Showing posts with label Romer. Show all posts
Showing posts with label Romer. Show all posts

Tuesday, June 30, 2015

You Thought I Was Bad

I frequently make the claim that our value proposition. Which is based on a comparison of our business model vs. the status quo bureaucracy. Provides the oil and gas industry with an additional $25.7 to $45.7 trillion in incremental value over the next 25 years. Some people may find this to be too much of a difference to be valid. I say look at the facts of how our value proposition is calculated, and the sorry state of affairs that the oil and gas industry is in. Then you will see that this value is available by implementing the Preliminary Specification in a timely manner.

Even my claims are now being out done by none other than the number one consulting firm in the world. McKinsey Consulting are claiming in an article that the Internet of Things (IoT) will generate $4 to $11 trillion in value by the year 2025. That’s annually! Which makes my $1.0  to $1.8 trillion per year look pretty small in comparison. Its good to have such prestigious company in the same nuthouse that I occupy. Here’s what they had to say.

The Internet of Things—sensors and actuators connected by networks to computing systems—has received enormous attention over the past five years. A new McKinsey Global Institute report, The Internet of Things: Mapping the value beyond the hype, attempts to determine exactly how IoT technology can create real economic value. Our central finding is that the hype may actually understate the full potential—but that capturing it will require an understanding of where real value can be created and a successful effort to address a set of systems issues, including interoperability.

To get a broader view of the IoT’s potential benefits and challenges across the global economy, we analyzed more than 150 use cases, ranging from people whose devices monitor health and wellness to manufacturers that utilize sensors to optimize the maintenance of equipment and protect the safety of workers. Our bottom-up analysis for the applications we size estimates that the IoT has a total potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025. At the top end, that level of value—including the consumer surplus—would be equivalent to about 11 percent of the world economy.

McKinsey are on the same wave length that I am in terms of the impact that the Internet is going to have on the business community. They are applying their analysis to all industries to come up with their much larger number. However the reasons that the value are being generated are the same. They note.

The digitization of machines, vehicles, and other elements of the physical world is a powerful idea. Even at this early stage, the IoT is starting to have a real impact by changing how goods are made and distributed, how products are serviced and refined, and how doctors and patients manage health and wellness. But capturing the full potential of IoT applications will require innovation in technologies and business models, as well as investment in new capabilities and talent. With policy actions to encourage interoperability, ensure security, and protect privacy and property rights, the Internet of Things can begin to reach its full potential—especially if leaders truly embrace data-driven decision making.

A little background into our name. In the late 1990’s Professor Paul Romer then of Stanford University came up with what has come to be known as “New Growth Theory” how economies grow in the 21st century. It used to be that if you wanted to grow the economy you should invest in financial capital, transportation or communications. These investments had the effect of enabling further growth in the economy. This theory has waned as the economy has become more advanced. Therefore a new theory for growth was needed. In essence Professor Paul Romer of New York University “New Growth Theory” is that you invest in People, Ideas & Things. I thought it would be worthwhile to adopt this as the name of the company and only converted the “things” to “objects” as we are object based software developers. Clearly this also ties in with the Internet of Things being a large part of Professor Paul Romer’s new growth theory. McKinsey now seem to be on to this as well. Here is Professor Romer’s concluding remarks in the Library of Economics and Liberty.

Only a failure of imagination, the same one that leads the man on the street to suppose that everything has already been invented, leads us to believe that all of the relevant institutions have been designed and that all of the policy levers have been found. For social scientists, every bit as much as for physical scientists, there are vast regions to explore and wonderful surprises to discover.

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

Sunday, August 14, 2011

McKinsey, Measuring the Nets Growth Dividend

It’s the weekend which means its time to review some of our McKinsey backlog. Today we have the executive summary of “Internet Matters: The Net’s Sweeping Impact On Growth, Jobs and Prosperity” from the McKinsey Global Institute.

I want to highlight three quotes from the executive summary as they pertain specifically to the work that we are doing here at People, Ideas & Objects. The first quote states what should be obvious to most people by now;

Our research shows that more than 75% of the value added created by the Internet is in traditional industries. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet. 
Applying technology to the oil and gas industry is to benefit those that work within the industry and the industry itself. To a large extent, what the Draft Specification provides is necessary functionality and process management for the industry to innovate and meet the markets demands for energy. Its not a nice to have but a necessity.

A few days ago we discussed Professor Paul Romer’s New Growth Theory and the three themes of People, Ideas & Things. In this next quotation McKinsey Global Institute discusses endogenous economic growth’s impact on per capita GDP.
The maturity of the Internet correlates with rising living standards.
Leveraging endogenous economic growth theory, we have been able to show that Internet maturity correlates with growth in per capita GDP. Using the results of the correlation, a simulation shows that an increase in Internet maturity similar to the one experienced in mature  countries over the past 15 years creates an increase in real GDP per capita of $500 on average during this period. It took the Industrial Revolution of the 19th century 50 years to achieve the same results. This shows both the magnitude of the positive impact of the Web at all levels of society and the speed at which it delivers benefits.  
If we are currently seeing these dramatic effects on per capita GDP, then the Information Revolution is well entrenched and the benefits to society are beginning to develop. As time passes these benefits will multiply and the values realized will grow. Now is the time to become active in these areas and start at what can only be described as the beginning of the commercialization of the Information Revolution.

This last quotation from McKinsey’s report advises where business leaders should put the Internet in terms of their strategic agenda. The Information and Communication Technologies are too powerful to leave outside of the tool kit of any CEO or business leader. Not only are they are powerful ways in which to lever competitive advantages, they leave areas of weakness exposed to competitors who exploit these technologies.
All business leaders, not just e-CEO’s, should put the Internet at the top of their strategic agenda.
Business leaders must optimize the benefits gleaned from the Internet through innovation and change. It is no longer a choice, given that many businesses face competitors who capitalize on the power of the Internet to Innovate business models. Business leaders should play a significant role in the spread of the Internet and systemically review how the Internet allows them to innovate more aggressively and even reinvent their business models to boost growth, performance, and productivity. 
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, August 10, 2011

What's In a Name...


One of the fundamental underlying beliefs of People, Ideas & Objects is that for the oil and gas industry to increase its output requires that we re-organize. Adam Smith wrote in his book, The Wealth of Nations, that all economic growth was a result of the division of labor and specialization. Applying these principles have been the primary means for all economic growth since Smith wrote his book in 1776. That is to say that all economic growth has been the result of the reorganization of labor around enhanced divisions of labor and further specialization.

Professor Paul Romer of Stanford University and New York University is a proponent of what has come to be known as New Growth Theory. We have written about Romer on this blog many times before. In this Reason Magazine interview Romer talks about his People, Ideas and Things as the three underlying themes of new growth theory. I have taken these themes as the basis of our name People, Ideas & Objects and only transferred Objects for Things as we are Object based software developers.

(From Reason)
As one of the chief architects of "New Growth Theory," Paul Romer has had a massive and profound impact on modern economic thinking and policymaking. New Growth Theory shows that economic growth doesn't arise just from adding more labor to more capital, but from new and better ideas expressed as technological progress. Along the way, it transforms economics from a "dismal science" that describes a world of scarcity and diminishing returns into a discipline that reveals a path toward constant improvement and unlimited potential. Ideas, in Romer's formulation, really do have consequences. Big ones.

So what does all this mean. Simply new growth theory, and the reason it resonates here at People, Ideas & Objects is that these underlying concepts can multiply the output of industries.

(From Romer’s Paper Economic Growth)
Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding: possibilities do not merely add up; they multiply.

People, Ideas & Objects provides the oil and gas industry with a means to have people, their ideas and things to be used in new and innovative ways. By having the software, and most importantly a software development capability available to accommodate the changes made from any new ideas, the industry can realize its full potential. This is what Professor Romer is talking about in New Growth Theory and what is enabled here by the software and particularly the software development capability proposed by People, Ideas & Objects.

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.

Tuesday, December 22, 2009

Professor Paul Romer, Endogenous Technical Change

We are in the middle of a comprehensive review of Professor's Carliss Baldwin and Eric von Hipple new working paper "Modelling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation". In the last post we learned that innovation within the community of People, Ideas & Objects is considered "a non-rival good: each participant in a collaborative effort gets the value of the whole design, but incurs only a fraction of the design cost." Music to my ears and a definitive benefit when a user considers their potential involvement in this community.

In a related document, Professor Paul Romer's October 1990 "Endogenous Technical Change"  discusses the impact of these non-rival goods impact on economic growth.

Growth in this model is driven by technological change that arises from international investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input it that it is neither a conventional good nor a public good; it is a non-rival, partiallyexcludable good.
These non-rival goods are being codified in the Draft Specification and developed by this community in the Preliminary Specification. The community will also develop their value adding service offerings, to be used with the People, Ideas & Objects software applications they've developed, in providing their producer clients with the most profitable means of oil and gas operations. I'd like to see Oracle compete with that.

What I want to highlight is Professor Romer's note that mankind's progress was constrained for a long period of time. Not until we were able to rise above the grind of working for our basic needs did we move forward.
This result offers one possible way to explain the wide variation in growth rates observed among countries and the fact that in some countries growth in income percapita has been close to zero. This explanation is reminiscent of the explanation for the absence of growth in prehistoric time that is offered by some historians and anthropologists: civilization, and hence growth, could not begin until human capital could be spared from the production of goods for immediate consumption.
Taken in this context it is clear to me that the community and these software applications have the capacity to significantly increase the productivity of the oil and gas producer. Our way of economic organizations have brought us to the point where we are today. To move forward in the future we need to revisit the ways in which we conduct business. And that is my desire for the oil and gas industry with this blog, software and communities development. What Romer has to state on this point is clearly beneficial for all concerned.
The most interesting positive implication of the model is that an economy with a large stock of human capital will experience faster growth. This finding suggests that free international trade can act to speed up growth. It also suggests a way to understand what it is about developed economies in the twentieth century that permitted rates of growth of income percapita that are unprecedented in history.
We stand on the shoulders of giants and begin a process of such great potential. Please join me here in 2010.

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Thursday, October 22, 2009

Paul Romer on BBC

We have covered former Stanford Professor Paul Romer in this blog before. In fact People, Ideas & Objects is the name that I derived from Romer's new growth theory. New growth theory suggests that future economic growth will be developed from People, Ideas & Things. I simply changed "Things" for "Objects" as we are object based software developers.

Romer is on the short list for a Nobel prize because of his new growth theory. In a related BBC commentary, an excellent summary of his thinking of what "Ideas" are about.

Physical objects are often scarce; economic growth is often limited by that scarcity. Conventional economics is the so-called dismal science, dominated by the law of diminishing returns where businesses compete with each other into their ultimate extinction, capitalism making the rope to hang itself.
Paul Romer disagrees, profoundly. Ideas are what makes the difference, and turn economics into the optimistic science. And in the networked world, in software, in new research-heavy disciplines such as biotechnology, ideas are shared across frontiers at lightening speed and then breed much faster than rabbits.
Needless to say Romer is blogging and providing more substance to his ideas here. His recent post on how certain countries were able to deal with the housing of its citizens is fascinating. Are we destined to learn these same lessons from the beginning again? We would be foolish not to review what works, and where it works, based on the experiences we have to date. That is what Charter Cities is about and I think the lesson is directly applicable to the work we are doing in People, Ideas & Objects software developments for oil and gas.

"There’s a little corner of economics where there still exists a sense of wonder about what is possible."


Please join me here.

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Tuesday, March 10, 2009

New Growth Theory

In an Op-Ed by Thomas Friedman in the New York Times entitled The Inflection Is Near? Friedman asks if the economy is undergoing a fundamental change.

What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”
Professor Paul Romer of Stanford University wrote his Reason Magazine 2001 article on New Growth Theory . People, Ideas & Things were the new elements of economic growth. Replacing the traditional economic growth variables transportation, communication and financial resources. 

That's the reason or justification for calling this project People, Ideas & Objects. Its about new growth in the energy industry. Using the Joint Operating Committee to define new and innovative ways of making the oil and gas industry more profitable and productive. Please join me here in taking the Draft Specification to the next level, the Preliminary Specification , and know that I am looking for the People to make this real.

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Tuesday, February 10, 2009

Professor Paul Romer on Banks.

First of all Professor Romer is someone we follow pretty closely here at People, Ideas & Objects. His new growth theories are short listed each year for the Nobel Prize in Economics. In a nutshell those new growth theories provide the replacement for the old growth theories of investing in Communications, Transportation and Financial infrastructure to expand an economy. His new growth theories are none other then simply People, Ideas and Things. The precursor to the name of this project.

As one of the chief architects of "New Growth Theory," Paul Romer has had a massive and profound impact on modern economic thinking and policy-making. New Growth Theory shows that economic growth doesn't arise just from adding more labor to more capital, but from new and better ideas expressed as technological progress. Along the way, it transforms economics from a "dismal science" that describes a world of scarcity and diminishing returns into a discipline that reveals a path toward constant improvement and unlimited potential. Ideas, in Romer's formulation, really do have consequences. Big ones.
Professor Romer is in the February 6th version of the Wall Street Journal with an interesting article entitled "Lets Start Brand New Banks" and in the February 6th Economist Magazine with "Lets Start a Bank". Romer suggests that instead of investing to recapitalize the banking system, it would be more effective to start new banks, and capitalize them with the remaining $350 billion in TARP funds. Noting that with the fresh cash in new banks, the ability to fund up to $3.5 trillion in new lending would occur under existing banking legislation.

This type of thinking resonates with me. Why not skip the failed capital restructuring? The first half of the TARP funds did nothing to spur lending, its intended purpose. Throwing more money at the banks will only provide the same results. Doing the same thing over and over, expecting different results is ...

I have another suggestion. Lets invest in new oil and gas companies. Firms like CNRL can be picked over by those that prefer to kick dead horses for a living. What we need is new organizations based on new and more innovative organizational constructs. Just as the Joint Operating Committee is the legal, financial, operational decision making, cultural and communication frameworks of the industry. Lets build a system that provides the software and services to support the Joint Operating Committee. A system that moves the hierarchies compliance, governance, tax, royalty and SEC requirements and aligns it to the Joint Operating Committee and its frameworks. The investors would then have the tools to manage the assets that they can cherry pick off the CNRL asset auctions. Providing as clean a break as Romer suggests for the banking system. Resurrecting old dinosaurs may make for great story lines in Hollywood, but not at this time and place in terms of the future capabilities of old organizations vs. new.

The investors that are disenchanted with the treatment and results of the previous managements, should fund these software developments and build these new organizations to make them profitable and productive for themselves and society. Carl Icahn was in the Wall Street Journal on Saturday, commenting on the topic of "Capitalism Should Return to Its Roots".  Mr Icahn states:
I have initiated United Shareholders of America to empower shareholders to institute changes, and I encourage you to join our cause. A majority of the U.S. population owns shares. Their voices need to be heard -- now -- on Capitol Hill and in the boardrooms of corporate America.
Mr Icahn's difficulties in dealing with management are well documented. I can assure you that I have faced many of the same difficulties in presenting the ideas around People, Ideas & Objects to the management of oil and gas concerns. Their attempts to steal these ideas and obstruct them from being developed is known by myself, and I can assure you I do not have the scope of Mr. Icahn's resources. 

Nonetheless I think we are in a time, and have a need that makes this software development project real and timely. Please join me here

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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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Monday, June 18, 2007

Plurality should not be assumed, without necessity.

This quotation is "Occam's razor" which I used as the title of my thesis that this blog is based upon. Click on the title of this entry for the Wikipedia entry.

I've found a few comments that bring about a different perception of where we are in this technologically induced, changing world.

"If we get this wrong, it doesn't matter what else we get right."
I read that for the first time on the Singularity Institute weblog. I found it highly reflective of the times that we live in, and the critical nature of some of today's technologies influence over our future.

Another interesting point was put across by Stanford Professor Paul Romer. Instead of economies being driven by "Land, Labor and Capital," it was now "People, Ideas and Things" that mattered.

And in a critical review of Thomas Friedman's best seller "The World is Flat", Professor Edward E. Leamer states the following.
"The speed at which ideas are exchanged determines the pace of progress."
and
"If you think of humans on Earth as a single thinking organism, then until the 1980's we have been using only about 1/3 of our global brain because 2/3rds of humanity were shut in closets where they couldn't communicate with the rest of us."
And maybe, I am thinking, the future has arrived.

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Tuesday, January 02, 2007

A new addition for 2007.

During December of 2006 I added the books that I have found of interest and feel provide some value to the readers who may share my passion for this topic. Another area that I think I will add some value for the reader is a listing and my justification for readers to go out and secure documents that are published in a variety of journals.

There are three authors that provide the stimulation for many of the ideas here. They are Dr. Paul Romer at Stanford, Dr. Giovanni Dosi at the Sant'Anna School of Advanced Studies and Dr. Carlota Perez who is a guest researcher at Cambridge University. These three have formed a topic that is of much interest to me and I would like to point out the individual documents that are currently being research by myself.

In the past I would post many of their thoughts and ideas, however, I believe that to be a violation of their Copyright. I therefore will only point them out and suggest that many of the documents are hard to source and in most cases, require access to the major academic database services.

So for this first installment I want to highlight three documents that combine to form a series of discussions about the changes that are happening in the business and technical worlds. They reflect the changes will be some of the most radical that we have faced in many years and will be difficult for people and organizations to adapt. Much of the writing notes a transition to a different time where the fundamental basis of the economy has changed. We are in this period now and it seems timely to review these three documents.

  1. Perez, Carlota (2004) Finance and Technical Change: A Long Term View (Provided here from her website.)
  2. Romer, Paul (2007) Economic Growth (Provided here from the Concise Encyclopedia of Economics.
  3. Perez, Carlota (2003) Rethinking Globalization After the Collapse of the Financial Bubble: An essay on the challenges of the Third Millennium (Provided here from her website.)
I hope that you enjoy them as much as I. As I begin to conduct more research, I trust there will be many more of these types of posts.

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Sunday, August 27, 2006

Executive Summary

It was in May 2004 that I published the preliminary research report entitled “Plurality should not be assumed without necessity”. (Readers are encouraged to revisit the preliminary report to assist in the context of this report.) The main thrusts of that document were its two primary research findings. The first finding was that the key organizational construct of the oil and gas industry is the joint operating committee. The joint operating committee is the legal, financial, cultural and operational decision-making framework of the industry. If the industry were to move the accountability framework in line with the four frameworks of the joint operating committee it would achieve greater organizational speed and innovativeness. The other research finding was that the software the firm uses defines the organization. Noting “SAP is the bureaucracy” it is apparent that to change the organizational construct requires that systems be developed to support the proposed organizational change.

The preliminary report also contained a project management proposal to build these systems around the joint operating committee. This budget was in the $70 – 85 million range and would require four years to complete. The budget of that system may remain within that scope; however, this final research report recommends that the industry pursue a proof of concept. This proof of concept is to build a Petroleum Lease Market application to start the organizational transition to the joint operating committee. This application’s scope has been budgeted at $2.6 to $3.5 million.

The four cornerstones of a technical vision.
Critical to the success of any prospective software development would be the impact of any future Information Technologies (IT). I am including a technical vision consisting of four key technologies, and describe how the future may be affected by these technical changes.

IPv6 (2 to the power of 128 in terms of addressing space.) enables the elimination of the technological model known as client – server. Replacing it with static IP addresses that can identify anything and everything. Enabling any electronic device that is connected to the Internet to be monitorable and controllable. I believe the engineers and geologists can and will do with this level of static addressing is unlimited.

The second element of the vision involves Java and the incremental nature of typed, object oriented programming languages. Where the predictability and control of systems is achieved through the strong implementation of strict typing.

Java is also enabling the exception handling capabilities and asynchronous process management that is critical to handling intra-partner transactions and interactions.

And finally wireless Internet through Wifi and soon Wimax, enabling electronic devices to be connected at low costs and high speed and in turn eliminating the “last mile” issues of technological access.

These four technologies will be revolutionary when applied over the joint operating committee as the organizational focus. This technical vision provides the industry with the organizational capability to facilitate rapid innovation in a controlled and managed environment.

Partnership Accounting.
I will then go on to discuss "Partnership Accounting" and how an algorithm can capture the unique and demanding accounting and reporting needs of the producers represented in the joint operating committee.

A new accounting dynamic is introduced by using the joint operating committee. This accounting dynamic enables the interactions to be quantified in an algorithm that although complex, addresses the accounting related issues that traditional ERP systems can’t handle.

The Partnership Accounting difficulty comes when all participants of the joint operating committee have been contributing people, financial and technical resources, and direct costs on behalf of themselves, and / or, with other members of the joint account. Through the JOC each producer’s collective resources are pooled to attain the highest level of technical capability, management and tactical deployment, which is sourced from the partner companies.

These costs and resources are being incurred on each producer’s behalf and may not be shared, but may be eligible to offset their obligations to other partners, be distributed equally among the producers interests, or need to be recognized by the joint operating committee irrespective of their source and nature. This is further complicated by the fact that many of the internal charges and overhead allowances that have traditionally been charged to the joint account also become redundant. These overhead styles of costs are replaced by the specific costs that were directly incurred by the producer, as represented in the joint operating committee. The system will capture these components as they are incurred by the employee / worker / investor / consultant / producer in an active job costing state as the user is logged on.

The nature of the oil and gas business is unique in many ways and this Partnership Accounting discussion will capture many of the issues that an oil and gas system needs to address. For example:

  • Daily and monthly production volumes.
  • Differing currencies of producers.
  • Differing currencies of operations.
  • Currencies that relate different accounting issues based on the criteria of one being balance sheet vs. income statement accounts.
  • Spec vs. raw products and by-products.
  • Processing and gathering fees based on (non) ownership,
  • Imperial vs. metric reporting standards.
  • Nominations and or commingling of gas.
Providing an unlimited set of possible reporting scenarios for each working interest owner. The partnership Accounting module’s algorithm needs to capture and deal with these nuances within this system.

Military Command.
I then by way of analogy, will note the traditional military command structure of corporals to generals as a replacement to the regular hierarchy. It is foolhardy to eliminate the hierarchy and lose some of the attributes of a control structure. I discuss how a similar military command type of structure can be used to enhance and augment the managements’ control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as represented by the JOC as their employers.

This military command structure will draw a parallel to the interactions of various military groups interacting under NATO. Where an army major of a branch of the U.S. military may have Canadian, French and / or British soldiers under his direct command. With these military personnel changes happening in a fluid, dynamic and ad-hoc basis.

Linear historical perceptions vs. the logarithmic and exponential future possibilities.
Stanford University Economist Dr. Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. The use of ideas has potentially logarithmic or exponential value creating capabilities. Progress and growth can be better attained through application of intellectual property within an industry.

Innovation is the beginning of this process. And to attain the highest level of innovativeness, the Joint Operating Committee has been proven by this research to be the ideal organizational model for the producers. This will not happen however, until such time as the systems are developed and in place, and the system developers’ capability becomes an inherent part of the capability of the industry.

Genesys value proposition.
In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is similar to Google's, where the costs of development are allocated over a larger base of users. Each user benefiting from the collective users purchasing power, demands and capabilities.

Google is proving this is the nature of software. The value of this proposition is something that I don't believe has been fully implemented or realized by the producers. It is my supposition here that the Oracles and SAPs realize this latent value. It is therefore my assertion that the oil and gas industries overall costs of systems development would decline under this proposed model.

Who would Henry Ford hire?
I also want to ask a question of the people who work within the oil and gas industry. That question is, whom today, would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago.

Just as Ford needed a new "type" of worker for his assembly line invention, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment? What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Calls to action.
Last if not least this proposal will note and discuss the numerous calls to action from:
  • Oxford Analytica.
  • Harvard University.
  • MIT.
  • Energy Secretary Bodman.
  • McKinsey Consulting.
  • SEC Chairman Christopher Cox.
  • Sir John Browne of BP.
  • John Hagel III and John Seely Brown
  • and many others.
These have become predictable in their message and their frequency. Many of these messages noting the time to act is now. And that is this proposal's message to industry.

This proposal is a clean slate proposal. There are no constraints in terms of existing code or client base to deter from the focus of these developments. The attainment of this type of software and software development capability must be built from the start. It is therefore expected that this proposal will be accepted and funded as required.
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Tuesday, August 08, 2006

The plan

With the 200+ entries into this blog, I see that a theme has developed. Two articles that I read last week were the trigger to realizing this theme, and now a plan has emerged. Senator John McCain in Fast Company wrote on the subject of courage. Stanford Economist Paul Romer writing on the topic of economic growth. It is clear to me now, the time in which the oil and gas industry builds these systems is now.

In the next month I will be writing a new proposal that incorporates the plurality document as its appendix. This new proposal will take a number of themes that I have written in the past six months, relate them all and publish them for distribution to the industry to consider and act upon.

This proposal will of course focus on the joint operating committee as the central organizational focus of the software. This is a theory that deserves to be fully tested through its adoption by industry. It is an idea that provides a sound foundation for the effective management of oil and gas assets. An idea that is based on facilitating the earth science and engineering disciplines greater innovativeness. An idea that can augment a producers capability and speed in this difficult time for oil and gas.

I will also be including the four cornerstones of the technical vision. How the impact of these technologies will affect the oil and gas market. IPv6 enabling the elimination of client - server and replacing it with static IP addresses for everything including your toothbrush. What I believe the engineers and geologists can and will do with this level of static addressing is unlimited. The incremental nature of typed, object oriented programming languages like Java, our chosen language. Java enabling the exception handling capabilities and asynchronous process management that is critical to handling the intra-partner interactions. And finally, Wifi enabling everything to be connected at low costs and high speed. These four technologies will be revolutionary in the oil and gas industry when layered over the joint operating committee as the organizational focus.

With this technical vision layered over the joint operating committee, I will then go on to discuss this blogs entries regarding "Partnership Accounting". How an algorithm can capture the unique and demanding accounting and reporting needs of the producers as represented in the joint operating committee.

I will then note the military command structure as a replacement to the regular hierarchy. It is probably foolhardy to eliminate the hierarchy and to loose some of the attributes of a control structure. In this blog I have discussed the military command type of structure to augment the managements control apparatus. This also allows the human resources to be deployed in a greater diversity of situations, and have their tasks outlined and issued from a variety of producers as their employers. This military command structure will draw a parallel to the interactions of various military groups interacting under NATO.

I will then want to highlight the historical perception of linear thinking and contrast it to the logarithmic and exponential futures. Stanford University Economist Paul Romer has captured what the future economical progress can be. In a world of limited resources it need not be a zero sum gain. That the use of ideas have potentially logarithmic or exponential value creating capabilities.

In addition to all of these topics of discussion I will reiterate the Genesys value proposition. A value proposition that is not dissimilar to Google's. Where the costs of development are allocated over a larger base of users. Where each user is able to benefit from the purchasing power and capabilities of the entire population of users. This is the nature of software and the value of its proposition is something that I don't believe has been fully implemented or realized by the producers.

I also want to ask one of my favorite questions of the people within the oil and gas industry. That question is, who would Henry Ford hire? A question that is just as pertinent today as it was 100 years ago. Just as Ford needed a new "type" of worker, so will the prospective oil and gas producer. What type of employee will the producers need in this dynamic networked environment. What type of skills and capabilities should the oil and gas worker obtain to be optimally deployed in the future oil and gas industry?

Today's news that BP has shut in their Alaskan production due to pipeline leaks is evidence of the tight balance between supply and demand. The market demands for energy can not sustain too many large fields being shut in. Companies are already being questioned by the cynics and those that can least afford the higher prices.

Last if not least this proposal will note the 12 + calls to action. Oxford, Harvard, MIT, Energy Secretary Bodman, McKinsey Consulting, SEC Chairman Christopher Cox, Sir John Browne of BP, John Hagel III and John Seely Brown and others. These have become predictable in their message and their frequency. Many noting the time to act is now. And that will be the proposal's message to industry.

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Thursday, August 03, 2006

The future...

I've come up with some new thinking that was more or less prompted by two articles I read today. These articles have put the final parts of the foundation and context of where I stand personally on this software development project. As may have been noted in my previous entries the fight with the industry is over to a large extent. I am willing to let what has happened pass into history with no remorse on my behalf. It may very well be time to move on and as such, this blog has served its purpose in securing and publicizing my intellectual property.

The first article "In Search of Courage" is from Fast Company and was written in 2004 by Senator John McCain. The second set of articles were written by Stanford Economist Paul Romer entitled "Economic Growth" and I'll start here and then move to the McCain article with a summary at the end.

When I was thinking as much as I could about the competitive nature of the software industry, I kept thinking what an enduring competitive advantage might be in such a fast moving business. It seemed that by the time you have adapted to the new requirements, more fundamental changes were necessary to be implemented. A never ending chasing your tail type of scenario. The only sustainable competitive advantage that I could determine was intellectual property. It was therefore in this area that I set out to establish my competitive advantage. And it is there that I was able to create the plurality document that establishes the copyright for these developments.

What I didn't know at the time was that ideas had consequences. The consequences of this particular idea was the repeated slamming of doors of opportunity in the oil and gas industry. Naively I believed that many of the industry leaders would see the value behind using the joint operating committee as the organizational focus and we could rally the troops around the development of the software. Since I had wrote the research I earned the copyright and the rest was history. Little was I aware of how the entire document would be perceived as a threat from the management of the industry. I know now what the consequences of good ideas are, as I have lived them for the last 30 months. I also now know that it was not personal, it was and should have been the expected reaction to such a forceful idea.

Paul Romer is an economist at Stanford University and is cited as having a significant influence in the study of economics from the point of view of growth and value. He concluded in the mid 1980's that the real value in the future was intellectual property (IP). Noting that IP was capable of multiplying the economies output and growth. That this multiplication had long term effects of making significant growth impacts on all economies. That ideas have consequences and those consequences were exponential growth capabilities.

Anyone with a limited working knowledge of oil and gas knows that the joint operating committee as the organizational focus is exponentially better then the hierarchies. Most if not all the problems in oil and gas melt away from the perspective of using this organizational focus and software tools of today. For the industry to achieve "Compound Rates of Growth" as Romer suggests will only be based on intellectual property.

Now a funny thing happened on the way to the researching of this theory. I published my proposal to industry in September 2003 on the basis that if they financed the research they would earn the copyright. Unfortunately for them they laughed at the prospect of a local company doing research and the door slamming started its now familiar tone. Since I did the research, I earned the copyright and now that is mine to do with as I please. Believing that the industry would be wise to the plurality document I continued on, by myself at great cost and personal sacrifice. The last thirty months would have been hard for anyone, but particularly for someone my age. This is where Senator McCain comes in with his article on courage.

Firstly I highly recommend that everyone read, print and keep a copy handy for what may be an economically rough ride for all in the next few years. I want to list the really pertinent points of the article and then conclude this posting.

"Courage is like a muscle. The more we exercise it, the stronger it gets."

"That means trouble for us all, because courage is the enforcing virtue, the one that makes possible all the other virtues common to exceptional leaders: honesty, integrity, confidence, compassion, and humility. In short, leaders who lack courage aren't leaders."

"The same holds true for the business world. Corporate America has taken significant blows to its reputation, because too many executives don't have the courage to stand up for what they know is right. The perception among many is that corporate leaders are committed only to their own self-enrichment. "

"Very few of us are called upon to test our courage in the crucible of fear and hard moral choices. And yet courage still matters -- more than we think."

"Winston Churchill called courage "the first of human qualities... Because it guarantees all the others." That's what we mean by the courage of our convictions. If we lack the courage to hold on to our beliefs in the moment of their testing, not just when they accord with those of others but also when they go against threatening opposition, then they're superficial, vain things that add nothing to our self respect or our society's respect for the virtues we profess. We can admire virtue and abhor corruption sincerely, but without courage we are corruptible."

"As courage demands great sacrifice so does it demand great economy in its definition. General William Tecumseh Sherman defined courage as a "perfect sensibility of the measure of danger and a mental willingness to endure it."

"Courage is the highest quality of life attainable by human beings. Its the moment however brief or singular -- when we are our complete, best self, when we know with an almost metaphysical certainty that we are right."

"You must be afraid to have courage. By fear, I mean the kind that entails serious harm to ourselves, physical or otherwise, the kind that wars with our need to take action but which we overcome because we value something or someone more than our own well being. Courage is not the absence of fear, but the capacity to act despite our fears. You can live with pain. You can live with embarrassment. Remorse is an awful companion."
I have lived with the consequences of my ideas. I have sacrificed everything that I have in the support of this software project. Believing fundamentally in the need for this to be done, to be done in a manner that did not consider my needs. I am a small issue in comparison to the issues of the oil and gas business and the community of its users.

So the point of this posting is... Simple, the time has come to call an end to the sacrifice and effort on my behalf. I have not stood on this intellectual property and become a troll just waiting to pounce. I have been active and pushing this theory and opportunity as hard as I could for the past thirty months and the time to call an end is complete. With 12 to 13 calls to action, all sounding the same call I noted in May 2004 the industries time to display the necessary courage is now. As I said mine is complete.

I think when everything that you can think to do has been done. When the personal sacrifice is complete and their is nothing to prove, particularly to myself, I know I am not the source of the problems. In the next few months I will be preparing a revised proposal looking for a few courageous oil and gas firms. Firms that can see and read the writing on the wall with respect to the long term prospects of the hierarchy, and have the moral courage to act. For it is time for action.

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