Who would Henry Ford hire?

As copy is returned from my editor I will publish it here first. I would expect that the remaining entries for the rest of August will consist of edited copy that will form the proposal in September.

One topic of discussion is the effect that information technology and innovation have on the various roles of society, organizations and people. According to Dr. Anthony Giddens Structuration theory, society, organizations and people all move in lock step with one another. Any distortion in the progress of one over the others will lead to a failure. Dr. Wanda Orlikowski further advanced this theory with her application of Structuration to information technologies whereby she noted that technology was an element of society.

The progress of society, based on the influence of information technologies, will be faster than organizations or people. However, I think the progress of society, as dictated by the various technologies will not exceed the speed at which the people can accept it. The critical motivating force in people accepting technology will be the demands of their employer. The hours worked and the productivity of "some" countries is creating pressure on people to respond and thus require technology to keep pace. This leaves the organization as the odd man out in the troika that Giddens and Orlikowski have defined.

This research report is dedicated to innovation and the application of technology in support of the oil and gas industry standard Joint Operating Committee. Today organizations such as Harvard University and McKinsey Consulting have joined the debate regarding organizational structure. They state that collaborative tools are available to eliminate the hierarchy, (my interpretation of their words) and that these technologies need to be used in order to sustain any competitive advantage large organizations have, which is the final evidence needed to prove this application of Giddens theory of Structuration.

With this preamble regarding Structuration, I want to ask, what effect did Henry Ford have on society, organizations and people? Clearly the type of worker that Ford employed after the invention of the assembly line was fundamentally different than what he needed before. The role of the organization was changed with such explicit and radical thinking as paying his workers better wages, which increased the number of people that were capable of purchasing a car.

The optimization of work around the assembly line took the better part of the last century to unfold. A century to develop information technology related innovations would seem like a luxury today as the pace of change accelerates and a century of innovations are likely to be compressed into what I suspect would be a decade.

What kind of worker is needed in this networked, virtual world of information technology and innovation? Ideas are not 9 to 5. Just as Ford today is challenged by its competitors’ more effective use of the assembly line, and is in jeopardy of facing its own demise, what roles need to change, and how will people act and react?

Therefore it is reasonable to ask whom would Henry Ford hire today, and what would these people do?
Technorati Tags: Research, Final+Report, Genesys, Henry+Ford

The SEC is building its system.

The SEC has now released an RFP (Request for Proposal) for the system that I discussed here. A copy of the press release can be seen by clicking on the title of this entry. If the old SEC can change it's stripes, maybe, just maybe the oil and gas industry can move forward as well. We'll find out in September when the proposal is delivered.

Technorati Tags: Christopher+Cox, Call-to-action, Genesys, XML

The plan

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

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

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

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

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

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

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

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

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

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

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

technorati tags: Genesys, proposal, call-to-action,

The future...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"You must be afraid to have courage. By fear, I mean the kind that entails serious harm to ourselves, physical or otherwise, the kind that wars with our need to take action but which we overcome because we value something or someone more than our own well being. Courage is not the absence of fear, but the capacity to act despite our fears. You can live with pain. You can live with embarrassment. Remorse is an awful companion."

I have lived with the consequences of my ideas. I have sacrificed everything that I have in the support of this software project. Believing fundamentally in the need for this to be done, to be done in a manner that did not consider my needs. I am a small issue in comparison to the issues of the oil and gas business and the community of its users.

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

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

technorati tags: Genesys, Project-Management, Courage, Economics

July Business Report.

Marketing

A change in our marketing approach. The more I think of it the more the old one seems to have been conceived in a nightmare. The number one objective in the next 3 months will be to find a project sponsor. The more I read the book we are reviewing "Don't Park Your Brain Outside" the clearer it is that the failing in making this project "real" is due to this blogs author. Instead of thinking that I am outside where my brain has been parked, our marketing will bring us back inside.

More on the marketing activities in this next month. Time for reflection and planning for the next 31 days.

Content

The pace that I had set out last month has slowed due I think to the summer months. The heat and the successful nature of the oil and gas industry seem to have permitted a few more relaxing hours then in the past. During September we will re-establish our objective of putting the 8 posts per week back into play.

This also seems to have had an effect on our technorati ranking. Sliding backwards a bit is reflective of the summer doldrums.

Technical Architecture

No changes to the overall technical architecture were made in July 2006. I will be reviewing the architecture in the month of August in line with and for the sponsor marketing search.

Budget

Revenue to the end of July: $0.00

Consistent with the marketing program changes I will be re-costing and reviewing the objectives for the sponsorship program. These will be comprehensive in nature and will involve the entire reconfiguration of the budget and goals that are to be set out.

Technorati Tags: Business-Report, Genesys

Petro Canada Q2 Earnings.

Petro Canada have published their second quarter earnings report and I have to admit that I was wrong in terms of the position I was taking on this blog. My inability to convince the industry of the needs of this type of solution had lead me to being convinced that conflict was a means to the end. In retrospect my frustration got the better part of discretion and I pursued the theme to the extreme. There is nothing more to do than to apologize to Petro Canada in the same manner the analysis was raised. I trust they will forgive me.

technorati tags: Genesys, Petro-Canada, Earnings

North American and European stock exchanges.

There has been some discussion on the cooling effect that Sarbane's Oxely (SOX) legislation has had on companies listed on the New York Stock Exchange and NASDAQ. The discussion lately has focused more on the impact that the additional regulations are having on companies, and the easier or less stringent London and European exchanges. Noting in some articles that American based companies would establish their listings in Europe as their stock markets are easier to comply with.

If I am not mistaken isn't this backwards. Isn't the perception in the investment community that the legislation is seen as being positive? Isn't it a benefit from the investor point of view, as opposed to the company? An additional check and balance on the activities of management? I would be leery of any management that wanted to move from the NYSE or NASDAQ to the London exchange. I would questions their motives and find out why they were thinking that would be a positive.

But this brings up another point. Recall that SEC Chairman Christopher Cox is implementing the compliance regulations in a number of XML based XBRL Tag Libraries. Enabling the power of the technologies to replace much of the compliance bull work. This is an important consideration. If the metadata or semantic web is able to monitor compliance through the transactions and interactions then the load that the management has to take on would be limited to the high end compliance activities. Rules and regulations are what technology has been able to provide a solution for a significant period of time.

The other concern is that their is no power in the universe that would ever try to approach repealing of Sarbane's Oxely legislation. Passed by a congress that was eager to prove to the world that the Enron's and WorldCom's are not acceptable. The message of any subsequent legislation that may lessen the impact of Sarbane's Oxely compliance would be still born. The U.S. Congress passed the legislation almost unanimously and would need to find some extremely critical data to motivate it to even consider any alternative.

I think the shoe is on the other foot. The legislation is a benefit to those investors who invest in the U.S.. Companies that are not interested in complying can certainly move to the foreign exchanges, but I would think this may not be in their best interests. After all the investor is the customer. Soon the compliance tag library will be available for all companies to implement. (Certainly within the next 5 years.) And at that time the companies will be able to purchase some extra large servers to manage their compliance requirements.

technorati tags: Genesys, SOX, Christopher+Cox, XBRL

McKinsey Strategy Series Part III, Tacit Interactions.

"Tacit interactions are becoming central to economic activity. Making those who undertake them more effective isn't like tweaking a production line."

This article states that tacit interactions, consisting of collaborative and complex problem solving, are the primary means of future economic value. The majority of these interactions are found in western based economies and are conducted by those that earn higher salaries. The article goes on to say;

"During the next decade, companies that make these activities - and the employees most involved in them - more productive will not only raise the top and bottom lines but also build talent based competitive advantages that rivals will find hard to match."

"But building these advantages won't be easy: companies must alter the way they craft strategies, design organizations, manage talent and leverage technology."

I particularly like that "Design Organizations" bit. It implies that the need and value of the hierarchy are last century. Today the technology exists to collaborate at a basic level. In the next ten years the development of collaborative applications will enable those firms that choose to increase these tacit interactions, with "competitive advantages that rivals will find hard to match."

McKinsey goes on to better define what is meant by tacit interactions noting "the searching, coordinating and monitoring activities required to exchange goods, services and information". The developed economies are finding the volume of tacit interactions are growing faster then in any other category or job description. Making up almost half of the resources in certain industries. The developing world is not far behind and have opportunities that could match the developed worlds pace in a very short period of time.

Automation of the business process, or transactional activities, does not augment the performance of tacit interactions. How a firm may increase those tacit interactions and increase performance is not well known or defined at this point.

"But that must now change. Executives will have to learn to innovate, and manage in era when tacit interactions dominate and drive performance."

Facilitating the people within your organization to increase tacit interactions requires the management to provide the tools for their people to do their jobs. In oil and gas, I would suggest that direct participation of all members of the joint operating committee, collaborating in a virtual environment is how I see the Genesys application being developed. Each engineer, geologist, administrator and developer are there to represent their companies interest in the area. Collectively the groups are able to collaborate and have the software support their thinking and decisions with tools that handle the business end of these interactions. For example, if it is determined that a sand frac is to be used on the well the following processes would be invoked;

• the contracting firm is chosen
• a purchase order is created
• a contract is made
• the invoicing and payment for those services are completed

all as a result of the decisions made by the joint operating committee (JOC). This frees them to conduct greater volumes of interactions and innovations that are necessary to meet the market demands for energy.

"Workers engage in a larger number of higher quality tacit interactions when organizational boundaries (such as hierarchies and silos) don't get in the way, when people trust each other and have the confidence to organize themselves, and when they have the tools to make better decisions and communicate quickly and easily."

McKinsey has conducted a survey of 8,000 companies and determined that certain sectors had higher levels of tacit interactions. Within each industry the number of tacit interactions was widely variable and appears to have a direct correlation to the overall performance of the firm! McKinsey goes on to say;

"The need to move forward is both substantial and urgent."

High levels of tacit interactions were consistently show to have built substantial competitive advantages. These advantages were difficult to be replicated by competitors as their "power lies in the collective company specific knowledge that emerges over time."

McKinsey goes on further to state that these require a;

"New Management Science" and "require changes in every facet of business, from hatching strategies, to organization, to managing talent, and leveraging IT."

Readers are encouraged to read the 200+ articles in the archives of this blog to see the manner in which this McKinsey Strategy Series dovetails with what has been suggested here for the oil and gas industry. The Genesys systems that will be developed with the joint operating committee as the organizational focus. Will enable high levels of tacit interactions and collaboration throughout the enterprise, the partnership in which the JOC is represented, and the industry as a whole. The what and how this is proposed to be done is documented in this blogs archives.

Consistent with the need to revisit all aspects of the firm, McKinsey believes the role and purpose of strategy and its development take on a higher importance then they do now. This becomes the critical task of senior management to provide the overall scope of interactions and their derivative innovations. This implying that innovations occur at the front lines of the business, not in the management ranks. The means that companies use to enhance the volume and value of tacit interactions is captured in the following;

"Tacit interactions reduce the importance of structure and elevate the importance of people and collaboration. Some of these changes are already underway. In many companies people now come together in project teams, address an issue, and disassemble to start the process again by joining other informal teams. In fact this approach is common in certain professional services and engineering firms, so their organizational charts rarely reflect what is really happening in them. Hierarchy busting has been a theme in the business press for years, but the pace of change has been slow and its effectiveness questionable."

The technology that companies will need to employ is fundamentally different from those used today. In addition to the enhanced communications, these technologies needs to be brought into context for the next ten years that McKinsey suggests these changes will occur. At this point I would assert the Genesys technical vision that I have documented here, here, here and here. This technical vision is necessary for these interactions to grow in predictable ways. Key will be the asynchronous process management and its ability to mirror the unpredictability of events as they occur. This is the real key of the entire discussion of these systems.

technorati tags: Plurality, Genesys, Petro-Canada, McKinsey,

McKinsey Strategy Series Part II, The Adaptable Corporation

"To survive corporations must execute in the present and adapt to the future."

This according to the author of this McKinsey article Eric D. Beinhocker. Click on the title to access this article, I highly recommend it's review. The author notes through research that two types of companies have evolved over the past century. High performance companies, which historically are unable to sustain their success vs. long term adaptors, companies that survive for long periods but do not perform well. The author provides research data that only a handful of organizations are able to achieve high performance and long term adaptation.

I have suggested this performance paradox is in play in the oil and gas industry today. And the solution to it is the hypothesis of the Plurality thesis underlying these blog entries. This solution involves identifying and supporting the joint operating committee. Building software that is consistent with the joint operating committee as the organizational focus. It is also my contention that this theory is the main point of conflict within the energy industry. To have McKinsey state explicit support for this type of thinking makes me realize that I have not pursued these ideas in vain.

The adaptability of a firm is dependent on three barriers, People, Structure and Resources.

"People, the price of experience"
The author notes that the "bias of over optimism can make organizational change efforts seem less urgent." I would add the confirmation bias, and as I noted in my Plurality thesis, both the motivational and cognitive paradox's. The confirmation bias enables people to see what they would like to see. The motivational paradox suggests that users lack the time and effort needed to learn new applications due to the overwhelming concern for though put. And the cognitive paradox notes that people tend to apply what they already know in coping with new situations.

Nonetheless each of these bias' and paradox point to the same issue. The installed base of management becomes a facilitator of execution, but also an albatross to adaptation to new situations.

"Structure, the risk of complexity catastrophe"
"As an organizations size and complexity grow, its degrees of freedom drop. The complexity of execution inevitably leads to inter-dependencies and organizational complexity, which in turn create the potential for gridlock."

I suggest that this implies that the performance of the firm would seriously degrade prior to the onset of gridlock. Is this what is occurring in oil and gas? Is the industry being challenged with new pricing and value metrics, facing an insurmountable change paradigm that management is unable to approach? If so it would be reasonable to assume that gridlock is right around the corner. It appears the majority of energy users demands are not being addressed or even recognized. If gridlock is the inevitable outcome as the author suggests, does this assume that we have to await its arrival before we take effective action? Or alternatively, will these software developments be driven by the users needs for a more effective and hence less timely way to do their jobs.

"Resources, the path to dependency."
"As managers search for complementary business processes and plans, over time those constrain the organization in its ability to expand its horizons."

"Creating an adaptive social architecture."

"Companies have two ways of overcoming these barriers. One is what Jack Welch called the "hardware" of an organization (its structure and processes), the other the "software" (norms and culture). The two sides must be consistent and mutually reinforcing to create a coherent social architecture."

It is suggested 3 approaches to overcome the gridlock and constraints:

1. Reduce the hierarchy.
   
2. Increase autonomy.
3. Encourage diversity.

However, addressing these hardware concerns provides only half the solution, you must also align the "software" of the organization.

"Organizational Software"
"Flatness, autonomy and diversity are diametrically opposed to the control, coordination and consistency that successful execution require. But the software of norms and culture can help organizations have their cake and execute it too."

The author notes the following 3 attributes are consistently seen in all high performing and adaptable organizations. These are as follows.

Co-operating norms.
As opposed to having the hierarchy enforce norms of trust, reciprocity and shared purpose. In this proposed solution, the joint operating committee operates at a level where the participants have control over these metrics. The focus is jointly shared by the participants collective motivation to optimize the investment.

Performing norms.
Replacing the role that senior management plays in pacing and setting performance requirements "by instilling norms that create strong expectations for individual performance." To offset senior managements centralized role of performance, individuals can be motivated to go the extra mile knowing success will be rewarded.

Innovating norms.
"Facts matter more that hierarchy" and "good ideas can come from anywhere." This blog is dedicated to the innovative producer. It is my assertion that the prices of energy commodities is a reallocation of the financial resources to support innovation. Innovation being a subset and mutually reinforcing cycle based on these underlying earth science and engineering disciplines.

Back to the original point that the author states. Companies need to execute in the present and adapt for, and to, the future. With the pace of change in the business community those that are able to effectively adapt will have the ongoing strategic capability to essentially continue on. Those that are unable to adapt are pursuing strategies of gridlock and quickly eroding competitive advantages.

I have stated many times in this blog that I do not see the structured hierarchy as being the means for the industry to adapt to these new realities. These realities are playing out and are addressed in this fine article. An article that provides an explicit solution that senior management must relieve some of their concerns for performance and place it in the hands of the front line. In the case of the oil and gas industry, the joint operating committee.

Part of the conflict that is prevalent in oil and gas companies is attributable to the "hardware" structure and processes of the organization are not aligned with the "software" components. The "software" being the culture and the norms of the organization are clearly based on the joint operating committee. Is it the legal, financial, operational decision making and cultural frameworks of the global oil and gas industry. Yet no company explicitly addresses this key organization method. This point is the source of the conflict in the industry and the source of its future adaptability.

If a user is faced with the change paradigm in this software development proposal, because it is consistent with the norms and culture of the industry the solution is very evident. The lack of cooperation between the joint operating committee and the hierarchy is the issue. The methods of management for the hierarchy have always conflicted with the joint operating committee. And over time no one questioned if this was the right direction. In other words, to adopt the joint operating committee will eliminate the majority of the conflict that is present in oil and gas administration and management.

Not pursuing this opportunity to develop these systems leaves the industry further behind where it should be in it's transition to adaptability. I can only assume at this point that the reason that these software developments are not being started is that the industry has attained that lofty point of gridlock.

technorati tags: Genesys, Plurality, McKinsey, Adaptability

A new McKinsey Strategy Series, Part I

The title of this entry will lead you to a series of McKinsey articles that provide some pertinent material for this blog. The majority of the focus of these articles is the transition from the technology induced forces that are active in business today. Within this series is a copy of the John Seely Brown and John Hagel III article "Creation Nets". I would point the key reason for this entry is to highlight how the article relates to this blog, as in this quote;

"Change is a constant in today's global business environment: new consumer preferences, innovative attackers, and technological discontinuities can challenge current leaders suddenly. This issue of McKinsey on Strategy examines three ways for companies to embrace the challenge of continual change. One is to reconcile the conflict between executing in the present and adapting to the future. Another is to embrace new knowledge and information trends that can make talented workers more effective and to look outside corporate boundaries for ideas, knowledge, and technology. The third is to counteract the common psychological biases that make executive hang on to failing businesses and products."

I can't think of a better summary of this blogs purpose and role. I have introduced significant change paradigms to the way that oil and gas companies are structured. I have noted that to change the structure requires that systems be built to define and support the new organizations, or as I have noted, SAP is the bureaucracy. And I have attracted significant resistance and as have stated before, and McKinsey is saying in this series, resistance is futile.

I will take each article and break them down into separate entries over the next few days. The first is the results of a Survey McKinsey conducted and their 10 trends.

An executive take on the global business concerns. A McKinsey Survey.

"Macroeconomics Trends"

"1) Centers of Economic activity will shift profoundly not just globally but also regionally."

Clearly China and India are having significant influence in the globalized economy. This trend will continue and bring with it the increase overall demands of energy. Underestimating the overall demand for energy is a fault of the energy producers. Thinking that prices are temporarily high is based more on past events then the globalized economy.

McKinsey notes that these trends are going to be with us for 20 years. The overall changes will be in concert with regional changes that are as dramatic. Noting that Europe and Asia may equalize in their economic size and influence.

"2) Public sector activities will balloon, making productivity gains essential."

This trend notes the demands in health care and other areas of the government will increase in the near future, and that increase has to be met through the enhanced productivity of the public sector. There simply won't be enough people to deal with the demand.

However, this trend is also in play in the oil and gas industry. Retirement of the brain trust will occur in the next 20 years. Methods of sustaining the reserve base requires more active science and engineering. These will have to be done as the fields get older and the targets smaller with less people then what are involved today.

"3) The consumer landscape will change and expand significantly."

Possibly intimating that the west will be the only one market of consumers, when India and China's middle classes continue to expand, the market for all products will be much stronger then the west is accustomed too. The energy sector is also directly affected by the consumer markets.

"Social and Environmental Trends"

"4) Technological connectivity will transform the way people live and interact."

Offices need to be designed to accommodate the new methods of completing work. The ability to conduct business anywhere, anytime is quickly becoming a reality. Telecommuting I think is a bad example of how this change will occur. Contact with a much larger population of workers and their regions will demand that the traditional methods of working needs to be considered.

"5) The battlefield for talent will shift. (Global labor and talent strategies)"

Dove-tailing with the technological connectivity trend, having people scattered in various regions will become commonplace. The ability to conduct operations where ever they are required is augmented by the capability to seek and source talent from remote areas.

"6) The roles and behavior of big business will come under increasingly sharp scrutiny."

Particularly in the energy industry. The Kyoto, CO2 emissions and general nature of the energy industry attracts those that have a strong environmental focus. Big business is also known to hog the lions share of consideration. The competitive and strategic advantages of size may become oriented to the smaller firms.

"7) Demand for natural resources will grow, as will the strain on the environment."

Well stated. McKinsey suggests that energy demand may grow by 50% in the next two decades. For me this certainly puts in perspective the scope and size of the problem in energy. Without energy, there is nothing. It is the lifeblood of an economy. If we intend to continue to develop these energy demands must be met. High energy prices are not a temporary pricing aberration from the conflict in the Middle East.

"Business and Industry Trends"

"8) New global industry structures are emerging."

Due to the proliferation of technologies and regulation like Sarbanes Oxeley, new business models are emerging. Here in Canada the development of private capital and trust conversions have dominated the energy sector. These business models were of limited use as little as 6 years ago.

"9) Management will go from art to science."

This trend is suggested as big businesses savior. The ability to continue on with size requires that the firm employ technologies throughout the organizations. Such that automated decision making replaces the current management structure of organizations. Read the McKinsey article if you have difficulty believing this.

"10) Ubiquitous access to information is changing the economics of knowledge."

This trend indicates to me that the real value in the future is intellectual property. Knowing is one thing, have access and authority to use many of the innovations in the future will be based on a completely different structure in industry. Who knew what and when will be more the deciding factor in creating value. Making licensing and publication more important elements of all businesses, but particularly energy.

I will continue on tomorrow with the next section of this series "The Adaptable Corporation."

technorati tags: Genesys, McKinsey, Trends, Energy, Change