Plurality Should not be assumed without necessity. Part A

More information is located on the innovation web log and the publication of a Draft Specification.

Abstract

“Plurality should not be assumed without necessity.” This title does not appear to mean much until it is explained
further. This statement was written by Ernst & Young in a 1997 report to the World Bank, and was described as: “It’s not what you know that you do not know that hurts you. It’s what you do not know, that you do not know that will. It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to bring about a new order of things.” Knoop & Valor (1997)

This statement clearly reflects the times we live in today. The difficulties in business appear to be expanding exponentially and inversely to the capacity to deal with them. Change within organizations is difficult when the constraints of a hierarchy are imposed on the employees within that organization. Additional issues that effect the organization are accurately reflected in the following statement:.

“What information consumes is rather obvious. It consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention.”

- Herbert Simon, Economist and Nobel Prize recipient.

Research purpose

To test the hypothesis of:

• The corporate hierarchical organizational structure is an impediment to progress and most particularly, innovation.
• Determine if the Industry Standard Joint Operating Committee, modified with today’s information technologies, provides an oil and gas concern with the opportunity for advanced innovativeness.
  

Research questions (In summary)

• Has the hierarchy’s value expired?
• Can the scope and understanding of the process of innovation; be reduced to a quantifiable and replicable process?
• Will the Standard Joint Operating Committee (SJOC) facilitate the means to innovate?
• Does the industry need to change from a “banking” to a “science and engineering” based mindset?

Genesys® perspective.

Several of the fundamental factors underlying the oil and gas business have changed.

• Commodity prices are providing a reallocation of financial resources to facilitate innovation.
• Earth sciences and engineering disciplines will expand substantially in the 5 - 10 year time frame.
• Oil and gas is entering a phase of complexity, risk, and reward particularly in:
• The mature Western Sedimentary Basin.
• The Arctic, a harsh and remote area.
• Heavy oil.
• Offshore operations, Pacific and Atlantic.

The scope of operations of an oil and gas concern is geographically, politically and scientifically diverse. The hierarchy limits the detail and focus to deal with the political and technical difficulties of each facility. Expecting an organization with these constraints to innovate is foolhardy.

The hierarchy has created “Information overload”, which in turn has created a paralysis in decision-making, directly affecting the capacity to change and or innovate. The hierarchy’s bureaucratic, complex and conflicting lines of authority have muddled accountability. The ability to identify success / failure, to share those experiences, and to learn from them has diminished and is not progressing. Calgary, as a collective group of independent producers, is discovering constraints to its ability to drill wells in the prairies. How can an industry with these constraints consider the complexities of the geopolitical, technical and operational concerns in the frontier areas of oil and gas.

Genesys® research results.

What’s the problem, the SJOC is operating as usual? However, the:

• SJOC is not directly accountable for its operating decisions in terms of financial performance.
• Smaller reserve opportunities require greater effort, innovation, consensus and focus.

Advantages of the SJOC.

• All participants are motivated equally. Financial opportunity drives consensus.
• The SJOC is the legal, financial, operational and cultural foundation of the oil and gas industry. All the internal processes tacitly support this fact.
• The participants in SJOC hold significant technical and managerial capabilities.

 
The scope of operational authority of the committee is constrained by the participants financial interest in the property. The committee’s formation is traditionally formed around a geographical area, is traditionally limited in its geological and areal extent. This naturally limits the focus of the committee to that facility. The SJOC is therefore motivated, and has the appropriate level of focus for the needs of an innovative organization.

The disadvantages of the conflict between the SJOC and the traditional hierarchy.
 

• Introduces political and bureaucratic conflict.
• Compromises and muddles internal decisions.
• Lacks the direct support from the hierarchy.
• Eliminates initiative and innovation. No tolerance for risk taking or experimentation that is required for innovation.
• Successes and / or failures are not identified, shared or learned explicitly by any of the participating organizations. Knowledge is held tacitly, limited amounts of knowledge is codified or made explicit.
• Conflicting processes between the hierarchy and SJOC impede not only innovation, but the speed and capabilities of the organization.
• The SJOC is not directly accountable.
• No consensus on performance related goals or objectives.
• No regulatory or internal financial reporting requirements.
• The hierarchically based organization is an impediment to future progress.
• Capacity to replace reserves has become logistically, operationally and organizationally constrained.
• Capacity to meet the market demand is diminishing.

Research conclusion.

The classic hierarchy’s useful life expired and its existence conflicts with the efforts and capabilities of the SJOC.

The Industry SJOC is the “natural” form of organization for oil and gas where the participants of the committee are supported and augmented through the diversity and availability of the remaining organizations team members. A greater alignment to this conceptual model would facilitate the desired innovation.

Qbyte, SAP and their competitors tacitly support the hierarchy and bureaucracy that obstruct alignment to the SJOC. And without explicit support for the SJOC, these ERP systems are inappropriate for an oil and gas organization. Genesys® research and software developments are the only opportunity for producers to acquire ERP styled systems based on the SJOC.

Technologies dark side.

One significant and serious threat exists for the independent producer.

• IBM has developed the product.
• IBM has developed and implemented the products strategy.
• Genesys® research has discovered this threat. Exposing technologies darker side.

The overall implication of the technology is the integrity of internal data will come into question. This research asserts the further implications of data integrity are significant with two possible outcomes:

• Calgary based producers will be at risk to regress in their management,technical and political influences and capabilities?
• Would this permit Houston to expand on its “branch plant” management theory?

Or,

• Subscribe to Genesys®, and facilitate the internal organizational innovation the market is demanding.

It has been noted in this report, that after World War 1, the French were active in preparing for their future defense with enhanced thinking and infrastructure based on trench warfare. The Maginot line is famous for its failure, and reflects that companies need to consider different strategies for today’s issues. And just as Albert Einstein once said, that today’s problems will not be solved by today’s thinking, producers need to consider this report in a manner that considers the changing structure and methods of success in their industry.

operational strategies (focused on growth) are now limiting, and possibly exposing major societies to economic decline. It is this author’s opinion that growth should not be an objective, but is something that occurs as a result of doing the right things correctly.

Enron and WorldCom achieved significant and spectacular growth and is testament to the misguided nature of pursuing growth as a corporate objective. Is innovation a key economic driver and operational strategy for the future of North American companies? Will a shift away from the focus on price strategies be replaced by quality and innovation as operational strategies? Will focusing on innovation lead North America to continue with its present influence and global position?

Dr. Giovanni Dosi’s work defines the basis of innovation for a company to straddle the business cycles that they see themselves in. With the increasing pace of change and compression of business and product cycles, transition from one cycle to the next has become increasingly perilous. If innovation does provide the means to straddle these business cycles, then the innovation model developed through this research will be of significant value to Genesys® and its oil and gas clients.
 
Dr. Dosi assumes that the motivations for companies to pursue innovation are the traditional economic cycle and monetary in nature, asserting that there is an implicit return on investment in science and technology. He defines the areas where innovation occurs is in product, process and organizationally. Since this research project is based on organizational innovation on independent oil and gas producers, the need to discuss the Structuration Theory of Dr. Giddens and Dr. Orlikowski’s Technology Model are critical in the role of defining constraints and enhancements to innovation. Additionally, this research will be based on Dr. Noel Tichy’s writings on managing strategic change. How Dr. Tichy’s theories and models involve the cultural, political and technical motivationsbehind change.

Dr. Dosi asserts that a technological paradigm involves a technical change of a specific technology. This research project is therefore to determine if the underlying development of information technologies has created technological paradigms that require changes in the organizational structure of oil and gas companies. This research proposes that the industry Standard Joint Operating Committee (SJOC) be configured as the center of the management function, where accountability, corporate performance and other management attributes fall within the domain of the operating committee’s roles and function. This research asks if organizational change can be facilitated through enhanced collaboration tools to support this revised structure. Has the abundance of knowledge, information, collaborative tools and information technology, with their inherent low costs, facilitated the technical paradigms that Dr. Dosi establishes as required for innovation, and provide the means to change the performance trajectory of the organizations?

This research project reflects an opportunity for the internationally oriented, independent oil and gas producer to take a different approach. A means to mitigate the costs from learning and risk be shared jointly amongst producers. Collaboration between producers through the SJOC can innovate, experiment, affect change and take risks far greater then one organization can. Each participant to the collaboration will learn different lessons from innovations process of trial and error, but the costs are shared. Today too many companies are incurring the same errors and this is a major impediment to their competition on a global basis. Sharing of risk and innovation through collaboration allows each producer to learn the lessons of “how to do things and how to improve them” at less cost by the industry as a whole, and enables each producer to accelerate the technology trajectories of their firm in a manner that is unique to their capability.

Enhancement of the capability of a producer to innovate is the desired objective of this research. The organizational structure is believed to be an impediment to the further progress of staff and society, and this is implicit in this research hypothesis. The liberation of the organizational structure through collaboration at the joint operating committee or SJOC is key to facilitating further innovation, shared risks, shared learning and shared costs across the producers involved within the specific facilities operating committee. It can therefore be stated that this research is to determine the viability of changes in the organizational structure of oil and gas, which would facilitate the innovation needed to remain competitive in a global environment.

Considering the societal and economic changes of the past 5 years. Changes that include low interest rates, staff shortages, high-energy costs, abundant and low cost information and knowledge. These scientific and technical changes should create substantial technical paradigms, shifting trajectories and therefore substantial innovation that supports this research projects assertion that the ability of the North American economy to compete is based on innovation.

The purpose of this research is to determine the validity of the hypothesis of how current oil and gas companies organizational structures are inappropriate for the future, and inhibit rather then support an innovative capability necessary of an internationally based organization. Employing Dr. Giddens and Dr. Orlikowski theory and model, the inappropriateness of current organizational structure is an impediment to the societal and human developments. That technology, which forms the duality of societal structures, employed in the fashion of this research, will provide a tangible opportunity for producers to innovate and progress.

This research project establishes Genesys Software Corporation in the position of building on their February 2003 proposal by quantifying and qualifying the means for interested producers with a method to analyze their innovativeness, and better understand the effect and opportunity of innovation. The development and implementation of The Genesys ® Model of Strategic Innovation will be one of the direct outputs of this research. The Genesys® Model of Strategic Innovation, in addition to Genesys ®, February 2003 software development proposal, provide a significant opportunity for a producer to build on the impact and broaden the scope of understanding around innovation.

It is therefore asked in this research: is the SJOC the basis of an Open Source style of organizational formation? Where like-minded groups comprised of individuals representing different organizations, meeting formally, informally, asynchronously, and in person. Manage all aspects of strategy, management and financial performance of a certain property? Should this be the basis of how the ownership, operation and construction of the oil and gas industry be organized? Is the addition of financial performance, accountability, full authority and responsibility at the operating committee a means to enhance a producer’s innovativeness? Will collaboration at the operating committee level facilitate the opportunity to innovate based on the criteria of Dr. Dosi’s as defined in this research project, and, instill the accountability, performance orientation, innovation, shared risk and organizational structure for the future of the global oil and gas producer?

The complexity and risks involved in oil and gas will escalate substantially in the short to mid-term. The risks are systemic and based on the facts regarding the reserves and deliverability of the Western sedimentary basin, the arctic, offshore operations and the oil sands.

A producer that participates in this research will receive a detailed report based on The Genesys ® Model of Strategic Innovation. Additional opportunities to participate in the Genesys®
ERP software developments are part of the specific recommendations of this report.

B a c k g r o u n d

In Dr. Daniel Yergin & Joseph Stanislaw’s (1998) book The Commanding Heights, the economic malaise that

consumed most of the European countries in the period prior to WW2 was attributable to the capitalist’s comfort with the status quo.

This status quo, and a well-defined class system, particularly in Britain, enabled capitalists to reap the benefits of their companies’ economic activity without the need for further investment or, more importantly, innovation. Yergin et al (1998) attributed the decline of this economic malaise to the majority of the European countries moving toward economic reforms in the form of government nationalization, planning and control of the commanding heights of each countries core market requirements. This level of planning initially spurred the European economies and was widely believed to be the appropriate role and responsibility of governments. These theories were supported by John Maynard Keynes “Keynesian” economic theories and thinking, and the fact the centrally planned industrial complex of the Soviet Union appeared to be more prosperous than western-based systems.

This economic thinking coupled with market reforms in Europe led many countries to pursue various forms of communist, nationalist style governments and even in the United States, high levels of regulation. This Keynesian economic period began in the immediate post war period and continued into the late 1970’s and led to the fundamental reforms of the Reagan - Thatcher era. Based on Friedrich von Hayek’s economic theories, Reaganomics led to comprehensive market reforms adopted by Russia and China that now have the opportunity and economic structure to compete effectively in the global economy.

During the 1990’s we began to see capital flow into the more risk-oriented areas of the global economy. This risk orientation was at the expense of what was considered the “old economy” and resulted in a feverish over expenditure in speculative and corrupt business models. This precipitated large-scale global economic fallout. This fallout being symptomatic of the occurrences of what this paper will describe as a global manufacturing capacity overhang, which is cited by this author for the purposes of this paper, as the cause of the current global deflationary pressures. However, was this capital orientation to risk incorrect? Or, did this level of capital investment form the basis of a third “revolution” in business and economics comparable to Keynesianism and Reaganomics? The thinking from the Reagan-Thatcher era now presents new issues, and begs the question: does the new economic revolution, or globalism, present a new basis for companies competing on a global basis?

Over the past ten years we have seen a comparable revolution in thinking of all forms of international governments, western based or communist. This presents new competitive threats and opportunities for firms operating in this new global environment. Today companies need to make difficult choices. Do today's companies atrophy under the guise of harvesting during the regular business cycle? And is history repeating itself by North America being challenged by a potential new global leader, just as the United States challenged Europe after WW2? Or, does management actively invest in their organizations on the basis of new competitive advantages and take the appropriate risks to enable their organizations to evolve and adapt in this rapid, change-oriented environment. History reflects that in the period after WW2, companies involved in investing in market share and growth were rewarded with larger and more profitable organizations. This model of “growth” has become so systemic in most of western management’s thinking that it is easy to confuse an organization’s growth orientation with their purpose of maximizing shareholder return. (Enron and WorldCom.) With unending supplies of human resources in the Asian and Eastern European countries, this growth strategy only exacerbates deflation.

Capital deflation presents two unique and difficult issues, which include:

• Deflationary cycles are difficult to stop. Witness Japan’s difficulty through the 1990’s and currently.
• During deflationary cycles no one “wins”.

Consumers, companies and countries find their holdings in a never-ending spiral of decline in value, which is only contrasted by the never ending upward spiral of debt, and commitments valued at prior periods higher valuations. Capital deflation must be avoided at all costs. The never-ending economic decline can become permanently entrenched in the minds of consumers and make the situation only worse as time passes. Witness the approach of the Japanese to their economy. The government, acting on the response of their citizens, after 12 years of deflation and recession, has not implemented the necessary market reforms to deal with this deflationary economic phenomenon. The Japanese people are generally well off and continue to accept that they need not invoke any measures to deal with problems that are not evident to them.

A new means of international competitiveness needs to be adopted by all companies operating in the global economy. The standard operational strategy (growth) is now limiting, and possibly exposing major societies to economic decline. It is this researcher’s opinion that innovation is a key economic driver and operational strategy that can augment a firm’s other strategies for the future. Innovation is an operational strategy that augments the other operational strategies of marketing, operations, financial, and human resource. Focusing on innovation will lead North America to continue with its present influence and global position.

Some choices in this environment are simple to make, but for companies such as Air Canada, built on the thinking that consolidation of market share was the key to prosperity, change is difficult to consider, let alone implement. What basis of competitiveness can provide western economies with sustainable competitive advantages? How does a firm expand its capacity to innovate? What are the necessary tools and methodologies that enable a firm to augment their capability to ensure that their competitiveness continues to accelerate throughout their product life cycles? Is innovation capable of supporting the western economies in such a competitive environment? With Vietnam and China taking the most advanced telecommunications and other products of the West and employing them, their economic infrastructure are immediately competitive.

The risks of not changing to a new economic model in North America are significant. Will organizations be able to stay in business? Is innovation the competitive advantage for the future of our western economies? What can a firm do to augment their innovativeness, and is there a method of implementing the appropriate procedures and policies to become innovative?

Or are we destined to rely on the competitive nature of the entrepreneurial methods of creative destruction?

What are the ethical dilemmas for a firm that chooses not to pursue an innovative path? With the inherent loss in value, standard of living and employment, the ethical dilemma is clear and should be articulated to the managers to ensure that these tools and methodologies are clearly understood and implemented.

Theoretical Basis of this Research.

Listed in descending order of importance to this paper, are the following theories:

The first is Dr. Giovanni Dosi’s theory and his 1988 article “Sources Procedures and Microeconomic effects of innovation”. Dr. Dosi’s article provides a critical level of thinking and introduces many tools necessary to implement innovation.

Secondly is Dr. Wanda Orlikowski’s Model of Structuration for Technology and Dr. Anthony Gidden’s theory of structuration, which states that society, organizations and people need to move in lock-step in order for successful advancement to occur. Dr. Orlikowski’s model asserts that a fundamental component of society is technology, that technology provides a duality and therefore is a constraint or inhibitor to successful advancement of society, people and organizations. It is this paper’s hypothesis that the hierarchical organizational structure is an impediment to advancement of the oil and gas company and society in general.

Thirdly Dr. Michael E. Porter’s work in “On Competition” and “Competitive Strategy” and his strict application of competitive strategy. A further movement away from the focus on growth needs to be further emphasized and acted upon in oil and gas. Dr. Porter’s work has emphasized that growth is not a successful strategy since the late 1970’s, and the methods and tools that Dr. Porter has developed, which include the definition of clusters, provide a sound basis for reviewing critical components of an organization’s underlying strategy.

Fourth, Dr. John Seely Brown and John Hagel III recent and comprehensive work on implementation and management of Web Services technologies. Dr. Brown is the former Director of Xerox PARC and has written extensively with John Hagel on the risks, opportunities and threats of the Web Services paradigm.

Fifth is Dr. Noel Tichy’s management of strategic change and the definition of change agents. How leadership is a
necessary component of change management. Where leaders engage and align the people within their organizations through technical, political and cultural dynamics.

Globalization requires companies to stop investing for market share and growth through increasing capacity; rather, innovation is the way to increase value for organizations, people and society. Emphasis on growth has lead to over capacity in all the western economies and now runs the risk of a protracted deflationary depression as witnessed in Japan over the past decade. Businesses must maintain their competitive offerings by innovating.

Implicit in this research project’s hypothesis is the capacity for the “old” system to provide growth is failing to increase shareholder value. This has presented a very precarious situation for large organizations in which errors in judgment, ethical behavior or market structures have the detrimental effect of being fatal to the health and independence of the organization. We have consistently seen large companies that have erred, and fail as a result. In a ruthless and unforgiving North American market, where do the companies move to mitigate or avoid these effects?

Of note: participants in the Japanese economy have not taken any risks, live in an environment where protection of companies mistakes is mitigated by government policies, and no innovation, failure or economic growth occurs. Conversely, why have Apple and 3M, companies built on innovation, fared better then their competitors? Apple has demonstrated resilience and has come back from near death experiences, and 3M has consistently outperformed others in value generation, on the basis of innovation, for decades.

One of the reasons cited for the former Soviet Union’s economic demise was the inability for the economic system (that propelled them to alleged greatness in the 40’s, 50’s, and 60’s) to accommodate change or innovation. Things were done because that was the way they were done. The lack of questioning and process inefficiencies continued until the system began to collapse upon itself. Are large organizations incapable of reforming and embracing innovation as a means of competitive survival? Enron lead the way with what was heralded as organizational innovation, only to be found criminal and eventually bankrupt. Since then the all time top three corporate bankruptcies have occurred in the United States and many CEO’s have been arrested and organizations shut down due to fraud and other inappropriate actions, a key example being the former accounting firm of Arthur Anderson. What is the cumulative effect of these occurrences, and are these parallel to the experience of the former Soviet Union?

During the past 15 years we have also seen a fundamental change and understanding in the individual’s role within organizations. The trust and commitment of people in their organizations has diminished through systemic and chronic downturns, layoffs, early retirements, pension revocations and brutal downsizing. The emergence of the superstar CEO and escalating pay scales for senior management has had the dual effect of recognizing the value of intellectual talent, and, further eroding the trust and commitment of the staff within those organizations. Today we see Disney, which was one of the greatest companies built on the basis of intellectual property, challenged by key employees and contractual relationships with suppliers and partners. Pixar Entertainment, Jeffrey Katzenberg and the Current CEO are collectively more profitable then the entire capital and intellectual property base of Disney. This dissection of value continues unabated, and essentially unidentified as a detrimental trend to the health of large organizations. Is this the beginning of the identification of this capital dissection, and the beginning of the legal remedies necessary to mitigate insidious devaluation of shareholder trust and value?

Microsoft faces it’s greatest challenge in the form of open source developed software. Independent, self-organizing teams working together, electronically, collaboratively, to build what they consider to be better software than that which is offered commercially.

Dr. Orlikowski’s model requires that the organization, society, technology, and people move in lock step with one another. Our society appears to have embraced market reforms on a global basis with outstanding success. Technology is being developed that could only be imagined a decade ago, and is readily available throughout the world. People are reaping the economic benefits of their increasing capabilities and monetary value. These benefits have placed enormous stress on the traditional organization with the ability for the organization to adjust appears limited.

Dr. Giddens states that failure occurs if the components get out of lock step with one another. It certainly appears likely to this author that it could be asserted today’s organizations are beginning to parallel the difficulties that the former Soviet Union experienced in its last decades. Does that mean companies must atrophy until the end is clearly presented to them, as is the case with Air Canada? The inability to innovate has stalled these organization’s growth, which was their overall purpose for existing.

Research Objectives

This researcher’s objective is to build an innovation model for Genesys Software Corporation (Genesys®) to use as a means to consult to organizations that desire to move away from the structural difficulties articulated above and become an innovative leader in their industry. Development of the innovation model will be based on the determination of key success factors and application of the success factors within the oil and gas industry. It is expected that this will be developed through a consulting role that is supported by producers.

What makes a company innovative? What tools, methods and procedures, implications for management, and leadership are available within an organization to define and implement innovation? Innovation is certainly a topical point in business conversations, everyone can clearly identify a new innovative idea or product, but how are these innovations initialized, developed, financed and created? Who can benefit from a consulting role that is specifically designed around a model for innovation? Where within an organization can innovation come from? How long can it take before the innovations begin to provide the expected returns, and what are the expected returns?

Key to the development of this innovation model will be an underlying reliance on project management’s role in the future of organizations. This author believes fundamentally in the ability to invoke change as fundamental as what is facing organizations today is a role best assumed by the project management methodology.

Research Questions.

Can the scope and understanding of the process of innovation, be reduced to a quantifiable and replicable process?

How are innovation leaders able to instill in their people the drive to attain the innovative needs of the organization?

What role does leadership play in an innovative firm? What corporate, operational and marketing strategies and methods do leaders use to assert their leadership?

Can the definition of innovation be expanded to include finance strategies, human resource strategies as well as products and processes and therefore be a critical component that compliments each operational strategy an organization employs?

What role does information technology and information strategy play in the innovative firm? Collaboration is a key component for the future but is it an enabling technology for innovation within organizations? How can collaboration be implemented to facilitate the work required in implementing innovative procedures, thinking and capability?

Hypotheses.

Implicit in this research project’s hypothesis is the capacity for the “old” organizational system to provide growth is failing. The current oil and gas hierarchical structure is inappropriate for the future of internationally based, innovative organizations.

This research can facilitate and affect a trajectory change in organizational performance through the development of the SJOC and by introducing collaborative tools and systems to facilitate innovation in production, process and organizational capabilities.

Research approach

Summary of this descriptive research design and methodology.

This research provides a base of understanding to assert that the method of competition for a large sector of the senior independent producers has changed. Where these independent producers are collectively contemplating the internationalization of their asset bases. Producers who need to consider a broader definition of what their competition consists of and consideration that they are now several of the largest of 100 oil and gas companies in the world. To compete in this new environment requires a different mindset of what their competition is and how to adopt a manner of cooperation and competition with other producers.

The selected methodology of research for this project’s approach is descriptive. Using a descriptive research approach provides a basis of research that is more speculative and tentative in nature, where the research questions and hypothesis are not necessarily based on causation and effect.

The purpose of this research is to determine the validity of the hypothesis that current oil and gas companies’ organizational structures are inappropriate for the future and lack the innovative capability of internationally based organizations. Employing Dr. Giddens and Dr. Orlikowski’s theory and model in this situation shows that the inappropriateness of current organizational structure is an impediment to societal and human developments. Technology, which forms the duality of societal structures, employed in the fashion of this research, will provide a tangible opportunity for producers to innovate and progress.

In February 2003 Genesys Software Corporation published a proposal for the oil and gas industry to consider a revised methodology of securing the Enterprise Resource Planning (ERP) style of software. This February proposal contained several innovative new methods for companies in “niche” markets to secure the ERP styles of software necessary for their future. Genesys®, February 2003 software development proposal is provided as an Appendix to this preliminary research report. This February 2003 proposal provides a unique value proposition for producers to consider.

Collaboration defined.

Consistent with a revised understanding of competitive forces, there is a need to better understand the attributes of collaboration. Dr. Dosi lays the fundamental groundwork for how industries need to deal with the types and methods of competing in an innovative manner. In this definition Dr. Dosi clearly raises the point that collaboration is key in raising a firm’s capability to straddle several business cycles and increase their long-term viability and competitiveness in a global environment.

Collaboration provides firms with the ability to achieve a collective learning. In the competitive environment of today where each company could be considered a competitive silo within an industry, errors and issues arise that are learned within each silo over and over again. The learning from these mistakes are not shared and therefore, based on a firm’s capability, incurred again and again by each silo.

Collaboration seeks to share the learning experience over a broader base. Whether internal or externally, this “sharing” attitude is inconsistent with the industries’ past and current culture. Hence, it may be a major impediment to their ability to move forward in the global competitive environment.

Research methodology.

How this organizational structural change can be orchestrated is through a relatively new development in a well-established technology. Lotus Notes has provided a collaborative environment for many companies that have effectively used the features of Notes beyond its email functionality. The change in Notes functionality was the upgrade to Lotus Notes 6 and release of Lotus Workplace in which users can be administered (a timely and costly task) remotely. The primary issue that Lotus Notes R6 and Lotus Workplace mitigate is the elimination of the need for the Lotus Notes style “big bang” approach to implementation. A company no longer needs to make the dedicated roll out of Lotus Notes on an enterprise wide level. Workplace moves the technical difficulties from the user and centralizes it to where it belongs. This facilitates the ease of having several individuals from each company “tied” together in a “sharing” style of technology, easily and affordably.

Some of the initial uses of Workplace for this research project are as follows. The following are considered basic components of Workplace and are available immediately. Please note that all communication and access is controlled through IBM’s extensive use of encryption keys and certificates.


The Construction, Ownership and Operation Agreement, with associated mail ballots, Joint Venture agreements with associated AFE’s, lease documents and other agreements that have been counterpart executed by members of the joint operating committee. Of note Workplace can invoke what is referred to as a CVS (Concurrent Version System). These were developed originally for programmers to enable the use of one code base as the “library” of all versions of their software code. Control and updates of these documents can be made subject to user-defined criteria. For example, if an amendment to the CO&O was considered, this could be proposed, edited, approved and managed through Workplace. This would provide a means to review the current existing CO&O and the evolution of the agreement over time.


For anyone who is familiar with Lotus Notes and the use of databases in that application Workplace is precisely the same thing, however available through a browser, and hence from anywhere with https (secure internet connection).

These discussions are unique in that they provide an asynchronous discussion of the issues. Many discussions may take significant time and are added to by the participants as the collective thinking advances. These discussions being asynchronous provides time for the user to think and consider other points of view and issues.

The other advantage is that these discussions are provided to all team members’ whether they contribute or not. This facilitates team learning and discussion, which is key to innovation, risk taking and sharing of costs. A noted by-product of these discussions is the direct documentation of the tacit knowledge of the staff and contributors, leading to the ability to capture and manage the knowledge of the organization.

The motivation to contribute to these discussions comes from the fact that the staffs thoughts, ideas and contributions are made explicit, noted by their peers and stamped with the time they were made. Recognizing the contributions of the specific staff member is a significant method of motivation.


Lotus’ implementation of instant messaging has many advantages over their competition. Firstly, these discussions are logged and posted within the databases for all the other team members to review thereby cutting the time for team learning down. Secondly, communications are encrypted and secure and are not a port for viruses or security breaches.
What this facility could be used for is innumerable. The oil and gas industry has been built on several basic principles that require “joint ventures”.
These are:

• The co-operative sharing of risk. Capital risk is shared systemically.
• Provincial environmental concerns of having too many gas plants.
• The areal extent of many of the producing fields.

As a result of these principles rarely does an oil and gas company participate in 100% ownership of both physical facilities and producing assets.
 
This is systemic and culturally ingrained in the industry. Consistent with the cooperative management of these facilities is the Standard Joint Operating Committee, which is comprised of members from each producer with a monetary interest in a facility or property. The committee, consisting primarily of engineers, is responsible for many of the decisions regarding the management of the facility and producing assets. Budgets are established; programs are developed, agreed to and approved collectively.

Most companies are active and use the operating committee as a means of managing their interests but other companies may, due to a relatively small financial interest, or non-core area participate only in annual meetings. The range of participation runs the gamut of possibilities.

Consistent with the authority of the committee, there are a number of forms, legal and other documents that represent the committee’s legal, environmental and cultural requirements. Each form requires counter-part execution by the committee members duly authorized officers. A current issue with respect to the management of oil and gas organizations is that the committee is not charged with the financial performance of the property. This task is left to the remaining organization to attempt to finance, produce and operate these assets in a profitable manner. This financial responsibility, generally, does not fall within the scope of the operating committee. What would happen if the joint operating committee or SJOC participants were charged with the responsibilities of attaining increased volumes, better financial returns or any of the other measurement criteria that are traditionally the domain of the hierarchy? Where the hierarchy has no direct influence in the manner of operational control. This anomaly between the hierarchy and joint operating committee forms a dichotomy or contradiction that this research project will attempt to further identify and resolve.

It is therefore asked in this research, is the Operating Committee the basis of an Open Source style of organizational formation? Is it where like- minded groups meeting formally, informally, online, and in person to manage, in all aspects, the strategy, management and financial performance of a certain property? Should this be the basis of how the ownership, operation and construction of the oil and gas industry be organized? Is the addition of financial performance, accountability, full authority and responsibility at the operating committee a means to enhance a producer’s innovativeness? An accountability that would include the financial reporting, tax planning and other requirements of management traditionally managed by the hierarchy? Is this revised method of accountability consistent with the requirements in the Sarbanes Oxely (SOA) legislation or Canadian Institute of Chartered Accountants (CICA)? Will collaboration at the operating committee level facilitate the opportunity to innovate based on the criteria of Dr. Dosi’s as defined in this research project? Will collaboration at the operating committee align and instill the accountability, performance orientation, innovation, shared risk and provide the organizational structure for the future of the global oil and gas producer?

Key success factors of this research

Based on the technical and organizational changes that are being introduced, assessments will be made on how collaboration has affected team performance, innovation, leadership and accountability. These and other measures of performance will be the criteria used to define and determine the key success factors. Key to this research will be the outcomes of the analysis

built on the primary theories introduced. Specifically, Dosi’s methods in determining how innovation is developed, Orlikowski’s structuration model and the interactions between human, organizational and societies with particular emphasis on technology’s role in structuring institutional properties and human agents. And finally, leadership based on Tichy’s methods and models of managing strategic change. Significant technical and organizational changes are being introduced to an informal team environment with specific responsibilities. The potential for increased team performance exists, however, how these changes are implemented, supported and instituted will be of particular importance towards measuring and assessing the current and future benefits.

In Orlikowski’s structuration model in addition to the duality of technology, where technology is a product of human interaction that in turn assumes structural properties, there is the concept of interpretative flexibility of technology, which asserts that institutional properties influence humans in their interaction with technology.

Dr. Tichy asserts that key to leadership is the role of teaching. Citing examples of how Navy Seals teach new recruits what it is that they know, for survival, as an example of the role a leader needs to assume. This point may be one of the critical underlying motivations behind the open software movement and its success. Where the collective good outweighs the harboring and control of information and knowledge. The leadership role in this research and in the operating committee will be critical to the success in that, just as in the examples of the Navy Seal and Open Source contributor, will the operating committee member be motivated on the basis of what the facility should and could be, and can that attitude be extrapolated across the producer population represented in the operating committee? Dr. Tichy’s book “Managing Strategic Change: Technical, Political and Cultural Dynamics”, will form much of the underlying base of understanding how to introduce the changes this research project presents.

This research reports delivery and implications.

This proposal’s method of research in innovation will be concentrated on the SJOC of those Genesys® clients that subscribe to this research project. The Workplace software facilities will be provided and prepared by Genesys Software Corporation. This research is being facilitated and monitored through Genesys Software Corporation and will form the basis of innovation. Innovative tools and techniques are for the collective good of Genesys Software Corporation and supporting producers. Copies of all data will be held confidentially and made available, upon request, and review, to ensure the confidentiality. Producers subscribing and sponsoring this research will receive copies of the final report based on the following outline:

1. Background and executive summary.
2. Literature search results.
3. The Genesys® Model of Strategic Innovation.
4. Generic results of the research. The basis of results will be across at least three producers complete with specific analysis for each sponsoring producers organization.
5. Managerial implication of this research.
6. Next steps. Opportunities and issues from this research.

This research should be considered in conjunction with Genesys®, February 2003 ERP proposal and the issues identified therein. It is explicitly stated this research project should lead to the development of an ERP system based on the proposed organizational structure of this research and Genesys®, February 2003 proposal.

Technologies Darker Side

In order to best describe how technology may impact an organization, a summary description of the IBM
WebSphere and Workplace technology and toolset is provided. Additionally this paper will describe some relatively
everyday technologies have become a greater threat than most people and organizations perceive them to be. Specific examples will be provided illustrating how the impact of a technology, with an associated revised business model, can be disruptive to established businesses and how technological induced change occurs today. Finally this review concludes with a description of a speculative scenario for oil and gas firms that might be triggered by the introduction of the IBM WebSphere or middleware technologies.

Summary of the technologies discussed.

The specific technology that is being contemplated in this research is considered “middleware” and “Web Services” by IBM, the owner and marketer of the products. A better description might be infrastructure. The technology consists of the core products of database and network infrastructure that are standard fare for the corporate enterprise. Additional technologies include Lotus Domino, WebSphere and Lotus Workplace which I will draw particular attention to. Summary descriptions of the particular components that comprise the overall architecture are now discussed.

Lotus Domino

This product is not necessarily new and has been a staple of the IBM product suite for almost 10 years. It is of particular value in managing the Lotus Workplace product and is the “backbone” of that functionality and capability. It is primarily a development environment that enables an organization to cater and accommodate the Workplace tool to meet the unique needs of the users. It is not the most comprehensive technology that is deployed in this overall infrastructure; it is however very unique with no other vendor currently able to offer a similar capability to facilitate the collaboration and integration of the user.

WebSphere

WebSphere is IBM’s product offering that falls within the Enterprise Java (J2EE) domain. Consisting of Enterprise Java Beans (EJB’s) that IBM has developed through an army of developers over the past years, WebSphere is sold as core infrastructure to corporations, and / or as Web Services to users requiring specific functionality on demand. WebSphere is IBM’s interpretation and implementation of the concept of software reuse that is one of the founding concepts behind Java
.
Developers can access the core functionality and process management of key specific requirements of an application, such as a general ledger, or specific requirements such as web enabled credit card processing. Both of these capabilities are on demand and can be further enhanced with other EJB’s from WebSphere, or developed internally or elsewhere. WebSphere is of the scope and scale of a highly sophisticated ERP system, which is its intended target and purpose.

Key to WebSphere is the Lotus Workplace product that provides for the interactions of the users. This interaction enables the product to tie disparate partners, customers and vendors together and enable them to share data and information under the same process management. Think of WebSphere as Enterprise Resource Planning (ERP) software over several different organizations. WebSphere and Workplace are the two key ingredients of the infrastructure that enable the joint operating committee to be tied together as suggested and introduced in this research.
 

Lotus Workplace

Workplace is the product suite and toolset that raises concerns for the organization that this research discovered. Workplace was the new name that IBM started calling their Quickplace product suite and is simply a “web enabled” version of Lotus Notes. Its primary difference compared to Notes is that it mitigates the two key issues of a Lotus Notes deployment, the first being the need to have everyone and anyone that you may want to collaborate with, must also have Lotus Notes installed as part of their desktop infrastructure. Many corporations found that the need to deploy Notes in a big bang style of integration caused the costs and complexity of the desktop configuration of Notes to be too much for the value provided.

The second issue regarding Notes was the user generally did not fully understand or appreciate the concepts and capability of the product suite and essentially reduced the system to an email client. One key difference of Workplace is the full ability of its tools to communicate person-to-person, person to process, process to person and process to process. Enabling Workplace to provide an asynchronous process and productivity tool for anyone with the access, understanding and capabilities to use it. Asynchronous communication is critical to effective team efforts. Not every individual needs to be present at the same time. Time to respond and follow a “thread” of thinking over several days which facilitates team participation and effective problem identification and resolution. This asynchronous communication provides each team member with the ability to follow each participant’s contributions to the discussion. Asynchronous communication is a key competitive differentiator of the Athabasca University’s MBA program and is one of the most powerful tools available to organizations. Companies not discussing asynchronously are at a significant disadvantage and will be unable to participate in asynchronous communications, and, asynchronous process management. Astute readers will fully comprehend the previous sentence. Others may not have captured the importance of “asynchronous process management”, and I urge them to attempt to visualize the importance and capability of the concept.

Workplace eliminates the two Lotus Notes related issues of deployment and configuration through its access, and management via the web browser. This web browser access is also where the concern that Lotus Workplace introduces to the organization. Specifically the product has a very insidious nature to it. It can be introduced to a user who needs only a browser. This introduction might be through the management of the company, but it is suspected that the majority of the introductions will take place from outside the management’s involvement and be mostly through other users, corporate partners and customers.

Workplace introduces the virtual ability to conduct activity anywhere, anytime and on any machine with a web browser. This reduces the need for employees to be at their desks in order to complete the work they are responsible for. This facilitates the ability for the team to meet and manage the process, as the process requires, and enabling groups to form and break asynchronously as required and to get the job done in the most efficient manner. If the need exists for physical meetings, they can be coordinated and facilitated through the tool. The value of this technology is best represented in the following analogy to the standard use of a telephone. No longer will your staff need to be at their desks in order to make a business telephone call, and then travel to their home to make a personal phone call.

An additional side and necessary benefit of these tools is intimated in the literature review of Dr. Giovanni Dosi. The further parsing of roles and responsibilities of individuals in order to have the project completed increases in an innovative environment. Workplace facilitates the larger population of users and specialists to actively participate and cross-pollinate their work and efforts more dynamically, and therefore increasing collaborations value.

As stated Workplace is a great tool and all should welcome this quality and functionality of the product. However, understanding users’ propensity to find the path of least resistance the Workplace tool could easily circumvent the entire infrastructure of the corporate IT department. Parsing small bits of processes and functionality out of an Enterprise Resource Planning system can render the data and systems of an organization useless, with the management of the company unaware of its introduction and use. Accelerating this trend over 5% of the company could have an effect that is nightmarish in its scenario in that it would render the entire corporate IT investment redundant by questioning the integrity of the data.

The particular capabilities of the Workplace tools are to facilitate user collaboration asynchronously. If Workplace were limited to that it would be of substantially less concern. Workplace’s critical feature and a key part of IBM product strategy is that it is a front end, or veneer, to all of IBM’s middleware products. DB2, WebSphere and Lotus Domino, which can be invoked and supported through Lotus Workplace. As users become more familiar with the Workplace product they will be introduced to additional capabilities, in the form of management of processes and functionality that could be initially limited to something such as distribution of a common legal or source document such as an invoice. Then, someone who understands the capabilities of Workplace asks a developer to write an Enterprise Java Bean (EJB) to strip the variables from the documents into Extensible Markup Language (XML) and soon you have data being captured by the Workplace tool. It’s not far from here that the concern for the traditional organization begins to become very serious and quite disconcerting.

Is this data required elsewhere, is this the same data consistent with what was reported last time, has this data been reported to the existing systems? Or, is this data critical for the financial reporting requirements, should this data have updated the current ERP system, is this data not being collected elsewhere today but is critical in the future, such as purchaser needing the specific gravity? What are the data requirements of a networked group of companies? What data is being released to our partners, what data is being collected that may be of strategic importance to our competitors? Are we undertaking an unnecessary cost or burden in collecting this data for our partners benefit only? Are our partners cost justifying why they are collecting critical data for our needs, but redundant to theirs? Where has our partner sourced the data that has been provided, is it correct and is it based on industry standards? Has a producer been able to establish their own “standards” and are now charging for the services? Have our partners ERP system been compromised? How is that data calculated in Libya? Is this data from our partner or that new virus, and did that virus infect that other data?

Workplace’s mission critical nature enables these products to achieve an Enterprise Resource Planning system level of capability. This is also from IBM, and not some irrelevant dot-com that may not see the better part of next year. How many competitors are actively considering these tools as their revised ERP environment? How many competitors are planning on introducing Workplace as a strategic and tactical Trojan horse into your organization? Their purpose would be to deter their competition (your organization) from realizing the value associated from its advanced IT infrastructure. Or has that already happened?

It is this potential replacement to the ERP system functionality and process capability that is of concern. IBM finds that the product grows in population like rabbits. It has been this writer’s experience that most of the time it is introduced to the user from outside of the company.

Another key point is, the developments and enhancements are incremental. The big bang implementation has proven to be unsuccessful and Workplace et al fully understand that and have built in incremental changes as part of its product attributes and strategy.

The question for management should be when and where would this product be introduced into the organization? Or, has it already arrived?

T h e s u b t l e i m p l i c a t i o n s o f t e c h n o l o g y

Today we need to better understand the subtlety of the implications of technology. Organizations are entering a time period where technology is providing a level of infrastructure that permits its proliferation and adoption that is firstly insidious, ubiquitous and with possible or probable implications that are not fully understood? Three generic examples are cited to show the cause and effect of technologies on an unsuspecting audience of users and businesses. They are, the downloading of MP3's and Apple's iTunes, PowerPoint as a presentation tool and SourceForge.net.

The first two, MP3's and PowerPoint contain warnings of not fully understanding the impact the technologies will have, with the third example expressing the threat that self organizing teams present as an organizational alternative to the comparatively inefficient hierarchical based organization.

All these examples share the same symptomatic cause and effect that the user is attempting to achieve, that is, to acquire what they want through the path of least resistance. The other major new thinking that may develop is that intellectual property and knowledge management are by far the most important aspect of a firms assets, and that they are very temporary as an advantage, aging in quarters, not years. Included within these intellectual property attributes are the organizational innovative capability, or appropriability and IT resources. I am citing this point to reflect that the competitive nature in business today is rapidly changing on all fronts.

MP3's and Apple's iTunes.

The following is a good example of how technology can become disruptive to a well-entrenched business model. Downloading of MP3’s and the effect it has had on the music industry should be well known at this point. The phenomenon of least resistance showed itself through otherwise very honest and hardworking individuals, knowingly breaking the law. These thefts were justified in the users minds by a variety of excuses, and with all that has happened to mitigate the effects, little if anything has been done to stem the waning tide in the revenue of the musicians and music companies. This is also not a recent phenomenon, copying records onto cassette tape was a concern in the 1970’s with the development of the cassette recorder. The downloading issue has been raised as a result of the selection of music made available through the networked user seeking the path of least resistance.

Initial attempts to shut down the vehicles (Napster) proved fruitless as the website's were only replicated quickly, and in far greater numbers, effectively providing users with more outlets in which to acquire their music.

Apple iTunes has provided a strong business model that appeals to the user and provides them with the ability to use their music in the fashion that they have always wanted. This is currently working effectively, with the full support of the law and under contract with the music distribution companies. In hindsight the record companies, in seeking Apple's help, might soon realize they invited a Trojan horse into their camp.

iTunes appears to be the application that users and musicians need as a portal for their communications and distribution of their products. This enabling an alternate solution for communication and distribution of music, which might eliminate the “music business” as represented by Time Warner, Universal and Sony.

All of the machination's conducted by the music industry to control the intellectual property of their distribution copyright, has only provided the music user and musicians with the ammunition and motivation to further eliminate any goodwill towards the music industry. Which musician will be the first to distribute their new music to their fans via iTunes, and how much less will they be asking? ITunes is the only system that maintains the musicians rights of intellectual property, which is another aspect that the competition does not appear to understand. Disintermediation of the music industry will most certainly be the result of these activities.

NASA's comments regarding the dangers of PowerPoint.

We have witnessed the recent NASA comments regarding PowerPoint presentations that place that product in the category of the real “killer app”. I interpret NASA's comments not so much as blaming PowerPoint for the failure of the space shuttle, but more for the phenomenon that users would seek the path of least resistance in getting their message across. We all inherently understand the point that NASA is attempting to make.

The ubiquity of PowerPoint presentations is as a result of their inherent ease of use and effectiveness at selling a message. Any attempt to eliminate the product from within an organization would be devastating to its internal communicative capability. The product works effectively for the reasons that it is used for.

The future implications are that any attempts to eliminate PowerPoint would be more negative than positive, the PowerPoint presenter and viewers need to be cognizant of the limitations of the application, which unfortunately they now are.

SourceForge.net

SourceForge is not a name that many people would have heard of before. And many will not hear of in the future. This is good example of how minor changes in a business model or technology could have significant implications on how the organization of commercial enterprises becomes redundant and therefore effectively disrupted.

Sourceforge.net is the open source vehicle used to download and manage the open source code that a user wants. It is also the forum where like- minded developers organize and work to build the better, and “free” code that is provided to anyone who wants it. This is strictly on a volunteer basis with the altruistic objective of building better software and is not guided in any form or fashion as a result of anyone’s policies. The Linux, MySQL, Darwin, and other software are being developed through this medium. Self-organizing groups of developers, motivated by similar causes, located throughout the world are tied together through CVS (Concurrent Version Systems) to produce the code they seek. Most never meet the other developers, ever.

This environment has developed over the last few years from a small community to a reasonably moderate size of 800,000 developers working on 80,000 different projects. Mostly organized in an ad-hoc and informal manner, these developers have produced software of the quality that Linux is now the alternative operating system used by IBM, Sun and other vendors, and is beginning to be the preferred system for many corporate servers and considered for the desktop.

SourceForge.net is so significant that it may render the corporate IT infrastructure unworkable in the short to mid-term. This is a pretty bold statement regarding a completely irrelevant and mostly unknown organization. The announcement and an explanation of how this might occur is as follows.
 
On December 16, 2003 SourceForge.net distributed the following announcement to their membership through their site wide mailing list. The announcement had three components of the same theme. These were:

• Donations could be made to the overall SourceForge.net organization.
• Donations could be made directly to the project of your choice.
• Donations could be made to the specific developer of your choice.

This one change in the business model of SourceForge.net will provide the economic means for the developer to live in what he may have always considered to be his career objective of full independence, freedom and a means of financial independence. This will provide developers with the confidence and capability, and who may have been moonlighting through SourceForge.net as a means to hone his / her craft, with the motivation to commence drafting that resignation from their day job and securing their long term intellectual property value.

This, of course, won't be all of the corporate IT staff, just the ones that have achieved the level of sophistication and capability that can and usually is measured in the quantum's of 10, 20 and 30 fold to the standard. The technical workers that preferred to work on building their craft outside the organization they work for.

Although the losses may be limited to a handful, they are the critical ones who are known for their capability and will be able to make significantly more money through SourceForge.net than through any other means they could have imagined. They will be further motivated by the fact that their previous employer may become their greatest supporter. Which opens the other side of this threat, namely the opportunity for the companies to acquire several of these high quality developers through SourceForge.net.

Recently SourceForge.net started a company that provides software tools for corporations to hire and manage the source code through SourceForge.net. The following two url’s are to that company, VA Software and provide the information necessary to understand this opportunity. Of particular interest are the members of the board of directors. (http://vasoftware.com/)

Corporations may look back on their decision to use Linux and other open source code as their biggest error. After all what were they thinking, you don't get anything for “free”!

IBM WebSphere technology’s introduction in oil and gas.

There is a need to look at the past ten years in a different perspective in order to fully appreciate the scope of the concern that this research has for the hierarchical organization. This research is asserting the impediment to further progress is the hierarchical organizational structure or bureaucracy. And by invoking Dr. Anthony Giddens Structuration theory, which states society, individuals and organizations need to move forward together, or not at all, any disparity in the pace of change in one has to match the others, or failure occurs. Dr. Orlikowski’s model of technology structuration also becomes progressively more important during this discussion.

It is implicit in this thesis’ hypothesis that at this time, society and individuals are or have moved on, and the organization, as represented in the hierarchical corporate organization is impeding further progress and performance. Alternate organizations are forming, or can be formed quickly and efficiently to eliminate the need for the organization in its hierarchical

The hierarchical organization is directly supported through many tacit and explicit support structures. Key among them is the ERP system that represents the largest single IT investment of an organization. Support systems that provide the hierarchical capability, and specifically the ERP system, are now under direct threat of an insidious and contagious technology. This technology accelerates the organization’s performance to that which is matched by the performance attributes and expectations of society and people. Or as Dr. Dosi (1988) states, “technical progress generally exhibits strong irreversibility features.” This “progress”, as demonstrated in the prior technology examples is impossible to stop and needs to be fully understood and embraced as the only tactical and strategic method of dealing with it. (p. 1144)

There has been much debate in the past few years as to whether technology was evolutionary or revolutionary. These past years have provided cold comfort to those who believed the best days of technology are behind us and that will be the end of the bubble, and the geeks. I am asserting that the technology revolution sustained a serious blow to its credibility and capability during the past four years. The only requirement for the technical revolution to continue is for the coup to trigger the signal. Metaphorically speaking, of course.

I perceive these technologies to be a threat to the status quo of an organization because of the inherent ability of the technology to reproduce itself quickly. A good analogy would be the differences between a user that is networked and a user that is not. Contrast the abilities and productivity of a worker in the networked world with one of 10 years ago, where no public network, applications or communications occurred, compared to the ubiquity of today. No one would deny the impact that the Internet has had on an individual’s productivity. The easy access to abundant and inexpensive data and information, communication and new applications has provided a base of infrastructure that has facilitated innovation in all forms. This analogy is strengthened giving the significant impact that Dr. Dosi’s work on innovation will have in the future.

The analogy of the worker over the past ten years is directly applicable in this instance. The difference being the individual is replaced for the purpose of the analogy, and represented by the organization. As opposed to having independent and unconnected islands of information and capability, there is a collective and co-operative interconnection between trading partners where more of everything is shared and learned through the enhanced collaboration of internal and external, self-organizing teams.

Today many individuals have sought refuge in the collapse of the dot-com bubble to justify their refusal and incapability to fully exploit the technology resources that they have been provided. An inherent inability to learn the technology is a phenomenon associated with older generations that have a complacency or satisfaction with the status quo. This is leading them to be functionally illiterate in the working world of today, with only a vested pension, years of service or rapidly depreciating tacit knowledge that enables them to maintain their illusion of technology. Ultimately this will be at significant cost to those individuals.

This scenario is not an alternative for the organization. Failure will occur swiftly to those organizations that cannot compete against the swiftness and productivity of self-organizing teams.

Revisiting the earlier comments about SourceForge.net reflects few organizations could be organized with 850,000 developers working on 80,000 projects. The key is not so much the volume, but the associated quality of the products. Linux is unquestionably the champion in comparison to the Microsoft Windows alternative as are many of the open source products. To now transform the organization into a method for developers to earn their living may be the most productive and effective means of deploying those resources. The benefits derived from this organization can be distributed over larger populations of users and in collaboration with like-minded individuals or organizations.

Like many of the individuals that refuse to understand, learn and exploit the technologies of today, some corporations may decide to ignore the opportunity and focus on the threats that are introduced through these technologies or reflect that it is not particularly relevant. However, unlike the individuals described as rejecting technology, through the competitive marketplace corporations will be rendered ineffective and inefficient far quicker than their human counterparts.

Application of this point regarding oil and gas is particularly revealing. Through the process of this research it is apparent that the susceptibility of the industry to this risk is high. The saying that to be forewarned is to be forearmed might be pertinent and should be heeded by industry.

One point that this research has noted, is that this issue has created a polarizing effect between members of the companies. The scope of change crosses all boundaries within an organization.

The senior IT managers are almost unanimously concerned about the possibility of the toolset rendering the technical infrastructure ineffective. Their efforts to have an ERP system function effectively as required in these large organizations has been tremendously difficult and is not something that should be experimented with. Some of the comments regarding the research are:

• We have that all operating in our company now.
• This is too significant a change to be contemplated by anyone other then the CEO, CFO and CIO.
• Unwilling to support or sponsor the research. Emphatically unwillingly.