business' to implement these technologies. Please see the Sun research documents here, here and here. And watch this video of Project Wonderland.



Before we get to Professor Orlikowski research I want to put one more critical aspect of the Draft Specification into play. The Military Command & Control Metaphor is a critical aspect of the Compliance & Governance Module and how things can work in the appropriate business sense. To suggest that anyone and everyone have access to a game players type of situation is ridiculous. The need to implement a key part of the organizations compliance and governance needs to be available. When we add that the JOC is representative of many producers we add an element that makes this scenario of a Synthetic World impossible. Add the layering of the Security & Access Control Module and the Military Command & Control Module in the Draft Specification, the problem is solved. The only requirement that I think we need to add is a means to visually identify the appropriate role and rank of each individual in the Synthetic World. [I'm thinking Star Trek Shirts with different colors and badges, oops there's my detractors again.] So that the representative from the fracing company can see that the avatar of the individual he is negotiating the contract with does have the authority to execute on behalf of the producer and the JOC.

One more paragraph and were at Professor Orlikowski's research. John Hagel posted an entry on how relationships and dynamics in the work place. His comments add another perspective to the discussion.

Professor Orlikowski's Abstract states;
Drawing on a specific scenario from a contemporary workplace, I review some of the dominant ways that management scholars have addressed technology over the past five decades. I will demonstrate that while materiality is an integral aspect of organizational actively, it has either been ignored by management research or investigated through an ontology of separateness that cannot account for the multiple and dynamic ways in which the social and the material areconstitutively entangled in everyday life. I will end by pointing to some possible alternative perspectives that may have the potential to help management scholars take seriously the distributed and complexsociomaterial configurations that form and perform contemporary organizations.
Commenting on the scenario that is best represented in the last YouTube video above, Orlikowski states:
A normal day at the office for a software development team? Not quite. I have omitted an important detail. The Project Wonderland rooms, offices screens, and documents are part of an online, three-dimensional,immersive environment for workplace collaboration within Sun Microsystems, known as MPK 20. Within this graphically intensive virtual workplace, users interact in real time using audio, text and images, and they share applications and content from a variety of online sources.
In answer to the many of Professor Orlikowski's questions; people use marketplaces for everything. The marketplace is the boiling pot of research into the capitalist system. A system of organization and activity that everyone subscribes to.
The use of synthetic worlds for organizational activities such as distributed collaboration raises interesting questions for scholars --  how to make sense of a study of these in management research? What are some existing perspectives that might usefully be drawn on to do so? What new or alternative perspectives might be more relevant? What are the implications of choosing certain perspectives over others in accounting for and articulating particular issues and insights?
2. Established perspectives on technology in management research

Professor Anthony Giddens Structuration Theory was used in the preliminary research report. His theory identifies that People, Organizations and Society move in lock step with one another. If there is a difference in the pace of change of these three elements, a failure occurs. As I indicated in a recent post, ProfessorOrlikowski "Structurational Model of Technology" was used in the Preliminary Research Report to determine that society and technology are linked by "the duality of technology" and the "interpretive flexibility of technology". Please see the Preliminary Research Report for further application to the energy industry. The majority of Professor Orlikowski's work has been in these areas.
Three distinctive conceptual positions on technology are clearly evident in the management literature of the past few decades. In the first perspective, which I will characterize as absent presence, technology is essentially unacknowledged by organizational researchers and thus unaccounted for in their studies. In the second perspective, technology is posited to be an exogenous force -- a powerful driver of history having determinate impacts on organizational life. The third perspective, that of emergent process, technology is positioned as a product of ongoing human interpretations and interactions, and thus as contextually and historically contingent.
The value she has created with her ideas is in this fourth perspective of technology. What she in essence says is that dealing with organizations and technologies as separates, management research has to deal with them as one. This is the area of research that the Preliminary Research Report was able to determine that to change organizations, the technology or ERP system should be designed and built to identify and support the Joint Operating Committee. It is also the area where the management of the oil and gas companies, my detractors if you will, have used these ideas against themselves. Suggesting that they would not be challenged in their positions if the technology never changed. These ideas and their implication provide the support I need to appeal to the shareholders and investors in oil and gas to take thisperversion of Professor Orlikowski's work away from the management and eliminate them.
Recently, a fourth perspective of technology -- that of entanglement in practice -- has attracted interest within management research, largely influenced by longer-standing development in sociology and science and technology studies (Barad, 2003; Latour, 2005; Suchman, 2007). As I will describe below, this alternative perspective entails a commitment to a relational ontology that undercuts the dualism that has characterized but also limited much of the prior technology research in management studies. In particular, this perspective offers the potential to radically re-conceptualize our notions of technology and reconfigure our understandings of contemporary organizational life.
I believe it is very clear that the threat to management by technology has been significant and it is human nature for them to resist. I think the Project Wonderland, People, Ideas & Objects marketplace models and the many other supporting conditions prove that the technology will eliminate management. And it is the responsibility of people and society to ensure that organizations change to ensure they do not continue to hold everything back.

5. Conclusion

Professor Orlikowski sees the aberrant way in which management have approached technology. In her conclusion she intimates that management will continue to forestall the adoption of further research.
Confronted with synthetic worlds, these researchers will in all probability focus their attention elsewhere. And this choice has consequences for the value of organizational scholarship: "to the extent that the management literature continues to overlook the ways in which organizing is critically bound up with material forms and spaces, our understanding of organizational life will remain limited at best, and misleading at worst' (Orlikowski and Scott, 2008, p. 466).

Orlikowski shows us the way's and means to implement these technologies.
They will conclude, as I do here, by suggesting that the perspective of entanglement may be particularly useful for management research going forward. As contemporary forms of technology and organizing are increasingly understood to be multiple, fluid, temporary, interconnected and dispersed (Ciborra, 1996; Stark, 1999; Child and McGrath, 2001; Law and Urry, 2004), a perspective that renounces the categorical presumption of separateness is likely to offer a more useful conceptual lens with which to think about the temporally emergentsociomaterial realities that form and perform contemporary organizations.
Multiple, fluid, temporary, interconnected and dispersed. I wonder if this type of environment would make the average oil and gas worker more productive? I wonder if the producer would be more profitable here vs. say SAP or through Oracle Fusion? This is how I see the oil and gas industry being able to raise it's productivity to the level necessary to fuel the worlds demand for energy. If you are a producer that sees this as a reasonable way in which to proceed, then please support these software developments and the Community of Independent Service Providers here. And if you're a user that sees the benefits of logging into this environment as opposed to spending the two and a half hour ritual needed to get to work. Please, sell short the commercial real estate stocks you own and join us here.

Technorati Tags:
 

Wednesday, January 13, 2010

Academics get on board.

A trend is forming in the academic community. There are no shortage of papers that address the types of opportunities that now exist in the technological, organizational and innovation areas of academic research. This is an extremely strong trend, one that is a follow-on to the massive effort that went into determining the causes and effects of the financial crisis. As we move away from the possibility of a meltdown, we can see the resources of the academic community moving forward in terms of where business should position itself to succeed in the future.

It started for People, Ideas & Objects with Professors Baldwin and von Hipple's paper. We took a detailed and comprehensive review of the paper due to its pertinence and value to the Community of Independent Service Providers and the producers that support People, Ideas & Objects. That review will soon be joined by one from Professor Giovanni Dosi entitled "On the nature of technologies: knowledge, procedures, artifacts and production inputs". Professor Dosi's work was the key or primary research component contained in the Preliminary Research Report. His work helped to define what an innovative oil and gas producer would need, and that the Joint Operating Committee (JOC) is indeed the means to achieve that innovativeness. This new paper resonates with the work that is being done here. I will be reviewing all these papers in this blog as soon as I can get to them.

An additional paper from Professors Wanda Orlikowski of MIT permits me to write about something that I was too reserved to write about. This paper will add a layer, or dimension, to our software developments that ties together many of the questions users have. Professor Orlikowski's work was used in the Preliminary Research Report as well. Her work had defined the Technological Model of Structuration based on Professor Anthony Giddens Structuration Theory. It was through this work we were able to define the cognitive and motivational paradox' of building these software modules. Her Model of Structuration was also used to determine that software defines the organization. Therefore to change the organization requires that we first change the software. Which led me to coin the phrase "SAP is the bureaucracy".

We also have two very good papers from Professor Carlota Perez of Cambridge University. She has been able to define for People, Ideas & Objects the economic environment we find ourselves in. Basing her theories on the research of economic events over the last 300 years. This has provided us with an understanding that the Information and Communication Technologies (ICT) are creating significant economic changes. These changes are reflected in the dot com bubble and our recent financial driven bubbles. And now that these "events" have occurred, as she predicted, we can see the context of the current ICT Revolution is ready to be exploited. Recall what Ludwig von Mises said about the industry revolution. It was the solution to the problems at that time. We find ourselves in similarly challenged times and the ICT Revolution is the solution to those problems.

All of these works from Hagel, Baldwin, von Hipple, Dosi, Orlikowski, Perez and others show the time for the oil and gas industry to undertake the types of revisions prescribed by People, Ideas & Objects is now. It is important to highlight this development in this posting. People who contribute their time and energy to the developments of People, Ideas & Objects are compensated handsomely for their contributions. It is however not enough to start these developments until we can assure the producers and users that this project will be successful. That the people behind this development are taking the steps necessary to ensure success and that the super human effort of going beyond what is expected can be undertaken by every individual who participates. The point of this post to highlight some of the areas that we can show the producers and users that this success is closer to being attained. What we have so far is as follows:

1)    There is general and widespread understanding that the oil and gas industry has entered an era where the cheap energy is gone. What remains is politically, logistically, financially and technically much more difficult. An exponentially higher level of difficulty. It has been noted by Exxon and others this will require upwards of $20 trillion additional capital over the next 20 years.

2)    Professor Oliver Williamson's Nobel Prize in Economics being awarded for Transaction Cost Economics (TCE). This was a surprise event in that this relatively obscure area of the science. TCE has now been recognized for its importance on a go forward basis. Most importantly the Draft Specification incorporates the state of the art understanding of Transaction Cost Economics.

3)    Our competition, Oracle and SAP have used and abused the oil and gas industry for too long. Neither have products that are satisfactory for the upstream oil and gas industry. Importantly Oracle has taken themselves out of the game by spending $39 in research and acquisition costs to bring Oracle Fusion to the world. This level of capital expenditure will price Oracle out of most of the markets they operate in. In addition, the oil and gas industry will need to spend at least as much in customized development costs as People, Ideas & Objects blank slate approach would.

4)    The oil and gas producers are being called to fund our budget for 2010. At $10 million this is the amount of money that I think we can physically spend. It is being applied to the Preliminary Specification based on the Draft Specification and the agile development methodology. This is not to suggest that the entire design will be complete with this budget. It would be fool hardy to suggest that this project will be undertaken on the basis of $10 million in design costs. I hope that we will be able to develop the first iteration of the Draft, Preliminary, Detailed and Final Specification's within the scope of a $100 million commitment. People, Ideas & Objects Users, Developers, Account Managers and Project Managers all need to see the oil and gas industry commit these resources for this design. Success demands this.

5)    The academic community, through independent actions of the noted leadership in their disciplines, highlight this area as a key area of value accretion to all businesses. People need to be seeing the academic community rallying around these concepts. Providing help for our users and producers to foresee how success can be attained. I would also suggest that the academic community is raising a serious warning to those producers who do not heed this call. It has been convenient for the bureaucrats to belittle People, Ideas & Objects, they may now be doing so at their own expense.

Here are the five compelling reasons that users and producers should get behind in this project. What is possible and attainable in People, Ideas & Objects has never been done before. For this reason the up-front analysis and work to ensure this project is successful is necessary. We are very close to that point, and the people want to move-on from just thinking and reading about it. If you are a producer that wants to support this project, please follow our Funding Policies & Procedures. If you are user that would like to join us, please follow this procedure.

Technorati Tags: