PRISM the colorful Information

I remember the first time I experimented with a prism in my secondary school science class. The grace and wonder of the multitude colors coming out a seemingly innocuous white light is mesmerizing.

The prism is possibly the simplest and most inspiring tool or technology that made humans wonder and discover the entire science of mankind.

The NSA surveillance program PRISM is an example of using “metadata” from noisy, large-volume and dynamic digital contents for “intelligence”. Metadata examination exploits two factors. One is technological, the other legal. The technological one is the development of algorithms that can search through telephone call logs, sms traffic, email flows, internet search and view, social media traffic, chatting patterns or map locations and derive ‘colorful’ patterns of behavior. Rightfully named as PRISM, it shows the colors of the digital metadata. The point is this: the messages themselves are not read, even the telephone numbers are not looked at. Only the patterns of activity as seen in the metadata drive the prism.

All of us, who come to work, leave a high-resolution digital footprint. From the ‘swipe-in’ till ‘swipe-out’ almost everything the white-collar worker does creates a digital record. For example, in a large office complex, the swipe data is enough to make a very intricate inference about working, leisure, eating, interfaces, team-work, climate-impact, and many others. It is possible to recreate the architecture of the complex from swipe data alone. If we complement with employee LDAP, a very unique interpretation of team dynamics can be gauged. Automate car tags and employee’s mode-of-transport, optimal parking management is a small fringe product. Compound it with the PC usage, file-stamps, emails, shared-drive consumption and internet access, an intricate footprint can be created.

The entire productive work is done with some kind or other of digital imprint. These carry time, location, uid, object, and resource measures. SAP transactions, application license logs, file-system usage under each uid and the swipe-card based location access details are nearly complete representation of everyone’s work done at the office complex!

PRISM is a beautiful back-office technology that can differentiate the red from violet and present an intricate detail of the thousands of personnel who work in an office complex. By creating a contextual business information framework model to obtain few levels of business and asset related metadata, the system can completely provide all necessary details.

People Management, Organization modeling or Process Architectures are far from being science. Their methods and implementations are far-cry from the 21^st century technology. They are quite unstructured, semantically weak and highly subjective to exploit the information revolution. Consequently, it is nearly impossible to determine their efficacy or predict their outcomes in any verifiable manner.

IT footprint record with careful metadata creation and analysis will do everything and much beyond the so called conventional process remodeling! This exploit is vital for all kinds of systems including organizations, businesses and management in this decade. It is restricted mainly due to various organizations’ mindsets and culture which are resident in 20^th century! Most managers cannot visualize the potential or identify the environment needed to cultivate the VIBGYOR! Often we are content with the black and white or unaware of color!

PRISM is low-cost, guaranteed to perform, non-intrusive and can show you lots of color.

Image & Reference to PRISM news:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/12/heres-everything-we-know-about-prism-to-date/

Accountability of the Highly Rated

Italian scientists jailed for six years after failing to issue warnings ahead of deadly L’Aquila earthquake

This is an important development that addresses accountability of the highly rated professionals. As human beings are developing more complex systems and interfaces, the clear process à Response relationships are getting difficult to demonstrate. It could be betting of high-profile individuals in IPL, assessed loss in coal-blocks, extent of land damage in illegal mining, ground-water contamination in a state, downgrade of reserves in a field or decline of production in a plant.

All these and many more have serious impact on the lives of millions of people – often irreversibly. Very routine things like the shampoo, hair dye or the off-shelf pain killer tablet all carry unknown accountability and responsibility of the makers. Examples from proliferation of DDT or Plastics are clearly visible as global problem to see.  Often, the people and organizations that create, publicize, make-you-trust, sell and become “standards” in our lives are driven by highly rated.

A specialist doctor who needs a 30day forward booking, elite scientist who graces all big events, attractive star who advices health and fairness,  big bull CEO who claims new BT food, and the high-profile bureaucrat who announces national water policy – all of them are HIGHLY PAID and VENERATED. They carry expensive price-tags often making millions in their career doing such high-value things. When these go wrong, they also expose millions of people, life and environment to serious sufferings.

There is seldom any accountability to such high-profile “postures” in modern society. It gets very difficult to pin the responsibility to any specific people, and much more difficult to prove it in court and get punishment. This is due to – the millions of ‘escape paths’ such functions have. They can state, that the data was wrong, the computer program was only 32bit precision (while it needs 128bits), the implementation didn’t see the ‘cautions’ raised in report, uncertainty with science and hundred other things. It is so easy to escape from any wrong happening, whereas, invariably all of them accrue wealth from all good outcomes.

In view of the extensive impact that the failures cause, there is reason why the high-profile people and companies are accountable. After all, they benefit from the successes, therefore, they have right to be given responsibility for the failures! In this 21^st century, the ability or need to work on “Trust” is unnecessary. Science being practiced as a “TRUSTFUL” activity is creating unalterable damage.  Science needs to be verifiable and auditable. The problem is global, national, social, within companies, and within individual teams.

There is an irrevocable need to bring accountability in complex processes at all levels.

This is possible by implementing proper databases, workflow systems, analytics and publication of information. Business Information Framework is the information solution that brings “ACCOUNTABILITY”.

All the great men and women, please note, you can, should and in 21^st century will be made accountable.

Workflows

Workflows are the game-changers in the formulation of 4th Paradigm. Almost all aspects of modern human endeavor involves workflows of one kind or another. Business, Commercial, Governance, Science and Technologies have always adopted some kind of workflows. Simple things like changing  the security level on the facebook account to clearing a space-craft pre-launch test, everything follows a pre-defined sequence of steps or a workflow. The context, scope and applicability of workflows in complex businesses like petroleum E&P are wide. Before attempting to address such complex systems in to a package of “Standard Operating Procedures” or “Processes & Workflows”, it is necessary to understand what workflows are and how they manifest.

Workflow is –

1.      A Sequence of connected Steps with definitive INPUT -> PROCESS -> OUTPUT.
2.      Every step of a workflow transforms the input into the output through a sequence of physical, logical or computational stages.
3.      It is an abstraction of the actual work. It can be treated as the LOGICAL representation of the work on a paper through some common notation.
4.      In the context of 4th Paradigm Science (Science of 21^st century), Workflows are treated slightly more intensely.

This brief description of workflow has emerged from years of working with Workflows in various organization models, commercial processing (e.g. Insurance claim), Industrial shop-floor, Instrumental methods of Science, and Computer Software Development.

When a workflow is taken on to some kind of computer based system and delivered as a solution (either on WWW or on other tools), it grows to describe the various levels of “Business Processes”. A large number of “Business Transformation” exercises aim to relook at the process hierarchy and arrive at a set of workflows and deliver it on some kind of computer platform (commonly SAP or similar ERP).

A hierarchy is now formed. 1) Process Category à 2) Process Group à 3) Process Principal and à 4) Activity. Workflows capture the flow very elegantly and precisely for a well-defined ‘Activity’. Within higher levels above activity, workflows show how orchestration of information flow, assessment, evaluation or decision making process is conducted in achieving collective goals from multiple activities in the context of the process level. Essentially, it is just an aggregation of information embedded in lower-level workflows.

“Workflows, Workflows everywhere and not a task to innovate” ?!

There is some difference in the way workflows (and their hierarchic masters – Process elements) behave in different situations and contexts. SAP (www.sap.com) is a popular Enterprise Resource Planning (ERP) system used in many organizations for managing standard workflows in many non-technical business areas (Finance, HR, Procurement etc.). Most of the IT programming is devoted to establishing workflows in commercial systems area. Banks, Airline ticketing, tax payments, stock-trading etc. demonstrate mature workflow based interfaces and usage. Basic concepts of workflow and methods of management of workflows  in commercial business processes is available (http://wwwis.win.tue.nl/~wvdaalst/workflowcourse/ ).

Commercial and Scientific (Engineering) workflows differ in many aspects. Science embarks on Discovery, whereas standard commerce addresses existence. New invoice processing has no new discovery embedded; it makes a SET transformation of input to output. A new airline ticket booking, a new leave application processing, or new inventory order are not expected to result into a new discovery.

• Analysis of a production profile of a well can easily and often spawn a new discovery and pattern hitherto unknown.
• New sample analysis using X-Ray microscopy can lead to a discovery of a new mineral or new composition.
• An experiment in genomics can identify a new epigenetic variation.
• A new scan of the Southern Sky with the LSST telescope may discover a new planet made of diamonds!

Two clearly different types are workflows are noticeable; Tethered : Untethered

1. Tethered: (http://www.thefreedictionary.com/tethered ) is about workflows that are designed to be “restrictive” holding the flow in place and allowing a “defined short room” for any changes to the predetermined course. It holds the flow “in place”. When the activity or task (e.g. invoice processing or leave approval) has definitive and firm options and flow towards the logical result, it is designed as a tethered workflow. ERP systems are ingenious in allowing a wide variety of tethered workflows covering most (if not all) business, commercial, inventory, logistics and similar processes.

When a sequence of steps is DEFINITIVE and BINDING with EXACT set of options and RESULTS (Tethered)

2.    Untethered: (untethered - not confined or restricted with a tether unbound - not restrained or tied down by bonds). Untethered workflows are designed to liberate the process element and allow ‘controlled variation, to its sequence or approach.

Steps are DIRECTIVE and INTELLIGENTLY CONDITIONAL with INEXACT set of options and thus VARIABLE RESULTS (Untethered). The sequence, the nature of options, parameters of running a step, and the method of screening the further course of action – any or all may change with the data conditions and the analyst’s judgment – within a broader boundary of the workflow.  

E.g. Invoice Processing – Tethered; Climate Prediction – Untethered. Task steps could even become abstract and broad guidance rather than specific directive!

e-Science is a term close to the 4th Paradigm wherein, the various steps in Science are carried out through a workflow addressing –

1. The steps and flow are formally defined using established notations and structures
2. Standards for Quality assessment at each step and across the entire workflow are specified and often measured within the workflow
3. Workflow is amenable for analysis and assessment (e.g. Petrinets)
4. Integrate with necessary process (Numerical – Math/Stats/Graphics, Instrumental – DCS/SCADA, Physical, Communications etc.)
5. Delivery and Distribution on platform (internet) for wider usage

Tethered and Untethered workflows are determined from the characteristics of the activity. Uncertainty, inferential deduction, multiple possible outcomes, natural system analysis, complex inter-dependencies and intricate data elements – all drive towards untethered workflow descriptions.

Reasons for seeking Untethered workflows are numerous in E&P (being a very complex science, technology, data and inference based deduction).

1.      Sequence of steps cannot be defined DEFINITIVELY due to continued changes to processing elements
2.      Steps are subject to change with data and analytical results
3.      Targets are NOT exactly the same with different runs of the workflow. Analyst (E&P professional) is targeting slightly different result on same data and workflow.
4.      Larger amounts of data, which cannot be confided into a precise sequence.
5.      Commercial workflows typically are transactional (your invoice processing and then mine), Scientific systems tend to look into entire data (relationships of invoice values with age, sex, rank etc.)
6.      Heterogeneous and Distributed techniques (stats or math methods), rendering (graphics) and resources (grids, super-clusters, special software).

It is not just impractical but can also be counterproductive  to force a tethered workflow on to a untethered problem. Inability to distinguish these two kinds of processes often leads to SAPping the whole world!

Taverna (www.taverna.org.uk ), Myexperiment (www.myexperiment.org ) have embarked on bringing Scientific Workflow systems into practice and creation of new scientific discovery. Biosciences, Astronomy and Physics are leading the initiative. These Workflows have created wonders in the collective quality and discovery in these areas. Clearly the known Science Workflows have not adopted the best of commercial Workflow systems like SAP.

It is essential to bring Petroleum E&P with all its sciences and technologies into correct perspective and prepare adopting proper workflows and suitable system tools. Not adopting Workflows today is akin to using snail-mail (post-card) only for communication! But adopting a SAP system to drive E&P is like using a road-roller to go drive everywhere.

EMAILS need to Die

Email is dead, Facebook founder Mark Zuckerberg declared famously last November.

<Copied from my Intranet post on March 2012>

Thierry Breton, the CEO of Atos, the French information technology company, one of the largest IT companies in the world according to Forbes, agrees and acted to control the use and abuse of emails in the company.

“There is no question there are a lot of useless emails and loss of productivity. When there’s an email on your BlackBerry you end up answering it even though it may be less important than what you are doing. It’s a habit.” Senior-level executives and CEOs are supposed to be great at managing their time, but they are vulnerable when it comes to email². An average business user responds to over a 100 emails daily, recent studies have found. Atos estimates that many employees spend 15-20 hours every week just checking email, of which only 15% are really useful to them or customers. But employees still trawl through the rest for fear of ‘missing out on something’.

You’ve got mail–not. Employees of tech company Atos will be banned from sending emails under the company’s new “zero email” policy. CEO Thierry Breton said only 10 percent of the 200 messages employees receive per day are useful and 18 percent is spam. That’s why he hopes the company can eradicate internal emails in 18 months¹. The goal is focused on internal emails rather than external emails with clients and partners. Atos has already reduced the number of internal emails by 20 percent in six months. “We are producing data on a massive scale that is fast polluting our working environments and also encroaching into our personal lives,” he said in a statement when first announcing the policy in February. “At [Atos] we are taking action now to reverse this trend, just as organizations took measures to reduce environmental pollution after the industrial revolution.” The company says by 2013, more than half of all new digital content will be the result of updates to, and editing of existing information. Middle managers spend more than 25 percent of their time searching for information, according to the company

Good, Bad and Ugly of Emails

“We use email for archiving data, which is a bad way to do it. We use email to send global information to everyone — this is also a bad way to communicate; we use email to manage processes, which is a bad way to do it. We have many bad usages of email.” Atos CEO lamented!

I agree.

1. Emails are the source of business document repository for me and others

2. Business Processes are Chain Emails. Decision tracking is synonymous to email chain of any conversation

3. Confidentiality & Control is Email TO or CC list! Breach of confidentiality is BCC or inappropriate forwarding!

4. No surprise, emails are the company’s most sought after service! Mail boxes fill-up their 500MB quota (for everyone?) and Mail servers and capacity is the “IN-THING”!

5. Emails go around calling people for everything from a board meeting to sharing a cup of tea!

Emails revolutionized communication when they became popular in 1990-95. They killed the Paper-Mail successfully. I last wrote a letter to my mother in 1996! For 15 years, they rule this world!

I don’t see significant difference in email capability since 1996. This is possibly ONLY high-tech gimmick that remained so STATIC! We seem to love the OLD WINE.

SURELY, the Email has outlived its life and like PLASTIC is now plaguing the efficiency of thought, communication and conduct!

KPI of Information Maturity

Any business that is PERFORMING effectively is deemed to be “efficient” in its Information management IF and ONLY IF,

1. Emails (internal) are redundant! AND

2. PowerPoint is made defunct!

Digital World

Take this simple questionnaire and see for yourself the changing world of business

1. Everything created at work is now some kind of digital content (Yes/No)

2. Barring Plants, Machinery and such Physical Assets rest of business process is creating, organizing and administering digital content. (Yes/No)

3. Organization structure, Roles and Assignments are ‘create, access, review and approve’ rights on Digital Content (yes/No).

4. All process related work is exercising the rights on one or more Digital Content (Yes/No)

5. All decisions are determining Go or No-go on a decision tree defined on a digital content (Yes/No)

6. Business Contexts (Assets, Functions, Attributes etc) are taxonomic classification of one or more digital content (Yes/No)

7. Security (barring physical search and security) with its cameras, ID-Cards, access-doors etc. is digital content (Yes/No)

8. Safety, Health, Environment translates to digital content of some observations, measurements or records (Yes/No)

9. KPIs, BSCs, SLAs all are digital measures (Yes/No)

10. Business Processes, Systems, Data, Roles, Contexts – all are digital contents (Yes/No)

1990-2012 the world of computer science and the technology that supports digital contents has radically changed

Bullock Carts and Hydrogen Cars

Most of the management concepts, diagraming methods, workflow mechanism, and hierarchical taxonomies are from the age of Bullock Carts!

They may co-exist on the streets of India, but to pursue a program to implement bullock cart transportation model in 2012 will be preposterous

Expanding Email based work culture is the same!

Entire world of Business Information and Digital Content CAN be elegantly and completely handled with better technologies. Contextual Business Information Frameworks (BIF) and expansive databases with analytical intelligence is the PRESENT and the FUTURE

Inefficient Technology is Death knell

What we do today needs to

· Conscious Learning from the PAST

· Alert Understanding of the PRESENT

· Intelligent Appreciation of the FUTURE

With Information Technologies changing at ‘exponential rates’ and successful businesses riding on ‘appropriate’ technologies – it is imperative to be innovative.

Choice of appropriate Technologies that wean out of Emails and PowerPoint is needed to face the Future. KPI that clearly discourages these tools must be part of BSC or other maturity measures. Information Maturity must be measured and pursued to its logical excellence!

Following methods of a Leader of 20^th Century in 21^st Century is not wise.

References

1. http://blog.gosocio.in/ Source : http://news.yahoo.com/tech-firm-implements-employee-zero-email-policy-165311050.html )

2. http://epaper.timesofindia.com/Repository/ml.asp?Ref=RVRNLzIwMTIvMDEvMTgjQXIwMDEwNA==&Mode=HTML&Locale=english-skin-custom

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Malthus : Solow – Quagmire – Technology for the Business World sustenance

Thomas Malthus : Robert Solow

Malthus (1766-1834) Anglican Clergyman, political economist remains relevant after 200 years. One of the most influential thinkers of modern economics, Malthus was concerned with the relationship between human population and resources access. He sought to constrain the population to manage the scarcity. Malthus placed longer-term stability of economy over short-term expediency. Though Malthus argued around food, the prevailing energy demand growth of the increasing population along with prevailing environment (climate) degradation – would eventually be unsustainable.

Professor Robert Solow (1924- 88 batting), Nobel winner in economics (1987, for analysis of economic growth) brought forward the ‘Solow residual’, which brings forth the contribution of ‘Technological Innovation’ explaining nearly 50% of growth, that is unexplained by ‘Capital’ & ‘Labor’. Solow has remarkable skills in statistics with matching insightful understanding. Providing the alternative to Malthus, Solow’s article originated “sources-of-growth accounting,” which economists use to estimate the separate effects on economic growth of labor, capital, and technological change.

Modern world of data-intensive scientific discovery (4^th paradigm science) is going to test the Mathusian –vs- Solowian models and extend the philosophy beyond economics, into other domains like environment, energy, terrorism and corruption!

Business Role

Businesses clearly have a major role to play in any strategy that tests the sustenance of this planet. They are the engines of the economies – i) devouring a disproportionate share of the world’s nonrenewable resources; ii) producing disproportionate share of its emissions; and iii) generating disproportionate disparity in incomes.

As every econometric measure and every thought is pursued as a business, driven by the funding generated by the businesses, it remains faithful for the businesses. We have a new quote replicating Abraham Lincoln’s – Economics of the Business, by the Business, for the Business shall not perish from the earth.

All other things of the planet ranging from politics, sociology, ethics, morality, research, science and face-book are driven by this emphatic link to businesses. The technology innovation which Solow proposed is alone capable of extricating the planet from this very-short-term singularity of dependence on businesses. The Data-Intensive-Scientific-Discovery or 4^th Paradigm Science is the way!

World Leaders’ nightmare

Each year the World Economic forum surveys experts and industry leaders to assess their level of concern over 50 global risks (divided into 5 categories), collating the ‘likelihood’ and ‘impact’.

Rank	Most Likely	Most Impactful
1	Severe Income Disparity	Major systematic financial failure
2	Chronic fiscal imbalances	Water supply crisis
3	Raising green-house gas emissions	Food shortage crisis
4	Cyber attacks	Chronic fiscal imbalances
5	Water supply crisis	Extreme volatility in Energy and agriculture prices

India with 1.2 billion population, possibly double-logarithmic income disparity may see more intense impact of these factors even if they happen in 2015 or 2020. A synthetic model of such income is in figure below:

Technology elements for sustenance

Establishing reliable and comprehensive databases is primary. GOI has taken-up the Public Information Infrastructure projects (PII). Businesses internally need to establish equivalent Business Information Infrastructure.

Developing transparency, analytical insight and decision-making using the data is the basis for converting the technology into business development and sustenance.

All other conventional aspects like Processes, People etc. are incapable of providing the kind of differential which Solow points to!

Data Driven Business is alone sustainable business that follows Solow’s model of innovation. The Solow residual is >>75% which is hidden in the data. Any amount of Capital or Labor cannot themselves retrieve this loss.

Big-Data Analytics & Business Decisions

·         Most companies have few (if any) analytics savvy workers
·         IT Infrastructure and technology elements for Big-Data analytics are common place
·         Data Management and Information extraction seeks tens of millions of dollars
·         Investment in Analytics is getting USELESS, even HARMFUL unless
a.       Employees are able to incorporate complex analytics and their implications into guidance
b.      Management is able to undertake complex decision making
·         At this moment, there is odds-on chance that poor decision is driven based on data-intensive information which was enormously expensive to collect

Managers need to wake-up to the fact that their data investments are providing limited returns because of under-investing and verifying on ‘understanding of information’.

For Deriving the VALUE proposition and adequately protect from harmful overdrives BIG-DATA analytics needs to be measured on the following:

INSIGHT IQ

It is a ‘Metric and method to measure and improve employee’s ability with data-driven decision making’.
1.       Unquestioning Empiricists’: Trusting analytics over Judgement
2.       Visceral decision makers: Exclusive trust on their gut
3.       Informed Skeptics: Best equipped to make balanced informed decisions

Companies need to cultivate data savvy workers and managers who show -
è Effective balance in judgment and analysis
è Strong analytic skills
è Listen and are willing to dissent
There is overall skill deficit which is compounded by 4 problem areas.

1.       IT needs to spend more time (and resources) on I than T
2.       Analytic skills are concentrated in too few employees
3.       Reliable information exists, but is hard to locate
4.       Business Executives don’t manage information as well as they manage Capital, Brand and talent

Companies need to measure the analytical ability as core performance measure at various levels and strive to develop competency.

Analytics in Oil&Gas

My own experience with this in Oil&Gas business is interesting.

1.       I for Information : Information is built upon the foundations of data organization and integration. In multi-disciplinary E&P business with very scarce skills on databases, the very understanding of this is at best primitive. T for Technology is always prevalent in E&P companies whole IT-Infrastructure spending is very healthy.

2.       Analytics : A traditional and conservative business with long lead-times from decision to impact depends heavily on conventional empirical and visual methods. Real-time data at every second is observed and trended for visual judgments. Invariably, conventional build-up tests or methods rule the interpretation. Analytical abilities and tool usage are specialized to domain tools that drive “proven” models. Little innovation and discovery, notwithstanding mountains of data.

3.       Information and Reliability : Ridden with complex inter-relationships there is seldom integration of data from multiple disciplines. Databases are complex and difficult. The 3-10y time-lapse from business decision (based on some prediction) to actual performance measurement, provides convenient avenue for diluted accountability and verifiability.

4.        Executive approach : Oil&Gas executives deciding upon myriad technical recommendations, compounded with regulatory issues, high-cost : high-value proposition and wide range of Uncertainties – rarely seek measures supporting their reviews or decisions. It is heavily a large collective ‘gut’ feeling!

Developing Informed Skeptics

Firtst and foremost, Skeptics need space in Organization and Business decision making processes. My next post on based on "New Sciencec of Building Teams" will discuss this in detail.

Analytical Intelligence is driven by sets of Informed Skeptics in an organization and its executive management. Three things matter:

1.       Training workers to increase ‘data literacy’
2.       Incorporate Information into decision making
3.       Provide right tools and technology
a.       Assortment of Enterprise tools supported by specialist tools
b.      Continuing nurturing of skills and analytical insights
c.       Providing access to coaching experts through people-oriented-data-experts

There are no ‘silver-bullets’ in Analytical Intelligence. Low hanging fruits are often dubious and of limited real value creators beyond the technology hype.

Analytics is a discipline – transgressing every technical, business and managerial function in most organizations. It empowers the core functionary who can understand differences in data, their biases and inter-relations. This requires critical thinking, unbiased approach and significant skepticism. There is no escape to establishing, building and cultivating strong database culture.

1. Analytical Intelligence is a definitive path in 21^st century.
2. It is a fundamental shift in organization and maturity of information in business decision.
3. It grows slowly.

Oil&Gas Innovations needs to be TRANSFORMATIONAL

E&P in 21st Century

Upstream Oil&Gas industry is also called Exploration & Production business. Dealing with characterization,  discovery, assessment, development, production and abandonment of oil, gas, and may be gas-hydrates fields.
Supplying the energy needs of the modern world. E&P is a critical business needing quantum innovation to meet the growing demands.
This Post deals with:

1. Will the Oil prices be Tamed?
2. What kind of Innovation is needed in E&P?
3. Research Quotient as a measure to scale the R&D. 

Which is the Horse to bet on?

PEOPLE, PROCESSES and TECHNOLOGY are the three contenders in the race. One of them is a race-Horse; another is a Bull and the third a Rabbit. It is unclear which of the PPT are HBR. {PPT=People Processes & Technology; HBR=Horse Bull & Rabbit}

This race has already started and will be run until 2020.

Ironically all thought processes on PPT tend to be on ‘.ppt’ (PowerPoint)! Ideas in this post on PPT are taken from articles in HBR (Harvard Business Review)!

At the end it is more about business continuity, growth and sustenance. E&P business is all I know of and the principles are elaborated with regards to Oil & Gas upstream.

Innovation for the 21^st Century

• Amid knowledge of all corporate management that “the YoY viability depends on its ability to innovate”, continuing uncertainty, keeps strategy and investments OFF innovation.
• People throughout your organization are energetically pursuing the new. But does all that add up to a strategy?

Context in India is like a “primary production” in an O&G field – just open the wells and make huge money. Often with 6-15% recovery and depleted resources – fast buck (early high rate production) at cost of EUR (expected ultimate recovery). Not much different from the fable – killing the golden goose! Fast growth companies in developing, poorly regulated, corrupt and free-filing economies grow at very fast levels that drain the resource desperately, while reaping disparate profits! The need for innovation as sustainable model emerges for those who stay beyond this aberration and don’t become fly-by-wire operators.

• Making matters worse, executives tend to respond with dramatic interventions and vacillating strategies. 
• Incremental innovations tend to split the pie with little or no real growth. 
• Transformational innovation needs proper structure and process – often directly contravening the normal ‘growth’ companies.

Innovation Ambitions

1.      Level-1: Enhancements to Core Offerings (C)

2.      Level-2: Pursuit of Adjacent opportunities (A)

3.      Level-3: Ventures into Transformational Territory (T)

Ambition matrix is dependent on 3 factors – i) Talent, ii) Management Approach, & iii) Metrics

Right balance between the 3 levels CAT is dependent on the business nature and the 3 factors. 

1. C:A:T=80:18:2  Incremental innovation focused on Core. Linear or Survival strategy 
2. C:A:T=70:20:10 Some support to Transformational. Opened Opportunity
3. C:A:T=45:40:15 Strong Adjacent and Transformational focus. Desire & Vision drivers

These are different focus ratios towards Level-3 Transformational allocations in different contexts

How innovation pays the bills

Among the high performers with favorable factors, distribution of total returns occurs in C:A:T=10:20:70 ratios, largely driven by 70% returns from Level-3 Transformational innovations. Just keep in mind that E&P is a transformational business. So are biotechnology, drug research and high-end computer science.

Organize and Manage the Total Innovation System

Healthy balance of Core, Adjacent & Transformational innovation is difficult to realize as companies are inadequately equipped in the 3 factors. Transformational innovation – to do different things – an organizational unit has to ‘do things differently’ to the rest.  Support to such units is often missing. 5 key areas of management that serve the 3 levels of innovation ambition are:

1.      Talent

2.      Integration

3.      Funding

4.      Pipeline management

5.      Metrics

E&P needs Innovation, driven by Metrics that assure the organized efforts. A clarity on strategy is the beginning. These 5 point to - PEOPLE (Talent+Integration); PROCESSES (Funding, Management & Metrics=Governance) and TECHNOLOGY (4th Paradigm Science)

The Trillion $ R&D Fix

TRILLION $ increase in market cap is lost due to top 20 companies in US have failed to optimize their R&D spending using Research Quotient (RQ) method? E&P majors Exxon Mobil, Chevron, Conoco-Phillips are assessed to have missed together $333,768 MM, which is 47% of their revenue. Analysis had shown for over 3 decades that the E&P companies invest far less in R&D than other transformation seeking businesses world-wide.

--> Do you see why oil sells at > $100+? NO TRANSFORMATIONAL INNOVATION!!

RQ (Research Quotient) is a measure of productivity of R&D investment using well known economic formula.

TO calculate your RQ for your business (E&P or entire diversified) you need several years’ of data on revenues and annual expenditures on PP&E (Property, Plant & Equipment), Labor (People), and R&D. After Logarithmic transformation the values are used to derive γ .

RQ is not a fancy new math. It is a measure to realize the significance of transformational innovation to business in 21^st century.

RQ is a good measure

1.      Universality

2.      Uniformity

3.      Reliability

RQ is a very accurate predictor of profits and share price performance. Unlike traditional measures that loosely measure R&D performance, RQ provides a measure for managers to optimally adjust the Innovation agenda (Budgets, Resources, Talents, Processes and Technology)

E&P is an Innovative Business

·         Classical 100+ year models of all E&P majors are built on innovation in CORE & ADJACENT areas of innovation.

·         TRANSFORMATIONAL innovation in E&P are rare, far between and most needed

·         21st century will distinguish those E&P companies that can bring forth transformational innovation.

·         There is a severe dearth of TALENT and MANAGEMENT VISION to perceive the $333BILLION and cognitive action to achieve it.

·         4th Paradigm Science – Big Data Analytics and Associated Collaborative (integrated) discovery – spurred by the huge instrumental data that occur in modern Oil&Gas fields is RIPE for TRANFORMATIONAL discovery

·         Be wary of the Killer Phrases

Killer Phrases

A killer phrase is a negative word or statement that is inevitably hurled at any new idea. Frequently the result is to shoot down the idea without a fair evaluation. Examples of killer phrases are . . .

•        “We tried that before.”

•        “That’s irrelevant.”

•        “Don’t waste time thinking.”

•        “It’s not in the budget.”

•        “Your ideas only have limited use in their present format.”

•        “It will be more trouble than it’s worth.”

•        “We’ve done all right so far.”

•        “No.”

•        silence

Are you ready to Bet?
Which to bet on?

1.      Technology: Big Bull. It can break all limitations. Mature. Powerful. READY. Note that it is ESSENTIAL that METRICS (Measures = Data, Analysis & Integration) is TECHNOLOGY driven when in action.

2.      Processes: Innovation is intensely untethered. It is more through culture, trust and spirit. A Rabit. Cute but sensitive. PROCESSES need to emulate collective discovery like in Proteomics (e.g. Taverna)

3.      People: The Horse. It pulls the company. It reaches far. Strong and resilient. Talented People are the horses for driving Innovation. The Horse (People) need to be adapting METRICS and TECHNOLOGY to be relevant in the Innovation game.

There is RISK – some money will be lost. UNCERTAINTY – transformational finding may not occur. BUT E&P is the game of RISK-UNCERTAINTY.

Supporting Innovation is Seed Money for the $333billion lost opportunity.

CHOICE is based on

DO YOU TRUST “THE FUTURE IS NOT WHAT IT USED TO BE?”