Showing posts with label Survey. Show all posts
Showing posts with label Survey. Show all posts

Saturday, March 06, 2010

McKinsey Organizational Capabilities

McKinsey have published the results of a recent survey. Their survey was on the topic of building organizational capabilities. People, Ideas & Objects is designed to provide the oil and gas industry with an ERP systems development capability. A user driven capability that provides the innovative oil and gas producer with the most profitable means of oil and gas operations. Key to this objective is the ability of the producer firm to focus on its strategic assets. And build the science and engineering capabilities necessary to exploit their talent and assets.

I would argue that with the financial crisis and the soon to be insatiable demand for energy. Will require industry to focus on developing these capabilities. However, I am satisfied with the survey result suggesting:
Nearly 60 percent of respondents to a recent McKinsey survey say that building organizational capabilities such as lean operations or project or talent management is a top-three priority for their companies. Yet only a third of companies actually focus their training programs on building the capability that adds the most value to their companies’ business performance.
The last sentence of that quotation is an area where the Community of Independent Service Providers have another business opportunity. It was noted here the other day that the CISP could research, develop and implement principles of and consulting services for the area of organizational behavior. Building organizational capabilities in focusing the producer on the engineering and earth science disciplines may very well be another area where the CISP could develop a substantial business. That is not to suggest that the CISP is involved in the direct science and engineering, McKinsey provides a good definition of the context.
We defined a capability as anything an organization does well that drives meaningful business results. The survey explored which capabilities are most critical to a company’s business performance and why they focus on the capabilities they do. It also asked executives how their companies create and manage training and skill-development programs and how effective those programs are in maintaining or improving on their priority capabilities.
I believe the oil and gas needs a strong software development capability. Software is an area where value can be built in all industries. If users are able to think of new and innovative ways of doing business, the ability to change to those new ways is dependent on the software that defines and supports the organization. In a science focused business such as oil and gas. Where innovation on those sciences will accelerate substantially in the decades to come. The capabilities within the producer, and the software development capability that is discussed on this blog, are areas where value can be built. According to the McKinsey survey results, this concern / objective is not generally shared.
Sixteen percent of respondents in China and 20 percent in India say capability building is a top priority for their companies—versus 10 percent overall and 8 percent in North America.
and
Respondents at companies whose training programs are effective in maintaining or improving the drivers of business performance also say their companies pay more attention to tools that support or enable capability building, such as standard operating procedures, IT systems, and target setting and metric tracking.
People, Ideas & Objects has been resisted by the management of oil and gas. They know that if there is no software developed that competes with their way of doing business, they can retire in riches. Building a capability is managements conflict of interest.
In addition, although resistance to change is often viewed as a barrier to building new capabilities, almost as many respondents to this survey identified a lack of resources and an unclear vision as barriers.
Within People, Ideas & Objects I have specified a Technical Vision of how IT will impact oil and gas. There is also a User Vision of how the users will interact within the system. And the Draft Specification details a vision of how and what the software will do for the oil and gas producer. What is management's vision of the future?

To reiterate this is an area where much value can be created. The producer firms will be challenged in ways that we can't imagine today. To prepare for this eventuality, the Community of Independent Service Providers will be able to prepare their clients in the fashion that McKinsey discusses in this survey's results. These are the types of businesses that can be developed by the CISP. I will continue to highlight areas where I think the most value can be generated to the producers, and earned by the CISP.

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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Thursday, December 18, 2008

McKinsey IT Global Survey

McKinsey have published their third annual Information Technology Global Survey. This survey was taken during a time of economic stress, and as such, I feel it necessary to comment on the state of economic affairs as I see them. Yesterday we saw Federal Reserve Chairman Ben Bernanke essentially capitulate to the power of this economic decline. Moving the interest rates to 0% and stating he will do what he has to do to solve these problems, there is a tacit recognition of the scope of this depression.

I have been referring to this downturn as the mother of all depressions, and I think I would get a consensus on that. The only remedy to this is to eliminate the inefficiency within the economy. That means radical organizational changes supported by powerful new IT systems. As I state on occasions "SAP is the bureaucracy" and to change the organization requires first and foremost a change in the systems used by the firm. It is within this economic backdrop of this survey that I make these comments. The survey respondents are generally the ones that will be fairly quickly losing their jobs. Click on the title of this entry to view the survey results.

It may be considered optimal or ideal to have IT lead the organization in term of innovation and competitive advantage. A competitive advantage that would be attainable by a fundamentally different system like the Draft Specification of People, Ideas & Objects could provide.

CIOs and other senior executives agree that ideally these capabilities should, for example, promote innovation and better enable companies to seize new opportunities. Still, they continue to see a gulf between these aspirations and the value that IT currently delivers. p. 1
Existing demands of IT and performance requirements show that the pressure to just stay afloat becomes more difficult.
The global economic downturn complicates matters. Respondents cite continuing pressures to deliver on existing IT projects and services at a time when they expect spending to fall. So they are making trade-offs: reducing IT operating expenses so they can maintain high-priority new investments that support broader business goals, such as improved sales force or supply chain management. p. 1
I suspect these types of decisions are being made throughout the oil and gas firms highlighted in our piggy series. Failure, despite the belief that the government can save everyone, is not an option. It is what is needed for society to move forward.

I have to reiterate the value that McKinsey Consulting is providing here. They are consistently showing the right direction for firms to move too. For the past number of years (3 by my count) they have shown that they are concerned about the economic consequences and are actively moving their firm and clients to the new model they preach. This survey is no different. As I have said before, I have allocated a sizable budget for their consulting to this project when we begin. Precisely for comments such as this.
Unprepared for disruption

Nearly two-thirds of respondents say their organizations are at risk from information- and technology-based disruption. Ranking highest among disruptive forces are potential shifts in customer expectations for better products or differentiated services enabled by information- and technology-based capabilities. p. 2
To add insult to injury, it is the other C class executives that are looking at their own internal IT groups with what sounds like the greatest of disappointment.
IT’s value to the corporation

The survey found aspirations for IT are substantially unmet: respondents see a large gulf between their IT organization’s current priorities and what IT could contribute. p. 3
Makes me think that there may be a spot for People, Ideas & Objects yet! And McKinsey reflects a strong intent for businesses to improve in this area. However, based on my experience with the Canadian producers I have highlighted as the Piggies, they are only concerned with their retirement and ensure their activity level remains low enough not to strain themselves. The point that I am trying to make is that saying this is the "intent" may make it through their budget processes, but we know it is mostly, if not all, BS.
This year’s results show an area of notable improvement: the way IT strategy is developed. Fifty-nine percent say that their companies develop multi-year IT plans, up from the 52 percent response last year, and 56 percent say that their IT strategies include technology-driven business innovations, versus 42 percent last year. Still, two-thirds of executives say further improvements are possible by integrating business and IT strategy more closely. They favor a process where IT strategy and the “art of the possible” in technology influence the development of business strategy, closing the loop in strategy development (Exhibit 3). This joint development of strategy by business and IT would reduce risks of surprise disruptions and better involve IT in bolstering competitive advantage. p. 3
The remainder of the document discusses the budget allocations of these managers. This I perceive as an academic exercise since none of it will come about. The economy will be acting swiftly against those that are unable to bridge the gap from the old to the new. And the new begins here with People, Ideas & Objects and the Draft Specification. Please join me here.

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Wednesday, September 17, 2008

McKinsey 2008 Web 2.0 Survey

Article 39 of relevant McKinsey articles sees the publication of their annual survey of "Web 2.0" technologies in business. What is clearly evident in this survey, is an enhanced level of interaction between suppliers, vendors and producers in the oil and gas industry, is enabled by Web 2.0 technologies.

A fundamental component of the Draft Specification is the redefinition of the boundaries between the firm and market. One of the objectives is that oil and gas producers must rely more heavily on the markets to better anticipate their needs. This is an extension of the logic that a producer researching and developing their own drill bits is wrong headed, and would be a comprehensively uncompetitive behavior. The competitive advantages of an oil and gas producer resides in their land base; and knowing what earth science and engineering capabilities exist within their organization, and joint interest partners organizations.

Building redundant duplications of capabilities in each silo'd company presents the industry with a critical shortage of these key human resources. If, based on the Joint Operating Committee's (JOC's) established partnerships, the producers pooled their resources, the unnecessary duplication of capabilities within each firm is eliminated. Releasing these resources to address the growing science and engineering demanded within each barrel of oil. This pooling also addresses the potential issues raised around the retirement of the industry brain trust.

Companies report that they are using Web 2.0 both within and outside their walls -- to forge tighter links with customers and suppliers and to engage employees more successfully. p. 1
How the Web 2.0 technologies enable the JOC and the producers that represent them is not so much of a technology issue as it is an organizational issue. The unique characteristics of the energy producer have always been addressed through the JOC; whereas the compliance and governance of the hierarchy has monopolized the attention of software vendors. This no longer needs to be the requirement.

I much prefer the term Enterprise 2.0, Web Services or Service Oriented Architectures (SOA) then Web 2.0. The intent is the same. However, I feel Web 2.0 addresses the consumer more then business. Call it what you will, according to McKinsey's survey companies are beginning to respond to the potential competitive benefits.
However, fundamental changes are beginning to take place among the satisfied companies as a result of their ambitious use of Web 2.0. These companies are not only using more technologies but also leveraging them to change management practices and organizational structures. p. 2
This is reflected in the attitudes towards Web 2.0 technologies. Writing a blog was perceived as a waste of time, now blogging is becoming more main stream as a form of idea communication. According to McKinsey's survey these technologies will begin to involve transactions. This may seem far fetched today, however, there really is no technical difference in a web enabled ERP system such as People, Ideas & Objects Draft Specification and one that Oracle or SAP sell. The differences are not IT related in nature, but our choice of which organization we define and support.
Following last year's pattern, Web Services (software that makes it easier to exchange information and conduct transactions) remains the technology with the highest level of use among respondents across all regions. Respondents also rate Web services as the most important tool. p. 4
The next step will be the innovative application of these technologies in the various primary industries. This is the primary focus of the People, Ideas & Objects application modules. Modules that enable innovation and solve the problems the industry faces today.
Innovation. Successful companies already use Web 2.0 for business applications such as communicating with customers and suppliers; soon they may use it to drive innovation. p. 10
I wish to appeal to those that have an interest in making this software development project real. If you know of a producing company, or an oil and gas investor that is interested in sponsoring this project, please email the URL of the web log to them and join me here.

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Sunday, November 26, 2006

Another McKinsey survey.

This survey is reported by Dr. Nicholas Carr on his Rough Type web log. (Click on the title of this entry to go there.) Noting that large percentages (61%) of companies in North America are on the verge of adopting SaaS (Software as a Service). Their motivation being, and it is a subtle point, that companies are moving closer to Dr. John Hagel lll's idea that industry will need to restructure as either;

  • Infrastructure Management (Firms like Genesys providing SaaS solutions.)
  • Innovation Management (The key role of the producer (Based on capabilities and oil and gas leases.))
  • Customer Management (The down stream business of refining and marketing.)
As I move to secure some of the residual budget allocation for 2006, I will be highlighting these points to the industry, I only hope they are listing to the volume of people that are speaking to these issues.

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