The Preliminary Specification Part XXXIX (R&C Part VII)

So far in our review of the Preliminary Specifications Research & Capabilities module we have touched on how the module helps the user analyze the business from the long term perspective. Adding value by managing the transition from the hierarchy to the aligned organization under the People, Ideas & Objects software application modules. Today we want to discuss the additional perspective of viewing the marketplace of the service industry itself, and how value is developed through the interfaces of the Research & Capabilities module. With this post we want to focus on the service industry and how the user of the Research & Capabilities module initiates the development of new and innovative products and services.

They say that need is the mother of all invention. As we have discussed before the user of the Research & Capabilities module is predominately a senior individual within the producer firm who rose through the ranks from engineering or geology. And therefore knows the industry well and the characteristics of the producer itself intimately. Within the Research area of the module the user is able to review the “ideas” that are being generated in the marketplace of the service industry vendors. These ideas are the bases of claims to copyright law and patent filings by their originator, and are published in blog like format through the service industries access to the Research & Capabilities module.

There is nothing precluding a producer from participating from posting ideas to the marketplace. Its possible that they could engage in licensing arrangements with service providers to sell products and services based on their ideas. However, that is not really the business of the oil and gas producer. Competing on the basis of a better drill bit or packer is not going to provide them with any greater opportunity to further their business. The ideas to extend the product or service requires the full scope of the oil and gas industry to participate as customers for the ideas and technologies in order for the technology to be proven, commercialized and to bring value to all the producers in the industry.

Competing on the basis of ideas is the only method that the oil and gas industry will move forward to solve the difficult problems of providing the market demands for energy. No one will do the hard work needed to solve the difficult problems if their ideas are going to be taken by someone who will in “me too” fashion just steal them and commercialize them and ignore the developer of the ideas. The oil and gas industry has to understand this and respect the rights of the person who develops the idea. That these idea generators are the keys to the long term prospects of the industry. If people see that the industry will respect an idea, then they will know that they can risk everything on the chance that it may work out, and if it does, they will earn the benefits of it. If they find that the industry quietly shrugs its shoulders and says “oh well” so and so got scooped on their invention, too bad. Then they will continue on in much of the same fashion they are today. What industry needs to do is respect the inventor and deal only with them. By doing so, and as a result, they will find the market will flood with new ideas, products and services.

The Research & Capabilities module is a window on the activities in the service industry. An opportunity to peer into the research that everyone is doing. Publication of the ideas is how you earn the copyright. Therefore by using the Research & Capabilities module the developer of the ideas is earning the copyright on the ideas and securing their rights. From there they should be able to solicit interested producers to help fund the further development of the product or service and move the development of it along faster to market.

Lastly the Research & Capabilities is a marketplace module that provides for collaborative interactions. This marketplace will reflect producers expressing needs and entrepreneurs trying to solve problems. It joins the other marketplace modules, the Petroleum Lease, Resource and Finance Marketplaces where people will be spending more of their time and energy working in the future. As our phones continue to record transactions and conduct other “things” that we used to call work. It is these interactions that are the areas where the real value is generated. And are the areas that computers can’t do.

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 XXXVIII (R&C Part VI)

What evidence do we have that the transition from the way things are done today, to what is suggested in the People, Ideas & Objects Draft Specifications Research & Capabilities module is valid? For the majority of producers it is a bit of a stretch that they will reorganize their firms in such a manner that will allow any “leakage” of proprietary capabilities from either the firm or the Joint Operating Committee. And that the parsing of the short and long term perspective across the JOC and the firm in the manner that has been discussed in these blog posts. It certainly will take some convincing in order to accept. And here I thought that “trust me” might work.

First of all this intuitively makes sense. From the Joint Operating Committee alignment of all the frameworks to having them focus on performance as the driving motivation. This also begins to make sense when we have the Joint Operating Committee pursuing the optimal short term horizon. Making the operational decisions based on the collaborative understanding of the partnership that makes up the Joint Operating Committee. And the producer firm undertaking the long term horizon of the firm by interacting with the Joint Operating Committee, the remainder of the industry and the service industry to build the needed earth science and engineering capabilities needed for the firm. However, as possibly the strongest and easiest evidence that I can provide that this is substantially correct is this quotation from Professor Richard Langlois.

The question then becomes: why are capabilities sometimes organized within firms, sometimes decentralized in markets, and sometimes coordinated by a myriad contractual and ownership arrangements like joint ventures, franchisees, and networks? Explicitly echoing Hayek, Jensen and Meckling (1992, p.251) who point out that economic organization must solve two different kinds of problems: "the rights assignment problem (determining who should exercise a decision right) and the control or agency problem (how to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective)." There are basically two ways to ensure such a "collocation" of knowledge and decision making: "One is by moving the knowledge to those with the decision rights; the other is by moving the decision rights to those with the knowledge." (Jensen and Meckling 1992 p. 253). p. 9

It is difficult for me to determine who, Professor Richard Langlois or Professor Giovanni Dosi, is the most influential in terms of the research that has been undertaken by People, Ideas & Objects. If the above quotation is inadequate to provide you with satisfactory evidence then I suggest that you review the papers of Professor Langlois, as we have in these 56 blog posts. His is a focus on organizational capabilities, and has provided us with sound direction in developing the Draft Specification.

To be specific, what we are doing in the Research & Capabilities module is “moving the knowledge to those with the decision rights”. And this is where the alignment under People, Ideas & Objects begins. What the bureaucracy is trying to do is “moving the decision rights to those with the knowledge”. And that is where the conflict is being created.

But more important then that, is that we have a sub-title for the Research & Capabilities module, and that is “How to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective.”

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 XXXVII (R&C Part V)

Yesterday we talked about the role the producer would have in determining the long term horizon of the firm. How the Research & Capabilities module would provide a window on the various Joint Operating Committees to provide the ability to apply systemic earth science and engineering innovations at each JOC with out the risks of unnecessary duplications or repeated following of blind bunny trails. Today I want to discuss the risks and rewards of the leakage of earth science and engineering information from the firm through the Research & Capabilities module. As it would be apparent that the level of discussion and collaboration through the partnerships in the Joint Operating Committees, through the industry itself and the service industry in particular would lead to significant leakage of the producers proprietary earth science and engineering knowledge, understanding and capabilities.

In the Preliminary Research Report we learned an interesting point about the producers proprietary earth science and engineering knowledge, understanding and capabilities.

In Brown & Duguid (1998) they make the following observations: “The leakiness of knowledge out of and into organizations, however, presents an interesting contrast to internal stickiness. Knowledge often travels more easily between organizations than it does within them. For while the division of labor erects boundaries within firms, it also produces extended communities that lie across the external boundaries of the firms. Moving knowledge among groups with similar practices and overlapping membership can thus sometimes be relatively easy compared to the difficulty in moving it among heterogeneous groups within the firm. Similar practice in a common field can allow ideas to flow. Indeed, it’s often harder to stop ideas spreading then to spread them.” (p. 102) p. 32

We all know this leakage of information to be inherently true. When someone discovers something that is “news” within the industry, it is generally well known within industry associations for the geologists or engineers as soon as it is known in the firm. It is either imputed through what is known, or the leakiness is as porous as it is. What is a producer firm to do to ensure that the information they have does not leak. I think that the point lies in the meaning of “capabilities”; which is “an aptitude that can be developed”. Simply it is not possible to stop the leakage. The question therefore becomes, is it best to develop your aptitude by curling up with a text book or to participate in a marketplace.

According to McKinsey the solution requires...

... a company must develop organizational overlays in the form of markets and networks that help its professionals work horizontally across its whole extent. These overlays make it easier for them to exchange knowledge, to find and collaborate with other professionals, and to develop communities that create intangible assets.

These tacit interactions are what are captured in the “Research” area of the Research & Capabilities module. Interaction with the larger communities to develop the knowledge and understanding around the science of oil and gas not only expands the capabilities of the producer firm but will also expand the overall science. We learned two other important points regarding innovation in the Preliminary Research Report.

1. That new science fuels new innovations, and new innovations fuel new science.
2. Technical trade-offs facilitate the ability for industries to innovate on the changing technical and scientific paradigms.

People, Ideas & Objects research assumes that one technical trade-off in oil and gas is accurately reflected in the oil and gas commodity pricing. That these prices are providing the resources to fuel innovative oil and gas producers. Therefore the faster we iterate on the science and innovation, the more appropriate a producers strategy should be focused on a capabilities approach.

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 XXXVI (R&C Part IV)

If we reduce the business of the oil and gas producer down to the activities of the Joint Operating Committee. And concern ourselves only with the day to day activities of the property then we can generally be satisfied that we will know where our next meal will come from. But what about everything else. This is the classic conflict that a business must satisfy, the struggle between the long and short term horizon of the business. How much should be sacrificed in the long term and how much should be sacrificed in the short term. It should be noted that the name of the module is Research & Capabilities, this blog post focuses on the capabilities component of the module.

What is the firm capable of and how can that capability be enhanced? And more importantly since we are so dependent on our partners in the Joint Operating Committee and the service industry how is this apparent contradiction resolved? The traditional steps of the producer was to build the in-house capability. The assumption that is used in People, Ideas & Objects is that the resource constraints do not permit the luxury of each producer building these capabilities. The need to collaborate with partners to build the capabilities needed for the Joint Operating Committee is how these needs are met.

But we are talking about more then just the capabilities that each Joint Operating Committee demands when we are talking about the capabilities of the producer firm and the use of the Research & Capabilities module. McKinsey put it well in this quotation.

Ongoing multi-year tasks such as launching new products, building new businesses, or fundamentally redesigning a company's technology platform usually call for small groups of full-time, focused professionals with the freedom "to wander the woods," discovering new, winning value propositions by trial and error and deductive tinkering.

We have detailed that the focus of the producer firm is on its asset base and its earth science and engineering capabilities. This area of focus of the Research & Capabilities module is therefore a key focus of the producer organization. We are not talking about the people that will be deployed in the day to day of the various Joint Operating Committees. These are the core scientists of the firm.

We discovered something very interesting in our research. When we deploy teams of people in a fashion like we are with People, Ideas & Objects use of the Joint Operating Committee. The earth science and engineering capabilities of each Joint Operating Committee will atrophy. They need to be fed a constant stream of new and innovative ideas and possibilities to remain “current” with the science. This of course has to be steered by the mother ship so as to not duplicate errors or replicate blind bunny trails unnecessarily in each and every Joint Operating Committee.

Now it may seem that I have contradicted myself by stating that the firm needs to develop the capabilities necessary “in-house”. But I didn't say that. The Research & Capabilities module should be considered to be from an industry perspective. That although each firm will have specific people defined to support each firms needed capabilities, the service industry will take on a greater role in providing much of the innovative capabilities that are developed through the mindset employed by the producer firms.

Lastly I would want to talk about the scope of the Research & Capabilities module. Although it would have specific application in the earth science and engineering areas it should be used in other areas to build capabilities in other areas of the oil and gas business. One area that I would think would build value would be for producers to sponsor the development of People, Ideas & Objects software development itself. Just a thought.

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 XXXV (R&C Part III)

In our last post we went through the four points from the McKinsey article as to why we should use the Research & Capabilities module for the long term perspective of the innovative oil and gas producer. In this post I want to revisit the first point of that article and highlight the significance of the opportunity that is presented by separating the long term perspective into the Research & Capabilities module, and the day to day into the Knowledge & Learning module. In the McKinsey article it is noted;

The first design principle is to clarify the reporting relationships, accountability, and responsibilities of the line managers, who make good on a company's earnings targets, for all other considerations will get short shrift until short term expectations are met.

By making the Joint Operating Committee the key organizational construct of the innovative oil and gas producer. By aligning the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee with the compliance and governance frameworks of the hierarchy. By providing an extension of the governance structure over the partnership with the Military Command & Control Metaphor. We have isolated the Joint Operating Committee as the day to day operation of the oil and gas producer. This frees up the remaining portion of the producer to concern itself with the long term value generation of the firm.

Recall in the last post that these Joint Operating Committee’s are autonomous in the sense that they are focused on providing the greatest performance. They are driven through the Performance Evaluation module that allows them to determine where and how they can build the greatest value each month. Because they are operated by the partnership, which is motivated equally by financially gain, the producers will have faith that the “line managers will make good on a companies earnings targets.”

The Research & Capabilities module is looking at the interests the producer has in any number of Joint Operating Committees. This number may total into the thousands. To concern themselves with the operational performance of each would be a daunting and impossible task. And based on the previous paragraph their involvement is limited. However, there may be systemic corporate similarities that can be applied to each that bring value to the overall producer firm. Systemic similarities that can only be seen from the perspective of the firm, and in the long term. These are where the business value can be generated through the use of the Research & Capabilities module. McKinsey notes;

Dynamic management and improved collaboration, as we show later, are better ways of accomplishing the purposes of these ad-hoc structures. A company that aims to streamline its line management structures should create an effective enterprise wide governance mechanism for decisions that cross them, such as the choices involved in managing shared IT costs.

It is through an iterative and collaborative approach to dealing with the various Joint Operating Committees that the users of the Research & Capabilities module is able to extract the value in the long term. By passing on new innovations or experiments for the JOC to try. The ability to influence any and all variables and to see any aspect of the firm and to analyze it is the domain of this application module. To define it as a set of fixed functionality will ultimately be the result of what the user community is able to provide, however, I am certain that they will also recommend that the application module remain open to analyzing any and all data.

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 XXXIV (R&C Part II)

Yesterday we discussed how the Research & Capabilities module would be used to help build value by managing the transition from the hierarchy to the aligned producer organization under the People, Ideas & Objects software. Where the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee were aligned with the hierarchies compliance and governance. Making this transition will create opportunities for people to make changes to the work that they do in order to be more efficient and effective. What and how the software will do this little bit of magic is best described in a McKinsey article that is referenced in the Draft Specification.

In a four part recommendation McKinsey sets out in broad strokes what is required.

• Streamlining and simplifying vertical and line management structures by discarding failed matrix and ad hoc approaches and narrowing the scope of the line manager's role to the creation of current earnings.

The process of using People, Ideas & Objects software will achieve all of these objectives. By aligning all of the Joint Operating Committee and the hierarchies frameworks, imposing the military chain of command and having the financial interests of the producers drive the management of the Joint Operating Committee we are “narrowing the scope of the line manager’s role to the creation of current earnings”. These are the focus of the Partnership Accounting, Accounting Voucher, Petroleum Lease Marketplace and Performance Evaluation modules.

• Deploying off-line teams to discover new wealth-creating opportunities while using a dynamic management process to resolve short and long term trade offs.

These are the critical new roles that are being discussed in these “new” modules “Research & Capabilities” and “Knowledge & Learning”. Providing valuable insight to their users about the business that is above the day to day noise. Where the long term vision of the organization can be set, executed and realized through these two advanced software modules.

• Developing knowledge marketplaces, talent marketplaces, and formal networks to stimulate the creation and exchange of intangibles.

Within the Preliminary Specification, if we include the Research & Capabilities and Knowledge & Learning marketplace definitions, we have five marketplace modules in People, Ideas & Objects. Marketplaces are things that people will be doing more of in terms of participation in the future. Computers can assist, but again are generally very poor at making decisions, bargaining, knowing what to do, etc. The other three marketplace modules in the Preliminary Specification include the Petroleum Lease, Resource and Financial Marketplaces.

• Relying on measurements of performance rather than supervision to get the most from self directed professionals.

We have already had our first pass through the Performance Evaluation and Analytics & Statistics modules. Handing the Performance Evaluation module to the team that is running the Joint Operating Committee will enable them to manage the property in the best possible fashion. They are going to be able to figure out what it is that makes the most sense in terms of value, and begin to generate more of it. It is as simple as that. Except it is a very complex business. And that’s why you have your best earth science and engineering staff on the job. And the best business / geological / engineering minds running the Research & Capabilities module.

It should be coming clearer that it is no longer the 20th century. That to manage an enterprise requires a different approach, and the first thing that is needed to manage that enterprise is the software to enable that approach. With real shortages in the quality human resources necessary to maintain the markets demand for energy, it will be the producer that is able to maintain a high performing organization based on criteria such as these.

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 XXXIII (R&C Part I)

The last thing that we want to do in the Security & Access Control module is to make it difficult for people to collaborate. Innovation is about ideas, and the free flow of ideas is the point of our next two modules review. Making it difficult for people to access the system should not be the result of all of these security requirements. People and Ideas once authorized and authenticated should be able to complete their work, not be involved in mindless security or access control warnings.

We now move on to the Research & Capabilities module of the Preliminary Specification. This is a dual specification module in that it shares strong similarities with the Knowledge & Learning module. The difference is that the Research & Capabilities is a firm, or producer, facing module and the Knowledge & Learning module is a Joint Operating Committee module. The best way to think of these modules is that they are “marketplace” modules. The Research & Capabilities module looks at the producer firm in the context of the greater oil and gas industry from the point of view of a market.

This module is difficult to conceptually understand as it is not in practical use in oil and gas today. If we think that the Joint Operating Committee is the day to day operation of the oil and gas producer. The Knowledge & Learning module will provide a means in which the producers will be able to optimize the earnings of the JOC. The Research & Capabilities should therefore be seen as the means in which a producer can exercise long term value accretion from the firm. The firm of course being a holding of many JOC’s.

The Research & Capabilities module provides a window on the producer firm that is above the noise of the day to day. One that provides the user with the ability to see where the value may be added to the firm. This module moves the work that people are doing away from recording transactions. The management science falls into the category of "interactions" which includes transactional, tacit knowledge, and transformational activities of the producer, its partners and the vendors or marketplace. The Preliminary Specification deals with the automation of transactions to free up the resources of the firm and market. The generation and application of ideas is the area that the innovative energy producer needs to have their resources spending most of their time. The producers will use the Research & Capabilities and Knowledge & Learning modules to obtain windows on these activities.

In the future we need to concern ourselves with the kind of work that computers can’t do. These modules are involved in these new "types" of jobs that humans can do far better then computers. Making judgments, based on good data and information, and deciding on the best course of action. The scope of the application module is unlimited. The proprietary data and information that is accessible by the users of these modules would limit their use to a handful of senior individuals within the firm. However, that does not preclude them from receiving the full scope of engineering resources in terms of software developments. I could see substantial value being developed through the intuitions being confirmed in these applications modules.

What the People, Ideas & Objects application does for the producer firm is align the Joint Operating Committee’s legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks with the hierarchies compliance and governance frameworks. This alignment provides new synergies in terms of operational performance in both the Joint Operating Committee and the producer firm. It also provides increases in the speed, innovativeness and accountability of both the firm and JOC. The Research & Capabilities module will be able to monitor and control these frameworks to see where the value can be gained and is maybe being lost. As we move away from the hierarchy this will be the tool that provides the window on “what” and “how” the transition will best be done. This is what I think will be one of the first uses of the tool.

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 XXXII (S&AC Part V)

People, Ideas & Objects development of the Military Command & Control Metaphor (MCCM) of the Security & Access Control module is not without some historical context. Before the hierarchy, which I perceive as somewhat of a commercial development of the 20th century, there was only the military structure in terms of large organizations. The main difference between the two is rather subtle but significant. The military structure is much broader and flatter then the hierarchy. That is one of the ideals that we are seeking, but the more important feature is the ability for the chain of command to span multiple internal and external organizational structures.

If we analyze the U.S. Military we find a number of interesting attributes of using the military chain of command that will provide value in the use of People, Ideas & Objects software applications. First is the title and assignment of an individual in the military.  For example, “Sgt. Richard Knuth, Company A, Brigade Special Troops Battalion, 3rd Heavy Brigade Combat Team, 3rd Infantry Division”. A similar title and assignment for the people within a Joint Operating Committee would help to clarify the role and responsibilities, authority and capabilities the individual would have within the JOC. For example this individual might have the following “Richard Knuth, Chief Engineer, Field Straddle, Elmworth. Irrespective of which firm this individual is from each of the participants would recognize that the authority of a Chief Engineer was the same throughout the industry and that the designation of Chief Engineer entitled the individual to authorize the appropriate actions.

Now this is not fundamentally different from how the industry operates today. What is different is the ability to operate in a fashion where the interactions between the producers in the JOC are done as if they were all employed by the JOC. Where multiple producer firms are contributing many full time staff to the JOC. This interaction between producers through the JOC can only be replicated if there is a recognizable chain of command between the firms that make up the JOC. In addition to the recognizable chain of command each organization must have additional governance concerns handled, and compliance plays a big part in this as well. (We will talk more about these in the future in the Compliance & Governance module.) That although it would be an easy thing to implement from a people point of view, the actual implementation of pooling the staff from multiple organizations becomes complex when we consider all of the implications. However, with the Information Technologies that exist today, and the issues of the shortages of earth science and engineering talent we have few choices but to pursue this pooling concept.

The nature of the people that will be working through the chain of command that is layered over the Joint Operating Committee will include all of the disciplines that are involved in the oil and gas industry. The contributions of staff, financial and technical resources will include everyone that is employed by the industry today. I can foresee many of the office buildings being refurbished to accommodate the staff of a single JOC. There the staff from the different producers would be seconded to work for the JOC, working at a single JOC not at any particular producer firm.

In previous blog posts discussing the Military Command & Control Metaphor (MCCM). I noted this inter and intra organizational use of the MCCM was similar to that used by NATO. That armies of the various countries could work together and recognize personnel from each others armies and immediately recognize and use the same chain of command. Unfortunately then came Libya and the failure of NATO may be well at hand. And the unfortunate parallel may be seen as a striking example as why the MCCM might not work in People, Ideas & Objects. I think otherwise as the Joint Operating Committee is the financial framework of the industry. This means that all of the members of a JOC are equally driven by their financial interests. And that financial interest drives consensus. Therefore, the analogy to Libya would be inappropriate as their objective is not financially driven and the NATO members can not form a consensus on what the objective is. The point in using the NATO example was to show the ability to recognize the chain of command spanning multiple organizations. Not to submit that countries driven by politically different philosophies could agree militarily.

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 XXXI (S&AC Part IV)

Looking at the security aspects of the Security & Access Control module we find that today’s technologies provide levels of security that are substantially higher then just a few years ago. With the security needs of the industry being so high, I believe the following security policies would be more then satisfactory to those needs. And it is suggested that these are the base case, as time passes we will be able to build on these specifications.

For people to be available online anytime and anywhere presents problems from the point of view of authentication. What we can do is ensure that only registered devices have access to the applications, information and data. These devices would include desktop computers, notebooks, phones and iPads etc. Where only certain registered devices on certain IP addresses are available to access the People, Ideas & Objects applications. In addition user name and password protection for access would be required. But in addition, we would require two step authentication where we text a code to their registered company phone, which would then have to be keyed into the device they were trying to log into. These three steps ensure that only authorized users were gaining access to the system.

Next we would ensure that all network traffic was encrypted. It has not been determined as of yet how the application will be presented to the users (browser or otherwise). However, once logged out of the system all data and information will be cleared from the cache and the device will have no information or data stored of the session. It should be noted that one of the advantages of the tools that we are using is that we should be able to present to the user the same desktop environment that they had left when they last logged out.

In our Hardware Policies and Procedures we have discussed how the People, Ideas & Objects application is hosted. This separate company is proposed to be jointly owned by industry, People, Ideas & Objects and Oracle. It is also proposed to be operated by the oil and gas industry primarily to meet their needs of maintaining the control they need for SEC regulatory compliance of their ERP systems. With industry having de-facto control of the “Cloud” infrastructure. This provides them with the means to maintain the physical control necessary to maintain their SEC needs. People, Ideas & Objects will be able to deliver a runnable binary of the application for them to operate without the need to be physically on-site.

And as I mentioned the other day it was an oversight that the Draft Specification initially indicated that the data storage and data base systems were not encrypted. Oracle provides high levels of encryption of both the storage medium and the database, at the data level itself. This will in turn provide no one at the industry operated cloud infrastructure with the ability to read any of the producers confidential data or information.

Implementing the technologies in this fashion will provide the industry with the security that they need to ensure that their data and information remains secure. These technologies are only the beginning of what will be implemented in the People, Ideas & Objects Security & Access Control module as they are all standard fare for the base level technologies used in Oracle. It is a simple manner of selecting them for use.

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 XXX (S&AC Part III)

When we talk about the various people within the producer firms affiliated with a Joint Operating Committee. And the number of Joint Operating Committees that a firm may have an interest in. And the number of people a firm may have employed. Access control becomes a big issue. It becomes a big issue when you consider that your people certainly should have the access that you require, but the level of trust that you may have with respect to the other partner organizations is probably not as strong. This is the point of this blog post and how People, Ideas & Objects deal with the access and trust issue in the Security & Access Control module.

When we concern ourselves with the data and information of the firm, and the information that is cleared from the various Joint Operating Committees that the oil and gas producer has an interest in. We can all agree that this information is proprietary and is subject to the internal policies of the producer firm. (Information such as reserves data, accounting information, internal reports and correspondence, strategy documents.) What we are also concerned about is the information and data that is held in the Accounting Voucher and the associated data that is common to the joint account. (well licenses, agreements, production data.) Recall also, in our last post, that relational theory deals with predicate calculus and set theory.

Closer analysis of these two types of data and information that are held within the firm and the Joint Operating Committee fall within the proprietary and public domains. In Canada at least, most of the data and information in a Joint Operating Committee can be freely obtained through various regulatory agencies. Nonetheless, the majority of the data is shared through the partnership, vendors, contract purchasers and a variety of other groups who have an interest in the data and information. Not so for the producer firms data. Most of the information is kept close at hand and is only reported through filtered reserve report summaries and annual reports. Therefore keeping a handle on proprietary data, while operating the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer, as proposed in People, Ideas & Objects, does not therefore present any immediate proprietary data leakage.

Access control can be limited by precluding any company personnel from viewing any other companies files. While in People, Ideas & Objects access control is limited to the Joint Operating Committees of the firm and the firms files only. (Set theory.) To extend this further we would have access control limited to the appropriate roles within the firm, then it is a matter for the user community to define a standard set of generic roles in which access is required to certain data types. This would also apply to the types of operations that can be handled by that role, for example, read, insert, update, delete. These generic roles could then be assigned to each individual within the organization based on their needs. Assigning multiple roles for more complex access.

The assignment of roles for access control can then be looked at from the producer point of view. What areas are deficient in terms of access control, are needed to be covered, and are not. An interface could be provided that would show these deficiencies and then additional roles could be assigned to cover off the areas that were previously deficient. A similar interface would be needed for the Joint Operating Committee so that the data and information needs were being met by the people that were assigned to work there.

Lastly these access control roles are assigned to the various positions within the chain of command that is developed through the Military Command & Control Metaphor of the People, Ideas & Objects application. This would be done to ensure that the people assigned were working in a natural way where the data and information they used was available for them to do their jobs.

By using the Joint Operating Committee as the perspective of how we view our systems brings into alignment all of the frameworks of the business. As we focus on the business of the business there will be areas where the producers will want to limit the exposure of certain data and information from some employees and partners. As we can see with this post, albeit with a little effort, it is certainly possible to maintain the acceptable limits to this information that have become the cultural norm in the oil and gas industry.

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 XXIX (S&AC Part II)

Throughout the Draft and Preliminary Specifications we have discussed one of the premier issues that the oil and gas industry faces. That being the demand for earth science and engineering effort per barrel of oil produced is increasing with each barrel produced. This is best represented in the steep escalation of the costs involved in the exploration and production of oil and gas. At the same time the critical earth science and engineering resources are somewhat fixed and are difficult to expand in the short or medium term. Add to that an anticipated retirement of the brain trust of the industry in the next twenty years and the problem becomes of critical concern.

There are few short term solutions to the short fall in geologist and engineers over the next twenty years. It takes the better part of that time to train them to operate in the industry. What we do know are two things that are being applied in the People, Ideas & Objects software applications modules. Key to these concepts applications are what we call the Military Command & Control Metaphor. The two key concepts are a further specialization and a reduction in the redundant building of capabilities within each oil and gas producer.

The first concept of specialization and division of labor is well known as a principle of economics that brings about greater amount of economic productivity from the same volume of resources. Given that the volume of earth science and engineering resources are known for the foreseeable future, specialization and the division of labor will provide us with a tangible means in which to deal with the productivity of the oil and gas industry. In today’s marketplace to approach a heightened level of specialization and division of labor without the use of software would be down right foolish.

The second concept involves the desire that each producer firm acquires the earth science and engineering capabilities necessary to deal with all the needs of their “operated” properties. This creates unneeded “just-in-case” capabilities for the scarce resources. When each producer within the industry pursues this same strategy substantial redundancies are built in to the industries capabilities. Redundancies that are left unused and unusable. What is proposed through the People, Ideas & Objects software application modules is that the producers operational strategy avoids the “operator” concept and begins pooling the technical resources through the partnership represented in the Joint Operating Committee. That way the redundancies that would have been present in the industry can be made available to the producers and used by the producers through an advanced specialization and division of labor.

What these concepts require therefore is what the Security & Access Control module is designed to provide. As was mentioned in yesterdays post, the system must provide access to the right person at the right time and the right place with the right authority and the right information. With the Military Command & Control Metaphor there will also be a manner in which the technical, and all the resources, that have been pooled from the producers, interact with an appropriate governance and chain of command.

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.

The Preliminary Specification Part XXVIII (S&AC Part I)

The Security & Access Control module is the place where dreams can be shattered or visions soar to fulfill the possibilities. It was suggested in the Draft Specification that the Security & Access Control module be one of the first modules to be developed. That would still be my recommendation.

What we have with using the Joint Operating Committee as the key organizational construct of the innovative oil and gas producer. Is the interactions of many producers and suppliers who are involved in the day to day commercial and strategic concerns of that JOC. What we need to concern ourselves with in the Security & Access Control module is that the right people have the right access to the right information with the right authority at the right time and at the right place. Simple stuff.

What we know is that the basis of relational database systems is relational theory. And that the basis of relational theory is predicate calculus and set theory. And it is here that we can begin to find the answer to the problem defined in the previous paragraph. That is to say that we can define this problem in the context of the Joint Operating Committee being a subset of the producers that comprise it.

There were two glaring errors that have been changed in the Draft Specification. The first one stated that there was no encryption on the hard drives or the database. These points must have been oversights as that should never have been the case and they now read otherwise. And the comment “No development outside of testing this Security & Access Control module will be done with the consent of the users in this development environment.” Leaves me a bit perplexed as to what it means and as a result I have removed it.

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.

The Preliminary Specification Part XXVII (AV Part V)

As we metaphorically peel this onion we find that this will be the last post on the Accounting Voucher module. We will return to this module as we get down to the deeper layers. However, after this post we will be moving on to the Security & Access Control module to pick up on some of the interactions of the people who are working within the various producer firms and vendors. We have discussed many of these interactions in this the Accounting Voucher, the Petroleum Lease Marketplace, Resource Marketplace and other modules. I will also have one closing comment in this post on the general practicality of the Accounting Voucher outside of its use in the Joint Operating Committee.

In the Draft Specification the Accounting Voucher is described as the crossroads for a variety of other modules in the People, Ideas & Objects applications. And we have described how certain data elements are brought into the Accounting Voucher in order to activate them and make them part of the history of that Accounting Voucher. For example, if a new well is producing it is brought in through interfaces from the Petroleum Lease Marketplace module. Once in the Accounting Voucher it can begin capturing the field data and recording the transactions for that well. What the Accounting Voucher provides is the means in which to take the data elements from the other modules, and conduct the necessary transactions upon them.

The last few posts we have concentrated on in the Accounting Voucher module have focused on the Joint Operating Committee clearing system. And that would be one of the key attributes of this People, Ideas & Objects module. However, there are more attributes to the Accounting Voucher then just the Joint Operating Committee clearing system. As we have noted here before, the Accounting Voucher is able to be used by the producer to capture their 100% charges and that is for all intents and purposes what an accounting voucher would be for in any other system. The use of capturing general and administrative costs, payroll, paying bills and other purposes would be included in the Accounting Voucher module.

Lastly I want to raise the point about the Purchase Order system that we touched on in the Accounting Voucher is something that I think will be a necessity. It should be something that is built in the People, Ideas & Objects applications and be available as an option for producers to use. And as such on the second run through the Preliminary Specification we will spend a little more time on it.

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.

The Preliminary Specification Part XXVI (AV Part IV)

Today I want to talk about the domain of the Joint Operating Committee. It is clear in the discussion of the Accounting Voucher that we are concerned about capturing and recording the business of the Joint Operating Committee. And clearing the costs and revenues of the property to the producers. What the Draft Specification talks about is Transaction Design which deals with the optimal location for a transaction to occur. The firm or the marketplace.

So much of what the Accounting Voucher aspires to do is to remove the user from the mundane aspects of dealing with transactions. With Information Technologies (IT) that are available today this is not only possible, but a competitive necessity. For instance you can buy an App for a phone that will take a picture of a receipt and code it to an accounting application. This is what I did in 1977 as my first job in oil and gas. The point of the Draft Specification is that users should be designing transactions as the key to building business value. This aspiration is what is so poorly discussed in the Draft Specification, but when your knee deep in papers, that’s the way the world looks.

Designing transactions, more or less from the point of view as to where the transaction will be conducted, in the firm or in the market, is part of the point of the exercise. What and How are two of the traditional questions of how to get things done. Now we need to answer the question, “where” will the transaction occur, and that is answered in the Accounting Voucher. The research and science on TCE that is referenced in the Draft Specification points to a means of determining where the transaction should occur. And that is what are called “thin crossing points”. However the first determination is the assessment of the capabilities of the group that is being assessed for the work that needs to be done. There is of course no sense in trying to determine the thinnest crossing points as the determining factor of who gets the deal.

It may seem intuitive to reduce the point of the transaction between two firms down to the thinnest point being the transfer of the invoice from one firm to the other. And that would score high on an exam but it would fail in terms of implementation of what the possibilities of Transaction Cost Economics could achieve. What if there were a system development, like People, Ideas & Objects Preliminary Specification, that was user community based that included the service industry as part of that user community? Would that provide an opportunity to define some service industry level systems integration that would be complementary to the Accounting Voucher of the People, Ideas & Objects application? Why couldn’t the service industry provider have their people populated into the Work Order system that we discussed earlier? Or, if the user community deemed that a Purchase Order system was worthwhile that this could also be used as means of direct communication between the producers represented in the Joint Operating Committee in the Accounting Voucher and the service industry providers.

There may ultimately be the thinnest of crossing points for the transaction being the invoice that crosses from the vendor to the joint account. Ultimately making the transaction the most efficient from the organizational point of view. However, with the use of IT we can also build on the information that is known and unknown in all of the producers and all the vendors that are party within a “transaction”.

What may not be clear is the need to design the transaction to ensure the business value is realized by the Joint Operating Committee. There is a general rule that whatever operation your conducting in the field, it is generally going to be conducted based on the understanding of the least experienced individual that is present in the field. It just seems to happen that way. Designing the transaction with these constraints in mind can help to mitigate the unknown factors from causing problems down the road. Also, because most of the “transactions” that occur in the marketplace are of such a large size, building of a compressor, building of a gathering system, drilling a well. The ability to apply further scientific strategic “game theory” type attributes in to the People, Ideas & Objects software is possible.

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.

The Preliminary Specification Part XXV (AV Part III)

Of particular interest to me is this is People, Ideas & Objects 1,000 blog post. Who would have thought that a simple idea of using the Joint Operating Committee could create so much discussion. We are well over 850,000 words and it feels like we are just beginning.

One of the implications of using the People, Ideas & Objects system is that each partner will have access to the Accounting Voucher during the time that the Voucher is either open or closed. Each of the producers involved in the JOC are therefore able to access the Accounting Voucher and have costs / revenues distributed to the other partners involved in the Joint Operating Committee. This is one of the key differences that we had discussed in the Petroleum Lease, and Resource Marketplace modules. Partners are all contributing to the joint account as equal participants with the role of “operator” being relegated to a thing of the past. (Note too of course, that each participant is able to charge their own account with their own 100% charges as well. These charges are to their private accounts and therefore not seen by any of the other participants.)

Cost control becomes an issue when everyone is able to charge freely to the joint account. A careful reading of the previous paragraph reflects that I didn’t state “charge freely”. Cost control comes about as a result of the traditional budgetary control of AFE and the Work Order system that we discussed earlier. Without pre-approval by the partnership nothing is able to be processed by the People, Ideas & Objects software applications. And as we will see in the upcoming discussion of the Security & Access Control module, few will have the authorization to “charge freely” to the joint account in any form or fashion.

With the traditional ability to charge to an AFE or Cost Center, and possibly during the development of the People, Ideas & Objects Preliminary Specification, the user community determines the need to have a purchase order system, ensuring that an appropriate bidding and contracting process is in place, no unauthorized amount will be accepted in the system. There is also the fact that each voucher needs to be approved for payment before any money is expended and that approval would need to consider the authority of the joint account.

As one can envision these Joint Operating Committee - Accounting Vouchers can become large as they include all of the business of the property. Accountants would be pulling their hair out at month-end trying to get these Vouchers closed if they had to seek approvals and close each of the transactions within the appropriate small window of time of their month end. Needless to say that each transaction within the Accounting Voucher is a small subset of the larger Accounting Voucher and can be dealt with as a stand alone individual item. Seeking it’s own approvals and authorizations that deal with just the domain of the specific transaction.

What is different in People, Ideas & Objects Accounting Voucher system vs what exist today is the elimination of the designation of operator. The capabilities to house the state of the art necessary to run the property within one oil and gas firm is believed to be beyond what is possible in the very near future. This is primarily as a result of the further specialization of earth science and engineering skills needed to be attained by each individual within the industry. If each firm were to attain the full scope of these capabilities then they would not be a viable business due to the extreme overhead burden. And specialization is the only solution to deal with the limited resources. Therefore it is necessary for each producer in the Joint Operating Committee to contribute their unique capabilities. The objective is to enable the Joint Operating Committee to draw from the much larger pool of producers engineers and earth scientists in order to obtain the global capabilities necessary for the property to operate.

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.

The Preliminary Specification Part XXIV (AV Part II)

Reading the Draft Specification for the Accounting Voucher is a tortuous read. What I can glean from the material is what I recall from the research, however, I’m sure no one else has read the research. Making the reading particularly difficult for everyone else. I will, hopefully, make some sense, in the next week or so, of the material through this discussion. I certainly promise to do my best. Another assumption that I am operating from is that everyone has a high level of understanding of how the oil and gas industry operates, making this content difficult to read.

Yesterday we discussed the manner in which the Accounting Voucher was able to handle the material balance report. How it handles the balancing of the volumes, debits and credits, and cleared these amounts to the partnership represented in the Joint Operating Committee. Today we want to talk about the contracts that the products produced may have associated with that JOC. Contracts that would include marketing for gas, oil, natural gas liquids, or contracts for charges for gathering, processing etc.

I don’t know what the correct term that should be used, but stream seems to me to be the most intuitive. If a stream of product was flowing through a facility, then a contract for processing or sale could be attached to it. The ability to attach a contract to a stream would enable the Accounting Voucher to establish the billing of gathering or processing charges / sale for that stream. These charges (invoices) or sales (receipts) being generated in an automated fashion by the People, Ideas & Objects software. This point now brings up a point that is obtusely discussed in the Draft Specification.

The Accounting Voucher is a for lack of a better term a template that is built upon as time passes. Each month as the property changes, these changes are captured within each Accounting Voucher and the template is renewed each month with the new information. If a new contract was added for the production from a new well, then that contract stream and the new well would be represented in next months Accounting Vouchers. The Accounting Voucher documents the changes in the property over time.

So it is with my sincere apologies to any readers that may have tried to make sense of the Draft Specifications Accounting Voucher. One can clearly see the value in a six month sabbatical. I’m sure we’ll run into more bumps along the way and will have to share a laugh at those.

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.