Show me the money.

This community is all nice and good but to sustain it in the long, and short term, money is what makes the world go round. This post is about where and how that money is made and distributed to the People in the community who contribute their ideas and hard work in making this software and the Community of Independent Service Providers real.

In my ever-ending flip flopping on how the Preliminary Specification gets started. I now note the need to pay the people for their time in building this software. They must and will be compensated form their first day. This will slow down the development and delay the start-up. However, it is important to ensure that the realness of the project is viable from a commercial point of view on day one. Those that have been keeping close score, this is a change in the policy of this development.

Previously it was thought the earlier start-up might be achieved by the Community of Independent Service Providers investing their time in establishing their business offerings and contributing to the specifications. Although now they will be compensated for their time in developing and defining the software, the time they spend in establishing their business offerings (as members of the Community of Independent Service Providers). These are investments that will have to be undertaken themselves. The other point is that it keeps the clarity of the Intellectual Property (IP) clearer and cleaner. I'll have more to write about the IP in this development in a future post.

So where is this money to pay the users in this software development going to come from. I have made it quite clear that I hold certain Canadian producers responsible (our four piggies) for the attempted theft of the IP of using the Joint Operating Committee. It is also the large bureaucracies that are challenged by my overt statements that they are redundant and failing their stakeholders. Not good to challenge the clients of the business.

The money for this software development and community comes from the producers. Those that are currently invested in many of these failing oil and gas firms. And are being wiped out financially from these self absorbed management types. I have referred to this new clientele as the disgruntled oil and gas investor. And challenged the readers of this blog to find anyone that believes the bureaucracy will be operational in 2020. They may also believe that this is just another recession. The corporation and its highly layered hierarchy are a dying mode of organization. Today with the new Information & Communication Technologies producers can be better managed through this community. So please join me here, and understand that this content is looking for you.

Technorati Tags: People's Community Failure Management User

"Content will find you."

Writing a blog and pushing the idea of using the Joint Operating Committee is somewhat of a passive activity. You promote your ideas and marvel at the distribution and the growth of your statistics. The Internet, as a medium, is quite spectacular in compressing time lines and achieving things in a short period of time.

I've had this idea floating around in my mind that this passive method of aggregating users is the wrong approach. Particularly now as I have set 2009 as the point in time that I and 100 users begin the work on defining the Preliminary Specification and Community of Independent Service Providers. How do I go about doing this, sourcing these people.

Then from the back of my mind I remember the comment made by Cisco CEO John Chambers that "Content will find you." Interesting, I certainly have content. From the original idea of using the Joint Operating Committee (JOC) to the detailed Draft Specification which I think lays out a pretty clear vision of the significance of moving to the JOC. Content we have, therefore we have to actively go looking for the users. Chambers exact quote is as follows .

People talk about devices... but we think it's about the network. It will move from a generation about data and voice, more to visual networking, wired and wireless. We think the key content will find you, and we see changing business models reflecting this.

I think he is right. And indeed we have to switch gears in order to begin the task of getting the people necessary for this critical next step of defining the Preliminary Specification and building the Community of Independent Service Providers.

Great idea, how do we implement it. I have advertised with Google off and on and if you've had the opportunity to use those tools you'll agree their effectiveness is unquestionable. But they are relatively slow in terms of meeting the criteria of developing the Preliminary Specification and Community of Independent Service Providers. We need something more direct.

How do we find the people with the oil and gas operational experience and business development experience to make the oil and gas industry and the service industry operate based on the vision of the Draft Specification? I had set up a LinkedIn account last summer and determined that the "social networks" were more of a social then a business thing. I recently had the opportunity to check LinkedIn more thoroughly and have come away with a renewed appreciation.

After less then a week of using it, clearly LinkedIn is the "Network" tool that will enable the Community of Independent Service Providers and their collaborative efforts in defining the Preliminary Specification. With over 376,281 users that have classified themselves as in the Oil & Energy industry classification, sourcing 100 people should be possible, if not easy. If you have not used LinkedIn I highly recommend you sign in. The people that are on LinkedIn are more of a senior level in organizations and it is not a social network per se. Oh and the reason that its so valuable is that people who are using it are paying a monthly fee to access the service.

"Content will find you" is a valid concept and one that will be applied in this development. So as opposed to just saying join me here, I'll also being saying I'm looking to find you. Here is my LinkedIn profile.

Technorati Tags: People's Community Preliminary Specification

Berkshire Shareholder Letter

We've all heard of the "Oracle of Omaha" Warren Buffett and understand his perspective on business. Lately he has taken some solid hits to his reputation with the high profile and large investments he made in Citibank and General Electric. Both being questionable in terms of judgement.

Nonetheless he has the clarity of thinking that provides a solid grounding of where we are and what may be happening to us economically.

“The economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” said Buffett. “Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so.”

The annual report of Berkshire Hathaway is available and down-loadable from here. The Wall Street Journal also has a review of the letter to shareholders here .

Is this recession really a depression? Have we seen a time when a recession has put so many homeowners underwater? Or watched the Japanese economies exports decline 45% year over year? A recession in which we have seen banks and auto manufacturers, media and almost every industry in such a decline that the poor performing companies are looking straight down the barrel of their demise?

Well actually yes we have. There have been many other periods of time in which the economy has been hit by a depression. The 1930's being the most recent. These are long wave economic theories that have been systemically analysed by Professor Carlota Perez. And I have applied them to the oil and gas industry in a variety of blog posts under the label Perez. The key takeaway from her theories is that there is economic stress, or shambles as Buffet calls it. This a necessary and productive time of renewal. The organizations that will come out of this decline will be more able to satisfy the needs of society and people. Something that the old economy styled companies where unable to do.

Professor Ludwig von Mises is famous for educating Professor Friedrich von Hayek in Economics. He also stated an important point pertaining to some of these long term economic cycles. And that is they are generally solutions to the problems of the day. Specifically he states that the "industrial revolution was the solution to the problem of mass hunger".
 

This puts in context the role of today's Information and Communication Technologies (IT). IT has for the past 40 years provided us with some of the solutions to the problems of the day. And we live in remarkable times as a result of these technologies. But there is so much more that is expected of them, and in many cases they have been systemically disappointing in terms of building specific value for organizations. With organizations unwilling to change or to adopt the new technologies to their fullest of potential, IT's impact has been limited. As a result we have barely experienced the value they could provide. I marvel at the stupidity of driving to the office in the morning. This activity consuming up to three hours of each individuals day, When in reality they were prepared and ready to work within 5 minutes of waking up.

We need these economic depressions to eliminate the weaker and less adaptive firms from the economy. In oil and gas I have written about the piggies and specifically about Canadian Natural Resources Ltd (CNRL). I have accused them of aggressively fudging their financial statements in the third quarter. They have lost Fidelity investments and this is the only news we have heard from them? They were to have their Horizon tar sands operational now, yet we only know that their is litigation with the contractor. With $26 billion in debt and greater then $3 billion working capital deficiency, these delays in reporting are evidence of the last moments of that organizations life. Say good bye to this pig.

The time in which people will be faced with the question "what do I do now" is answered with their involvement in this software development project. For a variety of reasons we need to begin the development of the People, Ideas & Objects software application. We have advanced as a society where the role of software in organizing is at a very high level. We have alternatives that make this choice very critical. We either build this software or regress to manual systems. A future that unfolds in a very bad way. We need to get moving with these developments, the time is brief, and we are not moving forward at this point in time. So please, join me here and lets build this software .

Technorati Tags: People's Economics Hayak Organization Perez Pig

McKinsey Where Innovation Creates Value

Once again we have a McKinsey article that is timely and topical. The point of this article is on innovation, and mostly talks about how firms are able to garner the advantages of research and technology. Clearly the importance of these attributes in the competitive toolbox of an innovative producer is unmistakable. "How" is the difficult question, and is why this software fills a key role in the delivery of value created by innovation.

In a nutshell, it is derived through the Community of Independent Service Providers (CISP) that are being recruited here. This communities role and purpose is clearly identified and explained in this article. I strongly suggest you download the article and keep it handy for future reference in what ever you do professionally. Yes it is that good.

McKinsey begin by suggesting that services will not follow the same demise that manufacturing did in the U.S. That the value generated by research and innovation are available to everyone who may want to use it. The problem isn't so much where to get it, but how to use it.

A similar complexity characterizes globalization. A variety of cross-border flows can be important to innovators—for instance, the diffusion of scientific principles and technological breakthroughs, the licensing of know-how, the export and import of final products, the procurement of intermediate goods and services (offshoring), equity investments, and the use of immigrant labor. Many kinds of global interactions have become more common, but not in a uniform way: international trade in manufactured goods has soared, but most services remain untraded. Of the many activities in the innovation game, only some are performed well in remote, low-cost locations; many midlevel activities, for example, are best conducted close to potential customers.

It is the CIPS who are on the frontlines in determining the producers needs, developing with People, Ideas & Objects developers the software applications that dovetail with the services they provide to their producer clients. But this is not the important aspect of this article or the method that the community is forming. It's in this next quote here.

Techno-nationalists and techno-fetishists oversimplify innovation by equating it with discoveries announced in scientific journals and with patents for cutting-edge technologies developed in university or commercial research labs. Since they rarely distinguish between the different levels and kinds of know-how, they ignore the contributions of the other players—contributions that don’t generate publications or patents.

There is a clear divide in most people's lives between the elite journal publishing academics and those that make oil and gas producers profitable and successful. This divide is not new, and it's important to note that in this article McKinsey says the relationship and interaction will remain relatively the same. What also remains the same is the value creating innovation will be with the same people, the difference is the mechanism and organization in which this craft will be applied, through the People, Ideas & Objects software applications and its Community of Independent Service providers. (Emphasis added).

The willingness and ability of lower-level players to create new know-how and products is at least as important to an economy as the scientific and technological breakthroughs on which they rest. Without radio manufacturers such as Sony, for instance, transistors might have remained mere curiosities in a lab. Maryland has a higher per capita income than Mississippi not because Maryland is or was an extremely significant developer of breakthrough technologies but because of its greater ability to benefit from them. Conversely, the city of Rochester, New York—home to Kodak and Xerox—is reputed to have one of the highest per capita levels of patents of all US cities. It is far from the most economically vibrant among them, however.

This next quotation puts in context the value of a community as is conceived and discussed in this blog. That the opportunity that we have in re-organizing the oil and gas industry and providing society with the ample energy we need to fully explore our economic opportunities is at hand. But it is the fact that the community is the producers most effective and efficient means of attaining its most profitable operations.

More than 40 years ago, the British economists Charles Carter and Bruce Williams warned that “it is easy to impede [economic] growth by excessive research, by having too high a percentage of scientific manpower engaged in adding to the stock of knowledge and too small a percentage engaged in using it. This is the position in Britain today.”2 It is very much to the point that the United States has not only great scientists and research labs but also many players that can exploit high-level breakthroughs regardless of where they originate. An increase in the supply of high-level know-how, no matter what its source, provides more raw material for mid- and ground-level innovations that raise US living standards.

If you feel that this post is too much of a reach, I would beg to disagree. We live in a time when the challenges and opportunities have never been better. Starting off with this economic transition to the new and better ways, we have this opportunity to take for ourselves, and in turn provide the producers and society as a whole with greater value.

But excelling in the overall innovation game requires a great and diverse team, which takes a very long time to build.

Please join me here.

Technorati Tags: People's McKinsey Community Call-to-action Capabilities

McKinsey on Creative Destruction

This article (click on the title of this entry) is a discussion with Richard Foster, a former McKinsey consultant and author of the book Creative Destruction: Why companies that are built to last under-perform the market - and how to successfully transform them".

Some time during the past few years we seem to have forgotten many of the lessons that we learned about the business cycle. That we were now sophisticated enough to suggest that the elimination of the down cycle was within our toolkit of economic control.

Let’s start by looking back. In the 1970s, we had the “Nifty 50”—invulnerable companies that couldn’t possibly lose, and of course they all did. It will be the same today; there will be surprising losers, and survival will come down to simple things, like cash and margins. If you’re a low-margin company without a lot of cash or perhaps with too much leverage, you will not make it. Someone will figure out how to do better.

In the oil and gas industry we have a lot of firms that are in the situation where they have leveraged themselves into losing propositions. We have the piggies, where I have highlighted these firms folly. These firms will fail. Companies like CNRL have incurred so much debt ($26 billion) the last time they reported and $3 billion in working capital deficiencies. How will they survive a long down draft of economic activity? They can't and that is what the process of renewal will undertake to do for the managers that deceived themselves about their control of the business cycle.

The market moves much quicker then the companies are able to change. A process of renewal is therefore necessary in order to make the changes demanded by the market moves. It is critical there be a clear definition of the market and firm in an industry. The Draft Specification designates a clear separation from the market and firms based on the research conducted by Professor Richard Langlois.

There can be periods—5, 7, 10, even 15 years—when that isn’t the case, [firm performance exceeds the market] but corporate performance always reverts to a lower level than the market because the economy is changing at a faster pace and on a larger scale than any individual company so far has been able to do without losing control. That’s the challenge: to create, operate, and trade—to divest old businesses and acquire or build new businesses—at the pace and scale of the market without losing control.

I have incorporated the ideas of Professor Langlois to define new organizational structures. These also require a new division of labor in order to expand the productivity and performance of the industry as a whole. We have limited resource and much to do, if we do not consider these important issues we might best leave the situation to the bureaucracies that exist today. Please review this research if you feel change is needed.

The renewal of companies within industries is well captured in the next quotation. I don't know why it is necessary for the current governments to stop these changes, but using the taxpayer money to prop up old zombie corporations is, to me, a waste.

New, young companies that have conserved cash and have solid and often expanding margins surge ahead. When this happened in the ’70s, companies such as The Limited, The Gap, Home Depot, and John Malone’s TeleCommunications Inc. sprung from the burned forest. After the crash of 1987, Microsoft, Oracle, and Amgen took off. Then in the ’90s, we had the Internet companies. Creation will happen again and will again leave behind the big guys trying to rely solely on operations.

It is also suggested that our economic systems have failed. Those with political agenda's are suggesting that something involving greater input by government is required. President Obama is also suggesting that he has the means to balance his budgets within his current term, clearly he sees things that are not there. Nonetheless the capitalist system is by far the best method of organization, one that deals with the failures and builds anew.

Equity was a very clever invention, and we are not going to give it up. This is the way people are. This is the way commerce works and will continue to work unless capitalism ends. And that won’t happen, regardless of what you read in the press.

Technorati Tags: People's Firm Market Change Trends

Henry Ford on service

A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large." - Henry Ford

Granted these words are in excess of 100 years old. Services still hold the higher margins that sustain a long term profitable operation. And it is reasonable to assume that the same will hold true in the future. Providing the Community of Independent Service Providers (CIPS) with the profitable operations that are necessary to support the innovative oil and gas producer.

The ideas that could make a difference in the day to day operation of a producer. Are locked away in the organization which is unable to exact the changes necessary to release this potential. The employee of the firm is constrained by authority and reach to make the necessary changes to the systems. It is removal of these constraints that I have designed into the Draft Specification.

Is the future of our organizations more of the same in terms of the ability to make the necessary changes. A future in which the sciences and engineering are evolving at a rapid rate, and will continue to do so, how will the organizations keep up. Clearly the bureaucracy can't and has decided that it won't pursue any reorganization of the industry. Therefore they will not be a part of the solution.

How does the individual who sees a better way to operate a certain property. Exact these changes in the systems that support the producer. Clearly this individual needs to be empowered to have the systems accommodate their needs. The producer firm is focused on their competitive advantages of applying their scientific and engineering capabilities to their asset base. The service provider supports these tasks with both the People, Ideas & Objects software applications, and as a member of the Community of Independent Service Providers.

With the objective of the software and services being to provide for the most profitable operations of the producer firm. The user is the critical point of all these organizations success. In order to begin these tasks we need to source the 100 users to move the Draft Specification to the Preliminary Specification . It is these 100 users who will have the greatest advantage in selecting the appropriate areas for themselves in establishing their service offerings. These people can start with this process and join me in making this real.

Technorati Tags: People's Community Development Entrepreneurial Value-Proposition

I've found the outrage.

Click on the title of this entry to be taken to a CNBC snip on the beginning of the outrage of the U.S. decline.

I have avoided commenting on the lunatic Obama Nation, and this will be the only one. President Obama should be locked up in a looney bin.

Social Collapse - Best Practices

This article provides a fascinating and entertaining story. It is written by Dimitri Orlov and is well written and topical. He has the unfortunate experience of living through the decline in the Former Soviet Union (FSR). And quite bluntly suggests that it's the Americans (where he now lives) or the West's turn.

In my original thesis I asked if the American economy was potentially headed down the same road as the FSR, Orlov says yes. It was also in my thesis that I made it quite clear of what I thought of Best Practices. Needless to say I don't have anything positive about this ridiculous practice that businesses some time waste their time on. But the title of this resonates loudly with me.

Orlov's article is located here. He has also written a book "Reinventing Collapse" and has another article located here .

But this talk is about something else, something other than making dire predictions and then acting all smug when they come true. You see, there is nothing more useless than predictions, once they have come true. It’s like looking at last year’s amazingly successful stock picks: what are you going to do about them this year? What we need are examples of things that have been shown to work in the strange, unfamiliar, post-collapse environment that we are all likely to have to confront. Stuart Brand proposed the title for the talk – “Social Collapse Best Practices” – and I thought that it was an excellent idea. 

To make the fundamental wholesale changes that are contemplated in the Draft Specification assumes this level of collapse of the old systems. And who wouldn't encourage the demise of the redundant and pathetic performance of the bureaucracy.

In organizations, especially large organizations, “best practices” also offer a good way to avoid painful episodes of watching colleagues trying to “think outside the box” whenever they are confronted with a new problem. If your colleagues were any good at thinking outside the box, they probably wouldn’t feel so compelled to spend their whole working lives sitting in a box keeping an office chair warm. If they were any good at thinking outside the box, they would have by now thought of a way to escape from that box. So perhaps what would make them feel happy and productive again is if someone came along and gave them a different box inside of which to think – a box better suited to the post-collapse environment.

Now I know why I am considered an outsider. It all makes so much sense. Here is the box that I have custom tailored to those that are concerned about the industries performance and the effect that a lack of energy has on society, please join me here .

Here is the key insight: you might think that when collapse happens, nothing works. That’s just not the case. The old ways of doing things don’t work any more, the old assumptions are all invalidated, conventional goals and measures of success become irrelevant. But a different set of goals, techniques, and measures of success can be brought to bear immediately, and the sooner the better.

This has to go down as one of the more valid calls to action for this system to be built.

We are always either months or years away from economic recovery. Business as usual will resume sooner or later, because some television bobble-head said so.

So if your question is "are we here yet" you'll now know the answer. What is terminal failure can not be resurrected by all the money from all the printing presses.

Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next.

Please join me here.

Technorati Tags: People's Call-to-action Failure Development

So much to do, so little time.

We are reminded today that we have to deal with the transition from the old economy to the new. The poorly managed companies are begining to fail and the demand for energy is affecting the energy prices in a material way. Although I suggested that the Western economies "may" go through a similar period that the Former Soviet Union experienced in the late 1980's. This was premised on the works of Sir Anthony Giddens and Carlota Perez. There is not much difficulty in gaining a consensus on this basis, but I would suggest the time to build the new systems and organizations is limited. 

Today shows why. We have three articles that suggest the energy industry will be changing again as fast as it has changed in the last 18 months. First up is the head of Total Petroleum in France talking to the Financial Times with the following prognosis. 

The world will never be able to produce more than 89m barrels a day of oil, the head of Europe's third-largest energy group has warned, citing high costs in areas such as Canada and political restrictions in countries such as Iran and Iraq.

Christophe de Margerie, chief executive of Total, the French oil and gas company, said he had revised his forecast for 2015 oil production downward by at least 4m barrels a day because of the current economic crisis and the collapse in oil prices.

He noted that national oil companies, which control the vast majority of the world's oil, and independent producers, which play a key role in finding new sources, were "substantially limited in their ability to fund investments in the current [financial] environment"

A serious problem is being created by the lack of focus by the producers. Prices and production are going to become a problem again.

Next up we have the Fox News network article entitled "IEA Sees Risk of Oil Supply Crunch From 2010 ".

LONDON--The International Energy Agency (IEA) said on Monday there could be an oil supply crunch from 2010 once global demand recovers and the impact of delayed investment crimps future supplies.

And lastly on the BBC , the market for crude oil was up today as the IEA made its comments. If anyone believes the existing bureaucracies are the way that these problems will be solved we could just sit and wait for the upturn in the prices. If we thought that this time was was more then just a recession, but an opportunity to make wholesale changes, now would be the time to start developing the People, Ideas & Objects application. 

In the past five years I have been able to think through the development of the system to create the eleven module Draft Specification . This took a lot of time and energy for me to do. Now the much needed work of thousands of people needs to begin putting some building materials on the foundation of this design. That is going to be done through participation in the Preliminary Specification . And it will take more time, possibly as much as another five years. We need to get started, so please join me here .

Technorati Tags: People's Call-to-action Development Economics Leadership

What kind of work?

Lets give some thought to the types of companies that will make up our Community of Independent Service Providers (CISP). Those people that will use the People, Ideas & Objects software application modules in their day to day servicing of their oil and gas producer clients. Those people that will interact with the developers of People, Ideas & Objects to define and build the People, Ideas & Objects applications to meet the needs of their producer clients.

Being a member of the "Community of Independent Service Providers" provides these people with two revenue streams. One being for the services provided to their producer clients. And for their time and efforts in defining and working with the developers. 

The point of this exercise is to build the systems and communities that provide the innovative oil and gas producer with the most productive and profitable means of operation. Lets' for a moment think about this. If the combination of this software and community provide the producer with the most profitable oil and gas operations, is it the ownership of the oil and gas assets that are the most lucrative, or access to the software and community the most lucrative element in the oil and gas business. I think it is the software and community and that is the primary reason that people should join this project and start building the software and the community.

Access to the Intellectual Property (IP) that makes up this system software and community is made through the license that will be signed by each member of the community. This license assigns any IP generated in the development of the application back to me, the originator of the idea of using the Joint Operating Committee. This in turn, through the license is granted back to each member of the community for them to use in an unencumbered fashion. Since all the IP is centralized and made available to everyone we are not subjected with potentially thousands of IP related claims that kill the possibility of this community developing and flourishing. I in turn use the IP to generate the necessary revenues from the producers to pay the community for their work with the developers, and the developers themselves. Producers then are paying for the software and services that the community provides separately. 

On to the subject at hand, what kind of work would the people in the community be doing? I foresee the community being very large. Essentially I do not see the industry employing anyone directly. Each individual may have their own enterprise in which they provide some value added service to the producers. These firms may be single proprietors or larger. Initially I think that all of them will be single proprietors that form as a result of this call for this community. Economically the old ways are being consumed by their failures, we can easily skip this by starting from a blank slate. The types of businesses will be in the areas of expertise you would find in the administrative, exploration and production areas. Or as I said, pretty much everyone.

We have defined in the Draft Specification that the division of labor and specialization will need to be enhanced for their to be a more productive industry. These attributes will have to be determined by the community understanding what is necessary and what is possible. 

I probably have made the understanding of what and how the work will be done in the future a little more confused. It is a future that is not well defined as the input from the community has been very minor up to this point. My responsibility was to provide a workable vision of how I think the industry could and should operate based on the research that I conducted. The knowledge held within the user community will be necessary to optimize the system to meet the objective of being the most profitable means of a producer to manage their oil and gas assets. That is the motivation. The communities purpose is not represented in a one to one agreement that provides individuals with the employment contract. The purpose is to ensure that the community is competitive in its offerings in comparison to any other oil and gas system. This is how the members of the community will earn their living and keep moving the oil and gas industry forward. It is a value based offering, not one that is dependent on the employee - employer concept of "doing a job". Please join me here. 

In this post I am establishing a new Label and Tag for CISP. I will also summarize these thought in a new knol located here.

Technorati Tags: People's CISP Community Innovation Knowledge Strategy