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.

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* 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).