Professor Giovanni Dosi, Part X

In our review of Professor Giovanni Dosi’s paper, “Sources, Procedures, and Microeconomic Effects of Innovation“ we now ask what are the incentives to invest in the discovery of innovations and there development? Will these depend on the incentives that interested and motivated agents perceive in terms of expected economic returns? Professor Dosi calls “appropriability those properties of technological knowledge and technical artifacts, of markets and the legal environment that permit innovations as rent yielding assets against competitor’s imitation”.

Professor Dosi (1988) notes a study conducted by Richard Levin et al 1984, in which they studied “the varying empirical significance of appropriability devices of (a) patents, (b) secrecy, (c) lead times, (d) costs and time required for duplication, (e) learning curve effects, (f) superior sales and service efforts.” Professor Dosi (1988) observed, “that lead times and learning cures are relatively more effective ways of protecting process innovations, and patents a more effective way to protect product innovations.” Dosi concludes. “Finally, there appears to be quite significant inter-industrial variance in the importance of the various ways of protecting innovations and in the overall degrees of appropriability”. (p. 1139)

Oil and gas producers are focused on process innovations, industry suppliers on product innovations. Recognizing this division of labor is how People, Ideas & Objects Resource Marketplace module provides and facilitates a greater interaction between producers and suppliers. Each group is concerned with securing their innovative capabilities without creating any conflict with the other. (The producer looking to lead times, learning curves while suppliers using patents to protect their innovations and capabilities.)

Levin states that the control of complementary technologies becomes a “rent-earning firm-specific asset”. Professor Dosi (1988) states “in general, it must be noticed that the partly tacit nature of innovative knowledge and its characteristics of partial private appropriability makes imitation a creative process, which involves search, which is not wholly distinct from the search for new development, and which is economically expensive - sometimes even more expensive then the original innovation, and applies to both patented and non-patented innovations.” (p. 1140)

With the fast changing science and technological paradigms and steep trajectories of the industry, the need to have the capability to innovate will be needed for each producer to develop on their own. If the costs of duplication are as steep as the costs of developing the internal capabilities, the producers should then rely on their process innovations to carry their firm. However, that also imputes that a greater level of co-dependency exists. Partners in the Joint Operating Committee will have resources available to commit to the projects and suppliers will have contributions as well. As the Resource Marketplace module seeks to eliminate the redundant and mutually exclusive capabilities being built within each silo’d corporation. The proposed alternative in the Draft Specification is to rely on the marketplace for development and deployment of these innovations.

To restate this another way. With the dual constraints of; the difficulty in increasing the volume of earth science and engineering resources in a material way, and secondly, the demand for greater volumes of science and engineering in each barrel of oil, the need for the producer to rely on the “market” (within the Resource Marketplace module) to define and support their innovative appropriability is a necessity. A means to effectively pool and manage the technical resources made available through the participants in the Joint Operating Committee and service industries, as contemplated in the Resource Marketplace module and Military Command & Control Metaphor.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Hagel & Brown on Leadership

John Hagel and John Seeley Brown are two authors that we follow closely here at People, Ideas & Objects. In a Forbes article entitled “Today You Can Only be a Leader by Creating Leaders” they bring up the topic of leadership and how it’s changing.

In a world where automation of transactions and business processes increases, and escalates, particularly with the development of the Draft Specification, leadership is one of the key human actions and skills that can not be automated. A short list of the types of work that people will be involved in in the future is as follows.

• Leadership
• Issue Identification
• Issue Resolution
• Decisions
• Design
• Ideas
• Search

This is to name just a few of the key human activities that will be needed. When we talk about leadership, we note the size and scope of the task that People, Ideas & Objects is focused on. It is the enormity of this task that will require many leaders. Whether its a Product Owner who will work to capture the users demands in the software, or a member of the Community of Independent Service Providers leading a system integration at a producer firm, leadership will be a key skill that will be needed. Hagel & Brown note the somewhat simple process in which this starts.

Leaders can flip these perceptions of risk and reward if they can paint compelling long-term views of the future. This is completely against the grain for most business and political leaders today; they study quarterly numbers to carefully craft a short-term view of the road ahead. Leaders in the big shift will be those who can peer ahead and paint compelling views of opportunities--and not just opportunities for themselves or their institutions but for all kinds of people. If they can help us to make sense of the long-term future, they'll be able to inspire bold action and investment in support of their initiatives, while everyone else sits on the sidelines.

People interested in getting involved with People, Ideas & Objects should contact me here to begin the process of joining this project. People who are interested in building and providing the systems and services the innovative oil and gas producers will need to meet the market demand for energy. We should also take note of the following.

But there will be another even bigger change in leadership. In the past, leaders were measured by how many people followed them. In the era ahead, they will be measured by how many other leaders they can cultivate. We are moving from a world of push, where people are expected to follow detailed scripts to accomplish specified tasks, to a world of pull, where everyone must master the techniques of drawing out people and resources when needed to address unanticipated opportunities and challenges. In the world of push, followers were prized. In the world of pull, everyone must figure out how to become a leader in their own domain.

This makes intuitive sense. With the systems handling the majority of the business, the remaining tasks are not going to be distributed by some all knowing greater power. The more that can be initiated by the leader, the higher the value that is generated for the producers.

Rather than using persuasion to get others to follow predefined programs, the new generation of leaders will use persuasion to help people more effectively draw out their own individual potential. The really effective leader will be one who can persuade emerging leaders to join forces toward common goals and develop faster than they could on their own.

I can’t think of a more exciting place to work. People, Ideas & Objects, the Community of Independent Service Providers offers leaders a place where their skills are needed.

The bottom line: Leaders will no longer be defined by the number of followers they have, but rather by the number of other leaders they have cultivated and mobilized across institutional boundaries. That is a profound shift.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Professor Giovanni Dosi, Part IX

And we’re back from a refreshing break. When we look at the decision to implement a new and innovative idea within an oil and gas property, we look to determine where the decision rights reside. In oil and gas the operational decision making authority resides with the Joint Operating Committee. Therefore to increase a firm or industries innovative-ness we have to move the technological and science based innovations closer to the decision making authority in order for them to be implemented. Whereas there may be a meeting of the minds on the course of actions to take, understandably this is also the area where the bureaucracy lurks. Time, or the pace of turnover of these processes, also becomes a critical issue.

In today’s post we will be continuing on with our look at technological paradigms and the effect they have on scientific and innovative trajectories in oil and gas. When discussing these points on innovation, it is important to remember that the sciences, the trajectories they are on, and the opportunities they generate for a producer, are accelerating and will continue to do so. Recognizing the Joint Operating Committee as the key organizational construct, as is done in the Draft Specification, is the means to deal with these scientific paradigms and trajectories, and hence, an area where significant process automation can and will take place through the development of People, Ideas & Objects software applications.

With this process in mind, we note that Professor Dosi suggests two separate phenomenon are observed:

• First, new technological paradigms have continuously brought forward new opportunities for product development and productivity increases. p. 1138
• Secondly “A rather uniform, characteristic of the observed technological trajectories is their wide scope for mechanization, specialization and division of labor within and among plants and industries.” p. 1138

Both of these points are inherently understood. If we approach this process to deal with the administrative attributes within the People, Ideas & Objects application modules, we have an opportunity to release those “new opportunities for product development and productivity increases”. We however, also need to understand that the dynamics of these processes require constant “mechanization, specialization and division of labor” as has been contemplated in the software development capability that People, Ideas & Objects provides. Professor Dosi notes one of the benefits of this.

Similarly, new technological paradigms, directly and indirectly -- via their effects on “old” ones -- generally prevent the establishment of decreasing returns in the search process for innovations. p. 1138

Looking to model the management of this process across all producers within all geographical regions would seem to be a difficult task. However, Professor Dosi notes that there are other serious concerns that need to be taken into consideration.

The appearance of new paradigms is unevenly distributed across sectors and so are (a) the degrees of technical difficulties in advancing production efficiency and product performance, and (b) the technological competence to innovate, embodied in people and firms. pp. 1138 - 1139

Simply not everyone will be working off the same page when it comes to the types of innovation, the scale of their application and degree of complexity. In this next quotation it becomes clear that the process under management by the software is the means in which to be able to deal with these underlying paradigms and trajectories. Therefore, in order for the producers to begin the path of innovativeness requires that we resolve these process design issues, and build the software before they are implementable.

These distributions of opportunities and competence, in turn are not random, but depend on (a) the nature of the sectoral production activities, (b) their technological distance from the “revolutionary core” where new paradigms are originated, and (c) the knowledge base that underpins innovation in any one sector. p. 1139

People, Ideas & Objects believes that if we engineer a software application to deal with these issues, we can accelerate the performance of the producer and the industry. From a systems engineering point of view this has been beyond the scope of one software development team working with one producer. For any producer to undertake the required analysis, let alone development of the systems, is beyond the scope of what was possible or desirable. It is well beyond the scope of any software developer to undertake on their own, in a speculative manner, and therefore has been beyond the imaginations and possibilities of the industry. I would also argue that, in the past, automation of this business process would have generated limited value. Today we can define a more specific division of labor and specialization and therefore, provide a more profitable means of oil and gas operation.

To state this point differently, we can focus the resources of the industry on the comprehensive engineering of these processes. Allocating these costs over the entire energy producing base presents opportunities to undertake the detailed development of software that has not been attempted before. This is the approach that is necessary to deal with the issues associated with the producers meeting the market demands for energy. Management of these processes is the key to enabling the organizational performance, technological paradigms and trajectories that Professor Dosi notes in this paper.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Professor Giovanni Dosi, Part VIII

I think it would be easy to attain a consensus that the underlying earth science and engineering, which is the basis of the competitive advantage of the oil and gas producer, is on a steep upward trajectory. The past few years has demanded more engineering and earth science per barrel of oil, and the complexity or difficulty of those inputs are on their own separate but related trajectory. The science of oil and gas will be the means in which producers are able to attain the market demand for energy. In this post Professor Dosi shows how these trajectories are affected by technological paradigms.

Technological paradigms have been directly linked with major scientific breakthroughs, form the discovery of the transistor to the development of modern computer technologies. Professor Dosi states that these links between science and technology have been evident since the days of Leonardo da Vinci and Galileo. What was unique to the 20th century was that the need to generate and utilize scientific knowledge, was internal to, and often a necessary condition of the development of new technology paradigms. Up until the end of the 19th century, most technological innovations were the development of imaginative craftsmen. Many of the 20th century development were the results of multiple disciplines, such as physics and microelectronics, whose scientists were awarded the Nobel Prize in 1962 for the semi-conductor.

Professor Dosi concludes that scientific input into the innovation process is evidence of the importance of factors exogenous to competitive forces among private economically motivated actors. This is subject to two important qualifications.

• Science and Technology are self-fulfilling in their developments.
• Scientific advances play a major direct role, especially at an early phase of development of new technological paradigms. p. 1136

These points support Dosi’s (1988) assertion that “general scientific knowledge yields a widening pool of potential technological paradigms,” where the greatest value is attained in the earlier stages. Professor Dosi analyzes the specific mechanisms through which a few of these potential paradigms are actually developed economically, subsequently applied, and that often have become dominant in their industry. The process of selection depends on the following factors.

• The nature and interests of the bridging institutions between pure research and economic applications. (p. 1136)
• Institutional factors that drive the technology or science, such as (the military) (p. 1137)
• The selection criteria of markets and or techno-economic requirements of early users. (p. 1137) (NASA, Pentagon the FDA and Nuclear Reactors for the Navy.)
• Trial and error associated with the Schumpterian entrepreneurship. 

Professor Dosi (1988) continues on to assert that much of the innovativeness of a firm is dependent on technology more than science, and is based on several implications. The first implication being the net benefactor of the cumulativeness, tacitness and technological knowledge implies that “innovation and the capabilities for pursuing them are to an extent local and firm specific.” Secondly, the “opportunity for technological advances in any one economic activity can also be expected to, and constrained by, the characteristics of each technological paradigm and its degree of maturity”. This is further defined by the technological and scientific capabilities, and “the advances made by suppliers and customers.” (p. 1137)

Recently we learned of the difficulty for a firm to copy another firms ideas or capability provides little to no value. On the contrary the effort to copy the capabilities is as potentially difficult as building their own unique capabilities. Today we learn that innovation is dependent on the technology that supports the firm. That is the technology both enables and / or constrains the capabilities of the producer.

Professor Dosi notes “New technology paradigms reshape the patterns of opportunities of technical progress in terms of both the scope of potential innovations and ease with which they are achieved.” p. 1138. The technology that a producer has includes the ERP systems used within the organization.  When the business is a science, as it is in oil and gas, it would be in the producers interest to remain open and flexible in both its scientific and business approach. This is the strategic position that a producer would be capable of maintaining with People, Ideas & Objects software applications, based on the Draft Specification.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Professor Giovanni Dosi, Part VII

We move back to our review of the Preliminary Research report and pick up with Professor Giovanni Dosi’s 1988 paper “Sources, Procedures, and Microeconomic Effects of Innovation.” Last Monday we discussed the difficulty and complexity in identifying and supporting innovation within an oil and gas firm. How both the science and business aspects of the firm need to be addressed. Today we discuss application of our factor of revenue per employee in identifying the level of innovativeness within the firm and / or Joint Operating Committee, and comparing it within a cluster of producers in which a firm competes. A cluster being the larger grouping of producers that are oriented to a single geographical region. People, Ideas & Objects believes that competitiveness between and within clusters will become more of a focus of producer firms. It should also be questioned that in the search for oil and gas, how much of the scientific capability of a producer is dependent on a standard or historical basis of competitive understanding and capability, and how much is based on a future understanding of cooperation within a cluster and / or competition against unknown and unseen global participants? Dosi notes.

In general, each organizational arrangement of a firm embodies procedures for resource allocation to particular activities (in our case, innovative activities), and for the efficient use of these resources in the search for new products, new processes, and procedures for improvements in existing routines; however, the specific nature of these procedures differs across firms and sectors. For example, the typical degrees of commitment of resources vary by industry and so do the rates at which learning occurs. I now turn to the interpretation of these phenomena. p. 1135

Professor Dosi (1988) states that profit motivated agents must involve both “the perception of some sort of opportunity and an effective set of incentives.” (p. 1135) Professor Dosi introduces the theory of Schmookler (1966) and asked “are the observed inter-sectoral differences in innovative investment the outcome of different incentive structures, different opportunities or both”? (p. 1135) Schmookler believed in differing degrees of economic activity derived from the same innovate inputs.

Using the factor of revenue per employee helps to define and clarify the value in assessing “the observed inter-sectoral differences” of an oil and gas company in investment outcome. The producer firm would then have the “different incentive structures” and “different opportunities” as the tools in which to increase their revenue per employee. This also reflects that “different incentive structures” and “different opportunities” are the product of the organizational structure that the producer firm employs.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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McKinsey, The Psychology of Change Management

McKinsey, once again, have published an article that provides real value and discussion to the work we are doing here at People, Ideas & Objects. Change is a difficult process to manage. This article discusses the psychology around change management within organizations, and therefore is relevant, but I want to mention a few aspects of People, Ideas & Objects unique perspective before we review this paper.

There are two types of changes that affect organizations. The first type of change is to steer the ship in a new direction, one that is believed to be the better choice for all concerned. The second type of change is the type that is forced upon an organization by events that are beyond the control of anyone. People, Ideas & Objects is oriented to the second type of change. One that addresses the scope of the forces of change that are being exercised on the oil and producer.

The forces of change that are currently being asserted on the oil and gas producers are significant. The change in oil and gas prices affects all aspects of a producer firm. At the same time the volume of engineering and earth science effort per barrel of oil continues on a steep upward trajectory. A third major change that is occurring is what I would call the maturation of the Information Technologies (IT), bringing new and innovative ways of doing business. These are of the type of changes that are seen once a century. Fundamental changes that have the power to re-configure the makeup of an industry.

To accommodate the changes that are acting against the producer firm, People, Ideas & Objects prescription is to align the producers internal processes. By simply moving the compliance and governance frameworks to be in alignment with the Joint Operating Committee’s legal, financial, operational decision making, cultural and communications frameworks. Our research has shown that this alignment increases innovativeness and accountability, to name just two of the key benefits.

Alternatively, left unaddressed, these changes will soon cause producers to outspend their revenue streams. These losses will also exercise the type of change that is needed within the producer firm and the oil and gas industry. Producers therefore need to choose to ride these forces or continue to resist them. Either way that these changes are made, People, Ideas & Objects will provide the systems and applications that provide the innovative oil and gas producer with the most profitable means of oil and gas operations.

Our claim to be the most profitable means of oil and gas operations is a bold statement. And we assert that this is provided through our value proposition and the enhanced division of labor the software will identify and support. By allocating the one time development costs across the producer base, the costs of software development will fall to a small percentage of what firms have traditionally paid for ERP systems.

With respect to the second component of our claim to being the most profitable means of oil and gas operations. For any industry to increase its economic output demands that an enhanced division of labor be used. This economic theory has been proven time and again over the last few hundred years. We now live in times where to expand on the current division of labor and specialization requires that advanced Information Technologies be employed to identify and support them. People, Ideas & Objects is configured to develop the software that will provide these to the producer firm. This is our fundamental competitive advantage.

McKinsey’s discussion on change is of the first type, or deliberate change an organization undertakes. Nonetheless it provides us with some valuable information regarding change in general.

Over the past 15 or so years, programs to improve corporate organizational performance have become increasingly common. Yet they are notoriously difficult to carry out. Success depends on persuading hundreds or thousands of groups and individuals to change the way they work, a transformation people will accept only if they can be persuaded to think differently about their jobs. In effect, CEOs must alter the mind-sets of their employees—no easy task.

People, Ideas & Objects have presented a workable vision of how the innovative oil and gas producer would operate. This vision is represented in the Draft Specification. People can then see the effect of working in that environment and adjust their actions to fulfill that vision and enable the innovative oil and gas producer.

But what if the only way a business can reach its higher performance goals is to change the way its people behave across the board? Suppose that it can become more competitive only by changing its culture fundamentally—from being reactive to proactive, hierarchical to collegial, or introspective to externally focused, for instance. Since the collective culture of an organization, strictly speaking, is an aggregate of what is common to all of its group and individual mind-sets, such a transformation entails changing the minds of hundreds or thousands of people. This is the third and deepest level: cultural change.

With the benefits of people having this vision in mind. And using the Joint Operating Committee as the key organizational construct of the innovative producer, people will be able to think differently about their work.

Employees will alter their mind-sets only if they see the point of the change and agree with it—at least enough to give it a try. The surrounding structures (reward and recognition systems, for example) must be in tune with the new behavior. Employees must have the skills to do what it requires. Finally, they must see people they respect modeling it actively. Each of these conditions is realized independently; together they add up to a way of changing the behavior of people in organizations by changing attitudes about what can and should happen at work.

In this next quote McKinsey note that cognitive dissonance will affect the people who believe in our purpose. I can only suggest that those people begin the process of joining People, Ideas & Objects or the Community of Independent Service Providers.

The implication of this finding for an organization is that if its people believe in its overall purpose, they will be happy to change their individual behavior to serve that purpose—indeed, they will suffer from cognitive dissonance if they don’t. But to feel comfortable about change and to carry it out with enthusiasm, people must understand the role of their actions in the unfolding drama of the company’s fortunes and believe that it is worthwhile for them to play a part. It isn’t enough to tell employees that they will have to do things differently. Anyone leading a major change program must take the time to think through its "story"—what makes it worth undertaking—and to explain that story to all of the people involved in making change happen, so that their contributions make sense to them as individuals.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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More on Oracle Fusion Applications

Larry Ellison finished off his 2010 Oracle Open World conference with a keynote that focused on his new applications and other related announcements. I find that his presentations are must see events and this one did not disappoint. Many of the comments that he made will have significant impact on the technology marketplace for years to come. These are some of the points that he made.

When talking about Exadata and Exalogic, the new hardware to run the Oracle database and Java, he continually stressed they were “hardware and software engineered together”. When buying these products every component of the servers configuration is standardized down to the most minute point. They are not something you could order with different components being upgraded or traded on. This was important as the support and services of those configurations will be standard across large portions of Oracle’s marketplace. Therefore if a database server fails for an Oracle customer on the other side of the Atlantic, they can diagnose it, and engineer a fix that can then be populated across the Exadata and Exalogic installed base. A fundamentally different way to deliver hardware and software reliability, accessibility, security and service.

Oracle will continue to spend over $4.0 billion in research and development each year. Oracle Fusion Applications were Oracle’s largest engineering project ever. Another comment that caught my attention was the additions that were being added to Java. He would be introducing new 2D and 3D vector graphics to the specification. These graphics in addition to HTML 5.0 would provide the opportunity to expand and enhance the user interface of People, Ideas & Objects applications.

Comments that were made about Oracle Fusion Applications included their interaction with other ERP applications. One of the key roles we look to the Community of Independent Service Providers is the integration of the oil and gas producers firm on to the People, Ideas & Objects applications. As has been discussed here, this integration will now include Fusion integration with SAP, PeopleSoft, J.D. Edwards and Oracle E-Business. During the presentation Ellison stated that no one would propose a “rip and replace” and this reverse integration was a key attribute of firms adopting Oracle Fusion Applications, and by association People, Ideas & Objects.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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S + B, Big Oil and the Natural Gas Bonanza

Booz & Co’s periodical Strategy + Business have published a paper that asks the question;

The oil majors hope to make major money in natural gas, but can they learn to operate two distinct types of businesses under one roof?

Noting that unconventional gas requires a different business model that may not be served by the conventional methods of the industry.

The unexpected revival of natural gas is quietly precipitating a fundamental shift in the oil and gas industry — a shift that few companies were prepared for but that may determine the industry’s overall future makeup. It pits the major oil companies against the independents, which have plied the unconventional reservoirs doggedly over the last seven to 10 years. And it raises questions about whether the oil giants can become big players in this new unconventional gas business. To do so, they will have to develop dual operating models under one roof — one, a traditional high-risk, corporate-led exploration model, and the other, a nimble, efficient, and decentralized operation. In other industries (notably airlines), such two-headed strategies have generally failed.

Change is certainly in the air. Oil and gas prices are probably one of the best measures of the level of change in the oil and gas industry. It is pleasant to see Strategy + Business’ analysis providing confirmation to many of the things that we have stated here. This critique is to ensure the innovative producers remain successful.

In order to compete in unconventional assets, oil majors will have to embrace a dual operating model — in essence, pairing traditional operations with separate and more agile business units modeled after the independent gas firms, with flatter organizations, simpler governance structures, and an emphasis on efficiency and innovation. These attributes are necessary to reduce operating costs, as well as to allow the firms to quickly adapt new well designs, source local contractors and materials, and secure labor as needed.

What concerns me is the nature of the oil and gas industry towards new ideas. There is a culture of how management will not support new ideas, which includes this software development project. I have attributed this to the 1980’s and 1990’s survival strategies that were a necessity in oil and gas. Times have changed and its time for the management to realize they have to act. S + B note.

Above all, management will need to ensure that existing processes and structures do not discount these fresh ideas because of a “not invented here” bias. If a joint venture is part of this approach, the company will need to develop a plan that allows it to learn from the arrangement, by creating formal and informal governance mechanisms to promote the transfer and dissemination of knowledge.

I am under no illusions at the scope of change that we are introducing in this project. Using the Joint Operating Committee as the key organizational construct of the innovative producer will be necessary at some point in the very near future. An idea that resonates with those in the business as something we should have been doing all along. By delaying this project, one in which we have many years of work ahead of us, I believe is dangerous.

If designed and managed appropriately, either strategy could be successful, but history suggests that most of the oil giants will struggle to make dual operating models coexist. Though it may not seem obvious today, many of these companies are likely to find that the technical hurdles of unconventional reserves are relatively minor. Far tougher — and ultimately out of reach for some — will be the challenge of changing behavior and culture. 

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Components of Oracle Fusion Applications

Included in the Oracle announcement is...

Oracle Fusion Financials is part of Oracle Fusion Applications, which are completely open, standards-based enterprise applications that can be easily integrated into a service-oriented architecture. Designed as a complete suite of modular applications, Oracle Fusion Applications help you improve performance, lower IT costs, and get better results. Whether you choose one module, a product family, or the entire suite, Oracle enables you to gain the benefits of Oracle Fusion Applications at a pace that matches your business needs.

Ah we’ll take the whole suite. I’m not going to detail the actual modules that will be used in the application, that's for others to decide. My involvement in the Preliminary Specification and subsequent development is nothing. As I have mentioned here before, I have to choose between doing all of the work or none, and I have taken the sane choice. There is no in between. Although I would love to participate in these developments, my role is to secure the financial resources for the development team and Community of Independent Service Providers.

From what I have been able to read about the application modules, they will be extremely flexible and provide the Community of Independent Service Providers with the ability to bring substantial and innovative systems to their producer clients.

Two things that stand out in my quick review, the first being what’s not there. That is any oil and gas specific functionality or process management. These are generic applications that are designed to be developed further for the individual industries use. That is where People, Ideas & Objects, and the Community of Independent Service Providers, will develop and provide the industry with systems based on using the Joint Operating Committee as the key organizational construct of the innovative producer.

The second point is about the overall architecture of the applications. SAP requires you to pick a process that is close to what you want and cater the firm to that process. As was noted in a recent post, the Oracle Fusion Applications provide the opportunity to design the most efficient organizational process and then build the systems to support the optimal solution.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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Larry Ellison Oracle Keynote

We have video highlights of Oracle CEO Larry Ellison's Keynote address. In this video Ellison talks about thier new products ExaLogic and Oracle Fusion Applications.



Oracle ExaLogic complements ExaData which was released within the last year. ExaLogic works to provide the Java Server functions to the ExaData Database.

Oracle Fusion Applications take up the last third of the video and they are all that I had hoped for them to be. Oracle have based the applications on 100% on their Fusion Middleware which provides People, Ideas & Objects with the fine granularity and control of the applications process and functionality. So when we embed, as the Draft Specification states, the production volumes within the Accounting Voucher module. We gain the ability to implement these features in a seamless and efficient manner, with the full integrity of Oracle's investment in Oracle Fusion Applications.

Oracle has put everything they have into the future of Oracle Fusion Applications. The product is the result of "taking the best of Oracle Financials, PeopleSoft, J.D. Edwards and Seibel", based on Java (recall Oracle now owns Java), and the result of five years of development efforts. If Oracle has done this right, which I think they have, they have a sizable opportunity ahead of them.

More good news comes in the form of when the applications will be generally available. It is reasonable to assume that they will have these applications available in the first half of 2011 which is in line with our needs of starting the development of the Preliminary Specification on January 1, 2011.

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