The Preliminary Specification Part CXLIX (A&S Part VIII)

In determining what and where people can begin the process of “innovating”, if that makes any sense. The search for problems is one of the things that people can do that computers can’t. Discovery of problems is also one of the critical skills in innovation. Therefore the Performance Evaluation and Analytics & Statistics modules should be part of the front lines of an innovative producers strategy. In today’s post we will discuss in general terms the innovation process and how these modules of the Preliminary Specification will help in the initiation of innovative thinking.

Professor Giovanni Dosi states “In very general terms, technological innovation involves or is the solution to problems.” Dosi goes on to further define this as “In other words, an innovative solution to a certain problem involves “discovery” (of the problem) and “creation” since no general algorithm can be derived from the information about the problems. Solutions to technological problems involve the use of information derived from experience and formal knowledge. It is the specific and un-codified capabilities, or tacit-ness” as Professor Dosi describes “on the part of the inventors who discover the creative solution.”

It is therefore asked specifically, how can the knowledge, information and capability of oil and gas firms solve the technical and scientific problems of the future? How can a firm more effectively employ its capability to solve problems and facilitate the discovery of new problems and creation of their solutions? These are the questions that this blog is determined to answer. From the perspective of the Performance Evaluation and Analytics & Statistics modules I think we can provide the user with a variety of tools that helps them to drill down into the data and ask the questions that haven’t been asked. People, Ideas & Objects is an ERP system, however, as we have shown with the modules in the Preliminary Specification there is a lot of data and information that is generated through collaborations and the documenting of items. It won’t be just accountants that will want to use these two modules, but anyone that is employed by a producer firm or Joint Operating Committee.

Here is a quick summary of some of the functionality and process management the Performance Evaluation and Analytics & Statistics modules provide the user.

• The ability to rise above the transactional work that is being managed by the other modules. We are moving from recording of transactions to designing transactions in many of the modules. Leaving the recording of transactions to the computers and the analysis to the users of these modules. 
• Use of the “R” statistical language as an embedded program within both of the modules. 
• Configured user tools that enable the user to demo, or build small applications that fit small niche needs. If these needs grew to where more people wanted similar programs they could be used as a prototype for the People, Ideas & Objects developers to build. 
• Querying and determining where the performance and direction of the firms or Joint Operating Committees value is found. Allowing people to focus on that value generation and avoid the potential destruction of value. 

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 CXLVIII (A&S Part VII)

In today’s post we want to revisit the key factors of innovation and apply them to the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification. In yesterday’s post we noted that the division of the two modules was between the Joint Operating Committee and the producer firm respectively. That these modules would focus on the data within those domains and what has been described as “unstructured” data. Included in that unstructured data would be the data and information contained within the various marketplace modules of the Preliminary Specification.

Turning once again to Professor Giovanni Dosi for the determination of the three key factors of innovation. He notes that they are the result of the “search, development and adoption of new processes and products in market economies are the outcomes of the interaction between:”

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

and

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

and

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

While in the Performance Evaluation and Analytics & Statistics modules the user would be searching for information or some insight into the data. This is the beginning of the innovation process and the tools provided in these modules would be part of the capabilities necessary for innovation to be developed within the innovative oil and gas producer. This is clearly evident by Professor Dosi’s three key factors. With the growth in data expected to continue. Users of these tools would find a rich resource to develop a perspective of looking at the data from an innovative point of view.

Lately we have heard about a new field of data that is growing in importance. Unstructured data. Data that isn't managed by a database and has no implied meaning to its structure. The marketplace modules of the Preliminary Specification, the Resource, Petroleum Lease and Financial Marketplace modules and to a lesser extent the Research & Capabilities module all have “marketplaces” within them. These marketplaces would have substantial unstructured data that would be of use to those potential users of the Performance Evaluation and Analytics & Statistics modules.

Taking a step out further, these two modules should not be constrained to the internal systems of the producers. They should have the ability to access other sources of data and information, structured and unstructured, so that the user can use all three of Professor Dosi’s key factors of innovation to develop new and innovative ideas. It might be worthwhile to have within a “Help” section of the People, Ideas & Objects modules. A section that includes the research of Professor Giovanni Dosi’s work on innovation. Then people would have a quick reference as to items like the three key factors so that they could use them in their day to day tasks to help develop a more innovative mindset.

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 CXLVII (A&S Part VI)

We now begin our third, or innovation focused, pass through the Performance Evaluation and Analytics & Statistics modules of the Preliminary Specification. Recall that these two modules have similar interfaces, the Performance Evaluation is focused on the Joint Operating Committee and the Analytics & Statistics module is focused on the producer firm. Essentially these are user based tools that enable analytical and statistical calculations are run against the data and information that are contained within the People, Ideas & Objects ERP systems and other unstructured data. Providing users with the ability to analyze data in new and innovative ways in seeking value for the firm or JOC.

In many of the posts we have focused on the factor of revenue per employee and included that factor in other modules. Since that factor is a critical component in many of the modules it is calculated only in those modules where the information is most needed. It is not necessarily needed in the Performance Evaluation or Analytics & Statistics modules, however, if the user community wants to put them in then that is their choice. The types of data and information that is prepared and presented in these modules is more dependent on the individual users and will in most instances be unique, based on their needs and interests, their scope of authority and the type of work they do.

When it comes to who will come up with the next great innovation we should expect that it will come from anywhere. Part of the process of innovation is discovery of the problem and we all see the situation from different perspectives. Therefore the point of view and the innovation will depend to a large extent on that different perspective. Someone working in the trenches may find innovations that affect their work materially, which may not interest others and vice-versa. This process of discovery should be assisted by the types of tools that include the Performance Evaluation and Analytics & Statistics modules. Professor Giovanni Dosi notes.

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation.

Irrespective of the source of the innovation the fact that it materially affects someones work should indicate that it should be followed through. These opportunities are hard to discover and we need to be able to evaluate them and assess them based on their impact and their ability to build value. What some times appears to be a good idea can also some times become an area where the firm could be exposed to unnecessary risk or loss. Having the historical data available is necessary, in the 21st century it is also necessary to have the advanced analytical tools to analyze that data.

In the Preliminary Research Report People Ideas & Objects determined two important findings. One was that the process of innovation can be reduced to quantifiable and replicable process. Analytical tools are part of that process. And two, that the Joint Operating Committee is the key organizational framework for innovation in the oil and gas industry. Therefore having analytical tools in the Joint Operating Committee is critical.

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 CXLVI (K&L Part XIV)

In both the Knowledge & Learning and Research & Capabilities modules producers are benefiting from something that may not be too obvious on the surface. That is the objective nature of the People, Ideas & Objects Preliminary Specification and the fact that it is not affiliated with any one specific producer. That is to say it is not an application that grew out of Exxon Mobil, BP or Shell and was used there first. It will be an application that was independently supported through the Revenue Model and will remain unbiased as to which producers perspective it takes. The same can be said for the Community of Independent Service Providers. This may mean more to some producers then others, however, from an innovation point of view it will also mean a few things.

People, Ideas & Objects is focused on providing the innovative oil and gas producer with ERP systems based on using the Joint Operating Committee as the key organizational construct. By having a software development capability present while working within the Knowledge & Learning module, the innovative producer will be able to deal with the many new possibilities in their business. The software that an organization uses is a “technology paradigm” that the oil and gas industry has to consider. And software puts the industry on a new “trajectory” just as we have discussed here for the earth science and engineering disciplines. Professor Giovanni Dosi notes.

• First, new technological paradigms have continuously brought forward new opportunities for product development and productivity increases. p. 1138
• Secondly “A rather uniform, characteristic of the observed technological trajectories is their wide scope for mechanization, specialization and division of labor within and among plants and industries.” p. 1138

Which speaks to the attributes of software. However, would these technological paradigms and trajectories be available to the producer community if the software was owned and operated by Exxon Mobil or Shell. What motivation would they have in making the changes to the software to accommodate your business? The third party, objective nature of People, Ideas & Objects and the Community of Independent Service Providers is necessary for the software to become amenable to the needs of its user communities. If the producer is to rely on this third paradigm and trajectory as a key advancement in their business, then it must remain open to the needs of the community. Professor Dosi notes.

Similarly, new technological paradigms, directly and indirectly -- via their effects on “old” ones -- generally prevent the establishment of decreasing returns in the search process for innovations. p. 1138

Let me restate this for clarity, the indirect nature of ERP software via its effect on the earth science and engineering disciplines, will generally prevent the establishment of decreasing returns in the search process for innovations.

Review of the Preliminary Specification to this point shows how different it is from any other ERP system. It is designed around the Joint Operating Committee, the innovative oil and gas producer and will include the user community in determining its precise needs. This is the type of application that is needed for the 21st century oil and gas producer. A vision that focuses the people who work within the industry on the activities that people do best. Collaborating, researching, evaluating and deciding. And leaves the computers to do the things that they do the best. A software development capability designed to provide the innovative oil and gas producer with the means to all of their ERP software needs. Tomorrow we will begin our innovation review of the Performance Evaluation and Analytics & Statistics modules.

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 CXLV (K&L Part XIII)

Yesterday’s post drew the analogy of a football coach who reviews his list of plays, selects one, and calls it for the team to execute, to the “Planning & Deployment Interface” of the Knowledge & Learning module. The ability for a Joint Operating Committee to have this style of communication and understanding of what needs to be conducted, may be necessary in the very near future. With the insatiable demands for energy, and the ever increasing demands of earth science and engineering work needed with each barrel of oil and gas produced, the amount of work required for the JOC will need to be conducted in a highly organized and controlled manner.

Adding to this level of increased work load the Joint Operating Committee is subjected to the real demands of the expanding earth science and engineering frontiers. In addition the field and service industries are going through their own innovative cycles. The problem is that if each Joint Operating Committee is left to deal with each of these issues on there own, then there will be significant time and energy wasted on pursuing “things” that may or may not bear fruit for the property. This is something that needs to be avoided. However, the JOC needs to be deploying the latest state of the art proven technology in the most capable manner.

If we look over the past many blog posts of the Research & Capabilities and Knowledge & Learning module we can see how these “things” are filtered out and dealt with. The Joint Operating Committee is being provided with the most up to date capabilities from the producer firms that have a financial interest in the property. It is those producers that are expending the research to expand their understanding of the earth science and engineering on behalf of all of their interests in all of their JOC’s. Taking the trips down the blind bunny trails once and only once on behalf of all the JOC’s. Not having each and every JOC discovery the blind bunny trail on their own. Then developing the capability to the level necessary for the inclusion in the “Capabilities Interface” where it will be used successfully by all of the JOC’s they have an interest in.

This process helps the Joint Operating Committee to focus on the property. To eliminate the noise of what is going on in the larger oil and gas arena for the moment and deploy the innovations that are known to add value. It is as when the coach calls the play the only concern is to ensure that you execute your part of the play in the manner that it is designed. There may be times back on the practice field to fiddle with some changes, but for now its time to run the play as it was designed. This is the business of the “Planning & Deployment Interface” in the Knowledge & Learning module.

Professor Giovanni Dosi asserts that much of the innovativeness of a firm is dependent on technology more than science, and is based on several implications. The first implication being the net benefactor of the cumulativeness, tacitness and technological knowledge implies that “innovation and the capabilities for pursuing them are to an extent local and firm specific.” Secondly, the “opportunity for technological advances in any one economic activity can also be expected to, and constrained by, the characteristics of each technological paradigm and its degree of maturity”. This is further defined by the technological and scientific capabilities, and “the advances made by suppliers and customers.” (p. 1137)

These implications that Professor Dosi notes are reflected in the processes managed in the Research & Capabilities and Knowledge & Learning modules. The Knowledge & Learning module enabling the Joint Operating Committee to implement the “innovation and the capabilities for pursuing them are to an extent local and firm specific.” With the Research & Capabilities module providing the future with the “opportunity for technological advances in any one economic activity can also be expected to, and constrained by, the characteristics of each technological paradigm and its degree of maturity”. Providing the producer with the best of both worlds.

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 CXLIV (K&L Part XII)

In our last two posts of the Knowledge & Learning module of the Preliminary Specification. We have discussed the factor of revenue per employee, and the “Capabilities Interface” that is populated with the capabilities of the producers who are part of the Joint Operating Committee. In today’s post we put these two points together. And provide a key point of how the Joint Operating Committee becomes the framework for innovation.

It is important to recall that innovation is not research. Research is being conducted in the Research & Capabilities module and when the research is proven, added to the “Capabilities Interface” which in turn is populated to the Knowledge & Learning module. We have also drawn the football analogy to how the development and execution of capabilities in the producer firm and Joint Operating Committees are similar to the way that football teams plays are developed and executed. Today we want to use the analogy of the coach who is motivated to win, selects the plays from a long list of plays of what the team can execute.

Professor Giovanni Dosi states that profit motivated agents must involve both “the perception of some sort of opportunity and an effective set of incentives.” (p. 1135) Professor Dosi introduces the theory of Schmookler (1966) and asked “are the observed inter-sectoral differences in innovative investment the outcome of different incentive structures, different opportunities or both”? (p. 1135) Schmookler believed in differing degrees of economic activity derived from the same innovate inputs. For the purposes of this post the perception of some sort of opportunity is realized through the members of the Joint Operating Committee reviewing the capabilities that are presented to them through the Knowledge & Learning module. The listing of capabilities presented from the various producers that are participants in the Joint Operating Committee would provide a depth of opportunity that was previously unqualified and unquantified. The incentives would be performance based and focused around the possibility of increasing the trajectory of revenue per employee.

We’ve all seen the coach on the sidelines with the list of hundreds of plays that can be called during the game. Selection of the appropriate play will help to move the team towards its goal of winning the game. To be presented with a list of hundreds of opportunities within a Joint Operating Committee has probably been the case for many in the industry. The ability to select and execute them in the manner that the coach is able to, and have them communicated to the team members for execution in the half second that it takes is the rarity. There is no reason for each and every Joint Operating Committee to not have this type of efficiency in the ability to select and execute the capabilities that are made available to them.

As in the Research & Capabilities module, the Knowledge & Learning module has a “Planning & Deployment Interface”. Within this interface the user is able to select the capabilities they want to deploy from the “Capabilities Interface” and resource it from the Military Command & Control Metaphor. Since the capabilities are listed from various firms in the Joint Operating Committees special considerations may need to be made in terms of the resource requirements. The “capabilities” that are selected are for company x, and available for company x, not necessarily for Joint Operating Committee xyz without the involvement of x. Therefore special arrangements to augment the Joint Operating Committee with resources from company x will most probably be required. From there the execution of the capabilities can take place.

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 CXLIII (K&L Part XI)

One of the advantages of writing the Preliminary Specification in the manner that we are is that you can aggregate the posts for one module by selecting its label. If you have an interest in working only on the Knowledge & Learning module then you can eliminate the other posts by just simply selecting the Knowledge-Learning label on this blog or from here. The disadvantage is that we are repeating ourselves in some cases so that the people who are focusing on one module are picking up all the pertinent information for that module. I would recommend that everyone read all the posts for all the modules as there is significant interactions between the modules, and we may not be able to catch all the pertinent detail that should be included in each module.

Today’s post discusses the risks of proprietary leakage of data or information as a result of the “Capabilities Interface” being populated with the capabilities information from each of the producers who are participants in the Joint Operating Committee.

We have all seen how information or secrets within the industry can travel from one firm to another at a rather rapid pace. No one should be surprised to learn that what they thought was confidential to the firm, was somehow leaked and became well known throughout the industry. It is some times more difficult to communicate information through the organization then it is to get information across the industry. The question therefore becomes how is proprietary information, and more importantly these proprietary capabilities that are available within the producer firms, deployed on an as needed basis within the various Joint Operating Committees.

Professor Dosi notes that although the free movement of information has occurred in industries for many years, yet has never been easily transferable to other companies within those industries. The ability to replicate a competitive advantage from one company to another is not as easy, and may indeed be not worthwhile doing. Dosi (1988) goes one step further and states, “even with technology license agreements, they do not stand as an all or nothing substitute for in house search.” A firm needs to develop “substantial in-house capacity in order to recognize, evaluate, negotiate and finally adapt the technology potentially available from others.”

Within the Knowledge & Learning module we are operating within the Joint Operating Committee. Populated with the capabilities from each of the participating producers through the “Capabilities Interface”. It may be a concern to some producers that the publication of these capabilities to other producers representatives in the Joint Operating Committee would lead to leakage of proprietary information or loss of knowledge or capabilities. That may be, however the nature of capabilities are such that they can’t be copied by a simple matter of recording the text. As we have discussed elsewhere, the development of capabilities is the results of research and application of the resources of the firm in a determined and purposeful manner to achieve an outcome. Copying the plans or instructions would not provide you with the means to achieve the objective.

If it is determined that the “Capabilities Interface” in the Knowledge & Learning module only provides a summary description of the capability, as opposed to publishing the entire capability in the Joint Operating Committee, then if selected it would be assumed that that producers staff would undertake to complete the task. That may be the ultimate solution to the concern for the loss of proprietary information, knowledge or capabilities. What we have to make sure that we don’t lose is the ability to deploy the right information, knowledge or capability at the right time and at the right place. Information’s shelf life expires faster each day. Knowledge, information and capabilities need to be employed and deployed when and where they are needed and required.

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 CXLII (K&L Part X)

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

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

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

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

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

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

and

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

• The structure of demand.

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

• The nature and strength of opportunities for technological advancement.

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

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

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

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

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

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

Professor Dosi (1988) notes a study conducted by Richard Levin et al 1984, in which they studied “the varying empirical significance of appropriability devices of (a) patents, (b) secrecy, (c) lead times, (d) costs and time required for duplication, (e) learning curve effects, (f) superior sales and service efforts.” Professor Dosi (1988) observed, “that lead times and learning cures are relatively more effective ways of protecting process innovations, and patents a more effective way to protect product innovations.” Dosi concludes. “Finally, there appears to be quite significant inter-industrial variance in the importance of the various ways of protecting innovations and in the overall degrees of appropriability”. (p. 1139)

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

Professor Dosi notes that Levin states that the control of complementary technologies becomes a “rent-earning firm-specific asset”. Dosi states “in general, it must be noticed that the partly tacit nature of innovative knowledge and its characteristics of partial private appropriability makes imitation a creative process, which involves search, which is not wholly distinct from the search for new development, and which is economically expensive - sometimes even more expensive then the original innovation, and applies to both patented and non-patented innovations.” (p. 1140)

With the fast changing science and technological paradigms and steep trajectories of the industry, the need to have the capability to innovate will be needed for each producer to develop on their own. If the costs of duplication are as steep as the costs of developing the internal capabilities, the producers should then rely on their process innovations to carry their firm. What are the alternatives. Sitting on your advanced innovations and not using them, for fear that someone will use them, in order to protect them?

However, this giving freely of ones capabilities to the joint account also imputes that a greater level of co-dependency exists. Partners in the Joint Operating Committee will have resources available to commit to the projects, and suppliers will have contributions as well. As the Preliminary Specification seeks to eliminate the redundant and mutually exclusive capabilities being built within each silo’d corporation. The proposed alternative in the Preliminary Specification is to rely on the advanced contributions of the partnerships to bring about the most innovative solutions to the Joint Operating Committee.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

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

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

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

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

With this process in mind, we note that Professor Giovanni Dosi suggests two separate phenomenon are observed:

• First, new technological paradigms have continuously brought forward new opportunities for product development and productivity increases. p. 1138
• Secondly “A rather uniform, characteristic of the observed technological trajectories is their wide scope for mechanization, specialization and division of labor within and among plants and industries.” p. 1138

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

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

The Preliminary Specification Part CXXXIII (R&C Part XXVIII

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

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

As the firm continues on over time, research from the endogenous and exogenous areas become innovations that populate the “Capabilities Interface” which in turn populate the various Joint Operating Committees. This is the process of how I see the innovations developed within the firm and elsewhere are implemented in the innovative oil and gas firm. Professor Dosi (1988) continues on to assert that much of the innovativeness of a firm is dependent on technology more than science, and is based on several implications. The first implication being the net benefactor of the cumulativeness, tacitness and technological knowledge implies that “innovation and the capabilities for pursuing them are to an extent local and firm specific.” Secondly, the “opportunity for technological advances in any one economic activity can also be expected to, and constrained by, the characteristics of each technological paradigm and its degree of maturity”. This is further defined by the technological and scientific capabilities, and “the advances made by suppliers and customers.” (p. 1137) We documented in yesterday’s post that we have three processes that deal with these variables under management in the Research & Capabilities module.

Recently we learned of the difficulty for a firm to copy another firms ideas or capability provides little to no value. On the contrary the effort to copy the capabilities is as potentially difficult as building their own unique capabilities. Today we learn that innovation is dependent on the technology that supports the firm. That is the technology both enables and / or constrains the capabilities of the producer.

Professor Dosi notes “New technology paradigms reshape the patterns of opportunities of technical progress in terms of both the scope of potential innovations and ease with which they are achieved.” p. 1138. The technology that a producer has includes the ERP systems used within the organization.  When the business is a science, as it is in oil and gas, it would be in the producers interest to remain open and flexible in both its scientific and business approach. This is the strategic position that a producer would be capable of maintaining with People, Ideas & Objects software applications, based on the Preliminary Specification.

For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.

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

The Preliminary Specification Part CXXXII (R&C Part XXVII)

Yesterday’s discussion of the Research & Capabilities “Research Budget Allocation Interface” offered the innovative oil and gas producer the opportunity to control the costs of the research and innovation conducted within their firm. We know from Professor Giovanni Dosi that businesses commit to innovation as a result of both the exogenous scientific factors and endogenous accumulated capabilities developed by their firms. We have discussed in fairly good detail how the capabilities are handled in the Research & Capabilities module of the Preliminary Specification. Today I want to continue to discuss how the research end of the module is managed.

With the “Research Budget Allocation Interface” we are able to provide a global view of the capabilities that the firm have under development. As was mentioned yesterday, this interface will provide the user with the ability to see areas that might otherwise fall through the cracks, so to speak. What is needed now is a similar interface that would give a view of the research that is being undertaken in the scientific arenas that enable the producer to “commit to innovation as a result of exogenous scientific factors”.

It might be important to quickly recall the major processes that are being managed in the Research & Capabilities module. We have the “Ideas Marketplace Blog” providing the environment where the service industry is actively developing new and innovative products and services with input from the producers. We have the “Capabilities Interface” where the firm is documenting what it is capable of and can achieve. These capabilities are deployed through the “Planning & Deployment Interface” in the Research & Capabilities or Knowledge & Learning modules and lastly we have the “Research Budget Allocation Interface” we discussed yesterday. There are more processes under management in the Research & Capabilities module, I only wanted to highlight the pertinent ones for the discussion that follows here on the scientific nature of the business.

Professor Dosi concludes that scientific input into the innovation process is evidence of the importance of factors exogenous to competitive forces among private economically motivated actors. This is subject to two important qualifications.

• Science and Technology are self-fulfilling in their developments.
• Scientific advances play a major direct role, especially at an early phase of development of new technological paradigms. p. 1136

These points support Dosi’s (1988) assertion that “general scientific knowledge yields a widening pool of potential technological paradigms,” where the greatest value is attained in the earlier stages. Professor Dosi analyzes the specific mechanisms through which a few of these potential paradigms are actually developed economically, subsequently applied, and that often have become dominant in their industry. The process of selection depends on the following factors.

• The nature and interests of the bridging institutions between pure research and economic applications. (p. 1136)
• Institutional factors that drive the technology or science, such as (the military) (p. 1137)
• The selection criteria of markets and or techno-economic requirements of early users. (p. 1137) (NASA, Pentagon the FDA and Nuclear Reactors for the Navy.)
• Trial and error associated with the Schumpterian entrepreneurship. 

There is little doubt in my mind that we need an interface here. An interface that is similar to the “Research Budget Allocation Interface” would be appropriate. And maybe we only need to establish a second “page” within that interface. One for the internal or endogenous budget items and one for the exogenous budget items. The key here is to note that the greatest value is attained in the earlier stages. And that seems somewhat intuitive doesn’t 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.

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.

2012 Fees Are Now Due

People, Ideas & Objects 2012 software development fees are now due. These fees were set in a November 1, 2011 blog post at $1.00 per barrel of oil equivalent per day production. (Producers with production of 50,000 barrels per day would pay $50,000.00 U.S. for software development fees for the 2012 calendar year.) Penalties of 300% of the 2012 fees will be assessed on any outstanding fees after March 31, 2012. All fees for 2010 onward must be paid in full by the producer before their participation can begin in the user community. 2010 and 2011 fees and penalties were set at $1.00 per barrel of oil equivalent per day production and 300%. All fees for 2010, 2011 and 2012 total $9.00 per barrel of oil equivalent.

Fees are used to support the developments of the Preliminary Specification. Please review our revenue model for more information on our fee structure and policies.

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.