Showing posts with label Science. Show all posts
Showing posts with label Science. Show all posts

Friday, August 27, 2010

Research Question # 4

In our fourth and final installment of the Preliminary Research Report’s research questions. We asked “Does the industry need to change from a “banking” to a “science and engineering” based mindset?

Much of current infrastructure of the oil and gas industry has been developed during a time when the costs associated with exploration and production were reasonable. A time when the efforts of the producer firm could be quantified by determining a reasonable return on investment in oil and gas. This generated what could be considered to be a “banking” mindset that sought to exploit a resource based on a specific return on investment.

That of course is the reasonable approach that any industry will take to the business at hand. To do anything other then approach the business from the return on investment would be foolhardy. What the question being asked is, will the approach of a guaranteed return on investment be capable of dealing with the complexity of a science based business in a resource constrained environment.

With the earth science and engineering disciplines expanding at a significant pace, where each barrel of oil produced requires progressively more science and engineering. With the supply of scientists available to producers being somewhat fixed. To expect this environment to produce a reasonable return on investment with no change in approach from the “easy” energy era will lead to disappointment.

I think the answer to the question is clear. The industry needs to change in order to meet the markets demand for energy. Since the time the Preliminary Research report was published and today, the world energy production has remained static. At a time when a large percentage of the worlds population is moving towards the middle class, the static or potentially declining world oil production is a serious problem for society. It is therefore reasonable to assume that high commodity prices will be with us for the long term. Prices are the reallocation of financial resources to facilitate innovation. Therefore it is also reasonable that the producers with the most innovative capability will have the highest return on their investments.

But lets be clear, changing the stripes on a Tiger is not easy. As we progress into this review we will see that this level of change may not be able to be managed by the current oil and gas producers. Some times the changes occur from an attrition of the existing firms and replaced by new and innovative producers. Either way, People, Ideas & Objects and our Draft Specification are designed to identify and support the successful innovative oil and gas producers.

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.

Wednesday, August 25, 2010

Research Question # 2

The second research question within the Preliminary Research Report was, Can the scope and understanding of the process of innovation; be reduced to a quantifiable and replicable process?

The short answer to this question is yes, most definitely. Which is significant news to most people. People, Ideas & Objects has consistently stated that high commodity prices are the reallocation of the financial resources to enable innovation. We stand at a point in time where the oil and gas industry will change to an innovation based and focused industry. Fascinating times.

It would be difficult to summarize the entire answer to this research question in one post. During the next few months of our review we will be better able to answer this question. Readers in the mean time can also review the Preliminary Research report.

The paper that was used to answer this research question was Professor Giovanni Dosi’s “Sources, Procedures and Macroeconomic Effects of Innovation” September 1988, Journal of Economic Literature, Volume XXVI pp. 1120 - 1171. If you have access to JSTOR or other databases I would highly recommend that you download and review the paper.

Professor Giovanni Dosi makes the statements that,

“The search, development and adoption of new processes and products in market economies are the outcome of the interaction between”:

  • “Capabilities and stimuli generated with each firm and within the industry of which they compete.”

The capacity to enhance reserves of oil and gas is significantly more challenging than as little as five years ago. Exploitation is generally expected to continue, however, an enhanced role for various degrees and types of exploration is expected to commence. The energy frontier brings many new risks and complexity in the area of technical, political and the environment. These account for much of the changes in stimuli and capability that Professor Dosi states are required to facilitate further innovation.

Secondly, the microeconomic trends associated with changes in the relative prices of outputs. Oil and gas prices are beginning to reflect the scarcity, importance and value of these commodities to society.

Dosi notes the second influence to enhanced innovation is;

  • "Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc.”

Innovation and science are iterative upon each other. As the pace of development in earth science and engineering innovations increase, these will have an accelerating effect on the development within the sciences which of course, will lead to further innovations.

These points are only the tip of the iceberg. Professor Dosi’s 1988 paper is renowned for its impact on business innovation. Over the next few months as our review of the Preliminary Research Report and Draft Specification progresses. We will be spending a significant amount of time in Professor Dosi’s paper.

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.

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Thursday, August 19, 2010

IBM's Global CEO Survey

IBM has published their bi-annual Global CEO Study. Registration is required to download the .pdf, I recommend reviewing the document to gain an understanding of the state of affairs in the global CEO’s mindset.

Oil and gas producers are faced with a difficult situation. As the earth science and engineering disciplines expand. And the volume of technical effort needed for each barrel of oil increases. The scientific human resources available to the producers remains relatively constant. What’s needed is a new division of labor and specialization to increase the volume of throughput of these fixed human resources. This changing environment is, according to the IBM study, being joined with a new variable, complexity.

Using the Joint Operating Committee (JOC) as the key organizational construct of the innovative oil and gas producer becomes a necessity in this complex environment. The JOC being the legal, financial, cultural, communication and operational decision making framework of the industry can deal with this enhanced complexity. When we are required to work with the needs of multiple producers within each and every JOC. Continuing to use generic ERP systems that don’t identify and support the JOC. Introduces unneeded complexity to an already difficult environment. If industry is to meet the market demands for energy, the Joint Operating Committee will need to be supported and identified by the ERP systems that are defined in the Draft Specification. The IBM Study notes.

In our past three global CEO studies, CEOs consistently said that coping with change was their most pressing challenge. In 2010, our conversations identified a new primary challenge: complexity. CEOs told us they operate in a world that is substantially more volatile, uncertain and complex. Many shared the view that incremental changes are no longer sufficient in a world that is operating in fundamentally different ways. Four primary findings arose from our conversations:
The first of these four findings is complexity and the capacity to deal with that it. IBM’s survey seems remarkably candid about the CEO’s capacity to deal with this new complexity.
Today’s complexity is only expected to rise, and more than half of CEOs doubt their ability to manage it.
Innovation will become the means for value creation in the oil and gas industry. Innovating on the basis of the expanding earth science and engineering disciplines. The industries leadership will be derived from those that are able to operate creatively in this scientific and technical environment.
Creativity is the most important leadership quality, according to CEOs. Standouts practice and encourage experimentation and innovation throughout their organizations. Creative leaders expect to make deeper business model changes to realize their strategies. To succeed, they take more calculated risks, find new ideas, and keep innovating in how they lead and communicate.
Third in the IBM study focuses on the customer, the Draft Specification will enable, closer interactions between the producers, vendors, suppliers and communities involved in the industry. IBM’s survey notes the focus of CEO’s is more towards the customer. Oil and gas producers never see their customers however, an expanded capability to deal with those involved in the business of oil and gas is needed.
The most successful organizations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number-one priority.
In the fourth finding, IBM focuses on the interactions between partners and suppliers.
Better performers manage complexity on behalf of their organizations, customers and partners. operations and products, and increasing dexterity to change the way they work, access resources and enter markets around the world.
These four conclusions are consistent with the needs of the innovative oil and gas producers. IBM has developed a strong capability in their bi-annual study of CEO’s. I can only assume that personally interviewing 1,500 CEO’s is done at substantial expense. I would question the value that IBM is able to generate from this survey. This paper was published in May 2010 and the volume of discussion that it has generated must be disappointing. I wonder if there will be another report in two years time.

Producers are encouraged to contact me in order to begin their participation in these communities and support our Revenue Model. Those individuals that are interested in joining People, Ideas & Objects can join me here.

Wednesday, May 12, 2010

Langlois, Innovation and Processs Part IV

Today our review of Professor Langlois' paper "Innovation Process & Industrial Districts" will look at part 4., the negative effects of embeddedness. Embeddedness is defined as "the degree to which individuals or firms are enmeshed in a social network". Langlois "investigates the effects of social embeddedness on innovation". Noting that;
Furthermore, there may be a relationship between the degree of embeddedness in the industrial district and innovation. It has been suggested that innovation increases as embeddedness increases, up to a point, and that beyond that point further embeddedness results in reduced innovation performance at the firm level (Uzzi, 1997; Boschma, 2005).3 Thus, depending on circumstances, participation in an industrial district can either encourage or impede innovation.
Therefore certain levels of embeddedness in each community of practice is necessary. These communities of practice would consist of local, regional, national and international communities. With access and participation in each by those that work within oil and gas and the service industries. What Professor Langlois explores in this section of the paper is the extent that embeddedness can be under / overdone.
4. Negative Effects of Embeddedness
Oil and gas' difficulty is the escalating earth science and engineering effort contained within each barrel of oil. With finite human resources, the Preliminary Research Report suggested that the industry turn away from its "banking" mentality of providing fixed returns on investments, and focus on its scientific attributes to generate value. These scientific difficulties are understood through out the industry. Much is being learned by everyone by BP's actions in the Gulf of Mexico. It is this learning and sharing of information in each of the communities of practice that Langlois refers to as embeddedness.
Much of impetus behind innovation may nevertheless derive from events outside a district - as a result of innovations developed elsewhere and of shifts in consumer demand. The survival of firms, and of entire IDs, therefore depends largely on their ability to adjust to external development. Indeed, Piore and Sabel's (1984) championing of industrial districts was based largely on their contention that small firms with generic equipment are more flexible in responding to shifts in demand than large, capital intensive firms with substantial investments in dedicated equipment. p. 14
BP's current failures will benefit the industry as a whole. Many will ask why the Gulf has to be exposed to such environmental risk? Here I think that Langlois intimates at where some of the problem may lay.
Nevertheless, the factors underlying successful innovation in some industrial districts may turn out to be weaknesses depending on the broader innovation environment within a trade or industry. Firms in an ID may simply be slow to notice changes arising outside their district because they do not have good external channel of communication. As Marshall (Loasby, 1990) recognized, close relationships among firms and their workers could reduce their access to knowledge developed outside the district and their willingness to consider ideas from unfamiliar or distant sources. p. 15
and
Paradoxically this failure of firms is possible after their IDs have had a period of market leadership. they become over-confident and suffer from what Alberti (2006) calls "success myopia". The result is that trends in innovation (and not just innovation per se) in an ID tend to suffer from inertia - that once tendencies develop, they are harder to stop or to reverse than might be the case if knowledge were generally collected far and wide and if new knowledge were not generated to accommodate implicitly standardized local interfaces. this can lead to severe, perhaps fatal difficulties when the district is not at the leading edge or when consumer tastes have changed. p.15
Definitely sounds like the Gulf of Mexico. Those that are not familiar with the oil and gas industry are frustrated by the efforts of BP. Why not just turn the well off? Why didn't someone think of these problems and have them solved in case of this type of event? Why are actions being taken at such a slow pace? It seems so elementary and yet the industry never considered the possibility of a blow out preventer failing in 5,000 feet of water.

In defense of the industry, the science has become pre-eminent. The Gulf of Mexico shows exactly the extent of these difficulties and tomorrow will not be any easier. Looking at the logarithmic decline curve of a reserve report focuses the mind and in my opinion limits the risks of the possibility of overconfidence. However, the scope of the overall sciences is too great for the means of organizational structures being currently employed. The scientists are working as hard as they can, it's the organizational constraints of the bureaucracy that are causing these problems. Then I could be biased towards building systems to identify and support the Joint Operating Committee in a fashion as described in the Draft Specification. Langlois would suggest that the level of embeddedness is "not enough" for the situation in the Gulf of Mexico.
Boschma (2005) argues that "too much and too little proximity are both detrimental to learning and innovation. that is, to function properly, proximity requires" just the right amount of distance between actors or organizations. geographic proximity, for example, may enhance inter-organizational learning and innovation though in the absence of geographic proximity other forms of proximity may substitute for it. On the other hand, too intense proximity, geographic and otherwise, can result in lock-in. Proximity / embeddedness can evolve over time too, from not enough, to just enough, to too much, suggesting a link between the issues of embeddednesss and life cycle considerations. p. 15
I am not suggesting that a free-for-all of ideas being thrown at BP would have helped. Ideas developed without structure and governance are useless to any of the firms residing in any community of practice. This is an area where the Draft Specifications Military Command & Control Metaphor (MCCM) would enable the right type of ideas to percolate to the top. For example, if, the MCCM was in play in the situation in the Gulf of Mexico. Having everyone in the global oil and gas and service industries designated with a "name, rank and serial number" (etc.) would allow those ideas from participants who work in offshore oil and gas, who are senior engineers, who are intimate with sub-sea operations, be found instantly. In addition if there was a community of practice that existed with the MCCM implying some structure, would the social embeddedness of these individuals have thought of and possibly thought through some of the issues that would have arisen? I think so, but then again I am biased.
For instance, decentralized systems of innovation ( including industrial districts may be at a disadvantage in generating genuinely systemic innovations (Teece 1986), that is, innovations that require the development of new components as well as new ways of integrating components In such a case, the location of much of the relevant knowledge within a tightly coupled systems is likely to facilitate innovation. This need not mean a single vertically integrated firm, but it does mean that lead or coordinating firms - in modern terminology, systemic integrators - must possess a wise range of knowledge or capability and must indeed "know more than they do' (Bruisoni, Prencipe, and Pavitt, 2001). They also need to be powerful enough to force other firms to follow their lead. p. 16
Seeing who has been designated as the "Red Adair" in offshore blowouts would have helped before and after a situation like this. And maybe this individual foresaw the difficulties in offshore blow out preventer's. And allocated a small budget of his engineering firm to research the idea that these could fail. And maybe they would have been well on their way to solving the problem when the incident happened. The alternative today is that the engineering firm would have had to fully developed the solution and marketed it throughout the industry for the oil and gas firm to turn their thumbs down on the idea. As we see in the Gulf today, we can't work this way anymore. Langlois notes;
In addition, their reliance on local standards can impede efforts by firms in an ID to indigenize innovation form outside, again raising the costs of adjustment and the time required. Finally, firms with a mature ID that do develop innovations may not only find it difficult to generate interest within their ID but are poorly placed to market their innovations externally. p. 16
Without these communities of practice in place, where is BP today? The costs of this disaster may seriously impede the firm. BP could face costs in the range of $10 billion with additional damage to the wells reserves. All because management didn't foresee that the innovations of offshore drilling moved ahead of the science. In the scenario that I provided before, where the engineer proposed a solution to what he saw as faulty offshore blow out preventer's. In today's marketplace management will thumb its nose at these ideas. In the future it may solve the problem and eliminate these costs.

People, Ideas & Objects asserts in the Draft Specification that the oil and gas producer is concerned with their asset base and application of the scientific and innovation capabilities of the marketplace. This is represented in the Resource Marketplace, Knowledge & Leaning, Research & Capabilities, and Accounting Voucher modules and the Military Command & Control Metaphor being extended to the communities of practice. If BP adopted this strategy of focusing on their assets and capabilities, where would they be today?

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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Sunday, May 09, 2010

Langlois, Innovation and Process Part II

Today we discuss the second part of Professor Richard N. Langlois' January 2008 working paper "Innovation Process and Industrial Districts". A summary of the first part of this series would highlight how the service industry, Community of Independent Service Providers (CISP), users and producer firms would re-organize themselves to facilitate innovation. With the producer firms focusing on their core competitive advantages of 1) a unique asset base and 2) application of the scientific and engineering capabilities available to them. Producers would be able to increase their reserves and deliver-ability. The knowledge, tacit and codified, residing in the "Industrial District" (ID), or Small Knowledge Intensive Enterprise (SKIE) of which the CISP would be considered a part of. As Professor Langlois noted, these communities may be organized in local, regional, national and international fashion with communication being encouraged between each.

Today we are discussing the enhanced division of labor and specialization necessary to expand the economic output of the oil and gas industry. With energy demand projected to be insatiable, the focus of the industry is changing. The scientific capability of the oil and gas industry is somewhat fixed and to increase output will therefore require new forms of organization. People, Ideas & Objects proposes to build the software that identifies and supports the industry standard Joint Operating Committee as the key organizational construct of the innovative producer. Within the software it is implicit that the enhanced division of labor and specialization is a key output of the Draft Specification.
2. Specialization and Embeddedness in Industrial Districts
Differentiation, Specialization and Integration
It is an economic fact that growth is achieved through Adam Smith's division of labor and specialization. To take the energy industry to drill a well may currently require over 1,000 specialized individuals when we consider the scope of individuals from the drilling firms billing accountant to the rig hands, to the geologist engineers and staff at the member firms of the Joint Operating Committee. To move to a higher level of performance will require a more defined and broader division of labor and specialization. How this comes about is suggested in Professor Langlois' discussion of ID's. Moving the majority of the science based capability to the market is the logical choice when we consider the real competitive advantages of producers are resident in their asset base.

The Resource Marketplace module of the Draft Specification facilitates Langlois' ID's. The point that I am attempting to focus on is the need to have the necessary systems in place to support the innovation based market. In addition, a software development capability such as contemplated by People, Ideas & Objects, is necessary to continue the iterative developments within the marketplace, based on the ideas of the greater oil and gas community. 
As adaptation usually takes time, a system that is optimized in the sense that there is near-perfect efficiency in the integration of inputs is probably not only stable but static and hence endangered if the surrounding environment is unstable (as is almost always the case). It is important, therefore, that an industrial district actively generate change in its internal relationships and in those with the outside world, and that it is flexible enough to absorb change without serious losses in efficiency. Inability to change either or both of the internal and external relationships contributed to the decline of such industrial districts as the textile and fashion district of Como (Alberti, 2006) and the eyewear manufacturing district of Belluno (Camuffo, 2003). p. 4
Flexibility has its costs and these directly affect performance. That is a given, and a static industry is a dying industry. I think that Professor Langlois clearly shows the risks and shows that a balanced approach may be the best strategy. We run risks and rewards in whichever direction we take. And maybe the optimal strategy is an ability to pre-select the balance of these criteria within the systems we build. Irrespective of the choices made. The key criteria is an enhanced specialization, division of labor and a capability to further enhance the division of labor and specialization.
Embeddedness and Centralization
In our first quarter 2010 budget drive we proved the management within oil and gas will not act to develop the Draft Specification. Alternatively we have turned to the investor / shareholder as the source of our budget funding. Oil and gas investors have the opportunity through People, Ideas & Objects to build the infrastructure necessary to manage their oil and gas assets in the most profitable manner. [The stated objective of the CISP.] Langlois ID's and Perez' SKIEs facilitate this form of organization through the industry standard JOC.
Because of their structure, industrial districts offer important benefits in innovation processes. For one thing, the high levels of differentiation and specialization allow firms, in the Smithian fashion, to focus on aspects of the supply chain in which they are especially competent. p. 5
What was able to be achieved through the hierarchy and "bigger is better" organizational thinking has been lost in the past 25 years. Bureaucracies were known to be inefficiently efficient, and for the past 100 years society has benefited greatly. We now see the multitude of stakeholders of these large corporations disenchanted by the performance of these organizations. Society is concerned about the environment, consumers are demanding more, better and faster service, and shareholders are being treated as poorly as could possibly be conceived of just a few years ago. The only benefactors appear to be the management. Their lack of financial support for the ideas represented in People, Ideas & Objects ensure that their way will remain unchallenged.

I see the future in many ways being an extension of the individual. The scope of an investors domain would be much smaller and be a direct function of his / her own capabilities. A move toward a much more hands on type of operation. Management is redundant, compromised and has lost the motivation to act on its stakeholders best interest. I foresee the management role being codified in the People, Ideas & Objects software that the investor uses to manage their operations. This assumes substantial administrative performance is provided to the investor.

The stakeholders that would benefit from this need to orchestrate this monumental change through active financial support of People, Ideas & Objects. With the Community of Independent Service Providers being a critical element of the embeddedness and a "virtual" Industrial District. 
Strong ties (Granovetter, 1973) among workers, including managers, can increase the amount of information available to firms and the readiness of people to share what they know when relationships gain a dimension of friendship to counterbalance the competitiveness among firms. p. 5
Communities of Practice and Knowledge Diffusion
To suggest that the oil and gas investor / shareholder, organized around the JOC, supported by the CISP and other ID's -- as represented in the Resource Marketplace module of the Draft Specification, is a fundamental and bold redrawing of the ways and means of the oil and gas industry. One that is based on an understanding derived from 30 years of working in oil and gas, utilizing the capabilities of the mature Information Technologies and steeped in the academic research conducted here. One sees a vision of how the industry could operate in a more natural and logical manner. One consistent with the culture of the industry, the JOC, that is summarily ignored by SAP and other systems vendors. A vision that deals with issues and opportunities that are open and available to those in the changed oil and gas industry. However, does this vision provide the enhanced division of labor and specialization that we are seeking?
When embeddedness is strong, the creation of communities of practice (Wenger, 1998; Brown and Duguid, 2000) generates competences that, although possessed by individuals, are collective in that they are based on a set of practices that is common to all members of a community. These competences (both tacit and codified) can transcend firm boundaries and become characteristics of an entire industrial district. As Marshall (1975, 197) wrote of nineteenth century Britain, “To use a mode of speaking which workmen themselves use, the skill required for their work ‘is in the air, and children breathe it as they grow up’”. p. 6
Langlois defines a risk associated with a limited distribution of the Industrial District. The limited division of labor and lack of significant levels of specialization obstruct the opportunity for this type of community to develop to their full potential.
Relationships within industrial districts therefore lead to diffusion but also to the creation of new knowledge through shared preoccupations. Because many people or firms can work on a problem simultaneously, a number of different solutions may be found (Bellandi, 2003b). The results is a larger and stronger "gene pool" within the sector (Loasby, 1990, 117), with the further advantage that solutions that are originally regarded as competing may turn out to be complementary and well-suited to different niches within the district.  p. 7
Although Langlois talks about networks and IT, not at the level needed for this discussion. Critical to the success of this type of industry re-organization will be a software development capability that is an active and involved member of the communities, ID's, SKIEs, CISP etc. This software development capability is what People, Ideas & Objects is proposing we build for these communities.

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, February 26, 2010

Pisano, Science Based Businesses Part I

Based on the weight of this new paper. We are including Harvard Professor Gary P. Pisano to our list of closely watched researchers. We haven't had the opportunity to add anyone to our list for many years. That's not as a result of a lack of quality content, it's that we are playing catch-up in terms of the work that has been done in the past 20 years. Look for the Pisano label to aggregate the posts that highlight his content. This first Part will highlight some of the assumptions that Professor Pisano is using, the extent of his research and reviews the Introduction of his new paper. The Evolution of Science-Based Business: Innovating How We Innovate.

For the work that we are doing here at People, Ideas & Objects, and particularly the oil and gas producers, this paper has substantial value. The Preliminary Research Report hypothesized the oil and gas industries underlying earth science and engineering disciplines were escalating. Each barrel of oil would require exponential volumes of these sciences as time passed. This underlying demand change in the sciences would lead to higher prices to offset the higher costs of exploration and production, hence rewarding the innovative oil and gas producer. This is the situation in the oil and gas marketplace today.

Professor Pisano's interests are in science based businesses. But more importantly, in the context of organizational and technological innovation.

Alfred Chandler taught us that organizational innovation and technological innovation are equal partners in the process of economic growth. Indeed, one often requires the other. In the late 19th and early 20th century, the large‐scale modern corporation both shaped and was shaped by advances in electrification, mass production, and transportation. Today, the specific technologies driving growth are, of course, quite different than they were a century ago. But, the fundamental lesson—that these technologies may require new organizational forms—is as relevant today now as it was then. p. 2
I would argue that technologies enable new organizational forms. Through our review of Harvard Professor Carliss Baldwin's research. People, Ideas & Objects have detailed a modular specification and a division between markets and firms in the Draft Specification. Information Technology (IT) defines and supports organizational constructs. And the People, Ideas & Objects software development capability provides the organizational flexibility that the producer will soon demand as necessary.

It is inherent in the Draft Specification that the market take a larger role in the science and innovation of the industry. The question is therefore asked, is the Draft Specification correct in it's assumption that research and innovation can be conducted within "markets" as opposed to in "firms"?
I argue that science‐based businesses face unique challenges as they straddle two worlds with very different time horizons, risks, expectations, and norms. Whereas once these challenges were managed inside the boundaries of corporate R&D labs—under the auspices of Chandler’s visible hand—today the invisible hand of markets increasingly governs them. An assessment of this form of governance against the requirements of science‐based businesses suggests a gap and a need for organizational innovation. The essay concludes with a discussion of what Chandler can teach us about science‐based business, and the organizational and institutional implications of science‐based business. p. 4
Elements of scientific risk are everywhere in the oil and gas industry. Outcomes are not necessarily predictable, and the lead times from idea to commercial success is substantial. The oil and gas industry qualifies as a science based business in Professor Pisano's strict interpretation.

In this paper Professor Pisano speaks about the different business models of how these science based businesses fund their research. Noting that the IBM, AT&T, 3M and Xerox research parks are reflective of an older era. If we accept Exxon's estimate that $20 trillion over 20 years is the required capital expenditure. We can ask is this demand for capital beyond the "normal" allocation mechanisms available in the marketplace? Are the capital and debt markets sophisticated enough to be able to determine which producers will be the winners and losers? I have argued throughout the Preliminary Research Report and this blog that the innovative producer will have the price mechanism reward innovative and scientific success.

If your an enlightened producer, an oil and gas 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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Monday, November 23, 2009

Pemex makes the change.

The market for People, Ideas & Objects software application is the oil and gas industry in general. This includes the International Oil Companies (IOC's), National Oil Companies (NOC's), Independents and start-ups. All of which of course use the Joint Operating Committee (JOC) as the means to deal with their partners. All of these types of organizations have the same needs from the point of view of managing their oil and gas assets.

Each barrel of oil equivalent is on a steep upward curve in terms of the volume of science and engineering involved in bringing the products to market. It is this upward cost curve that challenges the bureaucracies to keep up. What they are finding is the pace of change and the demand for innovative thinking is beyond the capabilities of the hierarchical firm. This is the situation for most of the western based producers and service companies.

People, Ideas & Objects approach is particularly unique from the point of view providing the NOC's. Pemex, Saudi Aramco, Petronas and the China National Oil Company to name just a few. Traditionally they have been charged with developing the countries energy resources for the country itself. Whether that is for its internal consumption of energy, management of royalties and / or export. The challenge to them is similar to the IOC's and Independents in that the level of effort per barrel of oil equivalent continues to escalate.

Mexican firm Petroleos Mexicanos is now indicating they will change how they develop their energy resources. In the Oil and Gas Journal, an article documenting the change notes.
Mexico’s state-owned Petroleos Mexicanos and the Secretaria de Energia (Sener) are preparing risk contracts that will be offered to oil companies—international and domestic—in order accelerate the search for oil and gas, according to local media.
These risk contracts have been used with a multitude of other methods by the NOC's before. The one constant is the Joint Operating Committee (JOC) is the means to manage these contracts. Recall the JOC is the legal foundation of the oil and gas industry. This is on a systemic and global basis with IOC's, NOC's etc. Pemex establishes the following framework for these contracts;
Sener explains that it is urgent "to speed up the discovery of new oil fields and the incorporation of reserves, as well as increase Pemex's execution capacity, particularly through new contracting schemes so that specialized companies can support its activities."
Clearly indicating that the support they are looking for not only includes the producer firms but also the service companies. Pemex is one of a number of countries that are establishing this trend as a result of the new realities of the scientific developments of the oil and gas industry.

Evidence of this is reflected in the research of the Baker Institutes Energy Forum's Cases under the heading of "The Role of National Oil Companies in International Energy Markets". In particular I want to highlight the research that was completed on for Malaysia's Petronas NOC. Reading that document clearly reflects the conclusion resonates with the work being done by the People, Ideas & Objects community. It also resonates with Petronas' strategy, history and economic needs.
In 2005 a Vice President of Petronas speaking before the Asian Energy Forum presented the firms corporate strategy. He emphasized several elements including growth and maximizing returns for shareholders. Growth has brought the move towards a global strategy with the desire to be an overseas investor in upstream and downstream sectors as well as encouraging foreign investment in Malaysia, while maximizing shareholder profits; he also noted the company's efforts to benefit local needs through a long term program involving Malaysia, host countries and other firms.
He asserted that it is important for Petronas to work with credible partners for several reasons:
  1. Risks mitigation
  2. Access to market
  3. Access to proprietary technology
  4. Political strength
  5. Government to government relationship p. 21
In my opinion this strategy is wholly consistent with both the Community of Independent Service Providers (CISP) and People, Ideas & Objects. Why?, due to the activities and operations of Petronas and other NOC's, the IOC's, Independents and start up producers need to align their governance and compliance frameworks with the JOC's legal, financial, operational decision making, cultural and communication frameworks. This alignment brings a transparency  between the participants that increases the accountability of all oil and gas operations for all concerned, irrespective of the individual strategies employed by each participant in the JOC. The current situation where the corporate compliance and governance frameworks are focused only on the individual corporation is inconsistent with the legal, financial, operational decision making, cultural and communication frameworks and operations of the JOC of which they are party to.

By granting a concession, lease, risk contract or any other vehicle to establish these oil and gas operations, a JOC is created. It is therefore necessary that the systems and procedures of those participants to the JOC have the JOC identified, supported and implicit in the day to day and strategic operation.

Additionally, each NOC or government that is interested in optimizing their oil and gas operations, both from a royalty income stream or as an active explorer and producer, want to have their jurisdiction open and active with the remainder of the oil and gas industry. Having the capacity to operate on the same basis of the global oil and gas producers and suppliers provides synergies to all involved. Using a standard system, such as People, Ideas & Objects amongst all participants of the industry enables access to the resources of the service companies, producer firms and other groups that may be involved in the JOC and available through an application based on the Draft Specification.

This also works for Petronas and other NOC's from the point of view of their strategy of wanting to be involved in oil and gas operations on a global basis. They, with standard systems based on the JOC, can easily participate based on known methods and means of operation on a global basis.
This is not a case of nationalization, although nationalism was a factor in its original formation. It has been a generally solid and well-respected partner to both private and state entities around the world. While it has become involved in a wide range of agreements with other companies and states in which its equity percentages has varied, Petronas itself is 100% state owned. It has no present intention to privatize. p. 35
Involving NOC's in the future in this manner is also consistent with the activities of the Baker Institute with their governing objective.
The Baker Institute Energy Forum is a multifaceted center that promotes original, forward-looking discussion and research on the energy-related challenges facing our society in the 21st century.
This future needs to be backed up by a software development capability as provided by the Community of Independent Service Providers and People, Ideas & Objects application modules. Please join us here.

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Sunday, March 15, 2009

The Internet @ twenty.

There is a video presentation of Tim Berners-Lee at the TED Conference in February 2009. (Click on the title of this entry for the video.) In the video he discusses his actions and concerns regarding his development of the World Wide Web. Many have claimed, including vice - president Al Gore, to have invented the web, but only Tim Berners Lee is recognized as doing so. Nighted by the Queen, Sir Berners-Lee notes in this video that the web will soon be 20 years of age, and that indeed it was recognized on Saturday March 14, 2009.

Berners-Lee worked for CERN, the group responsible for the Large Hadron Collider. His work at CERN demanded that a solution to the large volume of visiting physicists who were working there. Specifically Berners-Lee was concerned about the loss of kowledge through the large turnover at CERN. I think this parallels the potential loss of knowledge in the oil and gas industry. One that is addressed in the two modules of the People, Ideas & Objects Research & Capabilities and Knowledge & Learning

Berners-Lee goes on to talking about the future of the Internet and the role that data will have in that future. Asking what would happen if linked data were more readily available. And simply stating people would use it and make new and innovative ideas from it. Scientists in many disciplines have theories and ideas, but no data. He noted the efforts of dbpedia and I would add Freebase.com.

In People, Ideas & Objects two modules address the need for additional data. The Performance Evaluation (Joint Operating Committee) and Analytics & Statistics Modules (Firm focused.) Each working from one of the two different perspectives of the People, Ideas & Objects application. Please join me here

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Thursday, November 06, 2008

For the next 20 years.

The title of this entry will take you to a McKinsey article, number 40 in the series, entitled "Why Baby Boomers Will Need to Work Longer". Seem they think there are some holes in some people's retirement plans, and as a result, we all will be working a bit longer then we thought. These are McKinsey's words, I'm only the messenger.

I can't think of anything better to be doing then building this software and its never ending improvements. 20 years is the time frame that Professor Carlota Perez has placed for the Information and Communication Technologies (ICT) based upswing. We can accomplish a lot in that time. And when put in its long term context the job does not seem that daunting. In 20 years I'll be 70 and now might be a good time to consider what McKinsey says. By the way, 50 is the new 30.

Focusing on short term goals provides the sense of urgency to get things done. We, especially me, need to step back from that short term point of view for a minute, and put the context of making this software over the next 20 years, not 20 months.

What we can do with the technology is unlimited in its application. When we consider the Draft Specification, and how it naturally fits with the majority of processes, functionality and culture of the oil and gas industry. The generic aspects will be easy to implement, that is easier then SAP, Oracle or IBM.

What I look forward to is the unique and undefined ways that people will come up with for new ideas on how to analyze data, implement processes and enable the oil and gas producer to advance the sciences and innovation they depend upon. And most important of all make the industry as profitable as it possibly can. That is what this IT project is about, that is what is possible and that is what we are going to be doing here.

So join me here, and lets spend the next 20 years in making this industry the most profitable that it can be. Participate in the development of this application. Build your service businesses based on the Intellectual Property that is developed here, apply it to the oil and gas producers, and prepare for that retirement that McKinsey suggests needs some attention. Join me here.

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Thursday, September 25, 2008

Offshore drilling ban, banned!

If the political climate remains constant in the states, we can assume offshore drilling to survive the next administration. The American people want offshore drilling for oil and gas to fuel their economy. Add the necessary technical leap that is required to fully exploit the resource potential of the Pacific and Atlantic offshore. On top of the operating environment of the Gulf of Mexico, the Arctic, heavy oil, unconventional gas. Makes North America the most demanding operating environment. Add to it the retirement of the brain trust of the industry, politics and environmental concerns and you have a sizable task ahead.

One of the key developments in the Preliminary Research Report was that systems define and support the organization. What's SAP's plan for the oil and gas industry? Whats their approach for the high energy cost era? Or do they see the industry as unchanged from the $25 / barrel era?

Its at this point where the first reaction will be to spend more money. I think that will be a mistake. Its a systems first world we live in. If we approach this opportunity with the same old bureaucracies, we're not going to get there. (Increased production volumes). Offshore drilling is expensive and I don't expect any increase in drilling for a number of years. The time lines for new offshore production is long, and we have the opportunity to build the systems that will enable a more innovative, science and engineering focused producer. An appropriate competitive advantage for a producer in this new era of oil and gas.

I propose we build this system to ensure the innovation that is possible gets implemented into the industry. As I have stated here before I believe this system could attain an exponential increase in the performance of the producer. Innovation and performance increases are what have been solved through this five year research project. Now its time to build. Please, join me here.

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Wednesday, May 28, 2008

Robert Metcalfe on MIT Video

As I've mentioned in this blog before, Robert Metcalfe is someone that I find to be great interest to this energy problem. The introduction of Metcalfe in the Video provides a good summary of his background, and I would note that even despite his accomplishments his attitude remains fresh, and challenging to the status quo. The energy industry needs to be shaken and Metcalfe does a bit of shaking in this video.

Another aspect that Metcalfe was involved in was in participating in the MIT's founding of the Massachusetts Enertech Cluster. I held out high hopes that this was the necessary direction of the academic community, only to find soon after its forming it was hi-jacked by the climate and alternative fuels red herrings. I expressed my disappointment of this in this blog post here. Metcalfe is single handedly criticizing the Massachusetts Enertech Cluster in this one hour talk and returning the hope that I expressed of the MEC. Early on in the presentation @ approximately 9 minutes he states a few interesting points:

"Here are these trillion dollar markets (energy) that are poorly served."
"The people who have been doing energy investing for 50 years are annoyed with people like me, Internet people, invading the energy space." Stating, "look you guys have had your chance, and haven't solved it, move aside, here come the Internet people." (Here, here)

"In energy there are some particularly nasty people out there that are not going to welcome your technological developments."
Stating the goal should be that we pursue "clean" and "cheap" energy, Metcalfe summarily attacks the founding premises and objectives of the Massachusetts Enertech Cluster (MEC). Stating that;
  • Climate change is a "motivational bubble" that may be solved quickly.
  • Conservation should not be an objective of this project (MEC), we need abundant energy not conservation. Our economies need to grow, not be stifled by energy conservation.
  • No Nukes (MEC), which meets the clean and cheap energy objective. Technology can and will mitigate the effects of nuclear energy production.
  • Corn ethanol is a fraud.
  • The government needs to adopt a Manhattan styled project for energy. The government will have no solutions outside of taxes.
  • Only scale projects are needed, which of course is very foolhardy. Innovation will come from everywhere.
  • And lastly there are no silver bullets. Metcalfe suggests we spend more time finding the silver bullets instead of opposing their development.
Which leads me to this project. How is it that the energy industry can ignore the People, Ideas & Objects application as a solution?

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Sunday, May 25, 2008

Constrained Organizations

In a follow up post to the "Unconstrained Prices", I thought it might be a good time to reiterate the reasons that I see for the ever escalating oil and gas prices. Energy production is driven by the earth science and engineering disciplines. As one would expect, over a given period of time the science and engineering will be subject to new discoveries and findings, leading to further enhancements of the underlying sciences. Innovation plays a key role here in that the new sciences bring about new innovative uses, and in turn, lead to new science. This is the key area of long term value add in the oil and gas industry. A producer that is able to apply the science and ideas to the problem at hand will, over time, increase their production and reserves. I'd like to call this the "Capabilities Approach" to the oil and gas industry.


If we reduce the competitive nature of the industry down to this Capabilities Approach. We see the interactions and understanding of the industry as it developed over the past 100 years. Someone figures out how to drill deeper, then the subsequent wells expose more oil bearing formations and hence more opportunities for increased oil or gas production. As time has passed the more lucrative and "big" ideas have been applied in broader areas, and for longer periods of time.

As we have learned from Stanford Professor Paul Romer's new growth theory, "more" ideas are needed to progress forward from the current base of understanding. The supply / demand for these ideas is not linear, but logarithmic, and occur at a much faster pace through their life cycle. Enter the classic bureaucracy and realize its efficiencies are based on expansion of the underlying activity (growth) and continuous process improvement. Change, and particularly scientific and engineering change, are the hierarchy's deficiency. What we need is a new form of organizational structure that will support and enable the industry to compete in this dynamically changing and high demand marketplace. Until such time as we can change the performance dynamics of the organizational form for the oil and gas industry, prices of commodities will continue to rise.

It is these comments and ideas that I have asserted in this blog for the past few years. They are a direct result of my thesis that provides evidence that the Joint Operating Committee is the method of organization of the innovative energy producer. We need to start building the software that I have specified in the 11 module People, Ideas & Objects application and unleash the potential of the sciences for the betterment of society. I find these ideas are consistent with many of the industries leadership. The International Energy Agency recently made some comments that reflect these concerns.

The IEA states that by 2015 there will be a shortfall of 12.5 million boe / day.

"Future crude supplies could be far tighter than previously thought."

"Reflects an increasing fear within the IEA and elsewhere that oil producing regions aren't on track to meet future needs."

"The oil investments required may be much much higher than what people assume."

My personal favorite;

"This is a dangerous situation."

"We are optimistic in terms of resource availability, but wary about whether the investments get made in the right places and at a pace that will bring on supply to meet demand."

Yet nothing is done by these bureaucracies. They know what the problem is, there is just no motivation for them to make the necessary changes. Record profits at Exxon Mobil mask the 10% production declines. We need to consider who's responsibility this problem is, as the companies are unwilling to do so. After all it is not they who will be suffering with energy shortages but society in general.

On the other hand, and what I truly do not understand is that the $135 prices are rewarding those that find and produce the energy. This is an entirely new dynamic for the industry, when will we see the companies that are able to outperform the current crop of producers? The answer to that question unfortunately is not soon. Until this software is built to organize the efforts of the industry, our choices are limited to the status quo or manual systems. Join me here.

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Thursday, February 14, 2008

Yesterday's thinking.

Cambridge Energy Research Associates (CERA) are having their annual conference in Texas this week. The CERA / IHS line that a tidal wave of petroleum is about to hit the consumer continues without much basis in fact or reality. Its been too many years of this monotonic claim of theirs to consider the message as valid.

Irrespective of CERA's message, there are those that suggest more spending is needed. I think more spending has been tried by Chevron and others, and also proven invalid. Doing more and more is rarely the right choice. Change is certainly in the air, it is important to note this point in time is an opportunity for new thinking and actions to take place.

As Einstein stated, today's problems are not solved by today's thinking. I think it is reasonable to assume that the earth sciences and engineering disciplines have increased in complexity. As the bar is raised substantially for successful oil and gas exploration and production. Eventually the structured hierarchy, which is inefficiently efficient, will prove to be inadequate to meet the needs of the science and the industry. What is needed is new forms of organization where the science can develop within the organizations, and be used effectively to produce more oil and gas. This challenge has been the key issue that has driven the writings in this blog. The research to determine if the Joint Operating Committee can fulfill this role is proven, at least academically.

The management, and most importantly the system's like SAP and Oracle, have been developed in the old "banking" type thinking of the energy industry. Invest a dollar today, and you'll receive a 10% return on almost a guaranteed basis. This thinking is a product of the excessively low oil and gas prices of the 1980's and 1990's. The business today is more science oriented then the banking orientation can comprehend. The systems that were developed in the past are designed to accommodate the governance and compliance of the SEC, Tax and Royalty regimes. Neither SAP or Oracle recognize the existence of the Joint Operating Committee. Yet the JOC is the legal, financial, organizational decision making and cultural way of the business on a global basis. If we moved the compliance and governance of the bureaucracy to the the four frameworks of the JOC this science and innovation mindset of the industry will be accommodated.

But there are more benefits to be had. With the systems that are available in today's marketplace. And the current population of oil and gas workers. We can organize in ways that have been proven time and again to increase productivity. Adam Smith's Division of Labor is based on his re-organization of a pin making shop. Smith's reorganization of the pin factory rendered 240 times the volume of pin production. Division of labor is also known as the primary method of how economies grow. Further division of labor holds the greatest opportunity for the industry to deal with the age and retirement of the workforce.

The times that we now live in are too complex to move to a new organization without the proper preparations being made. Key to those preparations are the software developments that are built to accommodate these changes. Change must first be implemented in the software, or any unprepared change will be relegated to manual systems. I am in the process of publishing the eleven draft module specifications of the People, Ideas & Objects application. This application is under development here to incorporate these ideas and opportunities.

Ludwig von Mises noted the industrial revolution was the solution to the problem of over-population. We are faced with these same problems today, and I would suggest the Information Technology Revolution will only begin when it is deemed to be the solution to the problem of over-population. For oil and gas, please join me here.

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Sunday, April 29, 2007

McKinsey on the Environment

McKinsey consulting have prepared an economic summary of the relative costs and opportunities to address the "Global Warming" issue. This study is a global look at the situation and what the different methods will have in terms of success and costs of each method to the overall economy.

Two things I notice in the article is the size of the problem from the point of view of China's and the rest of the third worlds production of CO2. It is difficult to understand how there could be any progress made without those countries actively participating in CO2 reductions. In the Kyoto protocol China and the third world countries are now in compliance, and will be well into the future, without any changes. As these economies expand they may make the "Global Warming Crisis" into a real issue.

The second item that I noted is the cost, if McKinsey's calculations are correct, is less then the amount of insurance. Calculating the cost of insurance, excluding life insurance, the cost to the economy in 2030 is 3.3% of global GDP. Whereas the costs of climate change abatement totals only 0.6% of Global GDP, or 500 billion euros. If that is the cost, then what is the concern? And this last question needs to be questioned, I think.

You may be able to tell that I am skeptic about the impact of CO2. I need to be convinced that the globe is rising in temperature directly as a result of CO2 production. 500 billion euros is a lot of money to waste. It seems odd to me that the temperature on Mars has also increased lately, however, I don't think there is any human involvement in their atmospheres changes. What I am concerned about is we waste time and energy pursuing the wrong factors. Is there not natural phenomenon that can account for this. I would also suggest if you frame each weather oddity as evidence of global warming each night on every news channel around the world, then the distorted view of the climate change people will only be reinforced. How much of the CO2 is attributable to the spectacular volcanoes we have seen in the last 30 years? Humans don't necessarily cause everything on earth.

Much can also be done about the environment through effective and intelligent programs. In the 1980's we were subject to acid rain that was going to wipe out our forests. Maybe we should go back to creating acid rain so that the forests will be eliminated. The CO2 released by forest fires is very large. Prior to that, the ice age was coming back in the 1960's. I think that McKinsey have done a very good job at attempting to quantify the costs of global warming. Based on the understanding that we have today. And I don't doubt that global warming may be a fad that will abate as the acid rain and ice age did.

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Sunday, April 08, 2007

Collaborative Advantage


"The days of U.S. technological domination are over. The nation must learn to thrive through working with others."

Leonard Lynn
Hal Salzman

Blog Summary

I found this kicking around on my hard drive. I had apparently downloaded it from the Kauffman Foundation a while ago, a copy of this document can be secured by selecting the title of this entry. Collaboration is clearly a key attribute of how work will be done in the future. Collaboration facilitated by technologies that are available today provide competitive advantages, and different methods and means of completing work. This article suggests the American dominance in technology leadership is waning. How the U.S. can regain the leadership position they once enjoyed is suggested in this article is through collaboration. This document takes a critical look at the realities of globalization for the U.S. Based here in Canada, much of the same feelings of the need to compete is shared by most. We have lost some of our leading position, however, the U.S., and to a lesser degree Canada, were in need of a competitive challenge. Competition is good, and we are faced with some formidable competitors in a globalized world. This document focuses on collaboration in the sciences and technology, and specifically noting the role of engineers in providing the means for North America to compete.

It at times seems that the differences that made North Americans unique are fading quickly. Whether or not a reconciliation of the standard of living of all people is in force, most people would concur with this documents premise and hypothesis. The authors note;

"It is not that the new globalization has gone unnoticed. Many observers are concerned that the United States is beginning to fall into a vicious cycle of disinvestment in and weakening of its innovation systems. As U.S. firms move their engineering and R & D activities offshore, they may be dis-investing not just in their own facilities but also in colleges and regions of the country that now form critical innovation clusters. These forces may combine to dissolve the bonds that form the basis of U.S. innovation leadership." pp. 75
Were these challenges demand driven? Or, has the scientific and engineering capability to conduct most of the high end complex tasks what made North America so dominant? Or was it the freedom and liberty were being released in the former communist nations, that is now rising up to challenge the west? I think it is the latter, that with China in 1978 and the Former Soviet Union (FSR) since 1989, can now focus on quality of life issues and be less concerned with controlling their populations. The authors seem to think that some of the ways in which business had been conducted has been exploited by other countries. In an open society that is what will happen, and did happen to the benefit of all people. Although losing these competitive attributes is possible, the competitive focus they unleash is both the purpose of an open society and the key to its future.
"Strategies that may have served U.S. firms in the second generation globalization will not work in the third generation world. The new emerging economies are an order of magnitude larger than those that emerged a generation ago, and they are today's growth markets. Nor does the United States, despite its undeniable strengths, enjoy global dominance across the range of cutting-edge technologies. More-over, U.S. multinationals are weakening their national identities, becoming citizens of the countries in which they do business and providing no favors to their country of origin. This means that the goal advocated by some U.S. policy makers of having the United States regain its position of leadership in all key technologies is simply not feasible, nor is it clear how the United States would retain that advantage when its firms are only loosely tied to the country." pp. 77
These comments may appear to resonate more with a protectionist mindset then with a more globalized point of view. It also seems to state a wanting for a greater share of a smaller pie then sharing a large pie to a certain extent. If the third generation globalization ties into Professor Carlotta Perez's theories, the third generation is the point where the benefits are soon to arrive. Dr. Perez made that call just recently. So the installment period as she described has been made, and thankfully we had a large and growing China and India to help sustain the world through this transition. It is also necessary to point out that what fuels this activity is the oil, gas and coal industries. These resources are constrained due to the global demand, and are potentially a hindrance to the progress of the world economy. The only manner that the energy industry can meet this demand is to re-organize for this challenge. This reorganization has to be made explicit through the software that defines and supports the structure. We should be less concerned about the losses of competitiveness and focus more on how they can be solved collectively.

The authors offer some of the ways in which the past competitiveness of the U.S. market is slipping away. In these four categories I can clearly see that the authors are not offering a means to stop the hemorrhaging of the U.S. economy. But offering constructive ways in which the U.S. can participate in the global economy and compete.

The Bandwagon Syndrome.
"As U.S. multinationals join the bandwagon of offshore technology development, they often seem to go beyond what makes economic sense." pp. 77
The Snowball Effect.
"The more that U.S. multinationals move activities offshore, the more sense it makes to offshore more activities." pp. 77
The loss of Positive Externalities.
"Some multinationals are finding that if their technology is developed offshore, then it makes more sense to invest in offshore universities than in domestic universities." pp.78
The Rapid Rise of Competing Innovation Systems.
"Regional competence centers or innovation clusters in the United States grew haphazardly in response to local market stimuli. China, India and other countries are much more explicitly strategic in creating competence and innovations centers." pp. 78
"Rather, the United States needs to develop new strengths for the new generation of globalization. With U.S. and other multinational firms globalizing their innovation work, emerging economies developing their education systems and culling the most talented young people from their huge populations, and communication technologies enabling the free and fast flow of information, it is hard to imagine the United States being able to regain its former position as global technology hegemony." pp. 79
"No amount of science and engineering expansion will restore U.S. technology autarchy. Instead, a new approach - collaborative technology advantage - is needed to develop a vibrant S&T economy in the United States." pp. 80
Policies for strength,
"We believe that the government, universities, and other major players in the U.S. innovation system need to work toward three fundamental major goals:" pp. 80
  • "The United States should develop national strategies that are less focused on competitive, or even comparative, advantage in the traditional meaning of these terms, and are more focused on collaborative advantage." pp. 80
  • "To start, the nation needs to counter the bandwagon and snowball effects that are driving the out-sourcing of the technology in potentially harmful ways." pp. 80
  • "Designers of Tax Policies at all levels also can redirect policies in these directions." pp. 81
  • "To a large degree, the U.S. patent office serves as the patent office for the world." pp. 81
  • "As a second goal, the United States need to help create a world based on the free flow of S & T brainpower rather that a futile attempt to monopolize the global S&T workforce." pp. 81
  • "Immigration policies that support global circulation would allow easy short term entry of three to eight months for collaboration with U.S. based scientists and engineers." pp. 81
  • "Finally, in working toward the first two foals, the United States needs to develop an S&T education system that teaches collaborative competencies rather than just technical knowledge and skills." pp. 81
  • "Our finding suggest that it is not the technical education but the cross - boundary skills that are most needed (working across disciplinary, organization, cultural, and time / distance boundaries)." pp. 81

Finally as part of the conclusion of this paper, "the enhanced communications within and between organizations". In oil and gas the consistency of motivation between the members of a Joint Operating Committee (JOC) resonates with the recommendations of this paper. The science, technology and engineering is the focal point of those JOC members. It is their backgrounds and scientific interests. The JOC has the operational decision making capabilities, however, it must retard these processes for the various bureaucracies to sign off on the plan. Its time to stop placing the bureaucrats at the centre of the organization and adopt this papers recommendations. And it is my opinion that the start of this change would be to develop the software as part of the solution to our long term economic well being.
"Our research suggests that the new engineering requirements, like the old, should build on a strong foundation of science and mathematics. But now they go much further. Communication across disciplinary, organizational, and cultural boundaries is the hallmark of the new global engineer. Integrative technologies require collaboration among scientific disciplines, between science and engineering, and across the natural and social sciences. They also require collaboration across organizations as innovation emanates from small to large firms and from vendors to original equipment manufacturers. And obviously the require collaboration across cultures as global collaboration becomes the norm. These requirements mandate a new approach not only to education but to selecting future engineers:colleges need to recognize that the talent required for the new global engineer falls outside their traditional student profiles. Managers increasingly report that although they want technically competent engineers, the qualities most valued are these other attributes."

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