Leadership in the User Community Part IV

Yesterday we discussed the career risks to those that may take the plunge and join the user community in one of the many leadership positions that are open. Today I want to discuss what it is these people will be doing if they do join. And what impact they will have on the oil and gas industry in the mid to long term. It would be my opinion that the work that is being done in People, Ideas & Objects and the user community will be some of the most interesting work that has ever been undertaken in the oil and gas industry. Few opportunities of this scale would come around within the lifetime of an individuals career, if at all. I have stated before this may be a once in a century type of opportunity.

The bureaucracy has been the prevalent form of organization in business since they took over from the merchants in the late 1800’s and early 1900’s. What we are doing with People, Ideas & Objects and the user community is retiring the bureaucracy and replacing it with a new form of organization primarily focused around the Internet. This is the trend that is happening in all industries as the Internet is capable of providing greater efficiency in terms of the management of our organizations. This is the scale of the changes that are being made through the implementation of the Preliminary Specification and the development of the user community.

To participate in this level of revolutionary change. That is on such a scale, is a once in a century type of opportunity. The opportunity to take today’s prototypical producer firm and convert it to the one that operates under the Preliminary Specification and the user community doesn’t exist. The scope of change necessary is beyond what is humanly possible. The forces of inertia from the bureaucracy would need to be fought at every step and our energy would be wasted in such battles. So we chose not to concern ourselves with such battles and instead rely on the forces of creative destruction to make the choice between the performance that the bureaucracy provides, and the solution that we present here with the Preliminary Specification and the user community.

The transition from the bureaucracy to the Preliminary Specification may be as a result of successful producers buying out laggard firms that refuse to change. That is the normal course of change as a result of creative destruction. We don't know and we certainly don’t care. What we are concerned with is that we provide the most profitable means of oil and gas operations. And with the Preliminary Specification we already have a material difference in our value proposition. This will be the focus of the development of the user community and particularly the leadership. One area of our value proposition that we are unable to quantify is the value that we will be able to provide the dynamic, innovative and profitable producer due to the toolset that we implement within the Preliminary Specification. And that toolset currently consists of automation of the business process, specialization and the division of labor. With the configuration of the industry into service providers there is ripe material here for the ability to significantly add more value to the industry.

So it is these topics and areas of focus that will be the domain of the leadership within the user community. Very high level, once in a century type of work that will be something an individual can highlight their career with. The changes we are making are dramatic and will have a material effect on the performance, makeup and manner of how the oil and gas operates for the next 50 to 60 years. Foundational work that is material to how the producer performs, and since our organizations are a critical part of our society, healthy organizations lead to healthy societies which lead to healthy individuals.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Leadership in the User Community Part III

There are significant opportunities that lay ahead for the people who participate on the leadership team of the user community. They will have a hand in developing the organization that defines the manner in which the oil and gas’ business model is defined and supported. As we have noted before, the motivation for participation is the power and the money that the user community and service providers will hold in the new oil and gas industry. That’s the upside, and for the individual members of the leadership team, this upside will be significant. There are however some risks, and most of all the costs associated with participation in the user community in any one of the leadership positions.

The first cost that you'll incur, particularly in the short term. Is that your connections that provide you with your source of income, whatever that is, a job, revenue in your firm etc. will be at risk to dry up faster than you can say “what happened?” The bureaucracy doesn't mind acting out against individuals and when they see an individual who is taking a position that is counter to their long term benefit they act swiftly and ruthlessly. If you need your job or are happy with your company you should think twice about a leadership position. Leaders are expected to suffer for their cause. And this will be the primary way in which you will suffer. I can almost assure you that you will not survive in your job or your business if it is discovered that you have taken a leadership position in the user community.

The upside is that you’ll have significant amounts of time to commit to the user community. The next five years will certainly draw in your time and tax your savings while you pedal backwards in your life while everyone else moves forward in theirs. This can be a difficult thing for some people to sustain. To maintain the necessary focus on the job at hand while their ship is being torn apart by the storm. Do you continue on where the sailing “might” be better or turn back to port. This takes a certain type of fortitude and is not the domain of the majority of the population. It takes a certain type of person. An “A” class entrepreneur I would suggest.

The prize is that there will be revenues that are established in the user community. In the current budget the user community has a budget of $333 to $667 million for the software development costs of the Preliminary Specification. These are for the initial commercial release. As we have indicated before People, Ideas & Objects and the user community are based on the changes that are required in the industry. It is those changes that are the source of our revenues. People, Ideas & Objects and the user community are very much going concerns for the long term.

In addition the members of the user community are the ones that are establishing the service providers who provide the administrative and accounting services to the oil and gas producers under the decentralized production model. It is estimated that the revenues for these service providers for the North American oil and gas industry will range in the area of $40 - $60 billion per annum. These revenues are a replacement of the current G&A costs of the producers. It will be the leadership team that would have the primary opportunities in configuring solutions within the user community and the service providers. Therefore the known risks that were indicated in the earlier part of this post are not without their significant potential rewards.

People, Ideas & Objects have a reasonably high profile with the bureaucracy. If your name should show up as being involved in this project, not something that we would do first of all, they would attack you and anyone who shared that name with you. We can do this quietly. And protect people as much as possible. The Internet will provide us with some anonymity for some time. It also reduces our costs to the time involved in this project. So if you can hold your position and work on this project outside your job, all the better. We just need to realize that we operate in an extremely hostile environment that is very dangerous to those who participate here. And we need to take steps to ensure that no one is subjected to the bureaucracies antics unnecessarily..

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Leadership in the User Community Part II

The first installment of "Leadership in the User Community" was posted on April 22, 2014.

We have consistently asserted that we provide greater value to the dynamic, innovative and profitable oil and gas producer over what the bureaucracy is providing today. Our focus on developing the user community, its leadership and the associated service providers is our primary task in the next five years. We do this as we are striving to provide an alternative means of organization to the oil and gas industry. So that the oil and gas investor, and the people who work in oil and gas can choose the bureaucracy or People, Ideas & Objects Preliminary Specification, the user community and service providers as the method to manage their industry. Organizations don't change. Therefore without alternatives we are stuck with the bureaucracy. If we don’t work towards building an alternative, nothing will change. And just as organizations don't change, people do. And this is the place where people can begin the process of changing the oil and gas industry from a tired, poorly performing, muddling along behemoth to a dynamic, innovative and profitable industry.

We have documented within the Preliminary Specification how it provides over $705 billion in opportunity costs over the current bureaucracy. There are additional benefits that are not quantifiable that can be gained from the tools of specialization and the division of labor. It is a new way of operating the oil and gas industry. And as we have stated here before. Even if the bureaucracy could park their own selfish self interest and wanted to proceed with the developments we would not begin until the user community was fully formed. The Preliminary Specification is a fine vision of what the industry can operate as. However without the user communities involvement in the software developments it will be a great vision without the appropriate implementation. There must be strong user community involvement in the software development of the Preliminary Specification. It is mandatory, and as I have pointed out the user communities development is our current number one priority for the next five years. We have set this long time frame as we are without the support of the industry. The bureaucracy are challenged by the Preliminary Specification. They are eliminated from the landscape by it and therefore don’t want to be part of it. Therefore they will not support us. And therefore we have to build the user community brick by brick and stick by stick. And that takes time.

We have set out the 28 leadership positions of the user community that we are actively seeking to recruit today. These people will form the leadership team and help to develop the user community over these next few years. In preparing an offering for people to make a decision to go with our solution. And what that is qualitatively and quantitatively is unknown and unknowable at this time. We need to figure that out. We have however proven that we provide substantial value over the status quo. And the logic is compelling. People can see where and how they fit in within the industry quickly and begin to effectively and efficiently do their job. Using the Joint Operating Committee is a very natural way of organizing the oil and gas industry.

What compels someone to even think that we need to develop an alternative to the current way things are done. I don't know, and as I have indicated this has been a long term prospect for me. What I do know is that it doesn't sound so crazy anymore. Industry after industry is being disintermediated by Information Technology. And that is what we are doing here with the Preliminary Specification. And it is timely from a business point of view. The prolific nature of shale reserves is demanding a new business model be generated for the oil and gas industry. A business model that deals with the resource abundance and price destroying nature of producers producing unprofitable production. A business model that deals with allocating production fairly, based on profits and doesn’t harm a producer with shut in production with excessive G&A costs. A business model like the Preliminary Specification supported by the user community and the service providers.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Industry Specific ERP Systems

Modern miracles like the decentralized production model work because they are developed for the oil and gas industry. Just like SAP’s success in manufacturing is so strong. But don't take SAP’s success in manufacturing as the reason that it will succeed in oil and gas. And don't take the Preliminary Specification and expect it to do anything in the manufacturing sector. ERP applications need to be developed specifically for the industry that they operate in. The one size fits all type of ERP software product that is used to limited success currently. Is no longer capable of providing value to the dynamic, innovative and profitable oil and gas producer.

For Ford and GM there is no choice as to which system you want to operate with. SAP was designed and built for a major tier 1 manufacturer such as they are. What it does is schedule and manage the tier 2 and tier 3 manufacturers to bring their supply chain in line with Ford or GM’s needs. All that Ford or GM have to do is say they want a red truck to be built and the purchase orders for all the parts are distributed to all the manufacturers that build those parts and they are brought to the assembly line exactly when they are needed to build that truck. SAP does this with a precision and ease that make it their business in any manufacturing environment of size and scale. This is where they dominate and are the defacto standard ERP system.

At the same time SAP, which is the standard ERP system in the oil and gas industry, has essentially nothing to do with what happens in the oil and gas industry. Oil and gas is somewhat remotely related to a manufacturing process. Or it could be suggested that might have been the case in the past. And therefore elements of the SAP application might have been able to be retrofitted. With what I assert, the dynamic, innovative and profitable oil and gas producer needs, is the focus on the sciences on a go forward basis. And therefore the ability of SAP to deal with the needs of the oil and gas producers demands in the future are lost due to their focus on the tier 1 manufacturing capabilities.

At the same time it would be inappropriate for People, Ideas & Objects to market the Preliminary Specification or the decentralized production model to the likes of Ford or GM. Systems today have unique attributes that are industry specific and once outside of that industry, those software attributes are counter to the interests of any the other industry.

We may see what People, Ideas & Objects are imputing in their offering coming about in other industries in the next few years. What we are imputing is a homologation of the industry on one ERP system. And in the case of oil and gas that one system is People, Ideas & Objects Preliminary Specification hosted in a cloud computing configuration. With the capital costs of development, the focus necessary to complete the developments, high levels of inter-company interactions and the advantages of standardization. Competition in the ERP systems space will be between industry specific players with intra industry competition being a thing of the past.

Some would disagree with me on the viability of a model based on the ability to compete within an industry as a sole provider. Those that would disagree should be reminded that it is the Intellectual Property of the Preliminary Specification that is the source of competitive advantage that is used by People, Ideas & Objects. The ability and capability to circumvent that IP doesn’t exist in the marketplace. Therefore making the scenario that I have sketched out here the more probable one for the 21st century.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

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A New Business Model Based On Value

Our discussion of the business models that are under management by the software of People, Ideas & Objects, the user community and the service providers and how we generate the majority of the value represented in our claim of $705 billion in opportunity costs. What the decentralized production model provides the dynamic, innovative and profitable oil and gas producer is the ability to become a price maker as opposed to the traditional role of a price taker.

What the decentralized production model involves is the reduction of the footprint size of the prototypical oil and gas producer. Focusing on their key competitive advantages of their earth science and engineering capabilities, and their land and asset base. The producer is stripped down to the C class executives, the earth science and engineering resources, the land and legal, with some support staff. The remainder of the firm is reorganized permanently to service providers who are focused on an administrative or accounting process. And use the industry as their client base. It is in this way that the service providers are able to focus on their key competitive advantages of automation, specialization and the division of labor. As a result they are able to provide their clients, the producer firms, with better services at lower costs than what would otherwise be provided under the corporate model, or as we call them, the bureaucracy.

There are additional benefits as a result of using the decentralized production model. Each of the service providers are billing their services directly to the Joint Operating Committee that is incurring the administrative or accounting item. For example if the lease rental payment processor, or the production, revenue or royalty accountant processed a unit of activity for the property that month. Then they would charge that Joint Operating Committee for a lease rental payment processing fee, a production accounting fee, royalty accounting fee or revenue accounting fee. The real value comes into play if the producer decides, if the property is unable to cover the costs of operations and is indeed producing a loss, to shut-in the property. At which time the costs for the production, revenue and royalty accounting process service providers would not have any activity for the month and no administrative or accounting service fees would be incurred for the month where no production was produced. Note there may still be a charge for the lease rental payment as that is a charge that is incurred irrespective of production. And may be classified as a capital charge.

The point in having the administrative and accounting charges for the property to cease when there is no production is to have the property report a null operation. This is simply no loss, and no profit. The revenues less operations less overhead costs of the operation are null. This provides the producer with the benefit that the loss that was previously realized is no longer recorded. That the reserves that were being produced at a loss can be saved for a time when they can be produced at a profit. And the commodity markets can have an effective floor placed under them to ensure that there are no future declines in the commodity prices and that their other production receives a reasonable price.

If producers were to remove 15% of the production from the North American marketplace. The natural gas prices would rise to the point where the remaining natural gas production would all become profitable. This can be done under the decentralized production model without any of the producers being punished or harmed as a result. The reduction of your production profile has an equal effect on the G&A costs of the producer. If you reduce your production to 80% then your G&A would immediately scale to 80% as well. And the profitability on your remaining production would soar. This is the benefit that all producers would achieve under the decentralized production model and the reason for the high value of the opportunity costs.

The service providers would be the ones who would shoulder the loss of revenue as a result of any production cuts by the producers. However they are also the ones that are able to address the costs that they incur in providing the services to the producers. In essence, it is the service providers that are indirectly providing the producers with the ability to control their G&A costs for the very first time in the history of the industry.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Role of IT in Today's Organizations

The last time we discussed the user community we were addressing the two key motivating factors that people would be involved in the user community. And they were, that this was not your typical user community that is constrained in so many ways that caused it not to produce, or have any ideas, or even meet the needs of its community. The People, Ideas & Objects user community was different. In that we documented that it has both the power and the money to determine its and the industries direction with respect to the business models contained within the Preliminary Specification. These business models currently include the Joint Operating Committee and the decentralized production model. As time passes there may be additions to the user communities domain of business models and they would assert their authority over these as well.

Software can dictate the implementation of the business model. Indeed it is software that defines and supports the organizations that we use today. And that is why there have been no changes in your ERP software systems for the last ten years. The bureaucracy knows where their world begins and ends. And if they change the software they risk losing control of the organization. This is why they fight so hard against People, Ideas & Objects. When it comes time to structure the industries business model and provide them with the most profitable means of oil and gas operations it is necessary to get to the software development first. That is the role of Information Technology in the 21st century. It is not a cost of business. It is the business. Many people don't want to admit that fact. And as a result they will be left in the past. The fact of the matter is it is useless to own the oil and gas assets. If you don't also have access to the software that makes the oil and gas assets profitable. This is what People, Ideas & Objects, the user community and our service providers are providing the dynamic, innovative and profitable oil and gas producers.

It is our three organizations that are providing the industry with the choice of who manages their assets. The choice is between the bureaucracy and People, Ideas & Objects et al. We provide the most profitable means of oil and gas operations with over $705 billion in opportunity costs for the period between 2009 and 2019. These are incremental revenues above and beyond what the bureaucracy are able to provide. A substantial value proposition for a minimal cost and a reasonable amount of effort. The bureaucracy would have you join them in Church and sing hymns in prayer for another cold winter. That is what they think is valuable. We however, are offering an alternative.

The user community has defined a leadership team consisting of 28 representatives from the oil and gas industry. These people are being actively recruited now to help in the development of the user community. It is our plan to put together what is necessary, to provide the oil and gas investor, with an alternative means of organization for the oil and gas industry. What that actually consists of and how that comes about is unknown at this time. We will figure this out as time goes on. We have set out an appropriate amount of time for the development of the user community. Five years. And though this is an expensive time in terms of the opportunity costs to the industry. To expect that the bureaucracy will be doing anything but fight us and obstruct us in every way that they can, would be foolhardy. We therefore need this time to build this community on the basis of an effort that is built brick by brick, and stick by stick.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Pooling of Technical Resources in the Partnership Accounting Module

A few weeks have passed and its time to revisit some element of the Preliminary Specification to keep it fresh in everyone’s mind. Staying within the Partnership Accounting module and continuing on with the theme that we have been discussing regarding the technical resources of a producer firm. Today I want to discuss the pooling and charging of these technical resources to the Joint Operating Committee.

Recently we discussed the need for the members of the Joint Operating Committee to pool the earth science and engineering resources to make up the capabilities necessary for the property. This will be done due to the ability of each and every oil and gas producer to build the capabilities within their own producer firm. This will soon create excessive demand on the earth science and engineering professions that will extend beyond the existing industry resource base. With shortages in the numbers of earth scientists and engineers in the mid to long term. Alternative methods of organization, specialization and the division of labor are the means in which People, Ideas & Objects have chosen to deal with this issue.

When each producer is building the internal capabilities that are needed for their operated properties. They are required to build for every contingency for all of their properties. In doing so they are building capabilities that are unused and unusable when looked at from the industry perspective. These unused and unusable resources are trapped in the producer firm and are otherwise irretrievable. This current method will also discover difficulties as the underlying sciences continue to expand and demand that further specialization of the profession is necessary. Any further specialization, without the ability to reorganize these resources will cause the scope of what a producer needs to have on staff to expand further. Making the financial viability of the producer questionable at any production profile.

What People, Ideas & Objects Research & Capabilities and Knowledge & Learning module enable the producer firm to do is to specialize in their earth science and engineering capabilities. It will be in this way that the producer firm is able reduce the global scope of earth science and engineering capabilities within their firm. And take on a highly specialized capability. Something that the industry demands of the dynamic, innovative and profitable producer of the 21st century. Producers throughout the industry will be doing the same in terms of pursuing their unique specializations and capabilities.

As a result, the abilities and capabilities of the producers that make up the Joint Operating Committee will be diverse and quite probable to include what is required in order to cover off the global scope of the properties needs. A pooling of these capabilities will be enabled through the Knowledge & Learning module as its prime functionality. Additional capabilities, if required, can be made up from the marketplace of other earth science and engineering providers or producers.

Within the People, Ideas & Objects Preliminary Specification it is assumed that the earth science and engineering resources of the firm are not a cost centre but a source of revenue. Whether that revenue is derived as a result of direct charges to the Joint Operating Committee or to, lets call them customer Joint Operating Committees. The dynamic, innovative and profitable oil and gas producer has two separate and distinct revenue streams and lines of business within the lightweight footprint provided through the decentralized production model. This enables the producer firm to develop their earth science and engineering capabilities somewhat independently of their production profile.

The issue that is being resolved through the use of the Preliminary Specification here is the resource limitation of these critical professions. Using organizational methods, specialization and the division of labor are the appropriate means in which to approach the issue. The constraints of the Joint Operating Committee becomes an opportunity as it is the culture of the industry and therefore we are able to release the unused and unusable resources for use into the marketplace. Capturing this surplus capacity and employing it within the producer firms. Creating a second line of business within the producer firm helps to offset the costs of developing these highly specialized resources. Issues and opportunities that the dynamic, innovative and profitable oil and gas producer will need to address in the 21st century.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

What the Future Holds in Oil and Gas

Our primary focus at People, Ideas & Objects is the development of the user community. We have prepared a vision of how that organization will operate. And set out its objective of providing the oil and gas producer with the most profitable means of oil and gas operations. We are undertaking the user communities development in order to remove and replace the current oil and gas industries bureaucracy from their comfortable positions. Providing the oil and gas industry with a dynamic, innovative and profitable capability to deal with the issues and opportunities it faces on a go forward basis.

To date we have established the vision and objectives of the user community. We have also set out 28 leadership positions that make up a leadership team. These positions are being actively sought from those within the industry to begin the process of building an alternative means of organization for the oil and gas industry. It will be these individuals who will invest their time and energy over the next few years in developing the user community to convince the oil and gas investors to choose the user community and People, Ideas & Object as the manner in which to administer the industry. The leadership team is comprised of the Board of Directors, the C class executives and the Product Owners for the Preliminary Specification.

The motivation for people to invest their time and energy in the user community is substantial. Within the user communities vision is the capability of the community to manage the business model of the oil and gas industry. The current business models of the Preliminary Specification include the Joint Operating Committee and the decentralized production model. It is within the user community that they are the point of contact with respect to any changes that are needed or desired in the business model. It is through control of these business models that the user community exerts significant power within the industry. There are substantial business interests that will be generated from the leadership teams participation in the user community. Derived from the user community are the service providers whom the leadership team would potentially be founding members of. A new sub-industry with revenues in the tens of billions of dollars.

One thing we do know is the bureaucracy are not conceding the marketspace to us. They recognize the power and authority that they have within the industry and are not about to give up on it. However, as opposed to conduct themselves in a constructive manner they choose to do nothing in the face of natural gas prices that provide no one with any earnings potential. After several years of overproduction they continue with a flawed strategy that encourages no discussion or recognition that its even an issue. Their franchise is secure and there is little for them to be concerned about. Recently with our claims of providing over $705 billion in opportunity costs, they have begun to address the problem and begun to copy our ideas. However this is only for appearance sake, as we have documented here on this blog their attempts will be fruitless and are only designed to get them past annual report season with a “plan” to deal with the problem.

The question people should be asking themselves is where does the future of the oil and gas industry reside. Is it a dynamic, innovative and profitable industry where Information Technology plays a key role such as with the Preliminary Specification and the user community. And where does the future of the bureaucracy belong. Is it the dominant method of organization that “muddles along” through the issues and opportunities of the day. Hoping and praying for another cold winter as the best strategy for the industry. We've been endowed with unbelievable reserves of natural gas. Are we destined to produce them forever at a loss. Or can we make the changes necessary to implement People, Ideas & Objects and the user community to make the industry a price maker and turn it into the most profitable means of oil and gas operations.

The Preliminary Specification provides the oil and gas producer with the most profitable means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don't forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

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