Data and the Military

People, Ideas & Objects have define a Technical Vision that identifies and works to mitigate a technical issue that all areas of society need to address. The issue is the ballooning of data. Noted in National Defence Magazine an article entitled "Military Swimming in Sensors and Drowing in Data" it is stated “The appetite never seems to slow down.” As the energy industry is mostly based on the science of physics, chemistry and biology, it is believed this data growth will fuel innovative use and application in the industry. Those firms that have the capacity and ability to deal with this volume of data will have competitive and financial benefits arise from this capability, but only if this software development and community are funded.

The Community of Independent Service Providers and People, Ideas & Objects - Technical Vision suggests four cornerstone technologies enable this data explosion. At the same time, these technologies provide the ability to deal with the problem / opportunity. The four technologies are;

1. Object based technologies, and particularly Java.
2. Asynchronous Process Management.
3. IPv6
4. Wireless.

Further information on the Technical Vision can be found here.

Today's blog of Richard Fernandez notes this issue is affecting the U.S. Military. And of particular concern, is today's Wall Street Journal video of how Predator Drones have been monitored by insurgents. (If that specific URL doesn't work, search WSJ's video site for Predator Drones.) This issue of the Predator Drones is also noted in Fernandez's second blog post.

Some may note "This explosion of data has occurred for the better part of the last 40 years. Computers have always presented this difficulty and the energy industry will address this problem as it has before." I hope not, because the volume of data and the ability to use that data are something that will have to be purpose built and dynamic. What can be monitored can also be controlled.

People, Ideas & Objects has listed this Technical Vision as the manner in which this community will approach the problem. By exploiting the advantages and having the commercial benefits accrue to those that have a handle on them, I think, will be the difference between success and failure in the oil and gas industry. Critical to the success of the oil and gas producer will be this change oriented and innovation supporting community and application.

The Draft Specification considers a scenario where the use of this type of data and the ability to manage it is possible in a fundamentally more profitable way. The example is the manner in which energy prices can dictate, on a pre-determined and agreed too basis, at what price level would trigger the production was scaled back. If prices were to drop a predetermined percentage, then the production would be autonomously scaled back by X%. And these decisions could be executed on an iterative basis to fully exploit the reserves of the specific Joint Operating Committee (JOC).

These are business decisions that can be made by the Joint Operating Committee as it holds the legal and operational decision making control of the reserves underlying the property in question. (And something today's bureaucracies can not even begin to consider.) If the JOC has the authority, and the legal agreements consider this opportunity, then the industry can move from a price-taker to a price-maker position. This last point should be coming more evident as a necessity in the industry. Leaving everything to produce at 100% and then watch the prices drop year after year must get a little tiring. Only a fool would continue to sell his resources at a price less then its cost. And in an escalating cost environment, we have many managers who know they do not have the tools to deal with this problem, and yet will not support this software development project and associated community.

If it is generally agreed by the producers that an additional $20 trillion will be spent on oil and gas operations in the next 20 years. I would suggest the producers attain these types of capabilities so that they can prove to their shareholders they have the capabilities to address these difficulties and profit from them. Or is it really assumed that the bureaucracies can exist in that prospective environment, and provide returns to those outside of their own management team. Please join me here.

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Professor's Baldwin and von Hipple III

The third part of our review of the Baldwin and von Hipple paper focuses on the literature review. It is in this section of the paper that the issue of Intellectual Property is raised. Baldwin and von Hipple write what most people would consider to be factual in understanding how innovations are developed.

When taken together, the findings of all these empirical studies make it very clear that users have long been and are doing a lot of commercially-significant process development and product modification in many fields.

Let us first gain an understanding of what the authors define as Users. This user description is not different from what we are employing here at People, Ideas & Objects.

Users, as we define the term, are firms or individual consumers that expect to benefit from using a design, a product or a service. In contrast, producers expect to benefit from selling a design, a product, or a service. Innovation user and innovation producer are thus two general "functional" relationships between innovator and innovation. Users are unique in that they alone benefit directly from innovation. Producers must sell innovation-related products or services to users, hence the value of innovation to producers is derived from users willingness to pay. Thus, in order to profit, inventors must sell or license knowledge related to their new design, manufacture and sell goods embodying the innovations; or deliver and sell services incorporating complementing the innovations.

Users have unlimited access to the Intellectual Property that is developed by People, Ideas & Objects and the community. This IP, and all associated ideas, are a product of the User community and freely available for the user community to employ in their own service offering to their oil and gas clients. The only limitation for users is the ability to run the binary of the software is limited to People, Ideas & Objects exclusively. Also only licensed users who are active in the community will have access to the software, ideas and knowledge held within the community. Creating an exclusive service offering who's focus is to provide the oil and gas producer with the most profitable means of oil and gas operations.

The users then earn their fees in providing the services and software to oil and gas producers. Users are licensed to access this information based on their own skills and provide those services to their oil and gas producer clients at no charge for the software or the access to the underlying IP. (Users bill their clients for their services.) Clearly the involvement of a user within this community is critical to the success of the project, as we discussed yesterday. And this success provides the users with a means to pursue their career in the most effective manner that they see fit. Why do we do this.

Reexaminations of traditional economic arguments triggered by evidence of free revealing show that innovators generally freely reveal for two economically rational reasons. First, it is in practice difficult to effectively protect most innovations via secrecy or intellectual property rights. Second, significant private benefits often accrue to innovators that do freely reveal their innovations.

The Draft Specification is designed around eleven modules. Professor's Baldwin, Langlois and Williamson have defined the benefits of modularity and the importance of modular designs. Here the authors provide a good summary of how modularity fits within this project.

Modularity is important for collaboration in design because separate modules can be worked on independently and in parallel, without intense ongoing communication across modules. Designers working on different modules in a large system do not have to be colocated, but can still create a system in which the parts can be integrated and will function together as a whole. In small projects or within modules, designers can utilize “actionable transparency” rather than modularity to achieve coordination. When projects are small, each designer’s activities are “transparent” to his or her collaborators. In open collaborative projects, modularity and actionable transparency generally go hand in hand, with both factors contributing to the divisibility of tasks (Colfer, 2009).

Here in this last quotation is the real value of the CISP. The value of participating in this community is reflected in the name People, Ideas & Objects. Ideas are non-rival and therefore participation brings about the greatest attributes of ideas for all involved. Ideas are able to build on the prior knowledge and the many innovations and ideas that came before it. Having the communities ideas and innovation backed up by a user driven software development capability, only makes this more worthwhile for the members of the community and their oil and gas producer clients.

Building on arguments of Ghosh (1998), Raymond (1999), and von Hippel and von Krogh (2003), Baldwin and Clark (2006 b) showed formally that, if communication costs are low relative to design costs, then any degree of modularity suffices to cause rational innovators that do not compete with respect to the design being developed to prefer collaborative innovation over independent innovation. This result hinges on the fact that the innovative design itself is a non-rival good: each participant in a collaborative effort gets the value of the whole design, but incurs only a fraction of the design cost.

Please join me here.

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Professor's Baldwin and von Hipple II

I want to expand on Professor's Carliss Baldwin and Eric von Hippel's paper that we recently started reviewing. I think this paper is critical in defining many of the attributes of this software development project, and will add value with new insight and information. Specifically, in applying the findings in this paper I hope to prove to the User community that this type of project is less risky from the point of view of them investing their time and efforts in participating. The pace of this paper's review will be thorough and complete. Limiting our review in this second installment to just the Introduction and Overview.

As background information, People, Ideas & Objects software applications are marrying the User groups that define their needs in the software, with the software developers. This relationship is permanent and maintains the project in a constant state of change based on the users innovations. Software is not a destination but is best considered a journey. Users of People, Ideas & Objects applications are those that use this software in combination with their own service operations. The Community of Independent Service Providers derive their revenue from both the producers that employ them for their services and from People, Ideas & Objects for the work the users do in designing, implementing and working on development of the software. Creating an environment where the users are key in every aspect and element of this community.

This change oriented and innovation based community will generate their own innovations. In addition the People, Ideas & Objects software needs to mirror the needs of the producers who are iterating on the earth science and engineering innovations involved in oil and gas. The point I want to make is the users commitment to this community involves substantial risk and a comprehensive career commitment. Of the three models of innovation People, Ideas & Objects and the Community of Independent Service Providers fall into the authors "open collaborative model".

Our analysis will lead us to conclude that innovation by individual users and also open collaborative innovation are modes of innovating that increasingly compete with and may displace producer innovation in may parts of the economy.

We will argue that when it is technologically feasible, the transition from closed producer or single user innovation to open single user or collaborative innovation is also desirable in terms of social welfare, hence worthy of support by policy-makers. This is due to the free dissemination of innovation designs associated with the open model. Open innovation generates innovation without exclusivity or monopoly, and so should improve social welfare other things equal.

This last quote is in line with why this project is called People, Ideas & Objects. It is derivative of Professor Paul Romer's new growth theory of People, Ideas & Things. Which states in the virtual world ideas can be used by many people without diminishing the value to anyone else. The important take away for me was that we are needing exponential volumes of ideas to expand our economy. How these ideas are vetted, developed and implemented is the topic of Professor Baldwin and von Hipple's paper and this software development.

Users need to understand that the success of this project is wholly dependent on their involvement. This paper provides evidence that this mode of open collaborative innovation is preferable, "should improve social welfare" and will be successful. Therefore mitigating their risks in investing their time and efforts in this community. I think this provides the user with the most sound and economic basis for their review of this project from the point of view evaluating their investment in this model. Please join me here.

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Williamson gets his Nobel.

Professor Oliver Williamson received his Nobel Prize in economics yesterday. I thought it would be a good time to review his work and reflect on its impact here at People, Ideas & Objects. In his December 8th 2009 address Williamson is recognized for "his analysis of economic governance, especially the boundaries of the firm." In my opinion this is a must view video.

It has been our review of Professor's Williamson's, Richard N. Langlois of the University of Connecticut and Carliss Baldwin of Harvard that we have been able to incorporate in the Draft Specification. Defining where the boundaries of the oil and gas firm and market definitions exist. It is these ideas, being applied from this body of research that is being recognized in Oliver Williamson's Nobel Prize. Professor Williamson provides an overview of his work at the beginning of his Prize Lecture;

The research program on which I and others have been working has been variously described as the "economics of governance," the "economics of organization," and "transaction cost economics." Whereas governance is the overarching concept, appeal to organization theory provides vital support, and transaction cost economics is the means by which to breathe operational content into governance and organization. For economists, organization is important if and as it is made susceptible to analysis.

Many other people have written about Williamson's Nobel Prize. Two of the best reviews I saw were from Professor Gary Becker (a Nobel Laureate himself) and Richard Posner on the Becker / Posner blog. 

Posner notes:

Or--most fundamentally--why there are firms at all--why all economic activity isn't carried on by contracts among individuals. Ronald Coase asked that question in a paper entitled "The Nature of the Firm," published in the 1930s. His answer was that a producer has a choice between contracting with independent contractors for the output of the various inputs into this production of the finished product, and contracting with individual workers--employees--not for their output but for the right to direct their work--and that the employer would choose between forms of contract--the contract with the independent producers or the employment contract--on the basis of which was more efficient, given the nature of his business.

Becker states:

One of the most compelling observations from highly competitive environments is that many different organizational structures sometimes survive in the same industry.

Both the inter country and within country evidence indicate that no single organizational form is always the most profitable even in a particular sector of the economy. Different combinations of scale economies, principle-agent problems, compensation practices, thickness of the span of control, and many other variables highlighted in the organizational literature often produce outcomes that are about equally efficient and profitable. The outcome of strong competition is the only really decisive way to determine which are the possibly quite different but about equally efficient combinations of all these different variables.

Another good summary is provided by Douglass North (another Nobel Laureate) in this YouTube video.

It's about productivity. How will the organizations and individuals interact and transact business within the oil and gas industry. In People, Ideas & Objects the Joint Operating Committee is the key organizational construct of the innovative oil and gas producer. It is the objective of both the software and its associated Community of Independent Service Providers to provide the innovative oil and gas producer with the most profitable means of oil and gas production.

In his telephone interview on October 12, 2009 Professor Williamson said the one overall point of his work was to recognize that all forms of organization are flawed. That certainly applies to the hierarchy but also to our use of the Joint Operating Committee. What we have gained in making the change to the JOC is the elimination of many of the conflicts and contradictions that exist between the producer firms and the JOC. We are also expanding the understanding of the oil and gas producer within the ERP systems.

In summary, this project competes with the likes of Oracle and SAP. Where Oracle has expended $39 billion to bring a "new" application to market. Not an oil and gas specific application, but an application that is nonetheless constrained by Oracle's loose spending ways. There exists a general consensus of those in the oil and gas industry, that there is a need to expend an additional $20 trillion over the next 20 years in exploration and production. And now, an oil and gas application that is steeped in the academic research that is today recognized as important by the Nobel Prize committee. Is it not surprising to me that the do-nothing managers in the industry are threatened by this project. Please join me here.

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Professor's Baldwin and von Hipple I

Professor's Carliss Baldwin of Harvard, and Eric von Hipple of MIT have jointly published a paper that is of the highest quality and topical focus. Entitled "Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation." Carliss Baldwin is someone we have followed closely on this blog. Her work has been in the area of Modularity, Transaction Costs and Thin Crossing Points and is incorporated in the Draft Specification, mostly in the Accounting Voucher module. You can find our review of her work by selecting the Baldwin Label on this blog. We have also reviewed Eric von Hipple's work here as well. A review of his book "Democratizing Innovation", (Free eBook here.) and an MIT video of his presentation. His work is mostly on innovation and we have incorporated some of his ideas in the Draft Specification. Specifically, use of his understanding of Intellectual Property (IP) and how it can be applied in communities such as People, Ideas & Objects. I will briefly discuss IP in this post and hopefully be able to write about it in greater detail in the near future. Nonetheless, these IP related thoughts are incorporated here in the way that People can join this project. Coverage of Professor von Hipple's work does not have a label to aggregate all the posts in this blog, however you can search this blog for his content.

I want to put all this material out in this post, and address more of the substance in subsequent posts. I think this paper is of the highest quality and very pertinent to the work that is being done at People, Ideas & Objects. The abstract of this paper says it all.

In this paper we assess the economic viability of innovation by producers relative to two increasingly important alternative models: innovations by single user individuals or firms, and open collaborative innovation projects. We analyze the design costs and architectures and communication costs associated with each model. We conclude that innovation by individual users and also open collaborative innovation increasingly compete with - and may displace – producer innovation in many parts of the economy. We argue that a transition from producer innovation to open single user and open collaborative innovation is desirable in terms of social welfare, and so worthy of support by policymakers.

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More on the Preliminary Specification

The Draft Specification provides the overall vision of how these systems will be built and operate in the oil and gas industry. The Preliminary Specification uses the overall vision of the Draft Specification and puts much of the greater needs or details of each individual job in the oil and gas industry. Answering many of the what and how questions of the things that need to be done. This is a very large group of people that together hold the full scope of understanding of the industry. I am of the belief the Preliminary Specification will require several hundred people to develop a strong skeleton of the systems needs.

It is also this large group of people that will become the core of the Community of Independent Service Providers offerings. Providing leadership for both the Preliminary Specification and forming the core service offerings to support the producers in the future.

The role of the producers is critical at this point. Critical from the point of their specific needs. Participation helps to make the solution appropriate for their needs not only from a process and functionality point of view. But also getting involved at the beginning will help them form the service process relationships and fully integrate their firm's needs in the software. This is one of the critical areas of the quality that will eventually be reflected by this community and its software offering. Why the oil and gas companies continue to belittle the process and withhold their participation is beyond me. That however, is their problem as we can do this without the producers active involvement. They are critical for their individual needs, not the systems development.

Although I have detailed some of the technologies that are being used in this project. These technologies are not critical to the Preliminary Specification. In fact I want to eliminate any and all discussion of technology. It's not important and would be an impediment to the creative process that we are involved in. Using the Joint Operating Committee as the key organizational construct requires this blank slate approach. It has been the basis of how this design started, and as a result, will remain the key value of how this community provides the long term value to their client producers.

The deliverables from the Preliminary Specification will have a defined project scope. As a result, in subsequent phases of development we should not have any scope creep. Another key deliverable will be the development of the stories that communicate the systems needs to the developers. The last deliverable that I want to mention today will be how the CISP are able to take this design and integrate the software, through their service operation.

This sounds fairly ambitious, particularly from the point of view of the numbers of people. I would point out in my defense the name People, Ideas & Objects considers this. Also I would point out the spread of ideas to date. The Draft Specification has had over 1,500 people read Part I, and over 700 people read Part II. Think about that from the point of view of people having to spend a few hours reading this. If we draw a few hundred people out of this community, that have been reading and thinking about this system design, thinking about their involvement, bringing their ideas, and thinking how they can build a service offering to provide the producers with the most profitable means of oil and gas operation...

People are driving these changes, and their doing it from a business point of view. Trust me when I say that the developers will be able to accommodate any design that comes out of the Preliminary Specification. I guarantee it, therefore focusing on technology is a distraction. For the past 40 years it has been the technology that has driven the focus of oil and gas systems. The technologies and the compliance frameworks have made the oil and gas company about as foreign to the JOC as is possible to conceive. We are moving the focus away from technology to focus on the most profitable means of oil and gas operations.

In a world where the oil and gas producer will need to make more decisions based on ideas derived from the earth sciences and engineering basis of the business. A world where decisions are based on the legal and financial foundations of the participants of a JOC. The Community of Independent Service Providers and Users will capture this in the Preliminary Specification. Creating a system and organization that are representative of the underlying meeting of the minds of the producers involved. Please join me here.

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The issue in a nutshell.

The Oil & Gas Journal is covering The Society of Exploration Geophysicists (SEG) annual meeting in Houston. The topic of discussion is the exact issue that this software development project is designed to solve. The key issue which I wrote about in the Preliminary Research Report in May 2004. From the Journal's opening paragraph.

Energy research and development challenges are becoming more complex, demand integrated and individual approaches, and are in need of wider funding sources, concluded a forum at the Society of Exploration Geophysicists annual meeting in Houston.

When I read these types of articles I get frustrated and angry. Frustrated and angry at the do-nothing bureaucrats who currently occupy space at the oil and gas companies. The last six years has seen my efforts to promote this software development project, community and associated research, with absolutely no support, and not one penny from the oil and gas companies. The Journal's discussion goes on to quantify the amount of effort that needs to be undertaken.

John McDonald, Chevron vice-president and chief technology officer, reminded SEG delegates that the world took 125 years to consume the first trillion barrels of oil and is using the second trillion in 25 years. It is estimated that another trillion barrels remain to be discovered, ostensibly at a cost of $20 trillion over the next two decades.

This current bunch of bureaucrats suggest and expect we just hand $20 trillion over to further line their pockets? Where is the outrage? How is it that I was able to write the Preliminary Research Report in May of 2004? Was I the only individual in the oil and gas industry to realize this? Of course not, what was known in May 2004 was that this was a trend that was developing in the industry. And as I state in that report, the industry needs to move away from the banking mentality of guaranteed returns on their oil and gas investments. And begin developing the necessary resources and organizational structures necessary to support an innovative and performance based organization to address the underlying sciences.

So what are you going to do, Mr. budget director? Will you now undertake to do a study of the issue? Spend time and money marshaling resources towards coming up with a new vision of how the industry will solve these difficult issues. Gain a consensus amongst budget directors on what that vision should be. Hire SAP or Oracle to build you a system that gets you closer to your customer? You should be finished well after 2029 and therefore, your retirement will be fully secured.

You had your chance in May 2004, and instead did nothing. Now the consequences of your inaction will be the result of you being removed from the industry. Besides I think your going to be busy explaining what the hell it is that you have been doing all this time.

Bringing six years of research and a governing vision to the industry today has to be worth something. The community is ready and willing to move, the financial resources are all that is needed to be dedicated to this software development and community. Interested shareholders and investors should email me here with commitments to move forward. And please join me here.

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John Hagel on Pursuing Passion

Passion is something that is being discussed more and more in the business community these days. It's something that I feel fortunate to have discovered and have been able to focus my energies on this software development project. There is a comfort and peace afforded to those who find their passions, it is in many ways the reward for taking the risks and enduring the sacrifice. In terms of the discussion, passion is a difficult topic to define and describe what it is, and why it affects people in the way that it does. John Hagel has taken the time to define it from the point of view of a business necessity. I would highly recommend reading his document, I think he does the best job of it yet.

Hagel makes the point that with the economic conditions we find in the twenty first century, passion will be a necessity. As he states.

If we have not found a way to make our passion our profession or to discover passion in our profession, we will very quickly succumb to the growing economic and competitive pressures that are shaping our global business landscape.  The pressures will inexorably mount. Without passion, we will increasingly experience stress, our energy will be steadily drained and we will ultimately burn out under the mounting pressure. At best, we will be marginalized as we find ways to achieve “balance” and safety valves for the mounting pressure at work.

The definition of passion is broken into two distinct types. Hagel says there are "true believers" and "explorers." The true believer is described as "Their passion is enduring and it does focus, but it can also blind – leading the entrepreneur to reject critical input that does not match their preconceived views." Not a productive environment in my opinion. Collaboration is a major means of how ideas are developed today. To ignore the ideas of those that are involved is somewhat disrespectful. I'd like to think that this project would be defined as an "explorer" which Hagel describes as.

These are people who see a domain, but not the path. The fact that the paths are not clearly defined is what excites them and motivates them to move into the domain. It also makes them alert to a variety of inputs that can help them to better understand the domain and discover more promising paths through the unexplored terrain. They are constantly balancing the need to move forward with the need to be present in the moment and reflect on the experiences and inputs they are encountering.

I have prepared the supporting research that proves the Joint Operating Committee provides the innovative and organizational performance that the oil and gas producer must have. From this research I have been able to sketch out a vision of how a system based on the JOC would operate. The Draft Specification is the beginning of the involvement of the Community of Independent Service Providers. This is where the passions of many people will take the Draft Specification and build the software applications they will need in their day to day work in the oil and gas industry. Hagel notes;

Passion is also about pursuit. It is not passive. People with passion are driven to pursue and create. They may read books and observe others, but they are not content being bystanders. They feel an overwhelming urge to engage, to experience for themselves and to test their own capabilities. Passion compels us to act.

The heading of this blog calls to those with passion to act.

A global community of professionals dedicated to optimizing the performance and profitability of innovative oil and gas producers. We are focused on developing IT systems based on the Joint Operating Committee. The legal, financial, operational decision making, cultural and communication frameworks of all producers.

A community of people open to new ideas, who know that energy is the life blood of our global economy. People of action who demand more from IT, please join us.

I hope that I have designed a path for others with passion to follow. The comprehensive nature of John Hagel's article is best read in it's entirety, and please review his passion manifesto. The one comment that I would leave you with, if you are in oil and gas, is People, Ideas & Objects is the place where you can find your passion and act to make a difference in the industry. Please join me here.

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McKinsey on Enterprise 2.0

We have an interesting video of Professor Andrew McAfee talking about technologies under the label of Enterprise 2.0. This will be the fourth time that I have highlighted McAfee's work and the sixty third McKinsey article. All I can say is I'm glad this body of work is behind me. I still have many McKinsey articles that I want to write about, just not enough time in the day.

Professor Andrew McAfee coined the phrase and defined what "Enterprise 2.0" is and means. Particularly from the point of view of how organizations will be affected by these technologies. Like the recent discussion of Google CEO Eric Schmidt, McAfee is not talking about the technologies for the sake of the technologies but the massive impact that the Information Technology revolution is having on business.

Last time I highlighted the work of Professor McAfee and his Enterprise 2.0 concepts he was at Harvard. He seems to have escaped and moved closer to the river by joining MIT and is now the principal research scientist at the "Center for Digital Business" at the MIT Sloan School of Management. He also has a book coming out called "Enterprise 2.0: New Collaborative Tools for your Organization’s Toughest Challenges". Lastly the McKinsey article has this video presentation of this paper. (Video is available here.)

McKinsey ask a number of pertinent questions. McAfee's answers provide real value for this community in terms of what and how "Enterprise 2.0" and People, Ideas & Objects application modules will affect today's work place. The following is how I see it for oil and gas.

McKinsey: How is Enterprise 2.0 changing the way we work?

McAfee's answer to this question is in line with the collaborative developments of WikiPedia. How the initial start attempted to control the contributions of people, and only after scrapping the process and leaving it to self organized teams did the value, quality and quantity increase.

I see a much larger change. The 7 / 24 clock will be the time people are available to work. Asynchronous Process Management, a cornerstone of the People, Ideas & Objects Technical Vision will permit people to work when and where they want. The office will not be used even half as much as they are today, and the quality of life will be substantially higher. When the computer screen looks the same at home or in the coffee shop as it does at the office, an office will become a place to go to concentrate. The rest of the day will be interspersed with personal and work related activities completed as required.

McKinsey: How do you get this started in an organization?

McAfee comments;

There’s a lot of debate about that question right now. And the debate is typically between people who advocate [a top-down approach and those who advocate] almost a purely bottom-up approach—in other words, deploy the tools, stop worrying about what’s going to happen, and get out of the way as the management of the company and let it percolate up from down below. Or, if you hear about a grassroots effort, encourage it, support it financially, but, again, get out of the way, let the bottom-up energy happen.

People, Ideas & Objects has chosen the bottom-up grassroots method of solving these problems and building the software based on the Draft Specification. I like McAfee's comment that if you hear of a grassroots effort, encourage it, support it financially. Music to my ears so start spreading the news.

This software development can not be a sustained and quality effort unless the users are compensated financially for their time. This is a big part of our budget and defines why our approach is different from the rest of the marketplace. As McAfee states in this document, developing the community takes time and effort.

McKinsey: What else can undermine adoption?

McAfee notes the unreasonable time frames put on by management. People, Ideas & Object software developments, or any collaborative project, will not be zipping along before the end of the quarter. Such expectations are how the hierarchy greases the wheels with the consumption of human energy and spirit.

Another failure mode is to be too concerned about the possible risks and the downsides. If we get wrapped up in those, we’re not going to take the plunge and actually deploy any of these new tools and turn them on and encourage people to go ahead.

I don't see the downside here. Collaboration brings many risks to the bureaucracy. However their risks are the result of the collaboration out performing the bureaucracy. I can live with those risks, and I think that McAfeee's audience is different to those of this blog. He is preaching to the unconverted and as such has to hedge his comments while he moves the Trojan horse into place.

McKinsey: What is the CIO’s role in encouraging Enterprise 2.0 and managing the risk?

McAfee notes;

A lot of them see their roles as essentially conservative, though. In other words, “My job is to not increase the risk profile of this organization before everything else.” That’s a legitimate concern, it’s a legitimate job for the CIO, but all my experience so far tells me that Enterprise 2.0 doesn’t increase the risk profile of an organization.

This is probably why I get in so much difficulty with companies. I ask sarcastically what's a CIO? I don't see them surviving in the long run. Much like secretaries and draftsmen these positions may disappear rather quickly. These types of comments should be directed to the CEO or the CFO as they have the proper authority and responsibility to make the decision.

In my presentations to the industry I noticed something that I had never learned or considered before. When I talk to CEO's or CFO's I feel there desire to pick up People, Ideas & Objects software developments. Why they haven't is that they would do serious damage to their firms by changing direction to quickly, without the urgent need and support for the change. They therefore pass on the opportunity until such time as we proceed to a point where they can make the change.

McKinsey: What does this mean for middle managers?

McAfee notes;

If you’re a middle manager who essentially views your job as one of gate keeping or refereeing information flows, you should be pretty frightened by these technologies, because they’re going to greatly reduce your ability to do that. They’re going to reduce your ability to filter what goes up in the organization and what comes down in the organization. And they’re going to greatly reduce your ability to curtail who your people can interact with, talk with, and receive information from. So if you’re inherently a gatekeeper, this is a real problem for you.

In my presentations to the industry it is this group of people that feel challenged by these technologies and the People, Ideas & Objects application. The class of workers known as middle managers career and position are toast. I don't foresee many of these people continuing to be effective in the very near future. If this is news to anyone in middle management, good morning.

McKinsey: How should companies measure the success of Enterprise 2.0?

McAfee notes;

Again, you see a lot of energy, you see a lot of people very willing to take a few seconds to answer a colleague’s question—even if it’s a colleague they don’t know. So when I see successful companies tackling this tool kit, I see them doing a little bit of thinking upfront about what problem or opportunity they’re trying to address, then deploying an appropriate technology in response to that. They then measure progress: How much uptake are we getting? What’s the traffic look like on this? Which is very different than measuring ROI, I think.

In the Preliminary Research Report I suggested that companies use the revenue per employee as a measure of an oil and gas firms performance. Revenue per employee can vary significantly from company to company based on the unique attributes of its asset base. It has direct application between producers and is an accurate measure of the firms current and future capabilities. This is particularly the case as those producers with low revenue per employee will have difficulty increasing the revenue factor without having to address a possible over staffing issue.

The purpose, or competitive advantage, for the Community of Independent Service Providers and People, Ideas & Objects software applications. Is to provide the innovative producer with the most effective and profitable means of oil and gas operations. Revenue per employee will be a critical method of how the community advances the science of management and business for the oil and gas clients using this software and community. Please join us here.

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Pemex makes the change.

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

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

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

Mexican firm Petroleos Mexicanos is now indicating they will change how they develop their energy resources. In the Oil and Gas Journal, an article documenting the change notes.

Mexico’s state-owned Petroleos Mexicanos and the Secretaria de Energia (Sener) are preparing risk contracts that will be offered to oil companies—international and domestic—in order accelerate the search for oil and gas, according to local media.

These risk contracts have been used with a multitude of other methods by the NOC's before. The one constant is the Joint Operating Committee (JOC) is the means to manage these contracts. Recall the JOC is the legal foundation of the oil and gas industry. This is on a systemic and global basis with IOC's, NOC's etc. Pemex establishes the following framework for these contracts;

Sener explains that it is urgent "to speed up the discovery of new oil fields and the incorporation of reserves, as well as increase Pemex's execution capacity, particularly through new contracting schemes so that specialized companies can support its activities."

Clearly indicating that the support they are looking for not only includes the producer firms but also the service companies. Pemex is one of a number of countries that are establishing this trend as a result of the new realities of the scientific developments of the oil and gas industry.

Evidence of this is reflected in the research of the Baker Institutes Energy Forum's Cases under the heading of "The Role of National Oil Companies in International Energy Markets". In particular I want to highlight the research that was completed on for Malaysia's Petronas NOC. Reading that document clearly reflects the conclusion resonates with the work being done by the People, Ideas & Objects community. It also resonates with Petronas' strategy, history and economic needs.

In 2005 a Vice President of Petronas speaking before the Asian Energy Forum presented the firms corporate strategy. He emphasized several elements including growth and maximizing returns for shareholders. Growth has brought the move towards a global strategy with the desire to be an overseas investor in upstream and downstream sectors as well as encouraging foreign investment in Malaysia, while maximizing shareholder profits; he also noted the company's efforts to benefit local needs through a long term program involving Malaysia, host countries and other firms.

He asserted that it is important for Petronas to work with credible partners for several reasons:

1. Risks mitigation
2. Access to market
3. Access to proprietary technology
4. Political strength
5. Government to government relationship p. 21

In my opinion this strategy is wholly consistent with both the Community of Independent Service Providers (CISP) and People, Ideas & Objects. Why?, due to the activities and operations of Petronas and other NOC's, the IOC's, Independents and start up producers need to align their governance and compliance frameworks with the JOC's legal, financial, operational decision making, cultural and communication frameworks. This alignment brings a transparency  between the participants that increases the accountability of all oil and gas operations for all concerned, irrespective of the individual strategies employed by each participant in the JOC. The current situation where the corporate compliance and governance frameworks are focused only on the individual corporation is inconsistent with the legal, financial, operational decision making, cultural and communication frameworks and operations of the JOC of which they are party to.

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

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

This also works for Petronas and other NOC's from the point of view of their strategy of wanting to be involved in oil and gas operations on a global basis. They, with standard systems based on the JOC, can easily participate based on known methods and means of operation on a global basis.

This is not a case of nationalization, although nationalism was a factor in its original formation. It has been a generally solid and well-respected partner to both private and state entities around the world. While it has become involved in a wide range of agreements with other companies and states in which its equity percentages has varied, Petronas itself is 100% state owned. It has no present intention to privatize. p. 35

Involving NOC's in the future in this manner is also consistent with the activities of the Baker Institute with their governing objective.

The Baker Institute Energy Forum is a multifaceted center that promotes original, forward-looking discussion and research on the energy-related challenges facing our society in the 21st century.

This future needs to be backed up by a software development capability as provided by the Community of Independent Service Providers and People, Ideas & Objects application modules. Please join us here.

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