Profile of an Engineer: Part 1 – the 20 year veteran

I thought I would share some musings on differences in the UK economic and social environment as different generations grow up, and the effect it might have on their approach to the future.

I hasten to add that all the characters here are completely made up. This is a deliberate caricature based on some of my own observations but I hope it’s thought provoking at least.

Ok, so meet Peter, he’s got 20 years experience and is currently head of Subsurface at Big Oil Co.

He was born in 1976 so he’s 42 now. He graduated in Geology in 1999. He was taught computing on a Vax mainframe.

The University computers still ran DOS, not Windows. He had to go to the library to research material for his dissertation. When he started work Geology and Geophysics were separate departments and colour pencils were still being used to colour in seismic renderings.

This is what the UK economy was doing throughout his whole time in education.

The FTSE 100 between 1976 and 2000

The prevailing attitude of the time was “we have worked out the formula”. Mankind rocks! You do this, you get that. Put money in the stock market, it goes up. “The end of boom and bust!” (link).

Companies were run by “Command and Control”. You start at the bottom and you work your way up. You do your time. You wear a suit to work.

Peter started work in 1999 and the world turned upside down! This is the FTSE 100 during his career.

The FTSE 100 between 2000 and 2018

So pretty much the day Peter left full time education the formula stopped working! Don’t get me wrong here, I don’t mean the laws of physics stopped working. I just mean the accepted wisdom he was infused with during his education didn’t hold true anymore.

Peter has now lived through his 3rd downturn in the Oil & Gas industry. The ups and downs of the cycle are driven by macro economic trends completely out of his control. The industry itself is slow to change.

Peter recognises the signs of cynicism appearing in his attitude. He fights them because he know’s cynicism kills enthusiam! He is looking for ways to genuinely make things better. He’s still got 20 years before he retires. He needs to prepare is company for the future and that means recruiting great talent. How can he attract them to an industry that’s still talking about how to do that same things it was 20 years ago, and thinks it’s funny when the person opening a “Hackathon” jokes that they can’t spell the word and don’t know how to turn on their iPad thing (link).

Trophic cascades: Wolves, bees and “spreadsheet thinking”​

I don’t hate spreadsheets. Let me make that absolutely clear. I’ve used them for over 20 years and they are very useful. I’ve used them for all kinds of things from calculating inputs for air dispersion models to sizing relief valves and analysing my finances. I’ve even written a complete production reporting system in Excel and VBA for an onshore production facility.

However, I have also seen the dark side of spreadsheets; the misplaced confidence in our ability to accurately model reality. I’m not the only one as there is a European Spreadsheet Risks Interest Group (EuSpRIG) and they have complied a list of over 80 public reports of spreadsheet errors (top 8 here).

But what I want to explore here is two examples from nature that were not exactly caused by a spreadsheet but were caused by what I will call “spreadsheet thinking”. You know, solve for X, build a model that you represents your “problem” and manipulate the variables to maximise your favoured outcome.

They are both examples of Trophic Cascades

Trophic cascades are powerful indirect interactions that can control entire ecosystems

Reintroducing wolves in Yellowstone National Park increased beaver numbers (link)

If you were a cattle rancher or livestock farmer in the early 1900’s you want to maximise the amount of meat you can sell (this is your X). Wolves (W) eat meat therefore driving W towards zero positively influences X. Simple right. The last wolf was killed in 1926 (link) and sure enough it worked, at least it appeared to in the short term. Elk populations increased but they caused all sorts of other problems, including a reduction in the number of beavers because of the loss of willow trees lining the rivers. Coyote numbers shot up, so numbers of Coyote prey went down (rabbits etc.). It was anything but a targeted intervention and completely changed the ecosystem. Wolves were reintroduced in 1995 and now there are 9 beaver colonies instead of just 1. Seems obvious now right, but at the time the cattle ranchers made a convincing argument and the government listened to their case and supported their wolf eradication.

Efficient farming is unsustainable

If you are an arable farmer then you want to maximise the yield from the land you have. This has typically been solved by:

  • Removing hedgerows and making fields as big as possible so they can be worked easily by machines
  • Using fertiliser to increase the growth rates of crops
  • Using pesticides to kill all the things that eat your crops

Over the long term unexpected effects started to appear. Including increased soil erosion, the pollution of rivers and the decline in the bee populations (link). Now there are warnings that the decline in bees could wipe out the British apple industry (link). Oops! The problem was, these interactions were not in the original model.

We can’t keep on making these catastrophic cock-ups. The next phase of growth will have to be more careful about it’s impact on the environment.

Spreadsheets are so 2008!

VisiCalc – the first spreadsheet https://en.wikipedia.org/wiki/VisiCalc

A few weeks ago, at a talk I was giving at a Finding Petroleum conference (link), I quipped that the Oil and Gas industry has been run on spreadsheets for over 30 years. Someone in the audience joked back during the questions afterwards that I wasn’t quite right, it was actually Powerpoint! They had a point, but here’s the reason I think spreadsheets have been the reason for the 20 years of progress between 1980 and 2000 and why they are not the right tool for the next revolution*.

Here is a chart of the FTSE 100 index between 1978 and 2017.

There was a period of about 20 years of near exponential growth between 1980 and 2000. I think there is a strong case to be made that this was thanks to the arrival of the spreadsheet. The first spreadsheet, VisiCalc, was released on the Apple platform in 1979. The first version of Excel came out in 1985 but it wasn’t until the release of Windows 3.1 in 1992 that things really took off.

So why are they responsible for this growth?

Because now we had a tool that allowed us to do much more complex analysis of things. Everyone could build their own model of the world in a spreadsheet and optimise it. Goal Seek let us “solve for X”. Now we could model the past and use it to predict the future – hooray, and off we merrily went. We got really good at planning and offline analysis and developed a centralised Command and Control approach:

  • We better modelled and understood what was happening
  • Data was sent back for offline analysis & understanding
  • Then we sent the instructions back

That was great, but I believe this way of working came to an end with the Dotcom crash in March 2000, 19 years ago today as I write this. The spreadsheets had got too big and our faith in the models we built was misplaced. It’s easy to make errors in formulas but is is very difficult to audit a spreadsheet someone else has built.  Complex spreadsheets make it look like we know what’s going on, and the person with the most convincing argument (best spreadsheet) at the time wins. But it doesn’t mean the answer on the spreadsheet is what will actually happen!  

Every model comes with implicit assumptions and what is not in the model is just as important as what is.

The world has changed. There is now a distrust of centralised decision making and a rebellion against command and control.

Spreadsheets are a great tool and will always be around, but I think we need to change our thinking in order to advance again. We need to move away from the old command and control style. 

We must recognise that we don’t actually know the future and we can’t define exactly what we want/need up front.

We must recognise that we don’t actually know the future and we can’t define exactly what we want or need up front. We have to take small steps, get knowledge, fail fast and learn quickly.

Oh, and why did I pick 2008? Well that was the financial crisis caused by a lot of people doing stuff based on models (most probably on spreadsheets) that they didn’t actually understand.

——

* This is based on a presentation I wrote with Gareth Davies in 2017 and presented at the Digital Energy forum in Aberdeen on 14-March (link).

Looking for inspiration

I like to look across sources for analogy and stimulating ideas. A couple of things have recently caught my eye.

I find it amazing how hard it is for people (including me) to see the implications of new technologies and ways of working. In retrospect, once a change has happened, it’s obvious what the outcome would have to be. But when the change is happening it’s not so clear.

Going up

Ground floor
Perfumery, stationary, and leather goods, wigs and haberdashery, kitchenware and food. Going up…

Can you remember the theme tune to Are You Being Served?

I’m old enough to remember the lift operators in Aberdeen’s E&M and Watt & Grant department stores. They were replaced by automated lifts in about 1980. The stores have both succumbed – one to the shopping mall, the other a victim to digital retail.

Being a lift operator was a skilled profession, making sure that you stopped the elevator car level with the floor and opening the concertina iron-work doors with the brass handles.  Apparently New York’s last lift operator was only made redundant in 2009 Link

The Economist 1843 magazine just ran a story making the connection between the elevator operators strike and the adoption of self-driving cars. We could probably do the same with roles in the oil field.

The elevator strikes in 1945-47 crippled the city, and led to calls to redesign the city so that only low-rise development was permitted – to reduce the power of unions.

Of course, the answer was – as we know – automated elevators. But a lot of change management was required before people started to use them. Innovations such as emergency stop buttons, telephones for help and recorded announcements all came about in this time.

I’ll wager that we will look back at some of the manual ways of operating an oilfield we use today in the same way was we look back at the anachronism of the elevator operator.

Electricity – who’d want that?

Another story that I picked up on and found illustrated a point was this one [Link]. It’s written by the BBC’s Tim Harford. He asked and answered the question why did it take so long for electricity to displace steam in the factories in the North of England. It was decades after the invention that it was fully adopted.

He explained that it required a redesign of factories before the economics made enough sense for people to abandon centrally powered manufacturing and move to individually powered machines. We’ll see the same adoption economics in oil field operations and technologies such as 3D printing.

Digital Marketing – a lesson for oil and gas?

Today I found another article that resonated. This one is from Marketing Week [Link]

Mark Ritson makes the case that the separation between Digital Marketing teams and Traditional Marketing is ridiculous. What I think he’s saying echoes my point that there should be no separation between “IT” and “The Business”, because IT needs to be just how things are done around here. It’s true in Marketing, it’s true in Oil and Gas too.

“… On the one hand you need to avoid being precious about your digital creds. Signal early you are entirely comfortable losing the D prefix from your title and, for good measure, add something re-assuring like ‘I do not even know what digital means anymore’ or ‘isn’t everything digital now?’.

The merger process means that anyone who is a member of the extreme digerati will be the victim of the new regime. You know the type: obsessed with AI, convinced in the long-term value of VR, boastful that they don’t own a TV. They will be the first to go when the revolution comes.

Digital experience is a prerequisite

But make no mistake, it’s no good proclaiming that digital is wank and it’s time to get back to basics, pull all the money from Facebook and get it back into ‘proper’ media. The post-digital era cuts both ways.

While idiot digerati will be exposed, so too will those who aren’t open to the potential of all the new research and media options that have appeared over the past decade. When Alastair Pegg, the leading marketer at Co-op Bank, noted that that there was “no such thing as digital marketing” he followed up with the corollary that “all marketing is digital marketing”.

I think I can see the parallels between what he’s saying is happening in Marketing now, and what will overtake the world of Oil and Gas operations in the next 3-5 years. What do you think?

Grey innovation

Grey suits, grey ties, grey hair. Oh what a grey day.

I’ve just come back from the Subsea Expo in Aberdeen. I was heartened to hear some  thoughts I agree with expressed during the plenary session. Without pointing fingers, I heard that the UK regulator was keen to get operators to engage quickly with innovations coming from the supply chain (and saw the time-delays for making a decision, and taking action, as a major obstacle).

I also heard from a number of suppliers who were re-branding as “underwater engineering” so that they could engage with more proactive industries such as offshore wind – where their services and expertise were welcomed and where contracts were signed quickly.

I’ve had a bee in my bonnet for a while. It’s set-off by the general demographics of our industry which seems to get in the way of innovation being adopted.

Below are some images that I’ve shamelessly nicked from Google to illustrate my point. I put in the search term “Technology Innovation Team”, “Hackathon” and “Technology creatives”.  Here are some results:

HackathonForSocialImpact

FoodMobsters

BrightonTechStartUp

Now compare the demographics to our industry. No more comment required.

OGTC-Youth-Activist-Wing

It’s not the OGTC’s fault – they’re trying really hard and succeeding, but we’ve just got to become more fun!.

What are you going to do to innovate in 2019? Who do you need? Where are they coming from? How are you going to access new ideas?

To innovation and beyond – 2019+

My first post of the year – a look ahead for 2019 – was a bit tongue-in-cheek. Now The World Economic Forum (WEF) is meeting in Davos, Switzerland, I thought I would provide a more insightful analysis.

The WEF will be considering the implications of the 4th Industrial Revolution as the headline theme for their annual conference. If you’re new to all this here is a I4.0 primer from CNBC [Link]. 2019 is going to be a year where industrial innovation takes centre stage. 

The thinking from WEF is always good, detailed thorough. I think that some of the crucial themes for unlocking innovative value will be focussed around opportunities and risks. Here are some of my current favourites.

The Opportunities

  1. Using information and reconfigurable platforms to provide new solutions to stakeholder experience. This will establish new ways to create, deliver and consume the core outputs from industrial processes.
  2. Removing the idea of separation between “IT and the Business”. The two are now conjoined. Being good at tech will be a prerequisite of being good in business. Technology will be embedded in every way that work is done, products are created, consumed and delivered.
  3. Empowering the front-line will be crucial. The winners will be faster organisations where workers make autonomous decisions and are rewarded for outcomes. As an analogy think of Deliveroo drivers. For many reasons, more refined models of work-coordination are required but the core autonomous nature of the work is being previewed here. Decentralised decision-making and autonomous action guided by technology removes many of the tasks performed by middle management. I hope we will start to see teachers, dentists, doctors and nurses no longer filling in spreadsheets and working as relecutant automatons directed by ill-informed command-and-control resource-allocation systems.
  4. With power comes responsibility. Without middle management, new forms of controls (and motivation) will be needed to spot problems and reward behaviour. Surprisingly for some, I don’t believe it is the front-line worker, but middle management, that is most under threat from AI, visual computing and big-data. I hope the CFO won’t push progress only on AIQ but that marketing and talent managers will push the AEQ agenda. It’s important we understand not only economics but also pride, satisfaction and feelings of accomplishment.
  5. Innovation may not be in new forms of technology. The tech available to us now is far ahead of our application of it. Deployment options are already available but not used. Innovation will come from the application of existing technology to new areas of business. Those stuck with old infrastructure will not be able to reconfigure fast enough to keep up. Value will arise from designing new ways of working. Capturing the value will rest on finding ways to get the rest of us to work that way too.

And now the risks

  1. Innovation will come from networks. Big companies will look to small companies for ideas, small companies will be formed from collaborative networks of individuals. Ideas will be mashed-up to cross-fertilise creativity. Guards must be in place to avoid exploitative situations – if they arise unchecked it will mean that the small-guys can’t and won’t play for long. Without them, brilliant ideas will never be used. Rights management is crucial for the distribution of the value created. In the way that song-writing credits generate performance fees for artists. Licenses for ways-of-working are needed to stimulate innovation, and society needs to enable easy access to legal enforcement to uphold claims against copying without permission.
  2. Massive generalisation follows: Young people are frustrated by old-people’s inability to embrace new ways of working. Technology savvy folks are orders of magnitude more productive than their peers. They are quicker to make decisions and to multi-task. This leads to not only high-productivity but also to high-error rates. Iterative short-cycle experimentation and learning-by-doing is the hall-mark of agile strategy. This is not an approach that has been adapted to high-risk industrial work-settings. This leads to a clash of culture and an inability to attract and retain talent.
  3. Innovative individuals will continue to pursue independent careers in increasing numbers. Old industries will die, vested interests will be disenfranchised. The world of work, taxation, social contracts, pensions and access to finance will have to evolve to cope with this. To create a consensus and establish a sense of fairness new-politicians will need not only wisdom but also to deploy the old-tools of oratory and persuasion. There will be big disagreements across society and between nations. It will be necessary to create hope for those who fear being disenfranchised. They will not go quietly into that good night.
  4. Politics of property will come to the fore – the control of assets will be important. Whether that is physical real-estate where low-paid important workers are unable to afford to live where the people who need them reside; property from an accumulation of historical data that provides an unassailable lead and monopoly positions; or the “IDEA” that one person has spent 10 years creating that is exploited by a large corporation without reward. Society will need to find ways to address the control and distribution of property in a world where labour and working-time may not function as a distribution & motivation method.

I will spend time exploring these themes during the year – I have a number of initiatives already kicking off for the year and I hope that you’ll be able to help.

Leadership 4.0

The oil and gas industry is finding it hard to access needed talent. There are many reasons for this, and it’s only going to get worse. This report from the BBC is about the GETI (Global Energy Talent Index) survey [Link] that found the oil and gas sector is suffering from a talent shortage and an inability to attract graduates.

The survey said:

“possible recruits are attracted to the ‘technology’ sector rather than oil and gas.”

It did not elaborate on why that might be. My guess is that its to do with the old-fashioned approach our industry takes to adopting new ways of working coupled with young people’s expectations for the way they want to engage with the world. The idea that they want to work “in tech” may be read as they want to work “with tech”, and perhaps they equate “tech” with innovation and creativity.

This report on CNBC [Link] sets out to explain why people want to work in tech instead of finance. It’s findings include: “High-potential grads want to work at tech companies like Google and Facebook because they are more innovative in nature, give employees a deeper sense of purpose and offer flexibility”

The GETI report also found that

“young people were less attracted to big salaries than in the past – and instead wanted roles which offered promotion opportunities.”

What do you think that they meant by a promotion?  Perhaps that’s a desire for autonomy, self-direction, control and flexibility. Perhaps the new generation don’t appreciate being told what to do by an old bloke (and it normally is a bloke) who can’t use his email, who can’t be bothered with these guys who constantly have their face down using “twitbook” or “facesnap” on smarty phones.

The BBC quoted Hannah Peet from Energy Jobline saying

“Leaders and hiring managers recognise that the world has changed and the desires of young people are different, with only 30% of those aged under 25 believing that higher pay effectively attracts talent.  The trick now is to respond by working to provide individuals with more opportunities to grow their careers, travel and work with new technologies.”

What do you think she meant by the word “trick”, surely this language conveys an underlying lack of buy-in to the fundamental change that is required. Trick seems like a quick fix. Perhaps a deception. What I hear when I read it is: “We’re doing it right, we’re not going to change, we need young people to come into our industry – let’s trick them and they’ll come. Then we can show them what the world is really like which is not innovative, or tech led nor does it embrace change and discovery – by then it’ll be too late”.

Well I’m sorry: they’re right and you’re wrong. There isn’t a trick. We need to change – and the young recruits are going to show us how.

Leadership in the fourth industrial revolution is crucial, luckily the WEF (Davos) just published this a guide on how  to lead in the Fourth industrial Revolution.

http://www3.weforum.org/docs/WEF_Leading_through_the_Fourth_Industrial_Revolution.pdf

This quote is from there:

Googling the phrase “Every business is a digital business” reveals a list of today’s leaders attributed to that phrase. Yet, 44% of leaders say a lack of digital skills in their organization is delaying business transformation. Executives believe only one-fourth of their workforce is ready to work with intelligent technology. Less than half of executives believe they possess the skills and abilities to lead in the digital economy.
In his book, Dreams & Details, Jim Hagemann Snabe, Chairman of Siemens, wrote: “The new digital reality requires a new kind of leadership, one that understands the rules of the digital season, reinvents business from a position of strength, thinks exponentially rather than linearly and develops people to unleash their full potential.”