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.”

2019 – The Year Ahead

Happy New Year

As we enter 2019 I’ve managed to already break my first resolution – to get this blog post out before everyone gets back to work. As an excuse I’ve had a very busy start to the new year. As a warning, I think we will all have a busy year this year.

When looking forward, I often find it useful to reflect first on the past and see how thoughts are changing.  After you’ve read this post, please revisit this one [link]. It was written in March 2016 – Trump had not been elected, the Brexit Referendum had not occurred, Cambridge Analytics had not been exposed and Russian interference in the US election was not known about. An extract from the post reads as follows:

With modern communications and the ability to mobilise quickly we’ve already seen massive changes in the way the people (or, in Greek, demos) interact with conventional democratic systems and capitalism. [….] Whether that’s the Arab spring, so-called ISIS, Brexit, the mass-migration of populations or the astonishing rise of Donald Trump, things are getting decidedly odd in traditional politics. […..]

Cyber-politics is a whole new dimension. Whether cyber aggression is aimed at accessing private information, denying or altering the dissemination of information or compromising the physical integrity of machine-based systems the ability of people to alter the course of events through “hacking” has never been so great.

As the 4th Industrial revolution unfolds there will be more disruption ahead.

On the positive front, last year we saw the unveiling of the first industrial strategy for Britain for a generation link. I’m seeing the ripples of this throughout the industrial landscape of Britain, including a member of the Bestem network  who told me about some very innovative work he’s doing with the railways – all funded from central government. The funding he has access to is much larger than the whole OGTC [link] annual budget and he just needs to fill in a form to get it. It’s very light weight, no committees, websites, offices, equipment, industry sponsors – just get on with it. And he has. Big time. Oil and Gas is still not innovating, but we are good at committees and wasting each-other’s time.

My top predictions for 2019

  1. Attention will continue to swing away from economics & finance and towards science, inventiveness and engineering (genetic, information, computing, transport).

  2. Competition between nations will intensify with value-capture swinging towards creators and away from traders and rent-seekers.

  3. Politics will continue its rise – no more will debates be settled on the economic benefits of an argument. Politicians will start to use emotive language more. Manuals on speech-writing for rhetoric, bathos and pathos will be dusted off along with words and phrases including: trade, craft, pride, sacrifice, service, future, humanity, community, future-generations and “for-our-nations-children”.

  4. Language will continue its progression-regression. Old words take on new meanings. In my field the fourth industrial revolution became digitalisation, I am sensing that this is now becoming “innovation”. Again.

  5. Productivity will increase and the british economy will grow. Not, you understand, because it will objectively do so – but because the way we decide to measure it will change. We are already moving to double-deflation accounting in April [link] . You can expect more of this type of thing. It may be good for us.

  6. The Oil business will still be ruled by old-world economics and yesteryear-practices. I remember the dot-com boom in the late 1990s when there was genuine fear in my part of the Schlumberger world that we may be acquired by  Yahoo. Now Google (which was only formed in 1998 and not floated until 2004) could swallow Schlumberger many times over – but frankly, my dear, doesn’t give a damn. It’ll be the same this cycle, the Oil business will still work, be profitable and vital – but paradoxically become increasingly (and proportionally) less relevant to measured world economic activity.

  7. The Big-Oil innovation committee will, after a multi-year tender programme, finally hold a committee meeting to issue the PO for the automated remote light switch. After their youngest member retires on full final-salary and is the last to leave the building this will be used to turn off the lights. By SMS. Sent by his secretary. From the last electrons of his dying Blackberry.

  8. Elon Musk will either be killed in a freak mid-air collision between him and Richard Branson, or will buy a small nation (to be called Matrix) and will be joined John McAfee [link] and Larry Ellison. They will declare independence.

2019 looks like it will be a fascinating, scary, depressing, joyful and amazing ride. Strap-on, tune-in and don’t drop-off. All the best my friends, it’s going to be a wild-one.

Self driving and the digital avalanche

Justin Rowlatt just published an interesting article (he admits it is provocatively one sided) about the inevitability of self driving cars and the disruption it will cause. The article can be found here: https://www.bbc.co.uk/news/business-45786690.

I urge you to read the article, because it describes accurately the confluence of forces that causes avalanches and a split between the new and the old. When technologies hit a certain point the economies of network, scale and of learning kick-in to reduce the cost and increase the convenience of switching to the new, while the exact opposite happens to the old – making the switch happen in a non linear avalanche of change.

Justin’s article includes a photo of a New York street in 1900 and then in 1913 – in the first, the street is full of horse buggies and one car, in the latter the situation is reversed. The Model T Ford motor car was introduced in 1908.

For electric cars – just like in parts of the world where you still find many horse (and Ox) drawn carriages – motor cars as we know them will not disappear; the rate of manufacturing switch will be slower and cars bought today will still work in 20 years time.

A few years ago I made a calculation that, because of these and other factors, the internal combustion engine would take 50 years to be replaced even if the rate of uptake of electric vehicles accelerated. Justin makes a great point that, because of the effects of self-driving, we need, perhaps, only 10% of the current fleet to change and we’re done. Economics will kill the current car and nothing else matters.

This reminds me of why Amazon can (and has) destroyed the high-street. It doesn’t need to take 100% of the business, but – because bricks-and-motar retail has high fixed costs and low margins – they only need to take 10% of the revenue and Mrs. Smith’s Bookshop is toast.

The Fourth Industrial Revolution will be made on lots of changes like this. The facilities that the self driving car will enable (and the infrastructure needed to support them, and spin offs around that) will mean new industries emerge and old ones die. And it will happen quicker than we imagine.

Elon musk, for all his bluster about electric cars, is really re-inventing manufacturing [Link]. Not only will his disruption hit the auto industry, but any form of manufactured assembly of mass-produced product. And that’s just about everything consumers buy.

Get ready now!.

Digital overload?

I’ve just had the time to scan the Sept-Oct ’18 issue of HBR and there is one article that all digitalisation professionals should read. Titled “Too many projects” by Hollister and Watkins [https://hbr.org/2018/09/too-many-projects].

Not only does it provide an example of why cutting IT budgets across the board is a bad idea for business, and an explanation of “logrolling” where executives support each-other’s pet projects, but also it provides a neat framework for assessing initiatives prior to launch.

I touched on initiative selection as part of a prioritisation framework Introduction to Prioritisation V 1.0,  I also wrote an article in 2017 which was recently published in Oil and Gas Technology that touches on some of the concepts [link]

I hope HBR don’t mind me paraphrasing one of their templates but it’s really quite excellent:

Questions to Ask Before You Launch an Initiative:

Analyse the project

  • What problem is this initiative meant to fix?
  • What data or other evidence tells us that this initiative will have the desired impact?

Assessing resources

  • What is the true human capital demand?
  1. What resources (time, budget, and head count) are needed to design and launch the initiative?
  2. In addition to the department that owns the initiative what departments or functions will be tasked with supporting it?
  3. What time Commitments will be asked of leaders and staff members to attend meetings or develop the skills needed to understand or implement the initiative?
  4. What resources will be needed to sustain it?
  • How does the human capital demand compare with the potential business impact? Does the cost outweigh the benefit?
  • How will the organization determine whether it has the capacity to take on the initiative?

Sizing up stakeholder support

  • Who are the key stakeholders?
  • What actions will be required to support the initiative?
  • How fully is that support in place?

Selecting limits

  • What trade-offs are we willing to make? In other words, if we do this, what won’t get done?
  • What’s the sunset schedule and process?
In summary then: next time you're asked to add yet another digital initiative make sure that it takes into account the impact and value to operations!

image credit: http://www.chinadaily.com.cn/photo/2013-12/02/content_17143892_2.htm

 

 

BAgain

BA has had another IT disaster, it appears to be becoming a habit.

Quote from today’s FT

Neither the customer emails nor the airline’s public statements to date have offered any explanation for how BA managed to lose such vital information. Some critics of the airline have asked whether its parent IAG has focused too much on cost-cutting and failed to invest sufficiently in technology. This is its second big problem in two years — last May, BA’s global IT system crashed grounding more than 700 flights and leaving 75,000 passengers stranded. To be fair, the two problems are almost certainly unrelated except as part of a general window into BA’s IT. An airline spokesman insisted, “This was a sophisticated criminal act. We are investing more in cyber security than ever before and will continue to do so.”

The article can be found here: https://www.ft.com/content/a301f46a-b4df-11e8-bbc3-ccd7de085ffe

Just as a reminder, here are the pieces that I published last year [link] [link]

The fourth industrial revolution demands investment in information technology in order to reap the benefits of efficiency, BA has been trying to cost-cut its way to success. It will be left behind if it doesn’t get with the programme.

Image credit: https://edition.cnn.com/videos/travel/2015/09/08/las-vegas-british-airways-plane-catches-fire-hampton-beeper-erin.cnn

 

 

Report from the future

The trouble with our industry at the moment is the plethora of conferences and events that go on. The FT reported on Thursday that our industry is 40% less productive than the rest of the economy, is there a connection?

Last week there were, at least, four separate events happening in Europe. I didn’t manage to attend the Future Oil and Gas conference in Aberdeen, but it seems that I may have missed a rather good one. I’ve been asking around and receiving reports on the discussions and topics.

My informal word-count revealed some key themes: Open platforms, leverage of diverse data sets, generating insight (whatever that really means), data silos, collaboration, machine learning and AI.

Where are all the young people?

First the bad news. This conference seemed to have a definite bias towards the fourth industrial revolution and the future of innovative technology – but no-one arrived by skateboard. In fact, my sources indicate there were more suits and ties on display than at a moss-bros Christmas party and Grecian 2000 narrowly avoided being the main sponsor.

Where are all the young people?

When I go to a tech conference in the South East or in Silicon Valley I’m positively jumping out of the way of hover boards, unicycles and tattoo artists. I may appear flippant but I’m not – the great creative and innovative minds of the future seem to be missing from our conferences. If we are going to succeed we need to be able to form teams that embrace diversity and create energy. We need people like this and we need to provide an appealing set of challenges to keep them motivated.

Equinor supports entrepreneurs

Now onto the good stuff. Einar Landre from Equinor (the artist formally known as Statoil) told how they supported small vendors – while being careful to explain that they were not offering blank cheques, he recognised that procurement processes could be slow and risked pushing suppliers to the wall. I heard they claim to be actively promoting ways to engage with innovation and to create disruptive business models where they pay for outcomes rather than for inputs. Separately,  I  picked up on an announcement that Equinor plan to release all the operational data that was gathered on the Volve field to be used to test algorithms and find new ways of working. Well done chaps, I think that’s a very collaborative and welcome move.

Chrysaor integrates a new asset

I also hear that David Edem from Chrysaor gave a lively presentation where he told the gathering about the recent experience of taking over an oil field from another operator. How explained that first problem is to get hold of the data to understand what it is that you’ve actually bought. In the middle of all this their organisation head count grew 20x in a year and, for them, it is clear just how much time and effort had to be invested searching for data. David told us he was keen to address this early in the company’s life and highlighted one case where a simple change in data-handling practice is already producing savings of $1M pa. He said that we should consider carefully the value that is embedded in the data that comes with a platform and treat this as a capital asset.

Ithaca understands the tension between IT and OT

I also heard that Malcolm Brown from Ithaca was keen to share his experience regarding the tension between IT and OT. He brought a key insight that the perception of risk is different – IT believe that the more you leave a system alone the more vulnerable it becomes (because of the evolving security threats and the lack of patching), whereas OT believe the opposite – each time you touch a system it is more likely to break than get better (i.e. don’t fix what ain’t broke).

Of course, both viewpoints are valid and have merit. Reconciling these is going to be important for us all, so it sounds like formal risk-management processes with OT are going to be required to enable safe innovation.

Fail Fast and Learn

Another theme that emerged from the conference was Agile development of systems and processes. This is important, because Silicon valley has proven that Agile methods can increase the rate of value creation. They also establish competitive advantage and lead to unimagined breakthroughs. How can we integrate the “fail – fast & cheap – and learn” methodologies with our industry and still keep everything safe.

Keith Wildridge from Eigen brought this topic into his talk and was keen to share experience engaging in collaborative development with ENI making safety systems and using methods such as SCRUM and SPRINTS.

Event Format

The format for the event – that of discussions and panel sessions – was warmly received by everyone I talked to. They all said they were fed-up of boring people with boring powerpoints standing up and lecturing at an equally bored audience. This was much better.  They were also happy that the representations were not all from Vendors trying to find a way to dress-up a blatent sales pitch as some form of case study. Exploring broad themes in an open environment went down really well – so this conference seemed like a welcome boost and I think it will stand the test of time and become a feature in my diary for 2019.

Conclusion

I’ll leave it to the words of Esa Jokionen from Rolls Royce who apparently summed up the industry approach to AI and Big Data. I’m told he said it was like teenage sex. Everyone thinks everyone else is doing it, everyone wants to say they are doing it – but, truth be told, there is not much of it actually going on, no one knows how to do it properly but everyone’s keen to try.

Image credit: http://www.futureoilgas.com