[Dosi]
Continuing on with the overall review of Dr. Giovanni Dosi's theories on innovation.
B) Appropriability of Technological Innovations.
Dosi defines appropriability as the:
"properties of technological and technical artifact's, of markets, and of the legal environment that permit innovations and protect them, to varying degrees, as rent-yielding assets against competitors imitation."
Companies that are innovative in their markets are able to secure a variety of intellectual property as a means of competitive advantage. The IP may consist of the traditional patents, trademarks and copyrights but should also include secrecy, lead times, learning curve capabilities and internal processes. Dosi suggests that these forms of intellectual properties form strong advantages when combined together.
The costs associated with imitating the competitive advantages of another firm become expensive. Dosi provides evidence that the cost of imitation is often higher then the original innovation! Noting that both innovation and imitation are creative processes that involve search. And imputing that a capability has to be built to be either innovative or imitative, with the latter being the more costly. It is at this point I would ask what the purpose of "best practices" is for?
C) The Driving Forces of Technical Change.The various levels of innovativeness of each firm in an industry are derived through either exogenous scientific advances and / or endogenously accumulated capability within the firms. Dosi's general point is;
"the observed sectoral patterns of technical change are the result of the interplay between various sorts of market inducements, on the one hand, and opportunity and appropriability combinations on the other."
In terms of oil and gas this clearly sets the point that we are at. Oil hit $75 today and this is a major shift in the "market inducements" of the industry. Using Dosi's theory in oil and gas, it is clear that a producer that is able to establish higher levels of appropriability, as Dosi calls capability, would benefit from the higher commodity prices.
In the competitive market that exists today we see that each oil and gas company attempts to secure a competitive advantage based on the scientific capability built within the firm. In a related matter we are now seeing a projected shortfall in the number of qualified earth scientists and engineers. Universities will not be able to produce enough new graduates to fuel the prospective demand and replace the soon to retire baby boomers. This is where I think that Dosi's theories can be extended to communities, clusters, or ad-hoc self organizing teams.
If we continue to replicate the scientific and technical capability of each firm in an entrenched silo we most certainly will have failed in providing the marketplace with the energy required. These silo's of scientific capability mirror themselves in each large company. How wasteful of these critical resources is this? Smaller producers are less stringent on their use of outside assistance but could and should encourage greater sharing as well. What if we applied the theories of Dosi to the overall cluster of companies. Building the scientific and engineering capability from the larger pool of technical resources from each silo?
To arrange this pooling would be the simple part. The sharing of intellectual property and general mindset of the industry is that sharing is limited. I think that this is counter to the natural culture of most scientists who publish and submit their thesis and hypothesis to the community for critical review. What would happen if the Genesys system was able to:
- Manage all of the business attributes of the oil and gas operations.
- Provide market access to assets and resources for the producers.
- Including human, financial and technical resources.
I am unable to see how else we are to mitigate the issues of the market demand and the retirement of the knowledge base of the industry? Building independent silo's of capabilities higher is not the alternative.
Is this community the type of organizational structure and manner that the industry needs to gravitate too in order to rectify these issues? If so this blog should be seen as the main focal point of this reorganization. Building the systems to support this type of organizational structure and enable the community of oil and gas workers to get on with the job at hand.