McKinsey, On Organizational Health

It’s the weekend, which means its time for some McKinsey content. Today’s post provides some discussion around the topic of organizational health in a paper entitled “Organizational Health: The Ultimate Competitive Advantage.” This paper comes with a short video presentation by the authors and is a summary of their upcoming book. The substance of their work is captured well in this following quote.

Organizational health is about adapting to the present and shaping the future faster and better than the competition. Healthy organizations don’t merely learn to adjust themselves to their current context or to challenges that lie just ahead; they create a capacity to learn and keep changing over time. This, we believe, is where ultimate competitive advantage lies.

I particularly liked the five frames in which the authors used to define the state at which organizations passed through. The Aspire, Assess, Architect, Act and Advance frames accurately capture the long road ahead for us. Looking critically at their chart we could best claim to “Aspire” at this time at People, Ideas & Objects.

This would also leave us looking to perform the next frame which would be to “Assess”. And it is here that we have much to be desired. The oil and gas industry is in no condition to address the markets demands for energy. Its output has been stagnant since 2005 and the sense of urgency to address the problem does not exist.

If not for the global recession, the demand for energy would far outstrip supply and the producers would be scrambling in a very tight market. Nonetheless, I think that day is still ahead of us, and soon. Before we can approach those levels of energy demand we will need to organize ourselves first. That organization begins here at People, Ideas & Objects with building the systems that identify and support the Joint Operating Committee, the key organizational construct of the innovative oil and gas producer.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part XI (FM Part I)

We move now to the third marketplace module in the Preliminary Specification, the Financial Marketplace module. A lot has happened since the late spring / early summer of 2008 when I wrote this module. The financial marketplace has been shaken to its core and the implications of that shaking are still felt today. With many of the worlds financial markets continuing to be illiquid and nervous about certain situations. The capital and debt markets have been very negative towards the oil and gas industry with many of the independents being shut out of those markets. The rise of the Asian Joint Venture is a direct result of the inability to raise any money in the “normal” capital markets. I would expect to see further fall out as the Euro situation seems to be far from resolved, the U.S. is deeply indebted and demanding a lot of capital with only the quasi-government groups in Asia holding any significant amount of capital to invest.

The primary point that the Financial Marketplace module was making in 2008 was that there are competing interests and motivations in the industry in attempting to get things done. With different strategies being deployed by different partners within a Joint Operating Committee, is it any wonder that the financing of a project can ever fall into place. What the Financial Marketplace module proposes is that instead of the property being funded by several different company bankers, each taking a working interest share claim against the property. The Financial Marketplace module would see one bank fund the property in its entirety on behalf of the partners represented in the property. If that was the simpler solution. The attempt in the Financial Marketplace module was to offer a solution to the difficulty to funding properties when one or two of the participants were consistently falling behind in terms of their capabilities.

Today that may or may not be an objective or opportunity worth pursuing. However, I think that the freedom of having the attributes of the Financial Marketplace module still reside within the oil and gas market, and possibly even more as a result of the financial meltdown of 2008. Why? because the demand for capital will continue to be strong, and the supply will continue to be tight. In a capital intensive industry that’s going through the level of change that the oil and gas industry is going through. Having a system that employs a marketplace metaphor, which provides the participants with better information, may be more of a necessity.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part X (PLM Part V)

This post will represent my last kick at trying to sell the “user vision” as something more then just a technological toy or an interesting thing someone wanted but no one would ever use. I could certainly see how the user vision could be perceived as being something that would fall in either of those two classifications. However, if either of those were the results of what I thought the technology would be used for. I would be guilty of mis-communicating what I think the value in having the user vision implemented in the People, Ideas & Objects marketplace modules was.

To have the interface operational and people using it to browse as they do with web browsers today. Would be somewhat limiting in terms of the potential of what I see. With so much data and information available now and particularly in the future, how do we represent this data’s use in a manner that is usable to the user? The first requirement of the data is that it has to be reliable and have meaning. If the data and information that is contained within the user vision and marketplace modules are populated by public and private databases for well information, lease data, vendor and supplier inventory, scheduling calendars, and other unstructured data. Then producers, suppliers and others could conduct actionable events on that data and information.

When I say that information was populated into the system these should be live links that could include some of the information from a firms accounting systems. The point that I am attempting to make is that the information would be of value and therefore impute meaning into the “marketplace” modules where the “user vision” was employed. This would take the technology aspect of the device and make it the secondary reason for its use. The primary reason for the user visions use would be the business purpose of the user. The reason the user would continually return to use the marketplace would be the accuracy of the data and information that they find, and the interactions within the marketplace.

To develop a new systems for the oil and gas industry is an opportunity that I think is a once in a life time, maybe a once in a century opportunity. To think that we will use these systems in the manner that we use systems today underestimates the possibilities. The user interface is the area where the most innovation will occur in terms of how people will interact with larger volumes of data. These and other types of issues should be considered in the Preliminary Specification. I offer the “user vision” and these posts to initiate the discussion and expand the scope of what is possible in terms of the research that is undertaken. I thank you for your patience.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part IX (PLM Part IV)

When I sat down to write the Draft Specification I wanted to incorporate the marketplace metaphor into the modules that made up the People, Ideas & Objects systems. There had been discussion of exchanges and web services in the past and those never quite captured the reality of what was possible. I think exchanges are technological solutions attempting to resolve non-existent business problems. Whereas the marketplace is a business reality. A reality that we can build a virtual technical environment that emulates the real marketplace. A big difference in terms of how we approach the building of these systems.

The next aspect was to determine what marketplaces existed in oil and gas that the technology would need to replicate. The answer to that question became quite simply. The marketplace for financial resources, people, vendors and the service industry or as we have called them resources, and the P&NG leases. We therefore simply created three modules that replicate these three markets within the People, Ideas & Objects application. Talking about the output of the system should probably keep this simple fact in mind. That these are marketplaces. Marketplaces that are backed up by a proposed user community and software development capability that can evolve the applications as these markets evolve.

More on the division of labor and specialization.
When we were conducting a lot of our research. Professor Langlois noted that expansion of the division of labor and specialization was through the simple act of “gap-filing”. Work that wasn’t being done before, could-should-would, be nice if it was done now. In this day and age it might be easy to put the person in place, but what about the systems to support that person? As I have suggested before, should we consider these administrative positions from the point of view that these people will work for a process as opposed to any one company or Joint Operating Committee?

More on Documents.
The types of documents that are generated within the Petroleum Lease Marketplace are somewhat self-evident. (Recall we are including Land, Legal, Production Admin, Exploration Admin, Accounting and Others in the classifications.) Most of them are created in collaboration with the participants of the Joint Operating Committee and include: Authority for Expenditures (AFE"s), Capital Budgeting (Firm and JOC), Construction Ownership and Operating Agreements, Mail Ballots, Daily Drilling Reports, Lease Bonus, Lease Rental, Lease Taxes, Areas of Mutual Interest are some of the forms, processes and attributes of the Petroleum Lease Marketplace Module. A more detailed specification will be the result of the communities contribution and commitments.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

Access to Intellectual Property

Since my return from our sabbatical we have noted some of the finer points of the Intellectual Property that supports People, Ideas & Objects. In “Copyright Notice” we reflected that the costs to producers of involving themselves with software providers that did not have the supporting research to support their software; may end up costing that producer substantially. And that the larger software vendors, such as Oracle and SAP, would not be interested in contaminating their IP with other vendors who do not have the associated research and IP to their software. What this has shown is that it is a potentially difficult and tragic world for any producer that tries to circumvent any of the owners of any IP.

We also demonstrated in “Copyright License” how this community sources the financial resources for its long term support. And how those within the People, Ideas & Objects community access the IP they need to provide their service based offerings to their producer clients.

I feel this discussion is important as we are at the beginning of a new way of working in the 21st Century. One in which the tools, skills and resources that people have at their disposal are different then what they have been in the past. I think in the very near future the basic tool box of the average person working in the oil and gas industry will have to include access to some form of Intellectual Property (IP). This IP will be how they qualify for jobs, and will also be a critical element of how they earn their living.

We are beginning to see the enhanced role of Intellectual Property in today's marketplace with the litigation over the iPad and iPhone and who can sell similar devices. It is my opinion that Hewlett Packard's Board of Directors pulled the Touchpad off the market after only 7 weeks after realizing that their patent portfolio could not defend against claim by Apple.

In the future access to IP will be available to people in one of the following three forms.

Direct ownership of Intellectual Property. 
This will be the most difficult method to attain Intellectual Property. Not only will this require an original idea but also the costly and time consuming research necessary to develop the idea into a usable form. Rarely do we see these types of ownership occur.

Access to IP via License. 
This is a more common form of access, however it still involves some investment on behalf of the individuals. The licensee has to invest the time and effort necessary to build their service based offering. This business offering may be as a sole proprietor or involve many people, either way, as with all businesses, it requires time, effort and some times financial investments to build the clients and capabilities. These are the types of business leaders that I am primarily interested in when I talk about both the user base and the Community of Independent Service Providers.

Employment through a firm that owns or licenses IP. 
These are the people that are employed through firms that are mentioned in the above two categories. Employees of the owner or licensee of the IP, that although these people are not licensed directly, they have indirect access through their employers license. These people form part of the owners or licensee’s capabilities in providing the software development and service offerings to the producers.

People, Ideas & Objects (PI&O) software and independent service providers will require access to the IP in order to conduct their jobs. This is a fact. Those without access to the IP will not be provided with the opportunity to work for the producers. Simply they won’t be able to log-in or be able to access the community, PI&O, or producer systems, data or information. Therefore members of this community, who will be licensed in some manner mentioned above, will have access to the Intellectual Property necessary to undertake their jobs.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part VIII (PLM Part III)

In the past two posts regarding the Preliminary Specifications Output. We have noted two research projects for the community to undertake. The first research project relates to all three of the “marketplace” modules and is to determine if the user interface would incorporate elements of the “user vision”. The second research project relates to the Petroleum Lease Marketplace module and is to determine if the data and information is to be stored at the Joint Operating Committee level or at the producer. This would enable many changes, the most important of which was a revised division of labor and specialization in the administration of oil and gas.

The implications of the decisions from these research projects are far reaching. The entire Preliminary Specification is a substantial opportunity for the industry to participate in a significant redesign of how the industry operates. By realigning all of the frameworks of the hierarchy, those being the compliance and governance, with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee we are leaving no stone unturned. We have the opportunity to address everything and make it far more natural in how it operates.

The budget for the Preliminary Specification has taken on the controversial size of $100 million. We begin to see how that size matters in the type of work that needs to be done. These two research projects are only small subsets of the work that needs to be undertaken, but they are budgeted for. It is this type of research that will benefit the system as we move forward. These research decisions made at this early stage will have the dramatic impact on the system when it is developed. Change after the Preliminary Specification becomes difficult and very costly. Now is the time to address these difficult points, and now is the time to address them appropriately with the appropriate research budgets.

I don’t want to get into the details of what is required in each of the research projects. Once you start thinking it becomes quite a large issue. And that is why they will be addressed in the Preliminary 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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

S + B, Three Paths to Open Innovation

Strategy + Business published “Three Paths To Open Innovation” a few months ago and I thought that I would highlight it now. We recently discussed the Resource Marketplace module and how innovation at the service industry level, and within the producer needed to be handled within that module. This article helps to further define these needs.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

McKinsey, Edmund S. Phelps

It’s Saturday which means its time for some clearing of our McKinsey backlog. This is an enjoyable read from Edmund S. Phelps who won the Nobel Prize in Economics a few years ago. He is speaking on the topic of innovation, and although not specifically topical to what we are do here, it is worthwhile reading. The title of the paper is “Supporting Innovation: Why and How”.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part VII (PLM Part II)

Yesterday we discussed the Petroleum Lease Marketplaces virtual representation of the physical oil and gas marketplace. And the “User Vision”, or graphical user interface that could be used in the Preliminary Specification. In today’s post I want to discuss the general classifications of the people that will work in the Petroleum Lease Marketplace (PLM) and some of the activities they’ll be involved in.

When we look at the types of work that is carried out in the PLM we see a large group of administrators working within different areas within a producer firm. Whether it be the Land or Legal department, Production or Exploration Operations staff or Accounting people; all of these groups have an interest in the information, people, assets, documents, processes and functionality contained within the PLM.

The primary concern of the people in these groups is the information and data contained within the module. It’s accuracy, access, and use by those within their firm, but also within the Joint Operating Committee’s that their firm has an interest in. Some of this data will be similar to the data that is held by their firms partners, and much of the data has been generated in a cooperative and collaborative manner by those partnerships.

For example AFE’s, Mail Ballots, agreements, are generated through interactions by each of the participants in the Joint Operating Committee. How much of this data and information could therefore be held by the Joint Operating Committee with an interface to the firm, is a question that should be answered with significant research during the Preliminary Specification. To answer that question would also answer; for whom do those people we mentioned, work for. The implications would be significant.

One of the greatest opportunities that we have in developing this system is to address the division of labor and specialization. To take these people’s work and to reorganize it across the industry, so that it was focused on the Joint Operating Committee but very specialized in terms of the tasks that they conduct. And apply those skills across the entire industry, or a geographical region, or some other classification. Is something that could provide significant increases in oil and gas industry productivity and overall cost savings. That is to say that an individual would work for a process that is billed to 1,000 Joint Operating Committees that might represent 200 Companies.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.

The Preliminary Specification Part VI (PLM Part I)

We now move to the next “marketplace” module in the Preliminary Specification, the Petroleum Lease Marketplace (PLM) module. The PLM is the most interesting marketplace module as its objective is to replicate virtually what the physical oil and gas marketplace is. That begins of course with Petroleum Leases. The discussion of the Petroleum Lease Marketplace module will take a few posts as its scope is rather broad and the concepts far reaching.

When we are replicating the physical oil and gas marketplace, the Petroleum Lease is the source document that is the common denominator of all activity and ownership within the industry. Any physical oil and gas assets will be attached to some lease, agreement, rights or concession granting the holders the rights and privileges of ownership, lease or rental. These are the things that are contained within a marketplace. They are what are purchased and sold, bargained and traded for. They are the things that people are recruited to provide services for. Generally a marketplace is a dynamic and evolving commercially oriented hub of activity. That is what we are replicating in the PLM.

The second point that I want to put across today is the manner in which some of the interactions may take place in the PLM, the Resource Marketplace and Financial Marketplace modules of the People, Ideas & Objects application. I have been hesitant to promote this “user vision” too aggressively due to the controversial nature of the vision. Its something that the community will need to determine if it wants or needs to include the vision in the Preliminary Specification. Please read the user vision here.

Simply it shows a three dimensional version of a virtual representation of a marketplace. One which avatars looking to conduct business on behalf of their human representatives. I think it may have validity in the future of business. I could be wrong. If the “user vision” is necessary will be a determination of the community in the Preliminary Specification. I expect this decision to be based on substantial research and user input, not an initial show of hands as to who thinks its a good idea today. This may have some value for the innovative oil and gas producer. If so we will need to determine that in the Preliminary Specification, design those features and engineer them into the application.

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.

Please note what Google+ provides us is the opportunity to prove that People, Ideas & Objects are committed to developing this community. That this is user developed software, not change that is driven from the top down. Join me on the People, Ideas & Objects Google+ Circle and begin building the community for the development of the Preliminary Specification. Email me here if you need an invite.