Capabilities and Governance Part II

Revisiting Langlois and Foss' "Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization" article. There were a number of other worthwhile points that I would like to comment on. In the last entry I discussed mostly the Governance attributes of the article, I would now like to focus on the Capabilities. I unfortunately need to quote extensively from the article and will probably violate the fair use doctrine of Dr. Langlois' and Foss' copyright. I have been in contact with them and will make them whole based on their determination of these writings.

Previously I wrote my opinion that the energy industry had developed as a competitive resource, and asserted that I thought there was a need to develop an industry-wide based capability. Today many of the companies that are of size in oil and gas are also the respective Chairmen of the joint operating committees for the properties they have interests in. This requires each producer to develop the capability to conduct those operations primarily through in-house staff. With the move to a stronger innovation mindset the industry would need additional capabilities and capacities, particularly in the science and engineering areas. This has become evident in today's marketplace. I have suggested in this blog that a pooling of the industries resources would enable a greater overall industry-wide technical capability. One that would eliminate the need for the high level of capabilities that each producer currently holds in its "siloed" corporation. The reason that companies would do this is to ensure that the company was able to continue to conduct all the operations they are involved in. The average engineering and geological work necessary for a barrel of oil increases annually and this trend is rapidly accelerating.

Today, this has already begun with a large portion of the industry operates on the industry wide capability basis. The large engineering firms are employed and indeed do the majority of the bullwork for the producers. What I want to assert is; with the industry transformed from "transfers" to "transactions" as discussed here, capabilities need to be expanded further to reach the potential of the industry. This to enhance the producers production profile under the revised organizational construct, the Joint Operating Committee. This thinking is consistent with Langlois et al.

"However, a new approach to economic organization, here called "the capabilities approach", that places production centre-stage in the explanation of economic organization, is now emerging. We discuss the sources of this approach and its relation to the mainstream economics of organization." pp. 2

I also want to assert that in dealing with the Joint Operating Committee's four frameworks (legal, financial, cultural, and operational decision making) leads me to Langlois' definition of production costs. And the regulatory, administrative and compliance frameworks lead me to what Langlois' describes as "transaction costs".

"The legacy of this "path-dependent history, we will argue, has been a tendency (albeit an imperfect tendency) to respect an implicit dichotomy between the production aspects and the exchange aspects of the firm or, to put it another way, between production costs and transaction costs." pp. 5

In my May 2004 proposal I successfully asserted the joint operating committee is the appropriate organizational construct for innovative oil and gas producers. And in particular I noted Dr. Wanda Orlikowski's Model of Structuration, which is based on Dr. Anthony Giddens Theory of Structuration, that software defines the organizational construct. Therefore, within the Model of Structuration, I have asserted the existing software applications define, support and constrain the hierarchy. And I went further to state that SAP is in fact, the bureaucracy. Langlois notes in his paper that Economists neglected organizational changes as benefits, and I would assert for the same reasons that they have been neglected by management, through their choice of their ERP software solution.

"Seldom if ever have economists of organization considered that knowledge may be imperfect in the realm of production, and that institutional forms may play the role not (only) of constraining unproductive rent seeking behaviour but (also) of creating the possibilities for productive rent-seeking behaviour in the first place. To put it another way, economists have neglected the benefit side of alternative organizational structures; for reason of history and technique, they have allocated most of their resources to the cost side." pp. 6

In my previous entry reviewing of Langlois et al theory, I noted how the transition from "transfers" to "transactions" could benefit the energy industry and provide enhanced performance through essentially defining new boundaries of the firm, and division of labor. From the Langlois et al article, the dovetailing of the governance issues meet the capabilities issues. And they go on further to suggest

"One of the important goals here is to bring the capabilities view more centrally into the ken of economists. We offer it not as a finely honed theory but as a developing area of research whose potential remains relatively untapped. Moreover, we present the capabilities view not as an alternative to the transaction-cost approach but as a complementary area of research." pp. 7

Here we have further evidence of the point that I have made in my thesis. That software defines the organization. Or as I like to say SAP is the bureaucracy. The definition and implementation of the bureaucracy is what SAP does best, and may I assert is the primary reason for its success. We have now come a long way from the SAP styled organization in oil and gas to a point where new and better means of organization are not luxuries but necessities. The demands and constraints of the industry to produce more with less have only begun to be heard. Will SAP continue to support the petroleum producer in the near future? From what I hear through my current marketing efforts, apparently not.

More to come on this interesting topic.

Technorati Tags: Genesys, Langlois, Reference, Research, Strategy

Collaboration as an effective exploration tool.

One of the most difficult areas that needs to be approached is the secretive culture of the energy industry. This has always confused me. As most of the earth scientists and engineers involved in oil and gas have had some exposure to the academic world with its "publish or perish" and "peer review" methods of establishing and securing intellectual property. Why is there a hesitancy to publish what you know to earn the copyrights to what you discover? It might be suggested that the producers policies are the reasons for the secretive nature.

I read an interesting story in Canada's National Post this past weekend about Don Tapscott's new book, (no online version of this article can be found, the book on Amazon is here). The book is co-authored by Anthony D. Williams and is entitled "Wikinomics; How Mass Collaboration Changes Everything." An interesting title, however the story from my point of view is almost too good to be true. Apparently the CEO of GoldCorp Inc. Rob McEwen published all of the intellectual property information he and his small firm had on a certain mine that he owned. The small Toronto based miner was "struggling, besieged by strikes, lingering debts and an increasingly high cost of production." Sounds kind of familiar to me.

The short version of the story has McEwan hearing the story of Linus Torvalds and Linux during a visit to MIT in 1999. This brought McEwan to think:

"If Goldcorp employees couldn't find the Red Lake gold, maybe someone else could. And maybe the key to finding those people was to open up the exploration process in the same way Mr. Torvalds open-sourced Linux."

He then published all the data that was available about the mine and shared it with the world.
Turning the situation into a bit of a lottery with the best proposals being motivated to the challenge by $575,000 in prize money. The response to the challenge was significant. "Prospectors" from around the world got involved. The surprising thing was the entries came from disciplines that are not normally associated with geology. Students, consultants, mathematicians and military officers all contributed, representing applied math, advanced physics, intelligent systems, and computer graphics.

The results were surprising.

"110 targets were identified on the property 50% of which had never been identified by the company. More then 80% of the new targets yielded substantial quantities of gold. In fact, since the challenge was initiated, an astounding eight million ounces of gold have been found. Mr. McEwen estimates the collaborative process shaved two to three years off their exploration time."

and

"It catapulted the under performing $100 million mining company into a $9 billion juggernaut."

The conclusion to this excerpt is a difficult lesson, and one that takes a long time to learn.

"The Goldcorp story flies in the face of much conventional wisdom about how to run a business. Companies seek to protect their intellectual property, and through hiring and retaining the best people they generate new ideas, make new discoveries, compete and grow their business lines. Mr. McEwen saw things differently. He realized the uniquely qualified minds to make new discoveries were probably outside the boundaries of his organization, and by sharing some intellectual property he could harness a powerful new force - mass collaboration. In doing so, he stumbled successfully into the future of innovation, business and how wealth and just about everything else will be created."

Technorati Tags: Genesys, Innovation, Research, Strategy, Reference

A clarification of my contradiction.

In my previous post on the weekend, I stated that the industry should not fund the suppliers needs with the capital to build more rigs or capacity. And that would apply to all members of the service industry. The point that I was making is that the entrepreneurial and market forces are stunted by industry attempting to influence the market to get what it needs. The oil and gas producers need entrepreneurial activity to anticipate and provide the market with what it needs, when it needs it. The contradiction comes as a result of my asking industry to fund the development of these systems they need. How can I contradict myself in such a manner.

An important clarification would involve the difference between building drilling rigs and developing software. Software is a unique and important component in society, not to suggest that a rig is not. The business models are different in that all of the costs are in the up front initial phase, and the revenues are in the later phases. Software is intangible with nothing of value to leverage other then it's revenue stream. The purpose built software systems for industry needs should not be funded by capital infusions from the industry or venture capital. The funds necessary to develop these systems will be the revenue stream of the software developer.

The technical risks of the success of this software is highly dependent on the involvement of industry. If they have no skin in the game, then they are free to proceed in other directions leaving the development team and its potential investors in the lurch. By tying the industry to the funding in this manner also has them putting some skin in the game. Ensuring that the system gets built properly with the producers full attention.

Capital investment in software ceased during the dot com meltdown. The possibility of having someone stand up and finance this projects $110 million budget is laughable on the surface. The software is being built for the oil and gas industry and that is where the long term source of the software developers revenue will come from. Therefore, in my logic, revenue should also be used to develop the system. This method also reduces the producers costs by eliminating the venture capitalists costs and expectations.

Since the software business model is more long term, intangible and capital intensive then the drilling rig business model. This proposed model of revenue supported developments is the only manner that I should consider in taking on these developments, it is the only manner in which I have the full attention and support of the energy industry.

Technorati Tags: Genesys, Development, Plurality, Proposal
Photo courtesy troels

Capabilities and Governanace.

Continuing on with our review of Professor Richard N. Langlois, next up is his paper "Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization." Written by Langlois and Professor Nicolai J. Foss of the Copenhagen Business School. The title of this entry will take you to the Social Science Research Network to download the .pdf.

From the abstract of the document I would like to note how much of the work that Langlois et al are doing is applicable to the work being done here for oil and gas. I would suggest that oil and gas may become an excellent resource for this type of research. The abstract of this document states;

"However, a new approach to economic organization, here called "the capabilities approach," that places production centre stage in the explanation of economic organization, is now emerging. We discuss the sources of this approach and its relation to the mainstream economics of organization." pp. 1

Later in the document Langlois et al state

"One of our important goals here is to bring the capabilities view more centrally in the ken of economics. We offer it not as a finely honed theory but as a developing area of research whose potential remains relatively untapped. Moreover, we present the capabilities view not as an alternative to the transaction-cost approach but as complementary area of research" pp. 7.

And

"In sum, whether we see it from the perspective of the capabilities perspective or from the perspective of the modern economics of organization, there is an exciting theoretical frontier ahead." pp. 31

I can only concur.

A little review of Langlois' theories may help to assimilate the contents of this document. The market model requires "transactions" to occur between separate economic units. These transactions create "friction" in terms of the resources necessary to process the transaction itself. Typically these "transaction" costs were mitigated by industry forming companies that held the production and capabilities. This is referred to as the "transfer" model by Langlois et al. In the "transfer" model an employer only needed to tell his employees what needed to be done, there would be no transactions to process other then for the employee salary.

What happens as a result of this avoidance of "transaction" costs is that the industry needs to be defined and controlled through the traditional hierarchy's command and control structure. One of the key points that Langlois et al is providing evidence of is, transaction costs are used by the market to provide the oil and gas producer with what it needs in an entrepreneurial manner. The market is able to anticipate and make the determination of where the industry is heading and will work to anticipate and capture the future demands of the producer.

Langlois et al states that with the automation of transactions through the current Information Technologies. Transaction costs can be reduced to an immaterial level. This provides industry with evidence and a means to move from transfers within organizations, to transactions in markets.

It is at this point that I want to assert how damaging an economic model it can be when an industry is based on "transfers" instead of "transactions". In Calgary a few years ago many of the Drilling suppliers found their capacity utilization hit 100%. However, the market demand may have been at approximately 125% of capacity. Based on the history of the ups and downs in the market, the drillers were very hesitant to invest to increase their capacity. Recall that surplus capacity in any industry can become one of the largest fixed costs of a firm. Hence the producers who were needing the increased drilling capacity commissioned and paid for drilling rigs for their exclusive use. The drilling contractor would operate the new rigs for the producer on the basis of the producer's needs.

Why this type of "transaction" should be avoided is based directly on the Langlois et al theories that we have learned to date. The driller and his competitors, and most importantly the new drillers seeking to enter the business, seeing a new dynamic in the capacity increases and utilization, lost all incentive to take a risk in the market. Bringing a new rig or new technology to the marketplace would be too risky for any new player. What the producer signalled to the entire industry is that the hierarchies would now micro manage a drilling division due to the investment in drilling rigs. These types of "messages" are what Langlois et al is speaking about. The wrong message is being sent to both the competitive supplier side and the producer side. If producer A is willing to buy his own rigs, then producer B will have to do the same to have his wells drilled. The supplier marketplace, seeing that it is now possible to defer the risk and capital costs of new capacities to the industry will sit back and await the time for a producer to ask for the next great innovation. This is how the western capitalist marketplace begins to take on characteristics of the former Soviet Union.

In this scenario of market "transfers" it has become very difficult due to the lack of innovation and capabilities focus. The large producers don't understand why the marketplace can't accommodate its needs, and therefore feels compelled to get things done on its own. This is in essence what their large capital cost overruns are symptomatic of. Until an oil and gas producer does something to make the situation better by intervening in their suppliers marketplaces, nothing gets done.

The ability and capability of the management of the producers to deal and manage with the problems of the entire marketplace are as a result of what Langlois at al speaks of. The micromanagement of an entire industry, its suppliers and employees is not the domain of the producers hierarchical management. It is the responsibility of the market place left to resolve its own difficulties. That this has not been done for so long in the oil and gas industry only makes it look like there is strong demand for the producers management. This is false, it is an illusion. What is needed is the producers to signal to the marketplace in its entirety, that the innovative and risk oriented marketplace is what is necessary for all concerned to prosper in this new age.

Technorati Tags: Langlois, Genesys, Research, Innovation

An excellent resource that is a must read.

The title of this entry will take you to Professor Langlois Economics 486 "The Economics of Organization" which to me is a highly recommended set of slides to view. They lay out in very fine detail the beginning and current theories of the firm and markets. I hope you enjoy this resource as much as I.

Technorati Tags: Innovation, Research, Langlois, Development

Langlois has more to say on transactions.

Professor Richard N. Langlois wrote a fairly current paper on "The secret life of mundane transaction costs". Clicking on the title of this entry will enable you to download the .pdf from the Social Science Research Network.

Professor Langlois refers to Oliver Williamson for a summary of what transaction costs are, "...costs of running the economic system". (2006 pp. 1) A large part of that system is the costs associated with establishing and supporting standards. Here in Alberta we have a number of groups that have created standard ways and means of conducting business in the oil and gas industry. These standards help to form and support the culture of the industry, and that is particularly, the joint operating committee, the organizational focus of these writings.

"The modularity theory of the firm."

Dr. Langlois uses the established industry standards and the methods of enforcing compliance into the economic system to "establish and maintain a system of property rights." Langlois organizes the costs into 3 categories, I will mention those categories and then provide examples of the types of costs that are incurred in each category.

1) "Contains the fixed costs of establishing and maintaining a system of property rights."

Including the basic laws of the land, and the Alberta Governments royalty and mineral rights development laws and regulations, Petroleum Accountants Society of Canada, Canadian Association of Petroleum Landman, Public Petroleum Data Model and other standards bodies. The point in this categorization is to determine what the real fixed costs of establishing and maintaining the standards of operations of oil and gas are in Alberta and Canada. Needless to say many of these organizations are representative of larger global groups that have influence through out the global oil and gas industry.

2) "Contains costs that are paid periodically. These depend on time, but not on number or volume of transactions."

Langlois interestingly takes this categorization and classifies items like salaries of police, costs that are a function of time, in application to oil and gas, this would include the SEC, FASB, Auditors, Engineering appraisals and other compliance costs to regulations as the variable or time dependent costs of establishing and maintaining property rights in the oil and gas industry.

3) "Contains all the costs that come with the number of transactions or volumes of transfers."

The last grouping of costs Langlois sets out is the definitive variable costs of production. Based on the level of activity is the criterion that establishes the volume of costs and what Lanlois describes as "Neo-Classical T-Costs." These would include the royalties actually paid, the investment dollars spent, the costs associated with the revenue from the production of oil and gas.

Langlois has categorized these further, and are combined into the following;

• Category 1 and 2 = Costs of establishing and maintaining property rights.
• Category 3 = the Neo-Classical T-Costs mentioned.
• Category 2 and 3 = Mundane transaction costs.

It is at this point Langlois sets out to establish that these costs categories "have a secret life" and indeed "have a secret life cycle". In summary he is establishing much of the information analysis, or the tool that I previously wrote about from Baldwin and Clark. Through this the architecture of the industry is combined with the standards to form not only the encapsulated (companies) and modules (individuals) but also a means of operation via the price system.

Dr. Langlois quotes Hayek in this regard; it is a salient point;

"The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. ...The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information passed on and passed on only to those concerned. It is more that a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more that is reflected in the price movement." (Hayek 1945, pp. 526 - 527)

The architecture of the industry is what I have asserted is broken. Represented by the hierarchy, the oil and gas industry has been able to establish the appropriate standards and therefore maintain the property rights that are so critical to the development of the oil and gas industry. What is now redundant is the level of capability that is built up within each of the producers. Hierarchies have focused on their own needs and capabilities within the firm itself. Building extensive capacities to accommodate all of the needs that are associated with the category 1) 2) and 3) cost. What is needed is to conduct the analysis on the standards such that the efficient point of each transaction becomes the point of transfer. The tools to use are contained within these two documents of Langlois, Baldwin and Clark. This in a nutshell is the purpose and desired outcome of the development of the Genesys application. A reorganization, and a re-architecture of the oil and gas industry on a global basis.

Ensuring the necessary level of hidden information in each transaction is critical according to Langlois.

"Indeed, as the field of object-oriented programming has taught us, these hidden design parameters generally must not be communicated to others. This is the principle of encapsulation and information hiding. To allow another module knowledge of an access to one's inner workings is to invite those other modules to tinker - and thus to invite butterfly effects."

"The secret life"

Professor Langlois notes the friction that is created in transactions. The costs of standardization, counting and compensation when the tasks are assigned to a third party, or as Coase stated "the costs of using the price mechanism." These "friction" costs are incurred in the transaction as opposed to asking that the work be completed within the firm itself which Langlois suggests it simply doesn't pay to simplify and standardize the transactions, that the coordination costs can be limited by the market size, or if the transactions are more dynamic in nature and are subject to frequent change.

"The secret life cycle."

"With a larger extent of the market, and in the absence of any other kind of transaction costs, it starts to pay not only to subdivide tasks further but also to turn more transfers into transactions." pp. 26

And provides a necessary caution;

"But this is not the same thing as saying that we should observe vertical disintegration in a growing industry. Growth takes place in disequilibrium. And disequilibrium can lead to dynamic transaction costs, especially when the increase in the extent of the market calls for a systemic reorganization of the task-and-transfer system." pp. 27

As time passes, the volume of transactions increase, and the volume of dynamic transaction cost decrease. This makes inherent sense in that the ability to build an industry would require more transfers to mitigate the costs of un-standardized transaction costs. However, after time the reverse becomes the norm in that "thick markets will increasingly come to supplant management as a mechanism for buffering uncertainty". pp. 30 This phenomenon is what Langlois has called "The Vanishing Hand".

Technorati Tags: Development, Langlois, Research, Strategy

I want to reiterate my concern.

First, yes I want an iPhone as soon as possible. The networking and Mac OS / X underpinnings will make the "tool" usable by everyone and anyone.

Secondly, yes I will develop unique applications that employ the iPhone in the many ways the oil and gas users will want. Using Cascading Style Sheets, Ajax and JavaScript limit the scope of the applications that can run on the iPhone to ones imagination.


And thirdly, yes, I want to reiterate a concern that I mentioned last summer. As with any new technology the security and access privelages are becoming much more difficult to have under even reasonable control. My concern about wifi enabled pod slurping can and will be one of the greater risks to corporate security.

Technorati Tags: Security, Software, Innovation
Photo Courtesy of Apple.

Determining transactions, transfers and the division of labor.

Clicking on the title of this entry will enable you to download an article from the Social Science Research Network. This article was noted on Professor Langlois' guest blogging posts on Organizations and Markets and is a continuation of my research into his thinking. The article is written by Carliss Y. Baldwin and Kim B. Clark and is entitled:

"Where do organizations come from? A network design perspective of the theory of the firm."

The article discusses transactions and transfers of value in the business setting. A rather boring topic however, I think this article is of value in defining a tool for a company such as Genesys, with the means to analyze and develop new divisions of labor in oil and gas.

The approach that I am making here is based on the need to expand the growth opportunities of the oil and gas industry. Agreement amongst most economists would reflect that the expansion of Adam Smith's division of labor is the means to enhance the productivity of the oil and gas worker and the industry as a whole. Enabled by the new technologies, and reflected in the different make-up of markets as I proposed in the Human Resource Marketplace and Petroleum Lease Marketplace. The division of labor will need to be "adjusted" for every process, transaction, transfer and job. The tool that is defined in this paper provides us with the means to do this analysis.

Tearing into the document we find the articles definition of a transaction is:

"...objects that are transacted must be standardized and counted to the mutual satisfaction of the parties involved. Also in a transaction, there must be valuation on both sides and a backward, compensatory transfer - consideration paid by the buyer to the seller. Each of these activities - standardizing, counting, valuing, compensating - adds a new set of task and transfers to the overall task and transfer network. Thus it is costly to convert even the simplest transfer into a transaction."

The authors provide us with an appropriate definition. I would also assert the makeup and origin of these transactions might change due to the available information technologies. Oil and gas will have new more efficient means and methods to conduct transactions, and that is where the focus and value of this blog’s concepts are concerned. Does it make sense that a "Production Accountant" focus only on their employer’s production, or would it be more valuable to have the "Production Accountant" work for a variety of Joint Operating Committee's in a specific geographical area? "What would the revised job consist of..." is how we could analyze the changes with this tool.

The authors then introduce two concepts that are of critical competitive value, "Information Hiding" and "Thin Crossing Points". These two concepts define the need for the transaction and transfer to occur at the point where the simplest interface between the two parties exists. This "Thin Crossing Point" provides both vendor and purchaser with the ability to hide information from each other and still achieve the greatest level of efficiency in conducting the transaction, asserting that:

"The user and Producer need to deploy knowledgeable in their own domains, but each needs only a little knowledge about the other's. If labor is divided between two domains and most task-relevant information hidden with each one, then only a few, relatively simple transfers of material, energy and information need to pass between the domains." pp. 17

Using the example of the "Production Accountant" we can now analyze whether the transactions of his / her efforts should be conducted at the simplest point. This is because the transactions that are involved are standardized, counted, valued and compensated on the basis of (here in Canada) the EUB, the Accounting and Operating Procedures as defined and agreed to by the Joint Operating Committee.

The reason that I have selected the Production Accountant is due to the fact that there are never enough of them. A position that requires specific skills that always seems to be in short supply. The industry as I have suggested throughout these writings needs to undertake a revolutionary new approach to the business of oil and gas. Based on the science and engineering, it's obvious that wells will be drilled at a faster rate and the decline in reserves will continue to accererate. Therefore to sustain and grow the base of oil and gas production will require more Production Accountants, or, as I have proposed a different way of accounting for the production.

The authors then note:

"Placing a transaction - a shared definition, a means of counting, and a means of payment - at the completed transfer point allows the decentralized magic of the price system to go to work." pp.22

Intuitively Langlois was correct in his assertion that the decentralized production methods were more efficient then the high throughput production methods the industry is configured around. Therefore this last quotation provides a very detailed tool to determine the division of labor of the "revised" oil and gas industries. From this process the authors note:

"The most significant fact about this system, is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on..." Frederick Hayek (1945)

The authors provide another definition and concept:

"Encapsulated Network in a larger system of production is to facilitate complex transfers without making all of them transactions". pp 28

Which to my mind shows where the real value in this entire process is not only would the encapsulated network achieve the greatest efficiencies in the transfer and transaction. It would enable the participants to focus on their unique competitive advantages. I have suggested in previous postings and the research documents that the oil and gas industries competitive advantages lie in the oil and gas leases in which they own. The ability to find, develop and produce those reserves are the critical activity that the company is evaluated on. The producer should consider these assets and skills as the key point of where their competitive advantages are. The direct employment of production accountants within each company does not provide any value to the producer.

Therefore, the make or buy solution provides the justification for the new approach to defining the Production Accountants job, organization and processes. The ability to buy the services would offload the need to have each company with adequate production accountants to complete the required reporting. This assumes of course that the production accountants would be able to organize themselves in some manner that provided a greater overall capacity then what is currently available, and that is what the division of labor sets out to provide, an increased throughput from the same resource.

Technorati Tags: Innovation, Langlois, Research

Photo Courtesy Guileite

A quick note...

Clicking on the title of this entry will enable you to download the paper that Professor Langlois won for Shumpeter Prize, entitled. The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy.

Technorati Tags: Langlois, Research

Langlois provides more food for thought.

Dr. Richard N. Langlois has, to my mind, hit a few more balls out of the park. They come from "Chapter 4 The rise of the corporation." In it he suggests the organizations that developed over the past centuries sought "buffers" in order to mitigate the variances in markets. These buffers include inventories and in oil and gas commercial storage has been an area of significant investment over the past decade. These "buffers" help to offset the difficulties of the business and make the potential variances dissipate in terms of their magnitude and frequency. Langlois notes that buffers come with the cost of a lack of operational flexibility.

In the last three days the price of oil has fallen almost $8.00 or 12.5%. It is fair to assume that the costs of production have not declined by that amount, but what will we see the producers do from this price decline? They will probably revisit their capital budgets for the next year and slash them based on this new pricing information. The ability to reduce production, particularly from the fields that are high cost, and may now be losing money, does not exist.

Langlois states the concentration of high throughput production, the current industry makeup, is contrasted to the decentralized production model.

"In a world of decentralized production, most costs are variable costs; so, when variations or interruptions in product flow interfere with output, costs decline more or less in line with revenues. But when high-throughput production is accomplished by means of high-fixed-cost machinery and organization, variations and interruptions leave significant overheads uncovered." pp.58

What would be required to transform the industry from a concentration of high throughput production to an industry using the decentralized production model?

With the radical shifts in the commodity prices the industry adopts one of two positions, full production with no capital expenditures or full production with full capital expenditures. Leading only to further and further problems down the road. What is needed is what Langlois suggests, a move to a decentralized production model, which to me sounds like the joint operating committee. Without the ability to limit the production of a facility that has begun costing due to the commodity price declines. The industry will forever be subject to wild swings in the prices of their commodities.

The scaling back of production based on its contribution is a scenario that I can easily see the ownership consensus of the joint operating committee attaining. Methods and procedures to map the costs to the prices and ensure that the facility is not run at a deficit in terms of its earnings. This would have the immediate effect of removing the high cost production from the market, so that the market could adjust based on that information. Is this not what OPEC has been doing in the last year?

Currently the greatest influence on the price of oil and gas is the 5 day weather forecast. This strikes me as insane. I am asserting the oil and gas industry is failing as a high throughput production type of industry. Langlois states that there is a process to enable these changes.

"Economic growth occurs at the hands of entrepreneurs, who bring into the system knowledge that is quantitatively new - knowledge not contained in the existing economic configuration." pp.27.

I can only hope that industry will accept these facts and proceed with this project. As next week marks the start of the marketing of these concepts we will know fairly soon.

Technorati Tags: Call-to-action, development, Langlois, Research, strategy

"Economic growth is about the evolution of a complex structure"

In his book "The Dynamics of Industrial Capitalism" Richard N. Langlois, Professor of Economics at the University of Connecticut stated, "Economic growth is about the evolution of a complex structure". This expands on Adam Smith's theory of the division of labor.

If the energy industry is going to increase its output, the first order of business is to settle on a new form of organizational structure. In oil and gas the joint operating committee is the legal, financial, operational decision making and cultural frameworks of the industry. This is on a global basis. Once the software is built to explicitly support the joint operating committee, recall that software defines and constrains the organization; the industry can then proceed to expand its output. I am at a loss to determine what other means could be used to increase the capacity output?

Here we have further academic support for using the Joint Operating Committee. With over 230 years since Adam Smith wrote his theory on the division of labor, it is a testament to the strength of his thinking that we quote him so frequently. Dr. Langlois' quotation provides further evidence that the ability to expand will first and foremost require new organizational forms to institute growth. To me the choice is very simple.

Technorati Tags: Call-to-action, Military-Command, Research

Enterprise Search and Security.

New Idea Engineering publish a monthly newsletter that discusses the difficult topic of enterprise search and security. They have recently published a series of articles under the heading "Enterprise Search: Mapping Security Requirements to Enterprise Search." The three articles are available here, here and here.

In terms of the technology used in this application, I have stated the architecture that will be used here. Two major additions being added to the Genesys architecture are;

• Use of the Google Search Appliance.
• Virtualization of a producers environment on the Grid.

These New Idea Engineering articles point out a number of very important issues that I will address when we are getting closer to the start of development.

Photo Courtesy of fox2mike
Technorati Tags: Development, Strategy, Software, Security, Search

A new addition for 2007.

During December of 2006 I added the books that I have found of interest and feel provide some value to the readers who may share my passion for this topic. Another area that I think I will add some value for the reader is a listing and my justification for readers to go out and secure documents that are published in a variety of journals.

There are three authors that provide the stimulation for many of the ideas here. They are Dr. Paul Romer at Stanford, Dr. Giovanni Dosi at the Sant'Anna School of Advanced Studies and Dr. Carlota Perez who is a guest researcher at Cambridge University. These three have formed a topic that is of much interest to me and I would like to point out the individual documents that are currently being research by myself.

In the past I would post many of their thoughts and ideas, however, I believe that to be a violation of their Copyright. I therefore will only point them out and suggest that many of the documents are hard to source and in most cases, require access to the major academic database services.

So for this first installment I want to highlight three documents that combine to form a series of discussions about the changes that are happening in the business and technical worlds. They reflect the changes will be some of the most radical that we have faced in many years and will be difficult for people and organizations to adapt. Much of the writing notes a transition to a different time where the fundamental basis of the economy has changed. We are in this period now and it seems timely to review these three documents.

1. Perez, Carlota (2004) Finance and Technical Change: A Long Term View (Provided here from her website.)
2. Romer, Paul (2007) Economic Growth (Provided here from the Concise Encyclopedia of Economics.
3. Perez, Carlota (2003) Rethinking Globalization After the Collapse of the Financial Bubble: An essay on the challenges of the Third Millennium (Provided here from her website.)

I hope that you enjoy them as much as I. As I begin to conduct more research, I trust there will be many more of these types of posts.

Technorati Tags: Research, Innovation, Cluster, Dosi

Measuring Innovation in oil and gas.

It seems somewhat appropriate at the beginning of the new year to discuss what might be a good measurement of innovation in oil and gas. What criteria can an oil and gas company use to determine their level of innovation year over year, and in comparison to other producers. To me innovations purpose is to enhance the productivity of the oil and gas worker. Therefore, understanding there are reasonable exceptions, I would propose we use annual revenue per employee.

I have seen companies that have been able to achieve high metrics in terms of their productive capacity per employee. Mapped over a period of many years, revenue per employee would reflect on the producers ability to secure land, find commercial reserves and produce them profitably. Reflecting on the entire history of the facilities and fields the company owns and operates. Comments?

Technorati Tags: Innovation, Measurement, Strategy

My Christmas tradition...

In past years I have blogged a specific writing of my favorite author, Ralph Waldo Emerson. This year I am extending the tradition to me two new blogs.

The writing that I have selected for this year is Ambraham Lincoln. A writing that was prepared for the president at his funeral.

From RWE.org - The Complete Works of Ralph Waldo Emerson - Volume XI - Miscellanies (1884)
Contributed by Ralph Waldo Emerson
XV
ABRAHAM LINCOLN

REMARKS AT THE FUNERAL SERVICES HELD IN CONCORD, APRIL 19, 1865

" NATURE, they say, doth dote,
And cannot make a man
Save on some worn-out plan,
Repeating us by rote:
For him her Old-World moulds aside she threw,
And, choosing sweet clay from the breast
Of the unexhausted West,
'With stuff untainted shaped a hero new,
Wise, steadfast in the strength of God, and true.
How beautiful to see
Once more a shepherd of mankind indeed,
Who loved his charge, but never loved to lead;
One whose meek flock the people joyed to be,
Not lured by any cheat of birth,
But by his clear-grained human worth,
And brave old wisdom of sincerity!
They knew that outward grace is dust;
They could not choose but trust
In that sure-footed mind's unfaltering skill,
And supple-tempered will
That bent, like perfect steel, to spring again and thrust.

Nothing of Europe here,
Or, then, of Europe fronting mornward still,
Ere any names of Serf and Peer
Could Nature's equal scheme deface; . .
Here was a type of the true elder race,
And one of Plutarch's men talked with us face to face."
LOWELL, Commemoration Ode.

ABRAHAM LINCOLN

WE meet under the gloom of a calamity which darkens down over the minds of good men in all civil society, as the fearful tidings travel over sea, over land, from country to country, like the shadow of an uncalculated eclipse over the planet. Old as history is, and manifold as are its tragedies, I doubt if any death has caused so much pain to mankind as this has caused, or will cause, on its announcement ; and this, not so much because nations are by modern arts brought so closely together, as because of the mysterious hopes and fears which, in the present day, are connected with the name and institutions of America.

In this country, on Saturday, every one was struck dumb, and saw at first only deep below deep, as he meditated on the ghastly blow. And perhaps, at this hour, when the coffin which contains the dust of the President sets forward on its long march through mourning states, on its way to his home in Illinois, we might well be silent, and suffer the awful voices of the time to thunder to us. Yes, but that first despair was brief: the man was not so to be mourned. He was the most active and hopeful of men; and his work had not perished: but acclamations of praise for the task he had accomplished burst out into a song of triumph, which even tears for his death cannot keep down.

The President stood before us as a man of the people. He was thoroughly American, had never crossed the sea, had never been spoiled by English insularity or French dissipation ; a quite native, aboriginal man, as an acorn from the oak ; no aping of foreigners, no frivolous accomplishments, Kentuckian born, working on a farm, a flatboatman, a captain in the Black Hawk War, a country lawyer, a representative in the rural legislature of Illinois ;- on such modest foundations the broad structure of his fame was laid. How slowly, and yet by happily prepared steps, he came to his place. All of us remember - it is only a history of five or six years - the surprise and the disappointment of the country at his first nomination by the convention at Chicago. Mr. Seward, then in the culmination of his good fame, was the favorite of the Eastern States. And when the new and comparatively unknown name of Lincoln was announced (notwithstanding the report of the acclamations of that convention), we heard the result coldly and sadly. It seemed too rash, on a purely local reputation, to build so grave a trust in such anxious times ; and men naturally talked of the chances in politics as in-calculable. But it turned out not to be chance. The profound good opinion which the people of Illinois and of the West had conceived of him, and which they had imparted to their col-leagues, that they also might justify themselves to their constituents at home, was not rash, though they did not begin to know the riches of his worth.'

A plain man of the people, an extraordinary fortune attended him. He offered no shining qualities at the first encounter ; he did not offend by superiority. He had a face and manner which disarmed suspicion, which inspired confidence, which confirmed good will. He was a man without vices. He had a strong sense of duty, which it was very easy for him to obey. Then, he had what farmers call a long head ; was excellent in working out the sum for him-self; in arguing his case and convincing you fairly and firmly. Then, it turned out that he was a great worker ; had prodigious faculty of performance ; worked easily. A good worker is so rare ; everybody has some disabling quality. In a host of young men that start together and promise so many brilliant leaders for the next age, each fails on trial ; one by bad health, one by conceit, or by love of pleasure, or lethargy, or an ugly temper, - each has some disqualifying fault that throws him out of the career. But this man was sound to the core, cheerful, persistent, all right for labor, and liked nothing so well.

Then, he had a vast good nature, which made him tolerant and accessible to all ; fair-minded, leaning to the claim of the petitioner ; affable, and not sensible to the affliction which the innumerable visits paid to him when President would have brought to any one else.' And how this good nature became a noble humanity, in many a tragic case which the events of the war brought to him, every one will remember; and with what increasing tenderness he dealt when a whole race was thrown on his compassion. The poor negro said of him, on an impressive occasion, " Massa Linkum am eberywhere."
Then his broad good humor, running easily into jocular talk, in which he delighted and in which he excelled, was a rich gift to this wise man. It enabled him to keep his secret; to meet every kind of man and every rank in society ; to take off the edge of the severest decisions ; to mask his own purpose and sound his companion ; and to catch with true instinct the temper of every company he addressed. And, more than all, it is to a man of severe labor, in anxious and exhausting crises, the natural restorative, good as sleep, and is the protection of the overdriven brain against rancor and in-sanity.

He is the author of a multitude of good sayings, so disguised as pleasantries that it is certain they had no reputation at first but as jests ; and only later, by the very acceptance and adoption they find in the mouths of millions, turn out to be the wisdom of the hour. I am sure if this man had ruled in a period of less facility of printing, he would have become mythological in a very few years, like Æsop or Pilpay, or one of the Seven Wise Masters, by his fables and proverbs. But the weight and penetration of many passages in his letters, messages and speeches, hidden now by the very closeness of their application to the moment, are destined hereafter to wide fame. What pregnant definitions ; what unerring common sense ; what fore-sight ; and, on great occasion, what lofty, and more than national, what humane tone ! His brief speech at Gettysburg will not easily be surpassed by words on any recorded occasion. This, and one other American speech, that of John Brown to the court that tried him, and a part of Kossuth's speech at Birmingham, can only be compared with each other, and with no fourth.

His occupying the chair of state was a triumph of the good sense of mankind, and of the public conscience. This middle-class country had got a middle-class president, at last. Yes, in manners and sympathies, but not in powers, for his powers were superior. This man grew according to the need. His mind mastered the problem of the day ; and as the problem grew, so did his comprehension of it. Rarely was man so fitted to the event. In the midst of fears and jealousies, in the Babel of counsels and parties, this man wrought incessantly with all his might and all his honesty, laboring to find what the people wanted, and how to obtain that. It cannot be said there is any exaggeration of his worth. If ever a man was fairly tested, he was. There was no lack of resistance, nor of slander, nor of ridicule. The times have allowed no state secrets ; the nation has been in such ferment, such multitudes had to be trusted, that no secret could be kept. Every door was ajar, and we know all that be-fell.

Then, what an occasion was the whirlwind of the war. Here was place for no holiday magistrate, no fair-weather sailor ; the new pilot was hurried to the helm in a tornado. In four years, - four years of battle-days, - his endurance, his fertility of resources, his magnanimity, were sorely tried and never found wanting. There, by his courage, his justice, his even temper, his fertile counsel, his humanity, he stood a heroic figure in the centre of a heroic epoch. He is the true history of the American people in his time. Step by step he walked before them ; slow with their slowness, quickening his march by theirs, the true representative of this continent ; an entirely public man ; father of his country, the pulse of twenty millions throbbing in his heart, the thought of their minds articulated by his tongue.

Adam Smith remarks that the axe, which in Houbraken's portraits of British kings and worthies is engraved under those who have suffered at the block, adds a certain lofty charm to the picture. And who does not see, even in this tragedy so recent, how fast the terror and ruin of the massacre are already burning into glory around the victim ? Far happier this fate than to have lived to be wished away ; to have watched the decay of his own faculties ; to have seen - perhaps even he - the proverbial ingratitude of statesmen; to have seen mean men preferred. Had he not lived long enough to keep the greatest promise that ever man made to his fellow men, - the practical abolition of slavery ? He had seen Tennessee, Missouri and Maryland emancipate their slaves. He had seen Savannah, Charleston and Richmond surrendered ; had seen the main army of the rebellion lay down its arms. He had conquered the public opinion of Canada, England and France. Only Washington can compare with him in fortune.

And what if it should turn out, in the unfolding of the web, that he had reached the term ; that this heroic deliverer could no longer serve us ; that the rebellion had touched its natural conclusion, and what remained to be done required new and uncommitted hands, - a new spirit born out of the ashes of the war ; and that Heaven, wishing to show the world a completed benefactor, shall make him serve his country even more by his death than by his life ? Nations, like kings, are not good by facility and complaisance. " The kindness of kings consists in justice and strength." Easy good nature has been the dangerous foible of the Republic, and it was necessary that its enemies should outrage it, and drive us to unwonted firmness, to secure the salvation of this country in the next ages.

The ancients believed in a serene and beautiful Genius which ruled in the affairs of nations; which, with a slow but stern justice, carried for-ward the fortunes of certain chosen houses, weeding out single offenders or offending families, and securing at last the firm prosperity of the favorites of Heaven. It was too narrow a view of the Eternal Nemesis. There is a serene Providence which rules the fate of nations, which makes little account of time, little of one generation or race, makes no account of disasters, conquers alike by what is called defeat or by what is called victory, thrusts aside enemy and obstruction, crushes everything immoral as in-human, and obtains the ultimate triumph of the best race by the sacrifice of everything which resists the moral laws of the world.' It makes its own instruments, creates the man for the time, trains him in poverty, inspires his genius, and arms him for his task. It has given every race its own talent, and ordains that only that race which combines perfectly with the virtues of all shall endure.'

Technorati Tags: Emerson, Tradition, Innovation

One year summary.

It was December 29 last year that I started writing this blog. It was at the prompting from a friend that I write about the things that I was researching. Write about the things I was passionate about, to write about innovation in the oil and gas industry. I thank him for pointing out this opportunity to me. I started this blog with several specific objectives in mind;

1. Discuss the methods of (re)-organization of oil and gas firms, and specifically, replace the hierarchy or bureaucracy with the industry standard Joint Operating Committee (JOC).
   
2. Debate and discuss the attributes and elements of innovation within the oil and gas industry.
3. Explore the impact of today's information technologies, and their role in making energy firms more innovative and accountable.
4. Discover what is possible and how things could be better.
   

I am pleased to report that these objectives are being, and will continue to be, met. I am also pleased to report that I have no shortage of material to write about. The basis of this website is my Master's Thesis that proved the joint operating committee is the optimal organization for innovative oil and gas producers. The scale of this revised organizational structure is not small. The re-organization, re-configuration, and re-everything of every element of activity, process, data and approach in oil and gas is affected. I've certainly landed in the middle of a fire storm of controversy, conflict and best of all, value for all concerned.

Reviewing the material that I posted this past year, I noticed a theme that I thought was rather valuable for the industry. That these concepts and material, particularly the new organizations supported by the new information technologies, was being accepted in the larger academic arena. Explicit support was being built for these concepts. I was able to spin these concepts out of this weblog and publish the "Final Research Report." This support alone has significant tangible value for the energy industry. Value in that it documents the many calls to action that are being stated throughout the world for both the energy industry and business community in general.

There is something else I want to point out. That is the value that this weblog represents. I think the oil and gas worker has a central location for discussion and presentation of material that is consistent with the innovative employee / worker, and the technologies impact. These are the main focus of the recent revisions that I've done to the website. I am therefore making this an unexpected, and much valued objective of my writings.

Another area that I am particularly enthusiastic about is the Massachusetts EnerTech Cluster that was recently announced by Dr. Robert Metcalfe. This is based on the desperate need for something of this nature, and is building on the works done by the recent efforts of MIT's. This is necessary, and I would assert should have been done many years ago. I also foresee similar, however more limited, clusters of Energy Information Technologies in both Silicon Valley and Houston. These three locations will be the brain trust of how the energy needs of the future are met.

Technorati Tags: Innovation, Massachusetts-Enertech-Cluster, Proposal, Summary

MIT President Emeritus on MIT Video

Dr. Charles M. Vest provides an interesting discussion regarding the teaching and developmental challenges that the engineering disciplines will go through in the next 14 years.

At around the 35 minute point, Dr. Vest states their is a parallel to the current issues the energy industry faces, with the issues the auto industry faced in the 1970's. An interesting and accurate analogy.

During the Q and A Dr. Vest makes the point that at a diner with Secretary Rice, regarding the changes at the State Department, Newt Gingrich made it very clear, we have something that was built for a different era, that science and technology in industry have to re-organize to meet the challenges of today.

Technorati Tags: MIT-Video, MIT, Engineering, Innovation

Metcalfe's declaration of the Massachusetts Enertech Cluster

Dr. Robert Metcalfe is a major force in the technology world. He is the inventor of Ethernet which is the basic underlying infrastructure of the Internet. Based on Ethernet, Metcalfe founded 3Com which was an integral part of the building of the Internet. A man of great ideas, and a man who has the ability to make those ideas operate in the real world.

Dr. Metcalfe has been affiliated with MIT through out the years, and works with Polaris Partnerships, a venture capital firm he owns, and has recently guest blogged on VCMike's Blog, a silicon valley early stage venture capitalist. Click on the title of this entry to review Metcalfe's ideas.

Metcalfe's ideas are that the greater Boston area holds 10 first class research universities and over 100 universities in total. This is the place that he proposes to house the "Massachusetts Enertech Cluster"(MEC). He proposes the MEC to be modeled on the Silicon Valley Cluster, the area of MEC's focus will be on innovation in oil and gas, and I can not agree with him more.

Metcalfe's interest from a venture capital perspective are listed in this blog entry and include: Ember, Scicortex, and Greenfuel.

"Ember is a networking company that delivers tiny radio semiconductors and protocol software. Ember’s aim is to network all the world’s embedded micro-controllers, of which, according to IDC (another Massachusetts company) there will be 10 billion new ones shipped next year. Ember’s go-to-market focus is home and building control. And what do you think the principal benefits of home and building control are? By wirelessly controlling lights, heating, ventilation, and air conditioning, many of Ember’s early customers are conserving energy. By wirelessly reading meters, many of Ember’s early customers better measure the energy they are saving"

"SiCortex is a computer systems company, so why is it an example of Massachusetts enertech? First, SiCortex has just launched open-source software Linux superclusters that improve by factors of 10 delivered computational performance per dollar, per foot, and, yes, per watt. Because they each consume two factors of 10 fewer watts than the PC microprocessors on our desks, SiCortex fits six 64-bit microprocessors on a chip and therefore 5,832 in a single cabinet, cooled by air, saving energy on running the computers and even more on cooling them. That’s enertech. And second, SiCortex is enertech because its superclusters are designed for high-performance computing applications, prominent among which are seismic data analysis for oil exploration, climate modeling, fluid dynamics, reactor simulations, quantum chromo dynamics — enertech. No wonder the lead in SiCortex’s recent $21M venture financing was Chevron."

"GreenFuel is now working with huge electric power plants in the Arizona desert to scale up its enertech. GreenFuel pipes CO2-laden flue gases through algae slurries circulating in solar bioreactors. GreenFuel algae use photosynthesis in enertech greenhouses to remove greenhouse gases (CO2 and NOx) from the flue gases before release into the atmosphere. And then, get this, the rapidly thickening algal slurry is harvested several times per day to produce lipids, starches, and proteins for extraction into substantial quantities of, respectively, biodiesel, ethanol, and feed. GreenFuel algae-solar bioreactors do require acreage, water, and electricity, but junk land, dirty water, and single-digit percentages of parasitic power. GreenFuel treats CO2 as a valuable plant food and, rather than try to sequester it expensively, GreenFuel recycles CO2, cleaning the atmosphere while producing cheap and clean energy"

Out of these I would particularly like to point out the business of Ember. Building the network for all the worlds embedded network microcontrollers. Metcalfe defines the market as being 10 billion devices that will be shipped in 2007. IPv6 will provide the unique addressing of each of these devices, wirelessly. This is exactly the reason why IPv6 and WiMax reside in my Technical Vision.

This is evidence to me we are entering a world where things are changing quickly. Companies that continue to hold on to old ways of business risk everything. Now is the time for change.

Technorati Tags: MEC, Innovation, Metcalfe, Change

The attention economy.

John Hagel III has written a fascinating series of articles on what is being called the "Attention Economy". His comments are located here, here and here. I highly recommend my readers to view these articles thoroughly. Hagel picks up from the quotation of Professor Herbert Simon, Nobel Laureates quote,

"...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of the information sources that might consume it."

I think that Hagel is picking up where Simon's comment left off and introduces some current research that Michael Goldhaber is doing in this area. Goldhaber's best articles are here, here and here. Attention is not a commodity, in that it is fixed and Hagel discusses both the scope of your own attention and the attention that ideas can garner and sustain. I wanted to comment on the important impact of this thinking and relate the significance of what I think is being said.

For myself I find the demand to keep enhancing my information systems requires daily diligence of what, where and who I spend my attention on. If I am not vigilant I become satisfied with the status quo and that is a dangerous attitude to have these days. There is enough justification and supporting information to ignore and belittle the overall and global changes that are occurring today. Many prefer to refer to their BlackBerry's and consume their lives in the day to day grind of mindless activity. We need to focus our attention on what and where we are going with these technologies. If we loose sight of the road that we are travelling on we could be lost for a sizable amount of time.

An important point of view to maintain is the technology works for me to meet my needs, I do not respond in any way to the demands of the technology. Needless to say I have no BlackBerry and I ensure that at least 80% of my synchronous time is spent in person, with limited amount of time being spent on phone calls. I communicate asynchronously, or at my time, on my schedule and my agenda. Many things fall off the table as a result, and I am best able to prioritize what is necessary.

The other aspect that is important is the speed at which things are viewed. I like to spend as much time as I can per day on reviewing and writing what I am researching about. With three blogs and two major topics it is something that requires a focus that is difficult to sustain. So there are two modes, quick and summary where little is available for immediate recall, yet some of the more important aspects are recalled many days later, or as required. Here is where Google is an invaluable tool in that I am then able to re-find that reference almost immediately. And then there is the reading and reviewing at the pace that is necessary to take notes and assimilate the complex topics that demand my time and efforts. These can take a goodly amount of time, but that time is afforded to me as I know nothing otherwise will be lost.

I frequently look at it from the point of view that Google has provided me with at least 7,000 of the smartest people in the world, working to make my information better. Google also provides me with the supercomputing power necessary to index and make available that information that is the most important to me. Such power in the hands of every user will make the majority of the major issues in the world more solvable. The most surprising element of this tool is that Google is making a billion dollars a quarter doing this. The attention economy operates on a different premise.

So what is it that I am trying to do here. In a nutshell I am trying to create and sustain the necessary attention of my readers to ensure that their time is most effectively spent on reading, sharing and conversing through this blog. There ability to be fully informed through a high quality filter is what I am preparing and providing to them in this blog format. The recent changes that I have made to this blog are designed to increase the value and usability. And include;

• Use of Labels, as well as Technorati tags, providing my readers with a variety of ways to aggregate items that I and others write about.
• I installed three custom search engines;
• Oil and gas custom search reviews the highest quality journals and sites that cover the global oil and gas business. As I find more high quality documents and sites I will add them to that search engine.
• Innovation search engine reviews the quality documents and sites that I discover and use in my research regarding innovation.
• Academic search engine that provides the best academic sites available. Oxford, Harvard, MIT, London School of Economics, University of Chicago, Berkely, Princeton, Yale and Stanford to name just a few. Other sites like DSpace and most of the universities that provide their course offerings and videos online.
• I have installed not only the del.ico.us articles that I read and find of value, but now have included the tag cloud that these articles and tagging provides. Readers are encouraged to fully explore the referenced articles and tags, they are there for your reading enjoyment and to act as a filter to get to the quality stuff first. Please don't hesitate to join my del.ico.us network while visiting.
  
• I have also provided 50 of the most recent blog posts and readings that I discover through my RSS reader, Google Reader. These url's can be seen by going to the website where these ideas are hosted. These provide my readers with the best of the best.
• And finally a financial summary that caters to the oil and gas market activity. And a summary of the Sun Microsystem Aquarium which is where the J2EE server that we will be using is summarized.
  

If I am able to provide quality reading material and idea generation for my viewing public, focused on innovation in the oil and gas industry globally. With a strong focus of my writing regarding the revolutionary use of the joint operating committee, I think that I am spending my time as effectively as I can. I believe that this enables my readers to focus their attention a little clearer on the issues and opportunities we all face in the oil and gas industry.

I hope you enjoy this as much as I do. As I have mentioned here before, there is no better job in the world from my point of view. I will be writing more on the topic of the attention economy and work hard to focus my readers attention as finely as I can.

Technorati Tags: Attention-Economy, Hagel, Research, Strategy

Some books I like.

104 Titles of some of the best books that I found.

The Strategy of Conflict
Thomas C. Schelling

Classical and nonclassical logics : an introduction to the mathematics of propositions
Schechter, Eric, 1950-

Winning at collaboration commerce : the next competitive advantage
Collins, Heidi.; Gordon, Cindy.; Terra, Jose Claudio Cyrineu.
August 23, 2005

Computational Economics
David A. Kendrick, P. Ruben Mercado, Hans M. Amman
December 15, 2005

The Constitution of Society: Outline of the Theory of Structuration
Anthony Giddens
January 11, 1986

Execution: The Discipline of Getting Things Done
Larry Bossidy, Ram Charan, Charles Burck
June 15, 2002

Extreme Competition: Innovation And the Great 21st Century Business Reformation
Peter Fingar
January 31, 2006

The fast forward MBA in project management
Verzuh, Eric.

Freakonomics : a rogue economist explores the hidden side of everything
Levitt, Steven D.; Dubner, Stephen J.

The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style and Your Life
Thomas W. Malone
April 2, 2004

Genome
Matt Ridley
October 3, 2000

Happy Lives and the Highest Good : An Essay on Aristotle's "Nicomachean Ethics"
Gabriel Richardson Lear
January 5, 2004

Human accomplishment : the pursuit of excellence in the arts and sciences, 800 BC to 1950
Murray, Charles A.

Ideas Have Consequences
Richard M. Weaver
September 15, 1984

Income Distribution in Macroeconomic Models
Giuseppe Bertola, Reto Foellmi, Josef Zweimuller
December 1, 2005

Innovation, Organization and Economic Dynamics: Selected Essays
Giovanni Dosi
September 23, 2001

It's About Time : Understanding Einstein's Relativity
N. David Mermin
November 1, 2005

The Java programming language
Arnold, Ken, 1958-; Gosling, James.; Holmes, David (David Colin)

Java: An Eventful Approach
Kim Bruce, Andrea Danyluk, Thomas Murtagh
July 29, 2005

Leading with questions : how leaders find the right solutions by knowing what to ask
Marquardt, Michael J.

Learning the bash Shell
Newham, Cameron.; Rosenblatt, Bill.

Lecture Notes in Microeconomic Theory : The Economic Agent
Ariel Rubinstein
December 16, 2005

Max Plus at work : modeling and analysis of synchronized systems : a course on Max-Plus algebra and its applications
Heidergott, Bernd.; Olsder, Geert Jan.; Woude, J. W. van der.

On Adam Smith's Wealth of nations : a philosophical companion
Fleischacker, Samuel.

The only sustainable edge : why business strategy depends on productive friction and dynamic specialization
Hagel, John.; Brown, John Seely.

Philosophy as a Humanistic Discipline
Bernard Williams, A. W. Moore
January 2, 2006

Politics and Vision : Continuity and Innovation in Western Political Thought
Sheldon S. Wolin
May 3, 2004

The Politics of Good Intentions : History, Fear and Hypocrisy in the New World Order
David Runciman
May 5, 2006

Producing security : multinational corporations, globalization, and the changing calculus of conflict
Brooks, Stephen G., 1971-

Radical evolution : the promise and peril of enhancing our minds, our bodies--and what it means to be human
Garreau, Joel.

The Singularity Is Near : When Humans Transcend Biology
Ray Kurzweil
September 22, 2005

The State of Democratic Theory
Ian Shapiro
August 18, 2003

The Strategy of Conflict
Thomas C. Schelling
June 26, 2003

The Success of Open Source
Steve Weber

Swarm creativity : competitive advantage through collaborative innovation networks
Gloor, Peter A. (Peter Andreas), 1961-

The Theory of Corporate Finance
Jean Tirole
December 15, 2005

Understanding institutional diversity
Ostrom, Elinor.

The West's last chance : will we win the clash of civilizations?
Blankley, Tony.

Wicked cool Java : code bits, open-source libraries, and project ideas
Eubanks, Brian D.

Winning at collaboration commerce : the next competitive advantage
Collins, Heidi.; Gordon, Cindy.; Terra, Jos©♭ Cl©Łudio Cyrineu.

Winning the Knowledge Transfer Race
Michael J. English, William H. Baker
October 25, 2005

The World Is Flat: A Brief History of the Twenty-first Century
Thomas L. Friedman
April 5, 2005

Infrastructure: A Field Guide to the Industrial Landscape
Brian Hayes
September 26, 2005

It's Not What You Say...It's What You Do: How Following Through at Every Level Can Make or Break Your Company
Laurence Houghton, Laurence Haughton
December 28, 2004

Knowledge Accumulation and Industry Evolution : The Case of Pharma-Biotech
Mariana Mazzucato, Giovanni Dosi
March 9, 2006

The Nature and Dynamics of Organizational Capabilities
Giovanni Dosi, Richard R. Nelson, Sidney G. Winter
January 15, 2001

Technology, Organization, and Competitiveness : Perspectives on Industrial and Corporate Change
Giovanni Dosi, David J. Teece, Josef Chytry
May 21, 1998

Technology and Enterprise in Historical Perspective
Giovanni Dosi, Renato Giannetti, Pier Angelo Toninelli
August 1, 1992

The Economics of Technical Change and International Trade
Giovanni Dosi, Keith Pavitt, Luc Soete
March 23, 1991

Technical Change and Economic Theory (Ifias Research Series, Number 6)
Giovanni Dosi
October 23, 1990

Technical Change and Industrial Transformation
Giovanni Dosi
August 23, 1984

Technical change and survival: Europe's semiconductor industry (Industrial adjustment and policy)
Giovanni Dosi
February 23, 1981

Sisomo: The Future on Screen
Kevin Roberts
November 15, 2005

An Army of Davids : How Markets and Technology Empower Ordinary People to Beat Big Media, Big Government, and Other Goliaths
Glenn Reynolds
March 7, 2006

The Prepared Mind of a Leader : Eight Skills Leaders Use to Innovate, Make Decisions, and Solve Problems
Bill Welter, Jean Egmon
October 24, 2005

License to Harass : Law, Hierarchy, and Offensive Public Speech (The Cultural Lives of Law)
Laura Beth Nielsen
August 30, 2004

Plato's Fable : On the Mortal Condition in Shadowy Times (New Forum Books)
Joshua Mitchell
March 3, 2006

China the Balance Sheet: What the World Needs to Know about the Emerging Superpower
Institute for International Economics, Center for Strategic & International Stu
April 10, 2006

A Machine to Make a Future : Biotech Chronicles
Paul Rabinow, Talia Dan-Cohen
April 7, 2006

Dynamic Models in Biology
Stephen P. Ellner, John Guckenheimer
March 31, 2006

Information Science
David G. Luenberger
February 15, 2006

Information Revolution : Using the Information Evolution Model to Grow Your Business
Jim Davis, Gloria E. Miller, Allan Russell
January 9, 2006

Managing in the Next Society
Peter F. Drucker
July 24, 2002

The Long Tail : Why the Future of Business Is Selling Less of More
Chris Anderson
July 11, 2006

A New Kind of Science
Stephen Wolfram
May 14, 2002

The Second Cycle: Winning the War Against Bureaucracy
Lars Kolind
April 24, 2006

Competing on the Edge : Strategy as Structured Chaos
Shona L. Brown, Kathleen M. Eisenhardt
April 15, 1998

The Innovation Killer: How What We Know Limits What We Can Imagine... And What Smart Companies Are Doing About It
Cynthia Barton Rabe
June 30, 2006

A Whole New Mind: Moving from the Information Age to the Conceptual Age
Daniel H. Pink
March 24, 2005

Schumpeter on the Economics of Innovation And the Development of Capitalism
Arnold Heertje, Jan Middendorp
March 24, 2006

Infrastructure: A Field Guide to the Industrial Landscape
Brian Hayes
September 18, 2006

Choice and Consequence
Thomas C. Schelling
April 4, 2006

Micromotives and Macrobehavior (Fels Lectures on Public Policy Analysis)
Thomas C. Schelling
October 23, 1978

Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages
Carlota Perez
April 23, 2003

Innovation, Organization and Economic Dynamics: Selected Essays
Giovanni Dosi
September 23, 2001

Evolutionary Economics and Creative Destruction (Graz Schumpeter Lectures, 1)
J. Metcalfe
January 28, 1998

Knowledge, Institutions and Evolution in Economics (The Graz Schumpeter Lectures)
Brian Loasby
September 23, 2002

Schumpeter and the Endogeneity of Technology : Some American Perspectives
N. Rosenberg
June 23, 2000

Joseph Alois Schumpeter
Wolfgang F. Stolper
August 8, 1994

Democracy, Education, and Equality: Graz-Schumpeter Lectures (Econometric Society Monographs)
John E. Roemer
January 9, 2006

Invisible Engines: How Software Platforms Drive Innovation and Transform Industries
David S. Evans, Andrei Hagiu, Richard Schmalensee
October 1, 2006

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
Matthew R. Simmons
June 10, 2005

iWoz: From Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It
Steve Wozniak, Gina Smith
September 25, 2006

Mavericks at Work: Why the Most Original Minds in Business Win
William C. Taylor, Polly G. LaBarre
October 2, 2006

America Alone: The End of the World as We Know It
Mark Steyn
September 16, 2006

Power, Speed, and Form: Engineers and the Making of the Twentieth Century
David P. Billington, David P. Billington Jr.
October 2, 2006

Painting outside the Lines: Patterns of Creativity in Modern Art
David W. Galenson
January 18, 2002

Old Masters and Young Geniuses: The Two Life Cycles of Artistic Creativity
David W. Galenson
December 27, 2005

Capitalism and Freedom: Fortieth Anniversary Edition
Milton Friedman
November 15, 2002

The Road to Serfdom Fiftieth Anniversary Edition
F. A. Hayek, Milton Friedman
October 15, 1994

The Constitution of Liberty
F. A. Hayek
October 15, 1978

Law, Legislation and Liberty, Volume 1: Rules and Order
F. A. Hayek
February 15, 1978

Law, Legislation and Liberty, Volume 2: The Mirage of Social Justice
F. A. Hayek
October 15, 1978

Law, Legislation and Liberty, Volume 3: The Political Order of a Free People
F. A. Hayek
March 15, 1981

Individualism and Economic Order
F. A. Hayek
June 1, 1996

Capitalism and Freedom: Fortieth Anniversary Edition
Milton Friedman
November 15, 2002

Free to Choose: A Personal Statement
Milton Friedman, Rose Friedman
November 18, 1990

A New Kind of Science
Stephen Wolfram
May 14, 2002

The Emotion Machine: Commonsense Thinking, Artificial Intelligence, and the Future of the Human Mind
Marvin Minsky
November 7, 2006

Organizations,
James G. March
June 5, 1958

Lectures on Economic Growth
Robert E., Jr. Lucas
February 15, 2002

The Attention Economy : Understanding the New Currency of Business
Thomas H. Davenport, John C. Beck
June 6, 2001

Change or Die: How to Transform Your Organization from the Inside Out
M. David Dealy, Andrew R. Thomas
November 30, 2005

Technorati Tags: Books,, Innovation

Writing as an art form.

I enjoyed writing what I have called the final research report, it tops out at a little over 23,000 words and is the culmination of many of the ideas and issues regarding the oil and gas industry. One thing that I have learned, and enjoy about the skill of writing, is that generally the author does not know what he / she is writing about until such time as the work is completed in their mind, and they sit down and read it from cover to cover, literally for the first time.

I have experienced this phenomenon before in my writing. I thoroughly enjoy the final reading as there is some almost secret point that has been hidden deep in the subconscious that is being said in the words. I know I will be the first to see what that is, and it will be I who will be the most excited to discover it. This proposal did not disappoint.

The idea that came to the forefront is the copyright itself, and specifically, its application in what would be considered a unique way. The copyright has become a major sticking point with the industry and is deemed by myself to be of extremely high value. The point about ideas is that good ideas take an immense amount of intellectual effort to complete. The copyright is a monopoly granted to the writer for the lifetime of the writer + 70 years after death.

The point that I understood from my writing about the copyright is this. The copyright is far more valuable to industry then it is to me. My desire to keep it in tact and close care of it is also in the best interests of the industry. Why, for 2 reasons for sure, and their may be more, however, what I've learned in the development and writing of this proposal are these:

1. The level of technical risk that is inherent in these developments is high.
2. To focus the attention of the industry on the project owned by the copyright holder.

To expand on these concepts a little further, this copyright helps to focus the energy industries efforts on these software developments. For them to spend any money and resources on a pirated software venture would be wasteful and still born from the word go. Companies are not in the business of taking risks and the risks associated with sponsoring a pirated software venture are 100% in this instance.

Therefore industry is left with their resources being pooled to address, and mitigate the technical risks associated with these software developments. A handy benefit for the industry. From my point of view, I have done the industry a big favour by consolidating this intellectual property in one location. I doubt they will share in this opinion, however, it is time to start working together to solve these problems and building these solutions. I hope that they see this too.

Technorati Tags: Genesys, proposal, art-form, writing