Perez, Crisis and Innovation Part IV

What is particularly interesting about Professor Carlota Perez' new paper "The Financial Crisis and the Future of Innovation: A view of technical change with the aid of history." Is her description of Small Knowledge Intensive Enterprises (SKIEs). In almost all respects they are the same as People, Ideas & Objects Community of Independent Service Providers (CISP). This post introduces Perez' SKIEs and we will also discuss them more extensively in a future post.

Due to the escalating efforts in the earth science and engineering contained within each barrel of oil. People, Ideas & Objects suggest the bureaucracies are too constrained to maintain their reserves and production profiles over the long term. We see symptoms of these in Encana's $5.5 billion loss, Shell's escalating costs and BP's inability to control their well in the Gulf of Mexico. Why are these incidents happening? The demands for energy, and the scientific demands of energy are beyond the strategies and capabilities of the bureaucracies. Shell recently noted their reorganization, that took several years, was recently completed. So why then have they lost control of their costs?

People, Ideas & Objects Draft Specification enables the producer firm to concentrate on the strategic needs of their asset base, at the Joint Operating Committee level, and their scientific and engineering capabilities. The producer firm is augmented by the marketplaces that support the innovative producer. The market includes the service industries and of particular interest to People, Ideas & Objects the Community of Independent Service Providers. These various communities are involved in providing many products and services that may have traditionally been done internally at the producer firm. This redrawing the boundaries of the firm is to enable the innovation in the earth science and engineering disciplines within the producer firm. And the communities to innovate in their area of expertise. Professor Perez notes;

A basic principle applied by corporations when disaggregating all their activities into separable components is distinguishing between core competences and complementary ones. The guiding idea is that the core competences are what gives the strength and the competitive edge as well as the long-term value to the company, while the other activities can in principle be outsourced without jeopardising the future. Yet, this notion of outsourcing is not about separating innovating activities from non-innovating ones. On the contrary, it is about deciding who will innovate in each area. p. 17

The net objective of defining the boundaries of the market and firm in this manner. Is that the individual Joint Operating Committee's, with their own unique strategies, are able to achieve higher throughput and innovation. Maximizing the reserves in place and optimizing their production.

The final result is that the whole network becomes an innovating machine with each part maximising its contribution and improving the whole at a much faster rate. p. 18

In this next quotation Professor Perez introduces her concept of the SKIESs. I find nothing in her definition that does not directly apply to the CISP. They are one and the same, and I assume that I was reading some previous paper of Professor Perez where the concept was developed. The only thing that I would add to her definition is that the CISP is a community that is focused on defining, building and deploying the People, Ideas & Objects application modules within the producer firms. They are dedicated to optimizing the profitable performance of the producer by using the development team and Information Technology resources made available to them. And would be considered a subset community of the greater number of communities within the definition of SKIEs

This practice of global corporations has very important consequences for the fabric of the economy. It induces the proliferation of small knowledge intensive enterprises (SKIEs) which are active innovators at the same time as they serve as a sort of technical infrastructure for attracting further user investment. The denser the fabric of SKIEs in an economy the greater will be the externalities for growth and competitiveness of the user firms. In addition, SKIEs themselves, in whatever field, are typically intense users of ICT services and of highly skilled human capital. They are also natural networkers with universities and other sources of information within and outside the country of operation. Finally, they are likely to participate in export markets, either through global corporations for whom they are suppliers or through their own efforts. That makes them key actors in the deployment of the knowledge society in each country. p. 18

It should be noted that I see many of the current producer firms employees forming SKIE's and CISP in the future. If you are an engineer or an earth scientiest I think it is fairly reasonable to assume that the producer will remain your primary employer. If you are not in those primary areas of the producer's domain of concern, employment in a SKIE or CISP is more likely. It should be clearly stated at this point that I don't see many of the CISP's being much larger then 5 to 25 people in total. Very specialized groups that are able to cater to the needs of a small hand full of producer clients. Professor Perez also sees these SKIEs as a subset of the Small and Medium sized Enterprises (SMEs).

A major consequence of this is a radical redefinition of the role of SMEs. Without ignoring the importance of the traditional small and medium firms, it would seem that the treatment of SKIEs and the catering to their support requirements, being fundamentally different from those of SMEs, will demand a different set of policies. p. 18

As we will see in a future posting, Professor Perez notes that the SKIEs need to be built in a dedicated fashion. Expecting them to spontaneously exist is dreaming. These capabilities have to be purposely set about to develop, much as People, Ideas & Objects software development capabilities, and sustained for the long term.

There is however a whole range of business-model and organisational innovations to be fostered in these sorts of services, the importance of which becomes greater the more advanced the economy. That is because they are stable employment creators (face-to-face services cannot be off-shored) and because they are possibly those that would most directly influence the quality of life in any particular locality. pp. 19 - 20

I would suspect that bureaucracies are now fully distracted by their escalating costs and flowing wells. The development of these communities and capabilities would therefore fall to the investor and shareholder in oil and gas who are expected to also support People, Ideas & Objects. BP's stock is down 15% and I would question their likely hood of being granted any future offshore leases in the U.S. With the precedent of the Exxon Valdez, this may cause serious damage to the firm. Such that the investor / shareholder might be the ultimate loser in this operational nightmare.

Thus, the hyper segmentation of markets, technologies and activities, is giving rise to an emphasis on the small business unit, be it as a direct part of a Global Corporation, as an independent or semi-independent supplier, as a start-up that can some day become a giant, as a franchisee, a member of a specialised cluster, a local provider of services or an independent expert unit in interaction with other global players in that particular niche. This not only implies giving particular importance to fulfilling the needs of SME innovation but truly paying particular attention to the different types of small companies and their specific requirements. This is part of what will be discussed in the final section. p. 20

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Perez, Crisis and Innovation Part III

Continuing on with our review of Professor Carlota Perez new paper "The Financial Crisis and the Future of Innovation: A view of technical change with the aid of history". We begin to focus on the value of human capital in future organizations. The need to address the organizational structure and build systems to identify and support the Joint Operating Committee is due to a variety of issues developing in oil and gas. People, Ideas & Objects have asserted that the earth science and engineering effort per barrel of oil is escalating, and the current bureaucracies are unable to deal with the speed and the demands of the marketplace. Today the issue is evident in this BBC quotation regarding Royal Dutch Shell's 2010 first quarter earnings. "The average cost of a barrel of oil for the first three months of the year was $76. That compares with an average price of $41 a year ago." If Shell's costs have escalated 85% over one year, we are moving into our own crisis in oil and gas.

What is clear in the Shell report is that what they are doing is not working. If the trend in their costs continues and the prices remain stable, they will be losing substantial shareholder value. This is the reason that they were recently downgraded and stated in their report they were cutting staff. "Those poor results prompted Shell to announce plans to cut 2,000 jobs before the end of 2010, helping to cut a planned $1bn in costs." Essentially blaming the issue on staff shows the value of human capital is possibly lost on Shell's bureaucracy.

People, Ideas & Objects are user focused software developments. We value networked users in defining and developing the software defined in the Draft Specification. The value of human capital is also reflected in what we call the Community of Independent Service Providers (CISP). And these apply to all producers involved in oil and gas. That includes International Oil Companies (IOC's), National Oil Companies (NOC's), Independents and start-ups. Essentially any producer that uses the industry standard Joint Operating Committee. Professor Perez notes:

...but also that networks are the more adequate organisational structure to take advantage of the ICT technologies. Giant organisations –through the mediation of Internet– can now grow much larger than before but as relatively flat networks gaining all the flexibility and agility of small companies; small organisations in turn can gain the advantages of scale by joining with others to form dynamic networks. p. 12

Networks are one thing, having the software that ties together the human capital is necessary to bring the value to producers like Shell. That will only come when a software development capability as contemplated by People, Ideas & Objects is available to all producers.

Another major transformation is the new value placed on intangibles and human capital. Whereas in the previous four surges technology was usually embodied in tangible equipment or manufactured products, the area of intangible products, from services to information itself is now an increasing part of value added, of investment and naturally of innovation. The fact that the notion of human capital is replacing that of human resources is itself a signal of the deep change that has already occurred and is likely to intensify in the Deployment period. p. 12

What Professor Perez is noting here is that the changes that are occurring in the marketplaces are not part of the same old economy. Things have changed and the old approaches are not working. What is needed is a decidedly aggressive move to rebuild the industry, literally brick-by-brick and stick-by-stick around People, Ideas & Objects and the CISP's use of the Joint Operating Committee. The other solution is that Shell begins to sell unprofitable properties to groups of investors who see how the assets could be turned around. Investors that have answered the call to action and built the People, Ideas & Objects software application modules.

Thus, when there is a massive change in the prevailing technologies, there is an associated transformation not only in production and consumption patterns but also in the forms of organisation and competition, in the structure of markets and in the way the fabric of the economy is woven. p. 13

The fact of the matter is that it is Shell's management that needs to make the choice. Do they fund this software development, or begin handing over the assets to the shareholder groups in as little as a year. Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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McKinsey Conversation with Andrew Gould

Just a quick post today to highlight a McKinsey "conversation with global leaders" Mr. Andrew Gould CEO of oil field supply firm Schlumberger. Of particular interest to me was his discussion of his Research & Development efforts. (Note his M & A groups appear to be part of his R & D.)

We’ve had a separate M&A group. And the M&A group has two functions. The first is normal M&A. But the second is it has a group of technologists within it who just spend their time identifying and following up on small companies. And actually, we have, for the last four or five years, been making step investments into technologies that we think are interesting.

Interesting from the point of view that the head of the largest oil field supply firm is actively acquiring technology groups. This signals to me that the movement to a more innovative footing across the industry is beginning to develop. Add to that this next quotation regarding the complexity shows the opportunity for Schlumberger is clearly identified.

I think that projects are going to get bigger and they’re going to get more complex. They also, to a certain extent, are becoming more remote. In other words, when you see people starting to drill offshore in Greenland, or offshore in New Zealand for that matter, then the remoteness and the logistical complexity and cost of those projects are such that I think the traditional model of procuring each individual service from different vendors and then doing all the integration oneself is going to diminish.

The point of course is that the opportunity for firms, groups and communities of all types in oil and gas are as strong as they ever have been. I have talked about the performance of Agile / Scrum software development teams. As Agile developers we expect to develop software at approximately 500% of the traditional software development methodologies. Schlumberger is experiencing similar performance metrics.

So in China, funnily enough, at the moment our big research-and-development investment is in software. We decided we were too late to go to India. So we built a lab, which is on the campus of Tsinghua University in Beijing. So we basically hire from the two universities, Beijing and Tsinghua. And it’s now at 350 people. The average age is probably about 30. And the creativity and the productivity, the level of productivity, of that lab is incredible. It’s scary. It really is scary.

I mean, we took a program from the US, which was going really badly, and gave it to Beijing. And Beijing’s first reaction was, “You’re trying to kill us, huh? You’re trying to kill this lab.” Then they buckled down and they did it. I mean, it was extraordinary.

and

And I’m afraid it’s something that the West has, you know, not lost, but we better wake up.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Perez, Crisis and Innovation Part II

People, Ideas & Objects is about developing software that identifies and supports the energy industries standard Joint Operating Committee (JOC). The purpose in developing this software is to create the ways and means for the oil and gas producer to facilitate innovation in the expanding earth science and engineering disciplines. We are not about the latest version of Oracle's impressive database or some other technology. That is Oracle's business and we will implement these technologies in our software offering in innovative ways. The technology is not the critical element. We don't see significant levels of innovation being generated in the technology itself, they are mature and are not critical to the producers innovation. The innovation we are seeking is in the organizational methods that identify and support iterative development of the earth science and engineering capabilities of the producer firms and markets.

Installation and Deployment: different drivers of innovation

This difference between innovating on the Information Technologies and innovation in the producer firms is an important clarification of what we are doing. What I had not fully realized until reading Professor Carlota Perez' February 2010 paper is the clear distinction between the two types of innovation in the Information Technology & Communications Revolution (ICTR). With the two major phases of each "great surge of development" the "Installation Period" and the "Deployment Period", bring about two distinct types of innovation in the marketplace. Professor Perez notes;

Distinguishing between innovation in the core new industries themselves and in the industries or activities that apply the new technologies to innovate is important for understanding the main differences between Installation and Deployment as regards the rhythm and direction of technical change. p. 8

That we are innovating in "the industries or activities that apply the new technologies to innovate" is proof that we are in the deployment phase. This deployment phase is what Professor Perez compares to other golden ages and calls the "Sustainable global knowledge-society". A time when IT applied to traditional industries brings about the value creating activities that will sustain the globalized economy. Professor Perez contrasts the two periods.

The high and growing valuations of telecom and Internet-related companies during the NASDAQ bubble facilitated the completion of a global fibre optic network that has become the foundation of the globalisation process. p. 8

and

The deployment period is the time when the modernised companies across all sectors innovate using the power of the technologies of the revolution and of the new –by then, established– paradigm. It is a time of expansion, extension and multiplication of possibilities in the whole spectrum; it is also a time for social innovation in order to spread more widely across society the benefits of the vast wealth creating potential. p. 9

We have always considered, since the Preliminary Research Report, that high energy prices are the reallocation of the financial resources towards innovation. The investments in innovation by the oil and gas producers are not to be made through debt or equity or earnings but through the allocation of revenues to the appropriate areas. This reflects the high costs of innovation and the need to build capabilities within the producer firm and marketplace. Of note People, Ideas & Objects have developed a new classification of oil and gas workers that we call the Community of Independent Service Providers (CISP). These people are the critical resources that provide People, Ideas & Objects with the direction of our software developments. They are the ones that anticipate the needs of the producer firms they represent, and work with our developers to build the tools needed to support the user communities involved in oil and gas. It is the revenues of the producers that will go toward development of the capabilities within the producer firms, markets, the CISP and these software developments.

In sum, there is a changing of the innovation guard with the Turning Point. During Installation the innovation drivers are the new technological entrepreneurs and the financiers while the State has a service and facilitating role with a laissez faire attitude. During Deployment, the State comes back actively and serves as innovation driver together with production capital, which takes the helm of investment while financial capital serves as support. p. 9

I read "production capital" as the reallocation of the oil and gas revenues to the service industries to support the producers innovations. These are predominately service based businesses that provide a supporting role to the producers. "Production capital" denotes somewhat of an investment, whereas I see a long term relationship between the producers, their markets and communities. This restructuring of the oil and gas industry does not provide those, producers or otherwise, that may have invested "production capital" with any return. The continued expectation that the oil and gas industry will become innovative by the service industries investments and developments of technologies is fool-hardy. It may be debated whether that expectation is fool-hardy or not, but I can assure you that it is ridiculous when it is considered the oil and gas producers generate the entire revenue base of the producers, markets, service industry, CISP and People, Ideas & Objects. Continually squeezing the service industries for more has as much to do with the failure of the bureaucracies that control these financial flows, as the need for real reform in this area. I see the producers themselves spending this "production capital" on these markets and communities to support their own capabilities. Professor Perez has much more to say on this point later in this paper. We will revisit this point at that time.

The other process typical of the aftermath of technology bubbles that was already taking place during the second boom is the restructuring of one industry after another and the definition of new boundaries through mergers and acquisitions. p. 11

These changes in the industry structure underlay the revised focus on the demand for energy.

As will be discussed below, though, the hyper-segmentation of markets and the flexibility of ICT is likely to change the way of defining industries and the markets in which they compete, in order to focus on the demand sectors rather than on the supply ones. p. 11

If we are looking at this deployment period lasting another thirty years, re-structuring of the industry in some fashion to deal with these issues is necessary. And as I have noted in each of these posts, we will work with the producers and communities to determine which methods are the right ones and build the software on that basis. Professor Perez notes that these are consistent with the history she has studied.

Such sectoral redefinitions have occurred with every paradigm shift and the trace is kept –with delay– in the changes of statistical categories across history. Since such changes take time and occur as a result of trial and error strategies and competition, they can only be recognized in the statistics when they have already become the norm in practice. But being alert to these processes is crucial both for companies and for governments, because they provide important signals for innovation and growth paths. p. 11

and

But with Deployment comes a fundamental shift of focus. Rather than looking at the potential of technologies, the focus switches to the opportunities defined by markets and by growth possibilities. p. 11

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Perez, Crisis and Innovation Part I

We begin our review of Professor Carlota Perez new paper "The Financial Crisis and Innovation: A view of technical change with the aid of history". I would find it difficult to choose whom has had a greater influence on People, Ideas & Objects, Professor Carlota Perez or Professor Richard Langlois. Professor Langlois has helped to define the Draft Specification with his research in Modularity, Boundaries of the Firm, Transaction Cost Economics and his "Vanishing Hand". Whereas Professor Perez has established the context of the economic times that we find ourselves in. Particularly what we can expect as a result of the Information & Communications Technology Revolution (ICTR). I am grateful for both of their work.

This February 2010 paper of Professor Perez' is quite probably the most important, critical and timely paper we could ever review. There are many new and valuable findings within the document and it is of particular value to what we at People, Ideas & Objects call our Community of Independent Service Providers. We will be reviewing this paper in detail in several parts, today being a fresh look at some of her past work.

Professor Perez begins with a summary that sets the tone for the document. Emphasis is mine.

This essay locates the current financial crisis and its consequences in a historical context. It briefly outlines the difference in patterns of innovation between the first two or three decades of each technological revolution –regularly ending in a major financial collapse– and the next two or three decades of diffusion, until maturity is reached. With this historical experience in mind, the essay discusses the opportunity space for innovation across the production spectrum taking into account the specificity of the Information and Communications Technology (ICT) paradigm and the increasing social and environmental pressures in the context of a global economy. Finally, there is a brief look at the sorts of institutional innovations that would be required to provide adequate finance to take full advantage of those opportunities. p. 2

There has been much we have reviewed of Professor Perez' work. This next quotation appears new to me, however, it is so obvious now that I think she needed to state it clearly for us to fully appreciate our situation.

Nevertheless, globalisation is a fact and the new emerging economies will change the shape of the world to come. p. 3

From an oil and gas perspective, our focus on demand is justified. The volume of supply of oil and gas will be a constraint to the global economy. The demand for innovation from the oil and gas producer will reach significant proportions. Operating within the global economy will also bring the full scope of the political, geographical, logistical and science based issues to the forefront of everyone in the industry. Organizing for this purpose is what we have been writing about, and preparing the communities for, at People, Ideas & Objects.

In the past I have shied away from the discussion of political points of view with respect to Professor Perez' work. I am a free market kind of guy and her views on the role of government in solving the economic problems have caused me difficulty. I think however, that I have been incorrect in not attributing the role of government to moving away from the casino atmosphere of financial capital, and the need for production capital to take the lead. This paper clearly states her values and the need for this transition to be aided by the role of government. The partisan nature of the discussion in the U.S. however, I think needs to adopt more of the attitudes and thinking of Professor Perez.

The other consequence of the bust, which could in some sense be defined as ‘positive’, is that by revealing all the crooked ways of the financial world during the boom, it has broken the myth of an ideal ‘free market’ and brought back the State into an active role in the economy. Such a come back is not limited to restraining the abuses of finance but extends to favouring the expansion of production and job creating activities over speculation and to spreading the benefits of growth more widely across society. p. 3

I highly recommend that everyone download this paper and print it out in hard copy. It is something that will be valuable as a frequent reference over the next number of years. Professor Perez' work has substantial value to anyone and everyone that will live in this globalized economy, this paper summarizes her work in a very substantial way.

To highlight the review of her theories and terminology I include the following definitions that frame our economic times. [Time frame]

This is the Installation period, [approximately 1971 - 2000] which begins in the midst of a mature economy in decline and ends with a frenzied prosperity characterised by the triumph of the new paradigm, the emergence of new giants and the development and collapse of a major financial bubble. p. 6

The second period brings to fruition all the potential opened up by the new technologies. It is the Deployment period [current to 2040?] when the new production giants serve as engines of growth. It is a time of ‘creative construction’ involving the expansion of both the new and the rejuvenated sectors and usually spreading the benefits of growth much more widely than during Installation. Production capital is then at the helm of investment decisions and finance adapts (or is induced to adapt) to serve those longer-term objectives and benefits from them. p. 6

The years between the bust and the unleashing of Deployment (from two years to as much as thirteen, as was the case in the 1930s) [2000 to current] constitute the Turning Point, referring to the shift in conditions and leading role from one period to the other. p. 7

In a previous post I quoted Professor Ralph Raico who stated the following about Professor Ludwig von Mises.

Back in the early 1700's there were slums, people were poor, people died, every possible plague. Mises says you cannot understand the industrial revolution without understanding the western world was undergoing an un-precedented population explosion. For example, England in 1750 had a population of about 6 million; by 1850 the population was 24 million. The question was how would these new tens and tens of millions of people survive? Mises said the industrial revolution was the answer to the population explosion. That's how they survived, by society becoming immensely more productive.

The industrial revolution was the solution to the population explosion and issues of the day. We now stand at a point in time where the benefits of the Information & Communication Technology Revolution are available to solve the problems that we face today. With the research of Professor Perez we can see clearly that now is the beginning of this trend, and the only thing that is stopping us is ourselves. From her paper.

In 2009 the world is going through the Turning Point and deciding the global and national context for the full Deployment of the ICT surge. Understanding the nature and direction of the changes required is a crucial input for designing institutional and policy innovation and increases the probability of taking best advantage of the new wealth creating potential of the new paradigm. p. 7

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Encana's Form of Corporate Socialism

This past week we saw a number of 2009 annual reports being published. The majority of them reflecting the difficulty in the oil and gas business during the "great recession". One particular company, Encana Corporation caught my attention. There are a family of 800 pound Gorilla's in their report, one issue stands above the rest, which ties into a paper that I recently read. The paper is written by Professor David Bardolet of Bocconi University, Professor Dan Lovallo of the University of Sydney, and Professor Richard Rummelt of UCLA. The paper is entitled "The Hand of Corporate Management in Capital Allocations: patterns of investment in multi- and single- business firms." This is another paper from the April 2010 edition of the Oxford Journal of Industrial and Corporate Change .

So why does Encana get singled out for this special treatment? Simply this issue needs to be addressed, and they did everything they could to avoid addressing it. Looking at the report their is no discussion of this issue in the message from the CEO. There is no discussion of the issue in the Management Discussion and Analysis. Only in the notes to the financial statements will the issue be brought up, and none of the press releases reflect the point.

The issue is that for U.S. Generally Accepted Accounting Principles (GAAP) their is a $14.6 billion write down of the assets. This creates a $5.5 billion loss for all of 2009. However, as a Canadian company they have the option to report under Canadian GAAP rules and these show a profit of $1.862 billion. Just a small variance. Those that understand accounting for oil and gas will appreciate the ceiling test under Full Cost accounting. Both countries apply the same general principles for the ceiling test, the U.S. system has fewer exceptions and that is the cause of the $14.6 billion difference. What the management don't seem to realize is they will need to be explaining this anomaly in their reporting until such time as the timing differences in the Canadian reporting system expire. That could be as little as one year, or as much as the natural life of the firm, who knows, apparently not the management.

Reviewing the other Canadian firms that may report similar differences in the timing of their ceiling test write downs. I found no other material anomalies between Canada and U.S. reporting. So why has Encana been affected so materially whereas their peers have no such effect? Is it because they are "un-conventional" gas producers? Is there something inherently different in that classification that would cause these write-downs? We'll never know. As the management, led by the CEO, have taken the opportunity to be completely silent as to the anomaly. Why not take this as a teaching moment to inform and educate your investors as to why their assets have been impaired? Management doesn't think that way. They prefer to cower in the corner hoping that no one notices.

Encana defines it's strategy as a "low cost, margin maximizing natural gas producer". Whatever that means. The point of this post, and the branding of Encana as a form of corporate socialism, is based on the one size fits all strategy of this large bureaucracy. I will assert that the write down of $14.6 billion of its assets is a major hit to the firm. One that places them in the position of having to seriously address their asset base. An asset base where  its natural gas production declined by 3%. If "non-conventional" gas is such a lucrative and valuable business model, why are the reserve valuations and production in such decline. From the paper.

One possibility is that our study of “averages” misses the blockbusters. That is, multi-business firms might subsidize CNU businesses because, once in a while, one of them really takes off. We cannot completely discount this possibility or measure precisely the extent of this phenomenon. However, our study of the dynamics of these segments in Section VI suggests that multi-business firms are really not that successful in finding and nurturing these blockbusters. p. 19

By using the Joint Operating Committee as the key organizational construct, strategy can be set at the asset level. If the "low cost, margin maximizing natural gas producer" strategy doesn't fit the asset, a more appropriate one can be set for that asset. This assumes that we build the Draft Specification for the innovative oil and gas producer. Enabling them to manage their assets in that fashion. The use of generic global strategies is what firms did in the twentieth century, not today.

Our results are roughly consistent with the account of “corporate socialism” developed in the corporate finance literature. Some of the work in this line (e.g. Wulf, 1999; Rajan et al., 2000; Scharfstein and Stein, 2000) stresses the agency conflict between division managers and corporate headquarters. Division managers are portrayed as rent-seeking agents that try to obtain additional compensation (in the form of extra capital allocations, among others) from corporate headquarters. They try to do so by overstating their divisions’ prospects or by engaging in direct lobbying. In turn, corporate headquarters might decide that avoiding this inefficiency in resource allocation is not worth the cost of increased monitoring or low morale and thus accede to their demands. In particular, Scharfstein and Stein (2000) make the point that managers from weaker divisions have a stronger incentive to engage in firm politics given that their demands for capital investment cannot be argued so effectively solely on the base of a prospect’s quality. Therefore, those managers end up receiving more investment capital than they should and that creates the comparative difference with their stand-alone peers in the same industry.

The corporate socialism argument rests on a complex set of relationships among various agents within the corporation. A simpler theory is offered by the literature on cognitive biases. In particular, the allocations observed in this study can be explained as a consequence of behaviors called “naive diversification” and “partition dependence”. Naive diversification (Benartzi and Thaler, 2001)—also known as the “1/n heuristic”—is the tendency for individuals to be biased toward even allocations. p. 19

Just to be clear the authors point out that this applies to oil and gas as much as it does any other business.

Partition dependence is a consequence of naive diversification when the decision-maker faces a particular partition of the set of choices. In the case of capital allocations, this partition of choices would be the organization of the business units within the company. p. 19

And here the authors make it abundantly clear how these decisions are made.

Naive diversification and partition dependence are well-observed phenomena in other fields of human decision-making. For example, Benartzi and Thaler (2001) found a similar effect in both laboratory and field data studies of investment in 401(k) plans. When asked to choose between investing in a stock or bond fund, many individuals choose to invest 50% in each. When asked to choose between two stock funds and a bond fund, many individuals choose to spread allocations equally among the three funds, which creates an aggregate investment that is more heavily weighted (2/3) to stocks. Bardolet et al. (2009) found strong naive diversification and partition dependence effects in managers facing hypothetical capital allocation tasks. The naive diversification account applied to internal capital markets would predict a tendency toward equal allocation among all the business units in a firm, thus underweighting factors that would demand more uneven allocations (such as growth rates, profitability, etc). The experimental character of Bardolet, Fox and Lovallo’s study shows that even in situations where social and political factors are not in play (i.e. a laboratory environment) those two biases are enough to cause a tendency toward even capital allocations among all business units, thus corporate socialism is a sufficient but not necessary explanation of inefficient allocations. pp. 19 - 20

What I am asserting is that the capital allocations at Encana fall within the corporate socialism phenomenon. This has led to bad capital allocation decisions being made across the organization. Either too much capital was used in the development of the reserves, or the capital spent did not develop enough reserves to support the costs. Now those chickens have come home to roost in that the capital costs are too high to support the reserves held, forcing the write down. Those familiar with the nuances of the Full Cost ceiling test will realize the material nature of Encana's problem.

Further research on the anomalies we have identified seems warranted. In particular, it seems worthwhile to try to identify the relative importance of incentives, inertia, and biases towards even allocations in driving this result. One step in this direction would be a study which included data on corporate incentive mechanisms and changes in administration. p. 20

If they wanted to study Encana, one should also study the cognitive bias towards promoting pretty young blonde's to executive vice-president positions. Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Putting Strategy into Practice

Strategy + Business have published "Putting Strategy into Practice" which is a summary of an article published by Harvard Business Review (HBR). The value in this post is that Booz & Company are sponsoring the free distribution of a series of articles entitled "HBR's Must Reads on Strategy". This 143 page .pdf is a collection of 10 articles from Professor Micheal Porter and others that have been published in HBR in the past two decades. A valuable resource to add to your virtual library.

I only want to highlight only the Strategy + Business article today, I'll be reviewing the other articles for content in the near future. The reason that I want to highlight the article is contained within this quote.

Of all the false distinctions that dog business thinking — leadership versus management, profitability versus growth, short term versus long term — the most pernicious is the separation of strategy (where the company should go) from execution (getting there). Strategy without execution is daydreaming. What good is a blue ocean to one who cannot swim? Execution without strategy is pointless, even dangerous. What profit is there in doing the wrong things well?

People, Ideas & Objects has taken the position that the innovative oil and gas producer's strategy should focus on their unique asset base and their inherent capabilities in terms of the earth sciences and engineering disciplines. This is further extended by expanding the role and capabilities of the marketplace of service providers. Capabilities in essence are the means in which to execute strategy.

But the article is also worth celebrating more generally — because it is a harbinger of the closing of that false gap between strategy and execution, and of a new understanding of the role of capabilities in driving strategy.

In our recent review of Professor William Lazonick's paper on Chandler we reviewed his "Social Conditions of Innovative Enterprise" contained within his framework of the "Theory of Innovative Enterprise". Recall the framework provides for analyzing the roles of strategy, organization and finance. The social conditions which include decision rights, organizational integration, and financial commitment resonate with the ideas in this HBR article.

The gathering of this data began in 2002, with a question: How does a company design its organization to generate results and successfully adapt when circumstances change? Neilson and his coauthors articulated four “building blocks” that mattered most in the execution of any kind of strategy: decision rights, information flow (including metrics), motivators, and of course the “lines and boxes” structure of an organization chart.

The Draft Specification proposes the innovative producer need this type of integration. Here we have substantial documentation supporting the changes necessary to move to the Joint Operating Committee, the legal, financial, operational decision making, cultural and communication frameworks of the oil and gas industry. In the preparation of this HBR article the authors, who work at Booz & Company, set up a website to capture this information from their clients. Eventually they documented 125,000 profiles within their database.

Here’s what the data showed, when combined with in-depth studies of 31 client companies: Decision rights and information flows had twice as much impact on the success of a strategy as did changes in structure or motivators. Not only that: Executives introducing strategic change should address the questions of decision rights and information flow first. Once a company makes the structural change and fills the boxes of the org chart with names, the opportunity to make changes in the more critical areas vanishes. Any plans to “get to that later” evaporate. Says Gary Neilson, “We have not seen any exceptions to this pattern in our client work.”

Decision rights and information flows are the domain of the Joint Operating Committee. It is therefore the place in which we need to start. Structure and motivators are important as well and need to recognize, define and support the Joint Operating Committee.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Chandler The Role of Business in the ...

Professor Alfred D. Chandler published a document entitled "The Role of Business in the United States: A Historical Survey" in the Winter 1969 version of "Perspectives on Business" from MIT Press. This paper chronicles how the economy developed. I find it surprising in many of the things that are not generally known or understood about the role and function of finance in the early years.

For a paper on the historical role of business in America to provide a solid foundation for discussions of the present and future, it must examine a number of questions: Who were the American businessmen? How did they come to go into business? How were they trained? How broad was their outlook? And, of even more importance, what did they do? How did they carry out the basic economic functions of production, distribution, transportation, and finance? How was the work of these businessmen coordinated so that the American economic system operated as an integrated whole? Finally, how did these men and the system within which they worked adapt to fundamental changes in population, to the opening of new lands, resources, and markets, and to technological developments that transformed markets, sources of supply, and means of production and distribution? The answers to these questions, as limited as they may be, should help to make more understandable the present activities and future capabilities of American business. p. 23

I want to highlight the role of what has to be the key determinant in the development of the economy, the Merchant. Specifically, the role of the merchants in financing business development and trade. This enabled much of the development of the corporation, the separation of ownership and management and the speed, scope and scale of the structured hierarchy. Without the critical skills and capital of the merchants, it is doubtful that the hierarchy would have been able to rise to such prominence.

The colonial merchant was an all-purpose, non-specialized man of business. He was a wholesaler and a retailer, an importer and an exporter. In association with other merchants he built and owned the ships that carried goods to and from his town. He financed and insured the transportation and distribution of these goods. At the same time, he provided the funds needed by the planter and the artisan to finance the production of crops and goods. The merchant, operating on local, inter-regional, and international levels, adapted the economy to the relatively small population and technological changes of the day and to shifts in supply and demand resulting from international tensions. p. 24

and

Only a few of the great landowners and leading lawyers knew the larger world. It was the colonial merchants who, allied with lawyers from the seaport towns and with the Virginia planters, encouraged the Revolution, brought about the ratification of the Constitution, and then set up the new government in the last decade of the eighteenth century. p. 24

The Merchants were the key to the development of the economy. In this paper Chandler documents how effectively the Merchants expanded economic activity to the point where the scale and scope was beyond theirs and their extended families reach. How this eventually created the "Manager" and developed the concept of the separation of management and ownership. It is noted the professionalism of the managers and their development during this time. Management replacing direct ownership as the means to effective management. Yet what is clear in the history, and is plainly clear today, is that management have no financial stake in the firm. Interestingly Chandler notes this is not the first time that this has been an issue.

In many ways, the managers were more of an elite than the earlier businessmen had been. Even though this elite was based on performance rather than birth and played a critically constructive role in building and operating the world's most productive economy, its existence seemed to violate basic American democratic values. At the same time, its control of the central sector of the American economy challenged powerful economic concepts about the efficacy of a free market. After 1930, the managers came to share some of their economic power with others, particularly the federal government. Nevertheless, they were forced to do so not because of ideological reasons, but because they failed by themselves to assure the coordination and growth of the economy, the basic activities they had undertaken after 1900. p. 35

In 2010 it is clear the division between ownership and management is as great as it ever has been. Management hold the reigns of power and have advanced their concerns over the shareholders. Leaving the ownership generally dissatisfied. Government, particularly the Obama administration, believes they are the natural progression to takeover from management. I think networks, and particularly People, Ideas & Objects and the Community of Independent Service Providers provide the best alternative to the innovative oil and gas producer.

The Depression clearly demonstrated that the corporation managers alone were unable to provide the coordination and adaptation necessary to sustain a complex, highly differentiated, mass production, mass-distribution economy. The coming of the Depression itself reflected population and technological developments. p. 35

I think the eight hundred pound Gorilla in the room is that management have no stake in this game. If failure occurs then shareholders and debtors will pay the price and management will fend for themselves. Whether it is at another firm, or their vested pension that provides them with their continuity, either is satisfactory. The point is that with no skin in the game, what is keeping management at the table.?

They have proven unwilling to fund People, Ideas & Objects software developments, why do the hard work when a new pension statement has just arrived? We are foolish to expect anything more of management, they are there for the good times and their history shows they are incapable of bridging critical economic changes such as what we are facing today.

Just as the Merchants began the whole process. Applying their capital and skills to the economy. Future development of our economy is in the investor and shareholder hands once again. Society dictates, and I hear it in the Tea Party movement, that this process be renewed.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Chandler on Decision Making

In the March 1973 Journal of Economic History Professor Alfred D. Chandler presented a paper entitled "Decision Making and Modern Institutional Change". A few days ago I commented on the velocity of productivity in the volumes and speed of decision making and idea generation in oil and gas. The origins of these comments were the Google video of CEO Eric Schmidt, and the term velocity as used by teams of Agile-Scrum developers. Velocity is the key metric in determining the through put of the software development team. In this paper Chandler also discusses the concept of velocity and attributes it as the key success of the large firms over the past 100 years. I think many of the points that Chandler makes can also be applied today. A time when the challenges to the large firm are significant. Chandler notes;

The potential of the new means of transportation and communications could only be fully realized through new methods of organization. The operation of the railroad and telegraph systems required the operation of a complex managerial structure to assure steady and continuing flows of information and orders essential to guide the movement of trains, traffic and messages. Because of greater speed and fewer trans-shipments, a railroad car could make in two days the round trip that required a stage coach or canal boat a week. By careful coordination of flow within and between the large railroad enterprises, the time involved decreased still more. As the rate of traffic flow increased, so did output per worker and per unit of capital and equipment used in the movement of goods. p. 6

The Information & Communication Technology Revolution (ICTR) is assumed to be beginning its long process of impacting businesses now. Although these technologies have facilitated enhanced speed in all organizations, new methods of organization are necessary to enable greater speed and velocity. The movement to new methods of organization has been resisted by the current management, as it conflicts with their established power. People, Ideas & Objects has had no success in convincing management of the need to change to the JOC. Theirs is a static world where, as we will begin to see in the current annual report season, is commencing on a period where their speed and innovativeness are inadequate to meet even elementary financial performance. Specifically I think that higher operating and capital costs will be directly attributable to their lack of speed. And their large balances of indebtedness are long term constraints to their viability. Particularly during times of interest rate increases. All that management have done is fully valued their debt and obligations. I have asserted on this blog before, as the financial performance of the current bureaucracies deteriorate, the innovative producer supported by the People, Ideas & Objects software application and the Community of Independent Service Providers will enable the innovative producer to purchase many of these assets from these bureaucracies. But the software has to exist first.

The briefest of historical sketches of the rise of large scale managerial enterprise in American transportation's, communications, distribution and production, emphasize that the economies of scale within the firm resulted far more from speed then size. It was not the size of an enterprise but the velocity of throughput that permitted economies that lowered costs and increased output per worker and per machine and so provided the classic, competitive advantage. Speed brought size, but size in no sense brought speed. p. 9

Clearly the bureaucracies size and lack of increasing velocity are the issues. Such were the advantages of size and speed that Chandler notes;

Once such economies were attained, the large managerial, multi-unit enterprise rarely disappeared. p. 10

Therefore the problem can simply be rectified by increasing their size and speed. If only things were so simple.

Increased velocity in turn intensified the need for complex managerial organization. p. 11

In a dynamic, connected and virtual world it is easy to focus on the problem of today. Our focus however needs to be on larger issues as we have little that we can do to influence performance by focusing on the short term. This change in culture from optimizing today to innovative will not be an easy process. It however begins by the investor / shareholder seizing the industry from management through the process mentioned above. The process of seizing the control of the industry begins by building the necessary software and communities that will ultimately support the innovative producer.

The senior executives at the top attempted to focus their energies on the critical decisions concerning present and future allocation of resources. p. 11

As we reflect on the performance of the industry over the past year. We see the economy beginning to show signs of real life. One that may be as a result of the enhanced efficiencies and innovativeness brought about by the ICTR . Demand for energy will begin to grow again. Energy prices will respond, and the reallocation of the financial resources dedicated to innovation will increase. We should look back on the history of the hierarchy and realize two things. One is the significant contribution it has made to society in terms of our quality of life.

The dominance of our society by this and other large-scale organizations is one characteristic of the twentieth-century that distinguishes it from all others. The enormously increased speed and volume of economic activity is another. p. 15

And secondly realize that we stand on the shoulders of several generations of giants. If the bureaucracy degrades as a result of the forces aligned against it. How far will society degrade. We need to act to begin to develop the new organizational methods necessary to carry us for the foreseeable future.

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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Chandler on Organizational Capabilities

In a 1992 paper entitled "Organizational Capabilities and the Economic History of the Industrial Enterprise" Professor Alfred D. Chandler's summaries his work. Through this blog's review of Chandler, it is hoped that we gain insight into the role of the organization in the economic development of Western based businesses. Chandler's paper certainly provides that understanding and I highly recommend reviewing it for your own benefit. There are two other references to note here today. Both are in direct contrast to the firms that are noted in Chandler's paper, and lastly we will reference Professor William Lazonick's conclusion in "The Chandlerian Corporation and the theory of innovative enterprise".

The first reference is that Fitch has revised it's outlook for Royal Dutch Shell to negative from stable. Putting their AA+ credit rating in doubt due to Shell's medium term cash flow projections. These projections assume that Shell will be able to increase their production by 600,000 barrels by 2014 and prices will average $60.00. If Shell were able to increase their production by 600,000 barrels per day and earn only $60.00 in terms of an oil price, why would Fitch put them on notice? To me there seems to be more to the story then what Fitch is stating. Possibly they don't see the 600,000 barrels per day as "possible". This downgrade of Royal Dutch Shell strikes me as odd, after all the firm is only carrying a 15.5% net debt to capital ratio. Are the analysts seeing more in terms of difficulty in the oil and gas industry?

The second article that I want to draw attention to is from John Hagel on his blog "Edge Perspectives". His commentary reflects how the future economic conditions will have fundamental changes in the ways that industries are organized. What is clearly stated as the competitive advantages of firms in the past 100 years are no longer present in his future perspective. A future perspective that is consistent with the Draft Specification's view of the oil and gas industry.

Although these three introductions appear at first to not have any relevance to one another, they are all saying the same thing. Chandler notes the past was developed at different times and with different technologies, today the oil and gas producers are having difficulty in times of robust commodity prices and the future as Hagel notes, is always uncertain.

While understandable, these efforts to read near-term indices also present very significant risks.  We continue to be seduced by near-term news, while losing any perspective on longer-term trends. These longer terms trends tell a very different story and suggest that we may be lulled into complacency by the short-term news of recovery.

and

There is absolutely no reason to believe that the long-term performance erosion will not continue.

Those two references of Hagel's are certainly in line with the long term perspective taken at People, Ideas & Objects. We have consistently highlighted the work of Professor Carlota Perez and the accuracy of her prescient analysis of the long wave economic developments. Hagel is stating clearly that today we are experiencing these forces and now is the time to shift our focus to them.

The Power of Pull suggests that we are going through a fundamental shift in the source of economic value creation.  In the past, economic value creation depended on proprietary knowledge stocks.  The challenge for any company was to acquire some proprietary knowledge, rigorously protect it to make sure no one else had access to it, and then as efficiently as possible extract the economic value from this proprietary knowledge stock for as long as possible.  As change accelerates and uncertainty grows, though, knowledge stocks depreciate at a more rapid rate.  In this kind of environment, the key to economic value creation shifts to the ability to participate in a growing number of diverse knowledge flows to more rapidly refresh our knowledge stocks.

The Community of Independent Service Providers (CISP) is exactly what he is talking about. Participation as an independent entrepreneur that develops and implements the "knowledge stocks" of the innovative oil and gas producer is what the CISP is about. These people will also be the ones that work closely with the People, Ideas & Objects developers to instill their knowledge into the tools they will use to define and support the innovative oil and gas producer.

The good news is that there is a pragmatic migration path that can move us from where we are today to where we need to be in a world of pull.  Small moves, smartly made, can in fact set big things in motion. To pursue this path, though, we will need a sense of direction, harness different forms of leverage and deploy platforms that can accelerate the pace of change.

These small moves could be made by following this process to join the CISP. In the past week we provided a comprehensive review of Professor William Lazonicks work on Chandler. I want to close this post with a reference from Lazonick's conclusion that shows these changes are inevitable. Inevitable to everyone but the bureaucracies that are resisting these changes.

In the 2000s, it can fairly be said that the Chandlerian corporation has ceased to exist. In historical retrospect, Alfred Chandler uncovered the dynamics of a historically-specific business model that drove the development of the world’s richest economy. The essence of capitalism is, however, as Schumpeter recognized, change. The work of Chandler has provided us with a deep understanding of the foundations of US economic power in the middle decades of the last century. His work does not provide us with a roadmap for understanding the business models that have become dominant in the first decades of the 21st century. There is a need for us, who seek to build on the Chandlerian legacy, to remain committed to the integration of theory and history. My claim is that, with its focus on strategic control, organizational integration, and financial commitment, “the theory of innovative enterprise” is a potent framework for analyzing the process of change. It is a framework that, through the integration of theory and history, can enable us to “catch up with history” so that we can analyze the present as an evolving reality before the present as history passes us by. p 29

Our appeal should be based on these eight "Focused on" priorities and values of how better the oil and gas industry and its operations could be handled. They may not initially be the right way to go, but we are committed to working with the various communities to discover and ensure the right ones are. If your an enlightened producer, an oil and gas director, investor or shareholder, who would be interested in funding these software developments and communities, please follow our Funding Policies & Procedures, and our Hardware Policies & Procedures. If your a government that collects royalties from oil and gas producers, and are concerned about the accuracy of your royalty income, please review our Royalty Policies & Procedures and email me. And if your a potential user of this software, and possibly as a member of the Community of Independent Service Providers, please join us here.

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