Showing posts with label Productivity. Show all posts
Showing posts with label Productivity. Show all posts

Saturday, September 03, 2011

McKinsey on Productivity


Its the weekend and we have two McKinsey articles to fill in the time with some topical discussion. This first article is on productivity and how we need to accelerate, through innovation, our productivity to ensure job growth continues.

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.

Wednesday, May 26, 2010

Douglas North Chapter 1

Taking a short break from our review of Professor Langlois. I noticed that a new and interesting book has been published. The book is "Understanding the Process of Economic Change" by Nobel Prize winning economist Professor Douglass North. I took the opportunity to download the first chapter and I highly recommend the entire book, however, at this time we will only be covering this first chapter in our review.

If there is one word to summarize what People, Ideas & Objects is about, it's change. Moving from the bureaucracies that control the industry today. To a newer more innovative footing as represented in identifying and supporting the Joint Operating Committee. Brings about a significant scope of change in the oil and gas marketplace. How this change is implemented is of great concern to me. Making sure this process is focused on the new innovative footing, and not on the bureaucracies needs is a difficult dynamic to manage. Specifically we can't be concerned with the day-to-day of the industry. These day-to-day concerns are for the bureaucracy to manage for the time being. We can not be constrained by the difficulties that constrain the bureaucracy. People need to approach this project with fresh thinking that is free to be as it should be. This unfortunately makes my life infinitely more difficult, however, we are close to securing some funding. And that funding will be from the appropriate resource, the oil and gas investors and shareholders. Selling out to the bureaucrats at this point would be very destructive in terms of ensuring that we are not constrained by the bureaucrats.

We have also been mindful of how individuals approach People, Ideas & Objects. Mindful to ensure that there is a strong break from the day-to-day to ensure they don't bring their cognitive and motivational paradoxes with them from their day jobs. These paradox defined in 1998 by Carroll and Rosson were spelled out in an appendix to the Preliminary Research Report and are noted for the following.

The “motivational paradox” arises from the production bias. That is, users lack the time to learn new applications due to the overwhelming concern for through put. Their work is hampered by this lack of learning, and consequently productivity suffers.
The “cognitive paradox” has its root in the assimilation bias. People tend to apply what they already know in coping with new situations, and can be bound by the irrelevant and misleading similarities between the old and new situations. This can prevent people from learning and applying new and more effective solutions.
In the first paragraph North provides us with an understanding of where we are and the significance of the times at which we live.
UNDERSTANDING economic change including everything from the rise of the Western world to the demise of the Soviet Union requires that we cast a net much broader than purely economic change because it is a result of changes (1) in the quantity and quality of human beings; (2) in the stock of human knowledge particularly as applied to the human command over nature; and (3) in the institutional framework that defines the deliberate incentive structure of a society. A complete theory of economic change would therefore integrate theories of demographic, stock of knowledge, and institutional change. We are far from having good theories of any one of these three, much less of the three together, but we are making progress. The central focus of this study, and the key to improving economic performance, is the deliberate effort of human beings to control their environment. Therefore, priority is given here to institutional change, with the consequent incentive implications for demographic and stock of knowledge changes; but there is no implication that such an approach deals adequately with the latter two. p. 1
Clearly we have much to learn in terms of how best to approach the development of these systems. The other day I noted that we risk becoming blind sleep-walking experts in the hands of whoever wants to feed us. (Habermas) And this is reiterated by North. To "improve the economic performance" of the oil and gas industry requires that we deliberately exert effort to control our environment. I believe, if we continue in the fashion of the bureaucracy, that the world oil production will begin a serious decline in deliverability. Then we will realize, that some of the tasks that we need to occupy ourselves with are beyond those that are parsed out by managements budgets. North details the impact that existing constraints can have.
The structure we impose on our lives to reduce uncertainty is an accumulation of prescriptions and proscriptions together with the artifacts that have evolved as a part of this accumulation. The result is a complex mix of formal and informal constraints. These constraints are imbedded in language, physical artifacts, and beliefs that together define the patterns of human interaction. If our focus is narrowly on economics, then our concern is with scarcity and, hence, competition for resources. The structure of constraints we impose to order that competition shapes the way the game is played. Because various kinds of markets (political as well as economic) have different margins at which competition can be played out, the consequence of the structure we impose will be to determine whether the competitive structure induces increasing economic efficiency or stagnation. Thus well-developed property rights that encourage productivity will increase market efficiency. The evolving structure of political and economic markets is the key to explaining performance. pp. 1 - 2
If well developed property rights that encourage productivity will increase market efficiency, I think People, Ideas & Objects achieves the appropriate institution of those rights. Here I am talking about the Intellectual Property (IP) rights of the people that are associated with this project. I as the copyright holder to the ideas expressed here and in the Draft Specification license those participants in this project with unencumbered use of this IP. In turn, the derivative ideas generated in the development of the applications is essentially sold back to me, where in turn they become available to everyone in the community that has signed the license. This maintains the IP in its pristine condition and is available to all that need it. The license also provides members of the Community of Independent Service Providers with the rights to build a service based offering that is associated with the People, Ideas & Objects software applications.

North provides us with an understanding that we need to be ever vigilant in terms of these concerns.
While the uncertainty that pervades our existence may be reduced by the structure we impose, it is not eliminated. The constraints that we impose have, themselves, uncertain outcomes reflecting both our imperfect understanding of our environment and the equally imperfect nature of both the formal rules and the informal mechanisms we use to enforce those constraints. p. 2
I am unsure at this point if there will be a second post on this chapter. I have downloaded a number of Professor North's papers and we will review those for applicable content. I have also set up a "North" label so these posts can eventually be aggregated.
This book is a study about the ceaseless efforts of humans to gain greater control over their lives and in the course of that effort continually confronting new and novel problems to solve. It is a study of the perceptions that induce institutional innovation intended to reduce uncertainty or convert uncertainty into risk. It is also a study of a continually changing human landscape. This landscape poses new challenges, as a consequence of which policies emanating from “non-rational” explanations frequently play a part in the structures we create. p. 2
Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Friday, March 05, 2010

Google App Script and App Engine

Each user of People, Ideas & Objects is provided with a "Google Apps account for your domain". This includes Gmail, Calendar, Documents [Document, Presentation and Spreadsheet] and Sites applications. If necessary users will also be provided with access to SalesForce.com applications. All of these applications are included and accessed as part of the Security & Access Control Module of the Draft Specification. There are many other Google applications like Contacts, Start-Page, Groups and Chat but two of the most useful to the users might be Google App Script and Google App Engine.

Recall the purpose of the Security & Access Control Module is two-fold. First providing the data security and integrity of the producers information, and access control based on the Military Command & Control Metaphor. It is this module that enables and limits the users domain to that which they are authorized by their client producers and Joint Operating Committee's.

What People, Ideas & Objects provides is the software development capability that users need. Transaction processing, transaction design and marketplace application modules to name a few types of functions. This development capability is to build the software tools users need to exercise their tacit knowledge of the oil and gas industry. There is also a small area of functionality where it may be necessary to have ad-hoc queries and reports generated. Having the People, Ideas & Objects developers involved in these application types becomes expensive.

I'm assuming that the line between the two forms of processing, heavy industrial vs. lightweight, is understood by most users. This post is about the ad-hoc lightweight tools that users will have available to them within the Google Apps applications that are embedded within the Security & Access Control Module of the Draft Specification.

Google App Script is very similar to the advanced features in Excel. The ability to access data however, I think, is much more advanced then Excel. These Java Script scripts are not limited in any fashion. The user therefore inherits the web interface for these programs that they might write. Google has recently published a tutorial on the use of Google App Script that shows the power of this technology. If you have a Google account you can access these from within the Spreadsheet application included in Google Docs. The tutorial and API are available to get you started.

Google App Engine is substantially more capable. Particularly from the point of view of the Java based service. There are only two areas where the user is limited from accessing. The file system and threads. Best of all the SDK is able to be run in an IDE like NetBeans or Eclipse (both of which are free) which allows you to leverage the entire Java community. Powerful stuff, where the initial costs of running applications is next to nothing. Members of the Community of Independent Service Providers could also use Google App Engine to run applications for their own businesses.

I see a very large role for the user based applications described in this post, the Google tutorials and elsewhere. Having a "Swiss Army Knife" type of application is very valuable. The key difference between these services and the Draft Specification Modules is the ability to write data back to People, Ideas & Objects databases. That has to be handled in a fashion that can't be accommodated with the two tools we are talking about here today. However, Google App Engine provides you with access to Google's Big Table to store your own data.

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

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Wednesday, August 19, 2009

McKinsey conversation with John Chambers

McKinsey have posted a conversation with one of our favorite technology presenters, Cisco Chairman and CEO John Chambers. I have highlighted his talks three times before. (Here, here and particularly here, where he coins the phrase "Content will find you".) I find his presentation skills to be second only to Steve Jobs and is unquestionably the best presenter of business related technology today.


In the first video segment Chambers talks about how he is unleashing the most aggressive set of initiatives he has launched as CEO of the firm. Counting the number of initiatives he launched in the previous 4 recessions at one or two. Chambers states "we're gong to be the most aggressive we've ever been in our history." And is launching 30 initiatives in this downturn. His experience shows that recessions last longer and are deeper then most people expect. Nonetheless he believes his biggest mistakes are as a result of not moving quick enough. 

Chambers warns that moving too quickly is a danger if you don't have the structure and discipline necessary to deal with the speed and change. As we recall the dot com meltdown was particularly difficult for companies in technology. Cisco was one of three companies with market capitalization well within the $400 billion mark. (GE and Microsoft were the other two.) The initiatives he undertook in that recession enabled the new structure and discipline to form, and with today's new collaborative technologies he feels he has the speed and capacity to take on those thirty new initiatives. 

Cisco is just one company. The need or demand for the changes Chambers implemented may have been presented to Cisco in the dot com meltdown. Today I believe the oil and gas industry has similar calls and demands for the entire industry to take action. Yet to date the oil and gas producers have collectively done nothing to change the underlying approach to the business. Do we believe that doing more is the answer to our energy problems? Last years performance should have provided the evidence that more is no longer adequate. Spending record levels of capital, to drop production by 5 - 6% is not positive for the managements. Did they consider doing nothing as an alternative? That may have been the wiser choice. 

Back to the video, Chambers documents how his use of technology has affected the way that he does his job. Blogging, and particularly video blogging is the major form of communication he uses for all of the 56,000+ Cisco employees. The new collaborative technologies are a key enabling technology for Chambers to get his ideas out. But there's more. I have written about Cisco's Telepresence on this blog before. Chambers says Cisco's internal use of Telepresence has cut its annual travel costs from $750 million to $350 million. 

In the third, fourth and fifth installments of this video presentation. It seems as though Chambers has bought into the kool-aid that Silicon Valley has been brewing. It may seem that way to a lot of listeners but I think it is very important to note that his experience with the dot com meltdown was personal and extensive. The use of alternative business models and organizations augmented with the current collaborative technologies are what are providing Cisco with the ability to innovate and move at speed. So much of a firms future competitiveness is capabilities based. The oil and gas industry has a capacity that is below what the market demand for energy is. Oil and gas companies have no plan and no idea what to do. I think it is imperative that people listen to the experiences of Cisco in making their organization perform at these levels. If after thinking about it you still believe it is Silicon Valley kool-aid induced thinking, then I would advise you to consider who Cisco's top competitors are, and what they think of the Cisco juggernaut. (Nortel Networks is selling off major parts while in bankruptcy. And Alcatel / Lucent lost 5.2 billion in 2008.)

Key to capabilities based competition is the enhanced role that leadership takes in the revised business model, organizational structure and technology. Clearly the leadership at Cisco, as represented in its CEO and Chairman have the means to prosper in this new environment. He makes it clear that collaboration requires much more from its leaders. Chambers states the following.
The classic question is, "Well if I'm going to lead, I've got to have people reporting to me, and I've got to control budget" and the answer is 'No', and "No".         
Budgetary power and authority are out. Command and control are the impediments. Clearly he expects the efforts and actions of his firm today will show in the performance criteria in three to five years time. And expects that the earnings and performance of Cisco are baked in the cake as a result of the actions the firm took three to five years ago. We must step off this earnings and performance focused cannibalization of our companies. As Chambers says "you've already won or already lost". 

Lastly, Chambers refocuses on the customer. Selling a vision and communicating it through the multiple channels of Telepresence, Web 2.0 and collaborative tools. This is what I have chosen to do with People, Ideas & Objects. Some may think that is hypocritical of me to suggest the customer is of importance. I have gone to great lengths to criticize the current oil and gas companies. And that is because I do not consider these current oil and gas companies as our customers. It is the Users of the People, Ideas & Objects application that are the customer for this software development project. Our Users in turn have the oil and gas producer as their customer. Please join us here.

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Thursday, February 12, 2009

Watch those productivity stats.

Click on the title of this entry to be taken to a Wall Street Journal blog on productivity. We are well within the time period where the revolutionary impact of Information and Communication Technologies are affecting individuals and societies. Organizations are failing in terms of their ability to match the progress and demands of people and society. That is my summation of both Professor Carlota Perez long wave economic theories and Professor Anthony Giddens Structuration theory. Both suggest strong revolutionary changes are needed for progress to continue. Our current economic difficulties are predicted and based on these theories.


Computer technology has developed over the last 50 years and has matured to the point where, I believe, its promise to deliver is in the immediate future. We certainly have gone through many periods of time when the technologies appeared mature enough to effect what happens, and we know that those episodes have met with limited success, and at times spectacular failure. However, if we look at the impact of technology on society it can be generally agreed that it has been phenomenal in its scope and scale.

We stand at a period of time when it is not about the technology. "It's the economy stupid" in a quote from Bill Clinton. We have proceeded along without making the necessary changes in our organizations that people and societies have demanded and technology has enabled. The bureaucracy was a remarkably effective means of organization and served us well for the many decades. Today this way of life is too slow, particularly in its time lines for making decisions. And too withdrawn from the details and needs of the business. Generic business strategies applied over long periods of time to many disparate assets; make for the earnings potential that was adequate for the business' of yesteryear. We need more in order to optimize the output of the world economy. The sustainability of the never changing bureaucracy is at its end. Instead of creating value we are actively destroying it in our day to day activities with these organizations.

Organizations are changing. What we see are the developments of people using technology to more efficiently do the things that build value. These are reflected in the current productivity statistics that modern advanced economies are now realizing. What every other statistic is showing is a steep and significant slide. Business' of all kinds are being challenged with their own useful life. Earnings are deteriorating and what can be done to solve this economic malaise is happening as a result of the installed base of technology. That's right, technology is solving the problem. The productivity stats, particularly in the U.S. are showing a counter economic signal.

For the past ten years productivity has continued in a manner that defies previous understanding of what is possible. It is clear the bureaucracies enhanced productivity is a result of the impact of Information & Communication Technologies.

And if technology can enhance the performance of a bureaucracy, just imagine what it could do if the optimal oil and gas organizational construct, the Joint Operating Committee (JOC). The legal, financial, operational decision making, communication and cultural means of the oil and gas industry were augmented with these technologies? What could be possible. To suggest that the daily commute becomes archaic would be my first hope.

It's clear to me that the technologies have matured and society has benefited. People using the iPhone and the near ubiquitous home computer are compromised in their productivity by their managers need for attendance and the unnecessary ritual of being at the office. This is not to say that the office is something that will expire in its usefulness. It may be the ideal place for teams to meet and solve the big problems they are faced with. Imagine the JOC representative engineers of the producer firms getting together to evaluate and implement a new idea that promises to unleash more value for its owners. A team meeting room may be the best possibility.

The volume of comment and discussion of these trends is entering the mainstream business media. It's time for action, and please join me here. At times I have highlighted the podcasts of Professor Russ Roberts. He has the Podcast EconTalk and is a Professor at George Mason University as well as a Fellow at the Hoover Institute. In his blog he made the phenomenally clarifying statement
Good politics requires action, constant proof that the politician is working tirelessly.
Good economics requires quiet consistency so people can plan for the future.
The times we live in are the greatest example in my lifetime of the tension between these two goals.

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Monday, March 31, 2008

Topics of discussion.

One point that most users will be able to identify with is the recent focus of the industry. For the past year the focus has been on reserves, its land base, its production forecast, how difficult and expensive it is to produce oil and gas, and occasionally the retirement of the brain trust in the next 5 - 10 years. Any topics outside of the realm of these points of discussion is never raised. What about the systems, administration and management of the industry? Are these disciplines no longer considered a part of oil and gas? Is it through the neglect of these areas that is the motivating factor of the need for the People, Ideas & Objects application? Or is this just the natural evolution of the industry to focus on its key value added areas?

When you think about it, the topics of discussion of the industry are the most serious that they've faced. And the most demanding in their 140 year history. The magnitude of the problems and the seriousness of the issues requires 100% of their focus. Is it any wonder that many areas of traditional concern are falling off the table? I don't think so, and I would suggest the responsibility for action will fall on a different group to provide the systems, management and administration. And as we move forward the Users will become the leaders of this new service industry.

It is clear to me that the Users must be the lead in the development of this application. They're the only ones that collectively know how the industry operates. To preclude them from development would render this software quality down to that of SAP's and Oracle's. But there's more then just that. In the future what will the role of these users be in the oil and gas? What I'm getting at here is that People, Ideas & Objects application is the beginnings of a new User-driven technical support industry. Where the Users build their own software, manage and administer the day to day in oil and gas, and provide these critical resources as part of their service offering.

The current focus is not likely to change, and the earth scientists and engineers are off busy with their reserves, land, and production problems. They will need this new service industry to rely on, and will willingly pay for it. The number of people employed is very small for an industry that is in the ballpark of $4.5 trillion in revenue. Over the lifetime of the oil and gas business, the General & Administrative costs have been around 5% of the total. Is it reasonable to assume that this new industry we are talking about is a $225 billion in revenue? I think so, join me here.

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Wednesday, December 05, 2007

Open Office, not the software type.

The SiliconValley.com news (click on the title of this entry for the article) reported on a trend that is occurring at many of the offices in Silicon Valley. Companies such as Cisco, Sun and Intel, have been experimenting and implementing the "Open Office" or cubicle-less workplace. Unlike the cubicle world of before, the Open Office space provides work areas that can be transformed by any of the people assigned to the floor. The motivation for doing this is the company "saves space and money, and encourages collaboration among workers".

On any given day, said Neil Tunmore, Intel's director of corporate services, 60 percent of the company's cubes are empty because people are visiting customers, telecommuting, vacationing or in meetings. Employees work in assigned buildings only three days a week on average and spend 20 of the work hours telecommuting.
and
Already at Sun, about 56% of the workforce, or about 19,900 employees, work without assigned office space.
and possibly the most prescient comment of the article;
"My office isn't a space in a building", Livengood said. "My office is the space where I am."
I think this type of office layout would be ideal for the energy industry. In many of the same ways that the technology companies are experiencing benefits, the energy industry would as well. If we accept the reasoning that each incremental barrel of oil from this point forward will require increasing levels of engineering and earth science effort, then collaboration will be necessary. I wonder how long before employee demands begin to expect these types of working conditions.

According to the article, the companies that have been experimenting with this method of Open Office have experienced substantial savings, productivity increases, quicker decision making, and innovations from the collaborations. Cisco experienced a 40% increase in the number of people they could put on one floor. A savings that could help many of the major cities where oil and gas companies reside, relieve the demand on costly square footage.

The ways and means of work is changing. In oil and gas, using the Joint Operating Committee with collaborative information technologies, supported by a dedicated software development team, new office layouts enabling high levels of collaboration, ah the future.

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Tuesday, September 04, 2007

Leading and Creating Collaboration in Decentralized Organizations

Heather M. Caruso
Todd Rogers
Max Bazerman

Click on the title of this entry to download the .pdf. This Harvard Business School Working Paper provides some insight into the group dynamics of collaboration. I find many of the comments and recommendations are very consistent with my own experiences. These are skills that are necessary in today's marketplace, and I think that the level of collaboration is just beginning to evolve and will become much more complex in the very near future. The authors start out with a chilling example of collaborations failure and looks into the types of group and individual failures.

In reviewing the Web Services paradigm I sourced a document from John Seely Brown and John Hagel with can be read here. In that article it was discussed how the division of labor caused the dynamic of information leaking out of organizations faster then the information is transfered within the organization.

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)
We see this phenomenon in oil and gas where news travels very quickly through the industry. If it were an accounting issue it would be openly discussed with the audit firm, the professional associations and within the industry specific organizations such as the Petroleum Accountants Society. Discussions between CFO's of the various producers is very common and many of these conversations are beyond the scope of many of the other C class executives technical understanding.

The authors note a current example of this "stickiness" and start out with a chilling example of collaborations failure and then look into the types of group and individual failures.
Many employees note that, in decentralized organizations, it is harder to deal with other divisions or departments of their organization than it is to negotiate with outside suppliers or customers. In ordinary cases, this inter-organizational coordination failure which can cost substantial sums of money. In other cases, these failures can be catastrophic, as different agencies within the U.S. intelligence community (notably, the CIA and FBI) neglected to integrate knowledge of the looming threats that existed prior to September 11th, 2001. p. 2
and
Often, instances of coordination failure stem from the failure to appropriately structure the organization around the key inter-dependencies within the organization - whether that suggests organizing by function (e.g., sales, marketing, manufacturing, engineering, etc.), by product group, or by region. Yet, even when organizations are able to design divisions around the appropriate dimensions, there will always be a need to integrate information across the resulting units. We focus this paper on improving information coordination across these organizational units to maximize organizational effectiveness. p. 2
"The Need for Coordination Across Organizational Boundaries."

It is at this point that I believe the energy industry breaks from convention. The Joint Operating Committee (JOC) is the legal, financial, cultural and operational decision-making framework of the industry. The software that is used summarily ignores these facts. SAP, Oracle and others do not fully recognize these facts within their domain of functionality and processing. Theirs are focused more on the classic modular breakdown of General Ledger, Accounts Payable and Accounts Recievable with the occassional Land and Production modules designed to handle the company's interest.
As organizations grow to serve multiple product areas, regions, or demographic groups, they move toward decentralized structure, which enable them to structure the organization around organizational units that match the most important organizational dimension. This system makes it unnecessary for each unit to constantly involve the rest of the company in their local affairs, relying instead on each unit to coordinate their actions with others only when necessary, and to otherwise focus their relatively undivided energies on the niche for which they have been made experts. As a result, these decentralized units demand less monitoring from busy top management teams, expand the organizations capacity to explore and adapt to its environment, and create space for innovative, entrepreneurial problem solving. In addition, it is easier to motivate performance in a decentralized organization than in a tightly controlled centralized structure.
And possibly the authors are speaking proactively. In that the future dynamics of the organization will move closer toward a market configuration as opposed to the strucutured hiearchy. It would certainly appear in this next quotation that is the mindset of the authors.
Nevertheless the world is getting smaller. The various pockets of human society are becoming more dynamic and diverse because they are coming closer together, connected by an increasingly dense web of physical and technological expressways. With these connections, synchronized patterns and coordinated activities are likely to emerge across multiple locales, though they may be exceedingly complex, often anticipate, identify and respond to patterns of activity across the diverse niches their subdivision serve. p. 3
Which is all well and good but as we all have experienced in life, there are consequences of these things. And this is where collaboration can really cause disruption in the day to day functioning of inter-organizational communications. How can each and every producer within a JOC deal with the group dynamics of the property. I would suggest that ignoring the JOC for the majority of the time has been the bureaucracies and software vendors' means of dealing with these group dynamics. The problem with this position is that the tools necessary to have a more direct involvement are influencing the industry and the performance metrics of the JOC may (will?) provide real competitive advantages to those producers that embrace this new dynamic.
Unfortunately, the rapid and novel changes that create the demand for decentralization in the first place often place organization leaders in a considerably less certain, and consequently less commanding, position. p. 3
And here must be classified as another call to action;
Leaders cannot afford to possibly wait for these unstructured collaborations to emerge on their own. Boundaries and bad habits make organization members unlikely to instinctively reach across divisional lines to integrate their knowledge and activities appropriately. p. 4
"Barriers to Information Sharing across Organization Boundaries"

"Intergroup Bias"

There may be over 100,000 JOC's in the global oil and gas industry. Each one is distinct and has elements that make each one mutually exclusive to the others. Different partners, wells, facilities and location are just some of the attributes that make them unique. The authors suggest that this may impede collaboration between the companies associated with a JOC.
One key barrier to cross-boundary information sharing stems from one of the very reasons organizations establish group boundaries to begin with: to create and maintain a recognizable and meaningful distinction between two or more groups in the organization. p. 5
With the assocated size of many JOC's it is possible to have hundreds and possible several thousand people employed exclusively in one JOC. Therefore for each company to dedicate staff to that one area would not lead to too much difficulty. However, the firm has needs that are associated with that JOC that are above and beyond those individuals focus. Much as I have written about the possible difficulties experienced by Chrysler. Where the firm may lose some of its overall technical capability by the focus being exclusively on the JOC and the market that supports it. The firm needs to conduct elements of science and technology capabiliities which in addition to its land base are its key competitive advantages. Here the authors indirectly note the problem that I think is highly related to the Chrysler situation that I wrote about here.
In a decentralized organization, the salience of differing groups memberships and this self serving motivation set the stage for integroup bias - the systematic tendency to unfairly treat one's own group or its members better than a non-membership group or its members. p. 5
and
Competitive pressures on the different groups in a decentralized organization could easily provoke similar forms of intergroup antagonism and diminish or destroy any hope of unstructured, emergent collaboration. Company funding, access to markets, intellectual property rights, and numerous other organizational assets are all potentially scarce resources over which groups with the organization may have to (or feel they have to) compete. p. 6
and
This suggests that the fog created by legitimate competition between organizational groups can prevent group members from recognizing or taking advantage of unrelated opportunities to share mutually beneficial information and collaborate. If derogation of the out-group extends to derogation of the information it possesses, members of one group might foolishly reflect useful information from another group. Alternatively, perceived competition might create an exaggerated fear of sabotage form the other group, predisposing group members to hoard or withhold information form other groups that might leave them vulnerable. p. 6
These quotations add more focus to the problems that may be experienced by establishing the boundaries of the firms in this proposed software development. On the surface it may appear that the need to abort the idea of developing this software would be an ideal position. I would argue that noting could be further from the truth. It is the time and place that we find ourselves operating in that challenge us to work in a more decentralized manner. The technologies, the competitive pressures, the risks and the rewards would lead or motivate individuals to operate at this higher level. The risks are clearly articulated by the authors in this next quotation.
The now-famous intelligence failures surrounding September 11 reveal a situation in which the sometimes conflicting goals of the CIA (intelligence gathering) and FBI (Criminal Prosecution) have created the perception of inter-agency competition for information, time, and access to key informants or suspects. p. 7
One remedy that I could suggest may be effective would be for each company that has a working interest in a JOC would be entitled to the data and information that is available to the active members of the JOC. The ability to share information between the groups electronically is something that can be managed in an appropriate manner when the industry has the capability of a dedicated software developer as proposed here. Lastly the authors note that this intergroup bias may be a simple feature of the assignment of people to groups. What the technology proposal inherent in this blogs writings is attempting. Is to enhance the cross functional collaboration between the various disciplines involved in oil and gas. Hence this proposal provides the opportunity of eliminating one element of the intergroup bias.
Competition is certainly a powerful driver of intergroup bias, but it is not actually a necessary precondition for the emergence of bias. Remarkably, intergroup bias will arise with little more than the mere assignment of people into distinct groups. p. 7
"Group Territoriality"

Group dynamics have a potentially negative effect on the dynamics of establishing the market as the basis of the JOC definition. If these group dynamics are not clearly defined and dealt with the effectiveness of the market and the firm will be at risk. The intergroup bias has a strong tacit concurrence to the definition described, as does Group Territoriality defined by the authors as.
Organizational boundaries do not only serve to distinguish groups from one another, but also to help groups define themselves in a more absolute sense. Unfortunately, just as the former effect poses a threat to cross-boundary coordination through intergroup bias, the latter effect can have negative implications as well. p. 9
and
Once these items are identified as part of a groups territory, we suggest that they afford group members a sense of psychological ownership - claims to, or feelings of possessiveness and attachment toward, those objects. p. 9
When we add the elements of the cognitive and motivational paradoxes to these group dynamics, I think we can see some of the reasons why group territoriality comes into play. There is a sense of urgency involved in many of the operations of oil and gas that can further affect group dynamics. Therefore I think that this should be an area of intense study during this development. Not to add further fuel to the fire, but there is a large disparity in many of the peoples acceptance and use of technology. Not everyone will have the same capacities to deal with the technologies and see the opportunities that others see.
We classify these behaviours as instances of group territoriality action undertaken by a group or by individuals on behalf of their group which are designed to reflect, communicate, preserve, or restore the group's psychological ownership of its territory. Unlike intergroup bias, this preferential attention to the intergroup does not stem from the desire to improve the standing of one's group relative to others. Instead, this behaviour is more inward-looking; it stems from the need to respect and reaffirm the identity, efficacy, and security of the group with the organization. Nevertheless, group territoriality can constitute a significant barrier to emergent intergroup collaboration and information exchange. p. 10
and
Through marking and defining behaviors, group territoriality can often work against information exchange in decentralized organizations. These behaviours exaggerate each organizational unit's focus on itself, facilitating possessiveness and disregard for other units. p. 13
and
The second group need that undergirds group territoriality is the need to establish and maintain a sense of group efficacy in organizational relevant domains. This form of efficacy refers to a groups belief in its collective ability to organize and perform the activities necessary to achieve desired goals, At the broadest level, identification and protection of group territory helps groups to identify the goals they should aspire to achieve. Moreover, when a group's territory is widely recognized by others, such recognition can serve as an implicit endorsement of the group's efficacy in related domains. Control over group territory further enhances a sense of group efficacy by assuring groups of ready access to resources that can facilitate their accomplishments. p. 14
Finally a positive attribute of the times that we find ourselves in is the long term shortage of people in oil and gas. This is providing a level of job security that I have not experienced in the 30 years that I have worked in oil and gas. The authors point out that a secure environment is a precursor to dealing with issues.
When a group feels secure in its environment, it can more easily develop expectations of and predictions about its environment, which can facilitate the planning and execution of activities. p. 14
"Poor Negotiations Across the Organization"

This next topic would be something that is totally new to me. I will leave it to the authors to define the issue and their solution and then I will comment at the end.
The final barrier to effective cross-boundary information sharing we discuss involves the poor strategies used by members of different organizational divisions when they negotiate with one another. p. 15
and
Nevertheless, both parties commonly focus only on the claiming aspect, and destroy value for themselves and for the broader corporation. These failures are due to both faulty cognitive assumptions and to the failure to follow insightful prescriptions about how to negotiate more effectively. Perhaps the three most important cognitive errors are the myth of a "fixed pie" in negotiations, the failure to carefully consider the decision processes of one's negotiation partner, and the failure to recognize opportunities to negotiate in the first place. As parties enter into a negotiation, they too often assume that their task is to divide up a fixed pie of resources. Researchers have described this tendency to view competitive situation as purely win-lose as the mythical-fixed-pie mindset. p. 15
and
Related to the myth of a fixed pie is the cognitive failure to fully consider the perspective and decision processes of the other party. Though many people recognize the importance of "putting yourself in the shoes of others", ample research shows that most of us fail to do so. The price we pay for this failure is weaker negotiation outcomes. The key to creating value in negotiations is to identify areas where mutually beneficial trades are possible. p. 16
and
A last cognitive barrier to effective value creation in cross - divisional negotiations is that the parties fail to recognize that they are involved in a negotiation, thus missing the accompanying opportunity for value creation. pp. 16 - 17
This last point being the key from an administrative point of view. My perspective of being in accounting, audit, and systems has been skewed by wanting to provide the best services to the operational areas. I would suggest that many of the earth scientists and engineers can better appreciate the point of view of the authors.

"Leading Emergent Collaboration"
The challenges to effective emergent collaboration have a number of implications for effective leadership in decentralized organizations. Accordingly, we focus this next section on three key recommendations leaders may explore in order to overcome the threats of intergroup bias, group territoriality, and poor negotiation norms. p. 17
"Link Group Interest to Super-ordinate Interests."
They attacked competition as the root cause of the bias, and simply presented the groups with tasks that each group could only achieve through cooperation with the other. Faced with necessary cooperation, the groups began to exchange help, information and resources, they willingly shared the spoils of their achievements. While this demonstrates the power of the super-ordinate cooperative goals to facilitate cooperative behaviour, the result depended on the replacement of divergent group goals with the common goal. p. 18
Just as actual competition is not necessary to promote intergroup bias, more recent research suggests that actual cooperative goals are not necessary to resolve it. p. 18
In decentralized organizations, however, it can be important to retain and even emphasize the salience of distinct group goals and identities, so as to facilitate the efficient discovery of related resources and expertise. Focusing group members exclusively on a superordinate organizational identity may also distract members from thinking and acting in ways that are consistent with their group membership, diminishing their ability to provide the localized focus, perspective, and actions on which a decentralized organizational structure depends. pp. 18 - 19
It should be made clear that no one group can achieve the superordinate goals, nor can one group give the organization sufficient richness and depth. Group members can thus be encouraged to see themselves as fundamental linked to out group members while remaining cognizant of the fact that the link itself depends on their ability to contribute localized expertise to the others. p. 19
"Frame Collaboration as the Solution to Group Needs."
The underlying drivers of group territoriality are the groups needs for a sense of identity, efficacy, and security. the natural impulse for groups and their members is to satisfy these needs by becoming inwardly focused, by utilizing group territory to meet these needs, and by engaging in territorial behaviours to protect their ongoing ability to continue utilizing the territory for those purposes. p. 19
The key underlying issues here is that groups often seek to satisfy their needs by turning their attention exclusively to their own members and territory. They ignore or fail to recognize opportunities to satisfy their needs through, rather than in spite of, interference from other groups. p. 20
Raising the profile of eagerness to collaborate as a dimension of identity can thereby create a self-sustaining meaning and salience in the organizational environment, as it encourages groups to refer to each other not only in terms of their territory proper, but also in terms of their approach to sharing and exploring territory. p. 20
With the increasing popularity of cross-functional teams, it seems like it should be especially easy to sell collaboration to organizational group members as a way of developing new competencies and enhancing their sense of efficacy. However, because people are often drawn into collaboration across functional or disciplinary lines, group members may instead feel that they have been chosen to primarily "represent" and advocate for their group's ideas and approaches in the interaction. pp. 20 - 21
By thus highlighting the prospect of substantial losses, leaders can capitalize on the groups need for survival and increase the willingness of groups and their members to accept the security risks posed by information exchange and collaboration. p. 21
"Enable and Encourage Effective Negotiation Behaviours"
The second aspect of getting organization members to negotiate effectively across the divisional boundaries is to establish strong explicit norms (especially during times of change or transition) that support information gathering, disclosure, and constructive criticism. p. 22
This underscores the critical point in maximizing organizational value-creation during cross-divisional negotiations: optimal outcomes demand that a leader instill, and reinforce, norms that promote information sharing and discourage information hoarding. pp. 22 - 23
Some might argue that a norm of information sharing and collaboration would destroy "constructive conflict" within an organization. We do not agree. We think that it is fine for divisions to compete along many fronts, including value claiming once the total value of the pie has been maximized. But, such competition should not destroy value. Just as organizations have norms against lying, deception, fraud, and hiding defects in products, we argue that organizations could also have strong norms about optimal collaboration across units. p. 23
This last section of their document providing many of the solutions the authors have found to the group dynamics. I am unable to comment constructively on many of the points. I will however note that during my "online" studies for my MBA. I found it particularly difficult for most of the other students to offer or accept any constructive conflict in the discussions. The initial feeling is that conflict is something to be avoided and if anyone raises it they are not cooperating appropriately within the group. I tend to disagree primarily out of my type "A" personality, but also because I feel fundamentally that the contradictions and conflicts in life are the best means in which to identify and resolve issues. If the groups approach is to avoid conflict, then I feel that the groups approach is to get along and go through the exercise without any real debate. (Or argument.)

These last two blog entries have dealt with some of the personal issues that we will face in these developments. How best to proceed from this point, I think, is to establish this area with some real research that provides us with key understandings of the unique involvement here. With this research we should be able to identify many of the tools necessary to mitigate the problems and maximise the opportunities. Tools such as a comprehensive code of conduct that adopts these principles and research findings, and I am certain that most of the real issues remain undiscovered as we proceed down this road.

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Tuesday, August 28, 2007

Professor Paul Romer on Growth


Click on the title of this entry to be taken to a podcast from www.econtalk.org. Once there you will be able to download Professor Paul Romer's paper and listen to the podcast.

Stanford Professor Paul Romer is also a Senior Fellow at the Hoover Institute and one of the many academics that I follow. He is the author of the theory and ideas contained within the "People, Ideas and Things" as the three key attributes of economic growth. Recall that this was the initial idea that I used in calling this software development "People, Ideas and Objects."

At approximately 16:10 into the podcast there is a discussion that is very pertinent to the energy industry. And that is ideas need to be discovered to maintain growth. As we learn more, knowledge becomes more important in the enabling of growth in economies. And as economies increase in size, more ideas are required more frequently. In turn economic progress has enabled more people to be engaged in the discovery process. Knowledge building on prior knowledge, and more and more people engaged in the discovery process. Professor Romer notes over time, these two factors are why we are able to attain higher rates of growth.

The oil and gas industry is of course built on ideas. The industry has achieved its current levels on the basis of the ideas that have been generated over its 140 year history. To move forward will require more ideas, and at a faster pace. So not only is it an application and development of the earth sciences and engineering disciplines, it is a never ending escalation of knowledge. Tell me how, and explain to me why we expect the current bureaucratic corporations will ever attain this acceleration in idea generation and application? These concepts also imply that if we do not re-organize the industry, we will never attain anything greater then what exists today. We are organizationally constrained.

Professor Romer is asked during the podcast about securing intellectual property. As we have learned through the writings of Professor Langlois markets are made up of individuals. I believe that the tie-in of ideas and markets is a key attribute of the energy industries future. The motivation to pursue our own ideas is monetary. Once you have secured your rights by publishing them, then and only then are they used for the greater benefit of all. This is the dual role of copyrights, that they are earned through publication and the source of value generation in the future economy.

Meta ideas or idea discovery systems are an inherent part of this systems module definition. A definition that includes both Research and Capabilities, and Knowledge and Learning modules. Only when the organizational key players (the JOC) are recognized in the legal, financial, operational decision making and cultural frameworks will the ability to generate and use ideas come about. Elements of these two system modules will include the functionality of tracking and valuing the intellectual property. Professor Romer states that ideas lead to change which leads to growth. Bureaucracies can't change fast enough for the markets growth needs.

These comments of Romer's provide a clear understanding of how the energy industry will increase or maintain its productive capacity. Ideas, and their discovery process are the life blood of the earth scientists and engineers, and more importantly the future of this industry. Oil does indeed exist in the minds of oilmen.

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Tuesday, June 12, 2007

Steve Job's Keynote Address.

Click on the title of this entry to go to Apple's CEO's delivery of his Keynote presentation to the Apple developers conference.

I am a Mac person, I have never purchased a PC, and thankfully will never have to. The manner in which I work can not be replicated on a Windows machine. I can break the Windows machine within a few minutes and have an inability to move at the PC's induced slow pace. As a result in order to do my work I can achieve more then double the productivity on a Mac. If this is vendor based lock-in, then I admit I am a dupe. Such that I would also recommend everyone discover the advances on the Mac. By purchasing a Mac and using it exclusively for the six months necessary to make the transition from Windows. Most people will experience an increase in their personal, and work, productivity.

The beginning of this process should start with the number one salesman of Apple doing his trademarked presentations. Steve Jobs shows many of the ways that the Apple interface is superior and provides this bump in productivity. The one and half hours to view this video is time well spent, and will provide an understanding of why his products are so different. I highly recommend viewing the presentation and starting on the transition to a Mac as soon as you can.

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