The Preliminary Specification Part CXLII (K&L Part X)

In today’s post we want to talk about the publication of the specific Joint Operating Committee calculations of Revenue Per Employee, and particularly the trajectory that the factor is on. How this calculation could affect those that work within the property; and the use of the information contained within the Knowledge & Learning module of the Preliminary Specification.

First of all it is understood that not all people are necessarily assigned to work for one Joint Operating Committee. There are times when people might be assigned to dozens during the course of one month. Calculating the hours worked by the people within the Joint Operating Committee from the different companies is not going to be a difficulty for the People, Ideas & Objects software. With the Military Command & Control Metaphor the time and tasks that each individual will be doing is being recorded for these information purposes. Although most will only work part-time on a JOC, the factor will be converted on a full-time equivalent basis. Calculations of revenue for the property should be straight forward.

In previous posts we had discussed the calculation of a comparison of the factor of revenue per employee from one period of time to the other. These trajectories were the real key in determining where the factors were heading. Was the property accelerating its innovativeness, or decelerating. We also broke down the trajectory into three different types of variances. The volume variance, price variance, and employee # variance. Each of these variances reflecting the reason why the trajectory might have changed. All of these variables should be shown on their own “Revenue Per Employee” interface within the Joint Operating Committee. Each member that is assigned to the property should have access to this page and be able to contribute ideas and suggestions on how to improve the factor. An open collaboration focused on revenue per employee. In addition, this page could have a historical context of many time periods captured in a graphical format. Showing over the past many years how the revenue per employee at that Joint Operating Committee has performed.

A few days ago we also learned that revenue per employee reflects the asymmetry of the assets within the industry. That asymmetry would be very apparent in a comparison of Joint Operating Committees. We would see large variances in revenue per employee between Joint Operating Committees. And I am not suggesting that the comparisons are valid, just pointing out that the industry has a large asymmetry in their competitive makeup. The comparison of revenue per employee for the same property over time, I think, will have a significant impact on the people that work for that Joint Operating Committee.

One certain way to increase the factor of revenue per employee would be to fire all the employees. However, the best way to deal with the factor is described by Professor Giovanni Dosi when he states “In very general terms, technological innovation involves or is the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Solutions to technological problems involve the use of information derived from experience and formal knowledge. It is the specific and un-codified capabilities, or tacit-ness” as Professor Dosi describes “on the part of the inventors who discover the creative solution.”

Members of the Joint Operating Committee would be able to turn to the “Capabilities Interface” which contains the capabilities of the producer firms that are part of the partnership. There the people would be able to see what the firms offered in terms of their earth science and engineering problem solving solutions. It may then be realized that applying some formerly unknown capability to the situation in the JOC will yield greater productivity... or something like that.

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. 

The Preliminary Specification Part CXLI (K&L Part IX)

One of the first items that we address in this pass of the Knowledge & Learning module of the Preliminary Specification. Is how the items within the various “Capabilities Interfaces” of the many producers who are participants in the Joint Operating Committee are populated into the Knowledge & Learning module. As we have discussed each producer publishes the pertinent capabilities they have to the various Joint Operating Committees. Therefore the people who are working within the JOC are presented with a variety of capabilities that may be duplications and similar to others. That would be reasonable to expect. However, just as the football teams playbook may have similar looking plays, they may have subtle differences in the manner in which they are executed, etc. That would be the same case in the Knowledge & Learning module.

It would also be the case that company A who is a member of the Joint Operating Committee have developed a capability for XYZ operation that is considered state of the art in the industry. This capability is one of several capabilities that are listed in the Knowledge & Learning modules Capabilities Interface for XYZ operation. However, the Joint Operating Committee has operational decision making authority, and it is decided to execute the capability of company B for XYZ operation through the Knowledge & Learnings "Planning & Deployment Interface" instead. The JOC is the authority who have the choice as to how the day to day operations are implemented. Their motivation is based on performance, based on the Performance Evaluation module and they are most familiar with the property. In the football analogy this would be the quarterback calling an audible.

As technical paradigms are introduced, Joint Operating Committees will accept and use these innovative capabilities at different rates. This rate of acceptance can be classified as early innovators, imitators and fence sitters. Thus a satisfactory understanding of the relationship between innovation and distribution of JOC’s structural and performance characteristics implies an analysis of the learning and competitive process through which an industry changes. Professor Giovanni Dosi notes these behavioral attributes.

Finally, empirical studies often show the coexistence, within the same industry and for identical environmental incentives, of widely different strategies related to innovation, pricing, R & D, investment and so on. Specifically with regard to innovation one notices a range of strategies concerning whether or not to undertake R & D; being an inventor or an early imitator, or “wait and see”; the amount of investment in R & D; the choice between “incremental; and risky projects, and so on (see Charles Carter and Bruce Williams 1957; Freeman 1982 and the bibliography cited therein). Call these differences behavioral diversity. p. 1157

We have also seen over the past twenty years an interesting trend that has created significant differences in the stratification of the oil and gas industry in terms of the size of the producer and their associated innovativeness. The small organization was able to purchase reserves and facilities from the open market, or their previous owners, only to substantially increase the inherent value through increased production and / or performance. We can conclude that the bureaucracy inherent in the hierarchy had stifled the innovativeness in the larger organizations and most disturbing is the lack of concern or identification of this as an issue over the past number of decades.

With this structure and arrangement between the Research & Capabilities and Knowledge & Learning modules, focused around the Joint Operating Committee, replicating the small oil and gas producer and focused on performance. The probability that the lumbering bureaucracy has been defeated is significant.

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.

The Preliminary Specification Part CXL (K&L Part VIII)

We now start our third pass through the Knowledge & Learning module. This will provide a focus on Professor Giovanni Dosi’s 1988 paper “Sources, Procedures and Microeconomic Effects of Innovation”. We also metaphorically move from the “practice field” of the Research & Capabilities module to “game day” with our football analogy in this the Knowledge & Learning module. In reviewing what has been written so far in the Preliminary Specification I was interested in this comment. The domain of the Joint Operating Committee is; “the ability to innovate will not only permit the oil and gas producer to find more oil and gas, increase the production of oil and gas from the field, but will also provide innovative ways in which to deploy its capital and reduce its costs.” Which seems to capture the point of the exercise.

What we have in the Knowledge & Learning module is three interfaces developed so far. The first is the “Capabilities Interface” which is the published version of each of the producer firms capabilities that are part of the Joint Operating Committee. These interfaces are sorted based on geological zone, and other criteria, and published based on those criteria. Therefore each Joint Operating Committee receives access to the capabilities that are pertinent to that JOC from each producer. There is also a “Wiki Styled Information Repository” that includes the policies, procedures, operational and management information for the property. This area would also include what is commonly referred to as the well file in terms of the information that is contained with in it. Lastly there is the “Lessons Learned” interface where the people who work within the JOC record the information on the operations that did not follow the expected outcomes.

What we have learned from Professor Giovanni Dosi is comprehensive in terms of innovation. To capture these elements of innovation within the modules of the People, Ideas & Objects Preliminary Specification builds real value for the innovative oil and gas producers. To briefly summarize some of what we learned, primarily in the Research & Capabilities module, which is directly pertinent to the Knowledge & Learning module, is as follows.

Lets review the three key factors of innovation Professor Dosi notes:

The search, development and adoption of new processes and products in market economies are the outcome of the interaction between:

• Capabilities and stimuli generated with each firm and within the industry of which they complete.

and

• Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc.

Additional issues include the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulation, tax codes, patent and trademark laws and public procurement.)

Recall that these key factors are being funneled through the Research & Capabilities “Research Budget Allocation Interface” and “Capabilities Interface”. It is there that the greater issues of the science, the capabilities, microeconomic trends and public policy can be centralized and dealt with on behalf of all of the Joint Operating Committees that the producer may have an interest in. To expect that each individual JOC would deal with these greater issues would be unproductive and disorganized. By dealing with these points, and codifying them in the Capabilities Interface the producer firm is publishing the appropriate information to the JOC at the appropriate time. Then the JOC has to only deal with the issues and opportunities of the property and none of the noise that may or may not be arguing for attention.

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. 

The Preliminary Specification Part CXXXIX (R&C Part XXXIV)

In this the last post of the third, or innovation pass through the Research & Capabilities module of the Preliminary Specification. We get to soar with the eagles as we apply the over arching scope of the application of innovation to the oil and gas producer. Today’s post takes the summary of Professor Giovanni Dosi’s research and applies it to the oil and gas industry. To show the potential of what would be the effect of developing the People, Ideas & Objects ERP software.

In this post Professor Giovanni Dosi asserts that the makeup of industries and companies is attributable not only to the endogenous force of competition. Innovation and imitation also make up the fundamental structure of an industry. “Market structure and technological performance are endogenously generated by three underlying sets of determinants.”

Each of the following three components is evident in the marketplace of an oil and gas producer today, as reflected in:

• The structure of demand.

Satisfying the insatiable demand of the global energy marketplace is critical to the advancement of all societies. American and western as well as Chinese and developing societies face real challenges in sourcing adequate long term sources of energy. The long term demands on the energy producer have never been so great.

• The nature and strength of opportunities for technological advancement.

The nature and opportunities for technological advancement lead one to believe mankind has never faced the level of opportunity and acceleration that is possible today. The industrial mechanization of the past 100 years combined with the prospective mechanization of intellectual pursuits combine to markedly appreciate the value of human life. The availability of energy will be a critical element of this advancement.

• The ability of firms to appropriate the returns from private investment in research and development.

The oil and gas industry is moving closer to its earth science and engineering principles. Innovation, research and development in both the producer firm and the market are and will become more commercial in nature. It is on the basis of success or failure of these factors that will determine the success or failure of the firm within the industry.

By codifying the earth science and engineering capabilities within the “Capabilities Interface” the producer begins the process of documenting what it is capable of achieving. By using the “Planning & Deployment Interface” either through the Research & Capabilities or Knowledge & Learning module, the producer will be able to deploy those capabilities with the resources they have developed. We have drawn the analogy of a football team and how they design and communicate plays as to how these modules will work in the People, Ideas & Objects Preliminary Specification. But at the same time the overall process of innovation is working within the background. The research and development is being conducted and the innovation is being deployed. Tomorrow we will begin our third pass through the Knowledge & Learning module.

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. 

The Preliminary Specification Part CXXXVIII (R&C Part XXXIII)

One element that we have not discussed in our review of the Research & Capabilities module is the factor of revenue per employee. We are not using the factor anywhere in any of the interfaces, I am only highlighting it here today to show how the Research & Capabilities module influences the elements that make up the calculation of revenue per employee. Recall in the other modules that there are large variances in the factor between producers. These variances show that there is a large asymmetry between the innovativeness of the producers. It is this asymmetry that is the topic of today’s post.

It was through the review of Professor Giovanni Dosi’s paper “Sources, Procedures & Microeconomic Effects of Innovation” that we learned of the asymmetry effect. That each successful innovation creates an asymmetry effect, or an overall increase in competitive position of the entire industry. However, that does not necessarily increase the competitiveness of all the participants of the industry. The ability of laggard companies to improve their competitive position helps to form new positions within their industries. These laggard companies are generally able to move further and quicker through their imitation of leading companies. However, the primary differentiating component of competition based on innovation is attributable to the innovative capability of the firm.  ie. a laggard will remain a laggard without the direct and active development of innovative appropriability conditions.

Professor Dosi finds these points difficult to quantify and prove, but states these may be tacitly understood. People, Ideas & Objects asserts that that was the case in 1988 at the time this article was written, however, the laggards ability to “keep up” or even “catch up” may have progressively diminished through the application of information technology during the 2000’s.

There is a determining paradox for the ability to innovate based on imitation or on the basis of strict Research and Development. Companies can copy others innovations in industries with minimal asymmetry, (where competitors are all the same). Whereas industries that are asymmetric (like oil and gas) or have large variances in their capabilities are best served by differentiating themselves by pursuit of Research and Development.

This is why the focus on the capabilities is critical to the success of the oil and gas concern. They are able to differentiate themselves by research and development and the focusing on capabilities. Passing these capabilities on to the Joint Operating Committee through the Knowledge & Learning module allows the producer to initiate these capabilities “just in time” and where they are needed. This can be done without the concern that they are exposed or risked to potential competitors through the Joint Operating Committee. It should be clear through this analysis that those that would attempt to copy others capabilities will be expending extensive resources to do so, as much or even more then it would cost to develop the capabilities on their own, however, those that chose to copy will remain static within their competitive position within the industry. Its just not that easy to copy someone else, and its not that valuable to their firm. When markets such as oil and gas are asymmetric, Research & Development are the ways in which to differentiate capabilities and build an innovative oil and gas producer.

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. 

The Preliminary Specification Part CXXXVII (R&C Part XXXII)

When we consider what a producers capabilities, those that are listed in the “Capabilities Interface” of the Research & Capabilities module of the Preliminary Specification, would look like. Much would depend on the type of the producer that is represented there. As one could imagine a large firm such as Exxon would have a vast library of capabilities, and a small start up would be limited to a page or two in terms of what they were able to achieve. And there would be other criteria that would reflect the focus and innovativeness of the firm in terms of where their energies were best deployed.

Some might assume that the majority of the innovation in the oil and gas industry is developed within the large producers. However, I think that is generally considered to be untrue. The small and start up oil and gas firms along with the intermediate producers are probably responsible for the majority of the innovations in the last 20 - 30 years. Professor Giovanni Dosi’s reference to the Schumpeterian hypothesis, “that bigness is relatively more conducive to innovation, that concentration and market power affect the propensity to innovate” and his rejection of that premise is evident in this paper’s following three points.

• First, although “there appears to be roughly a log linear relation within industries between firm size and R & D expenditures”, upon closer investigation, “estimates show roughly non-decreasing return of innovative process to firm size.” This is probably attributable to the fact that very large and very small firms conduct most R & D. p. 1151
• Second, although the expenditures in R & D incurred by large firms are impressive from a total expenditure perspective, the aggregate expenditures of small firms on a global basis becomes far greater in aggregate than the large business. p. 1151
• Third, money is not necessarily a good indicator of innovativeness. Large variances within industries can clearly be identified irrespective of firm size. p. 1152

Therefore “bigness” is not necessarily an element that enhances innovation. This might be intuitively understood by the small oil and gas producers ability to punch above their weight. In the software development business, SAP may do significant generic research in the software development arena. However, they do very little in terms of specific oil and gas research. On the other end of the scale People, Ideas & Objects have completed substantial oil and gas specific research and have commenced the development of oil and gas specific software with the publication of the Preliminary Specification. And I can assure you that at this time we are a very small firm, proving Professor Dosi’s first point.

If we look at Professor Dosi’s second and third point together. It is clear that money is not necessarily a determining factor in innovation. Although large firms spend impressively on R&D, that does not produce a number of usable innovations. And it may be the lack of financial resources that motivate the smaller firms to innovative problem solving on the other end.

Professor Dosi (1988) provides three caveats to the three differences noted.

1. “Statistical proxies cannot capture aspects of technical change based on informal learning” p. 1152
2. Secondly, “differences in businesses and business lines (and business or product life cycles) may provide discrepancies in comparison of “like” firms. p. 1152
3. Thirdly, many firms are expending significant research dollars in keeping up with other firms innovations.  p. 1152

Or in summary, proof that money is not necessarily a determinant of innovative success.

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. 

The Preliminary Specification Part CXXXVI (R&C Part XXXI)

When we are discussing the Research Budget Allocation Interface of the Research & Capabilities module it feels that we are at the heart of the innovative oil and gas producer. Professor Giovanni Dosi’s 1988 paper “Sources, Procedures and Microeconomic Effects of Innovation” has clearly identified the key factors that make a firm innovative. By instilling his work within the modules of the People, Ideas & Objects Preliminary Specification, the innovative oil and gas producer is able to have the quantifiable and replicable process of innovation within their domain. Something that I think is necessary for the difficult energy era that we find ourselves in today.

The vision that has been laid out so far in the Preliminary Specification provides a coherent way in which the producer would operate in this difficult energy era. These processes are all to support the innovative oil and gas producer and are based on the research that has been conducted here at People, Ideas & Objects. What is also clear in the research is that the lack of the processes that identify and support the innovation will lead to no innovation at all. A producer that was originally constructed in the easy energy era. An era that was focused on cost control can not function in the innovative and difficult energy era that is here, or just around the corner. The difficulty in managing these oil and gas concerns, with conflicting constructs and demands will only intensify. 2012 will be an interesting year.

A few days ago I stated that the people who are operating in the Joint Operating Committee are not experimental lab rats. That to leave a capability that was untested and untried for them to sort out was counter to the purpose of the “Capabilities Interface”, the Knowledge & Learning module and the Joint Operating Committee. They are there for execution and not for the purpose of developing concepts or experimenting. To use the football analogy the Joint Operating Committee is game day, and what the research and study area needs is a metaphorical practice field. One in which the opportunity to explore failure is welcome and where a producer can attain a learning experience to the ultimate solution or capability.

With that it sounds like its time for another interface. And we’ll call this the “Experiments Interface” which will list the number of experiments and document the type and expected results of any and all experiments being conducted by the firm. This will be a comprehensive interface, much like the “Research Budget Allocation Interface” in that it will also have many similarities to a project management interface. This will provide the users with the ability to manage the project from start to finish in a manner that the capabilities are able to be developed as expected by the firm. These two interfaces will enable the users to control and manage the firms development at the speed of the market and the science.

I am not asserting that efforts in the past were not innovative or moved the science substantially. The issue People, Ideas & Objects is raising is that the pace and speed of the science’s development in the near to mid-term, and particularly the long term, will accelerate based on the fact that, globally, reserve replacement continues to be progressively more challenging, and the prices realized for the commodities have begun to reflect these challenges. Professor Dosi concludes with “Finally, the evolution of the economic environment in the longer term, is instrumental in the selection of new technological paradigms, and, thus in the long term selection of the fundamental directions and procedures of innovative search.” p. 1142

Therefore being in tune with the market and the science is the only safe place for the innovative oil and gas producer to be.

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. 

The Preliminary Specification Part CXXXV (R&C Part XXX)

The individual user(s) of the Research Budget Allocation Interface of the Research & Capabilities module will be at the forefront of the innovation that occurs within the producer firm. Having windows on the research that is developing within the firm, within the scientific community, the lessons learned in the Joint Operating Committees, and lets not forget the “Ideas Marketplace Blog” is not far away either. Theirs will be a rich medium of information of what is happening in the innovative oil and gas industry. The concern that many will have is that this information is then codified into further capabilities which is subsequently published through to the various relevant Joint Operating Committees. There they will have these capabilities available to the members of the JOC’s able to see and use the capabilities, which will include participants of other producer firms.

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 which Dosi observed “that lead times and learning curves are relatively more effective ways of protecting them”. Which brings up a very valid point. Assume that one of the capabilities that was published through the Knowledge & Learning module was the capability to fracture shale. Just because it is published doesn't mean that it can be copied. The “team” has practiced and built the capability from previous experience and “learning curves” and that is how the capability exists. Just because a football team sees the design of another teams play does not mean that they will be able to implement the same play. They will have to work at building the right talent and practice to implement the capabilities necessary to execute the capability before they can successfully complete it. The same would be the situation for anyone observing another producers capabilities in a Joint Operating Committee.

Professor Dosi notes that Levin states that the control of complementary technologies becomes a “rent-earning firm-specific asset”. Dosi 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. What are the alternatives. Sitting on your advanced innovations and not using them, for fear that someone will use them, in order to protect them?

However, this giving freely of ones capabilities to the joint account 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 Preliminary Specification seeks to eliminate the redundant and mutually exclusive capabilities being built within each silo’d corporation. The proposed alternative in the Preliminary Specification is to rely on the advanced contributions of the partnerships to bring about the most innovative solutions to the Joint Operating Committee.

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.

The Preliminary Specification Part CXXXIV (R&C Part XXIX)

In today’s post I want to highlight the speed at which a producer firm is able to implement innovations. From the point in time of the research and discovery, to the actual implementation of the innovation there is little in terms of time or bureaucracy standing in the way of the proven innovation being implemented on a global scale across the firm. When the time comes for people to use the latest and greatest in terms of what innovation they should use, there is also no ambiguity as to what is authorized in terms of the most recent approved capabilities to use.

To review the process; we have the firm conducting a variety of studies or research through Work Orders and AFE’s to enhance their capabilities. The day to day of these studies and research are monitored in the “Research Budget Allocation Interface” which also has a page that monitors the scientific communities research. When these studies and research are concluded and capabilities are enhanced they are added to the “Capabilities Interface” of the Research & Capabilities module where they are populated with all of the information necessary to document and implement the capability. We have drawn a football analogy here to the playbook of a football team. A team member only needs to look at the playbook to determine what their role is in during any play. The “Capabilities Interface” is sorted through a variety of different keys with geological formation being one of them. In the Knowledge & Learning module any Joint Operating Committee that produces from xyz formation will therefore have access to xyz capabilities in the “Capabilities Interface”.

The key limiting determinant in terms of time is the amount of effort necessary to take the research or study from its raw form and turn it into a usable capability. The people within the Joint Operating Committee are doing two things. Making operational decisions and executing the operations. They are not field testing experiments as lab rats. Its important that this distinction be made and the proper documentation be handed off from the research and study to those that will execute it. As once it is documented, you can see that it will be immediately executed the next time that the operation is conducted anywhere within the producer firm. We will also have more to discuss on this point in the Knowledge & Learning module.

With this process in mind, we note that Professor Giovanni 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

This brings to mind that the Research & Capabilities module, with the complexity of processes as we detailed in the last few days. Would be deficient from the point of view of having any feedback from the Joint Operating Committees. Particularly from the first phenomenon noted above. Therefore we need to open a third “page” in the “Research Budget Allocation Interface” that is a window on the “Lessons Learned” from the Knowledge & Learning module. That way what is being learned on a day to day basis can “bring forward new opportunities for product development and productivity increases.” I might be mistaken but I don’t think that a lot can be done from the Research & Capabilities module perspective in terms of the “mechanization, specialization and division of labor within and among plants and industries.” The user community may have a different point of view and see things differently which is the purpose of these user based developments. Therefore we’ll leave this point open to further debate, as all the other areas are.

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. 

The Preliminary Specification Part CXXXIII (R&C Part XXVIII

In today’s post I want to continue on with yesterday’s discussion of the “Research Budget Allocation Interface” and the two “pages” format. Recall that one page would be for the endogenous developed capabilities and the other for the exogenous scientific findings. What I want to discuss today is the process that the user of this interface will be involved in in documenting the capabilities from the research that is being conducted within the firm and the greater scientific community. By way of the football analogy that we raised a few weeks ago, I want to show how this documentation would be done.

Ultimately the objective of the “Research Budget Allocation Interface” is to augment the firms “Capabilities Interface” or to enhance the firms overall capabilities. The Capabilities Interface documents what the firm is capable of and is in turn populated, through the Knowledge & Learning module, to the various Joint Operating Committees. And then based on geological zones and other criteria that are applicable to the property. The user select the pertinent capabilities that are needed. At which time the people that are assigned the work at the Joint Operating Committee are able to determine the state of the capabilities of the firm, and apply them to their work. The football analogy would come into play here in that the design of a play is committed to writing in which the team studies it, and each team member learns their role, and then executes the play in the manner in which it was designed.

As the firm continues on over time, research from the endogenous and exogenous areas become innovations that populate the “Capabilities Interface” which in turn populate the various Joint Operating Committees. This is the process of how I see the innovations developed within the firm and elsewhere are implemented in the innovative oil and gas firm. 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) We documented in yesterday’s post that we have three processes that deal with these variables under management in the Research & Capabilities module.

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 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.