The Rapid Response Institute

Category: Cybersecurity

  • Roadmap to Decision Making In the ‘Smart’ Era

    Roadmap to Decision Making In the ‘Smart’ Era

    “Nothing is more difficult, and therefore more precious, than to be able to decide.”

    — Napoleon Bonaparte

    Volumes have been written on decision-making and this pundit has offered his share of insight and comment on the subject as well.  Some of our comments regard the appropriateness of the human intercession in electronic decision making.  Others raise questions regarding algorithm fallibility.  Moreover, Human Factors must be considered for any technology initiative which are becoming increasingly important.

    If one unpacks the previous paragraph a substantial level of complexity emerges.  As complexity increases so does risk and the need from proper governance.  However, many still see this potential transformation through the lens of just another IT initiative.

    Roadmap

    The oil and gas industry faced a similar dilemma at the dawn of the 21st Century.  At the time, referred to as DOFF or Digital Oilfield of the Future, a plethora of technologies became available.  The task was to transform 100 plus years of traditional operation to what is now referred to as the Digital Oilfield, aka Integrated Operations and a number or synonyms.  While this processes continues to evolve as new solutions emerge, i.e., Cloud, at the time much was trial and error.

    In conjunction with industry leadership, we released our Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation in the fall of 2004.  We believe it was the first industry (POSC) supported effort that was not simply research but a ‘bona fide’ action plan or roadmap to success based on industry/other knowledge, standards, economic value and best practices.

    Click for full size Integrated Operations Framework or graphic

    Since then, we have updated this roadmap into an Operational Excellence Platform.  Note that Integrated Operations is a key component.  The platform is a robust detailed solution that is available not just to the energy sector but all sectors identified by Homeland Security as Critical Infrastructure.  These sectors were recently identified as susceptible to hacking by the US government.

    Getting Smart

    Enormous corporate (shareholder) wealth has been destroyed implementing ‘game changing’ technology enabled transformation efforts.  Are we about to do that again, getting smart?  The easy answer is yes, but it does not have to be.

    Roadmap constructs are well understood and provide guidance.  In some models the step by step process provide practitioners with well defined models that can lead to success–defined as on time and under budget performance against Key Performance Indicators (KPIs).

    We are in the process of writing a book, to be released in 2022.  One chapter will define a roadmap for the transformation to ‘Smart’ for a major industrial segment.  As with earlier works, it will focus on the human element aligned with a technology assessment process.

    Get Smart was a comedic TV show spoofing the Cold War ‘spy’ environment of the 1960s.  Getting Smart today may not be a lot different.  The goal under a ‘Cone of Silence‘ was to attain and sustain competitive advantaged achieving superior stakeholder returns.

    Getting smart in 2021 will require a ‘Roadmap to Smart.’  A set of ‘to do’ processes that assures success.

    What is your Organization’s Plan to put Smart Decisioning Making Processes in Place?

     

    For More Information

    Please note, RRI does not endorse or advocate the links to any third-party materials.  They are provided for education and entertainment only.

    For more information on Cross Cultural Engagement, check out our Cross Cultural Serious Game

    We presented, Should Cross Cultural Serious Games Be Included in Your Diversity Program: Best Practices and Lessons Learned at the Online Conference, New Diversity Summit 2020 the week of September 14, 2020.  Check Out this timely event and contact the organizer for access to the presentations!!

    You can contact this author as well.

  • ESG Implementation–Strong v Weak Revisited

    ESG Implementation–Strong v Weak Revisited

    “A healthy corporation acts on the interests of its stakeholders and customers”

    — Ari Melber, Journalist

    Currently, organizations are being implored to implement Environmental, Social, and Governance (ESG) driven business models.   Proponents even suggest that investment in organizations that do not have this imprimatur should be avoided or even divested.

    However, one wonders what has changed?  Successful firms, private and public have long understood that they must add value to their constituencies.  One example, a few decades ago an energy services provider used its high volume oilfield pumps to help a small town in Kansas where it had a district office drain flood waters.  Why would they do this?  Perhaps because employees lived in this community or perhaps it was just the right thing to do.

    Flash forward and we find organizational largess still in place.  During the recent Texas freeze, a local furniture retailer opened its doors to dispossessed individuals and families.  The owner has a long record of supporting the community and his responses to local disasters is legendary.

    After the Deepwater Horizon incident in April 2010, our firm started to look at Asset Integrity issues in oilfield operations.  Our discoveries transcended several Critical Infrastructure segments.  The recent failure of the Colonial Pipeline is a manifestation of issues uncovered yet not resolved more than a decade ago!

    Focus on Operations

    In 2011, we posited that organizational governance was not just a financial issue at the ‘C’ level.  Rather its true focus should be at the revenue generating asset level.  This led to our 2011 groundbreaking monograph, Asset/Equipment Integrity Governance: Operations–Enterprise Alignment.  Therein, we posited a new governance model that incorporated the ESG components widely discussed today.

    Moreover, in 2014 our book, IMPLEMENTING A CULTURE of SAFETY: A ROADMAP FOR PERFORMANCE BASED COMPLIANCE identified the requirement for organizations in the Critical Infrastructure space to change governance models to one of Strong Bond.

    Following the release of our AIG model, we put forth a Strong v Weak governance model to manage High Reliability Organizations (HRO) necessary for firms in Critical Infrastructure sectors.  Strong Bond is appropriate for organizations in Critical Infrastructure segments, while Weak Bonds may be better for retail.

    One suspects that ESG is another tick in the box.  If ten years (or earlier) from now another critical system fails, it will not be because HRM processes were not followed or ESG verbiage was in the annual report Letter to Shareholders; it will be because nothing really changed.  As of this writing the US Federal government is advising organizations in Critical Infrastructure sectors to more aggressively address cybersecurity risks.

    Why is this? Do Boards and CEOs need politicians and bureaucrats to tell them about the details of running a business?  If they do, investors may want to revisit their portfolios.

    One suspects that the ESG fad will fade. There will always be a new management mantra that consultants will put forth.  Well run organizations will remain well run.  Others not so much.

    Governance models come and go.  Regardless, how will you assure your organization is well run?

    For More Information

    Please note, RRI does not endorse or advocate the links to any third-party materials.  They are provided for education and entertainment only.

    For more information on Cross Cultural Engagement, check out our Cross Cultural Serious Game

    We presented, Should Cross Cultural Serious Games Be Included in Your Diversity Program: Best Practices and Lessons Learned at the Online Conference, New Diversity Summit 2020 the week of September 14, 2020.  Check Out this timely event and contact the organizer for access to the presentations!!

    You can contact this author as well.

  • It’s the Economics Stupid!

    It’s the Economics Stupid!

    Since it was first uttered in the early 1990s, the phrase “It’s the economy stupid” has been used and misused extensively.  Let’s squander the lexicon one more time.

    The US ‘silly’ political season is well underway and forecast to last almost 13 more months—no telling what voodoo economics will emerge.  Those of us with our business noses to the grindstone must ride this stormy weather to a safe port next November.

    Most have an interest in the macroeconomic policies nation states put forth but other than voting and perhaps lobbying, there is little many can do to materially impact the economy.  What we can do is focus on the economics of our business—CAPEX.  Hence, our daily mantra should be, “It’s the Economics Stupid.”

    What Is Your Value to the Customer?

    For over the fifteen our organization has been, “Helping Clients Achieve Organizational Agility, Resiliency and Sustainability.”  Assisting clients develop and articulate a viable economic value proposition has been one of the most elusive and vexing challenges.

    There is a strong tendency to make statements that are Overstated, Not Demonstrable, and Not Defendable.  Declarations such as, “Enhanced credit control system for partners through increased information visibility” are effectively meaningless—yes, this is an actual quotation from a software company.  Customers are left with the question, “What does that mean for me?”

    Translate Technology into the Language of Business

    If you leave your customer with the above and/or other questions regarding your value to their enterprise, likely the sale will not close.  Probably, a more coherent competitor will leave with the deal.

    CAPEX always undergoes extensive scrutiny; even at the Board level in some cases.  While new and cool technology may ultimately be disruptive and of extremely high value, peddlers must speak the language of the Chief Financial Officer and her staff.  These are ‘green’ deals!

    Those tasked with generating revenue from technological solutions must also take on the role of translator.  Bridging the cultural differences between cool stuff and the bottom line requires a Rosetta Stone.

    The Economic Value Proposition Matrix® model (EVPM) was originally developed with a Super Independent oil and gas operator at the first part of the century to become that Rosetta Stone.  Working with customers, technology providers can now prepare for the inevitable decision by the CFO.  Usually, the vendor will not attend said meeting but preparing the customer staff to make the case is mandatory.

    This video tells the whole story in less than 43 minutes.  Is winning your next deal worth an investment of three quarters of an hour?  If not, keep doing what your doing and hope for a different result.

    The video makes the case that technology offerings often seems similar.  The same buzzwords and euphemisms often confused clients and make it appear that since the solutions are basically the same, just go with the low dollar.  Rising above this clutter is required to be successful.

    How is Your Value Proposition Better Than Your Competitors’?

    For More Information

    Please note, RRI does not endorse or advocate the links to third party materials.  They are provided for education and entertainment only.

    You can contact the author more information as well.

    End Notes

      https://en.wikipedia.org/wiki/It%27s_the_economy,_stupid

      https://www.forbes.com/sites/briandomitrovic/2018/12/02/george-h-w-bushs-voodoo-rhetoric/#26f9ad21798a

      https://www.investopedia.com/ask/answers/042415/what-difference-between-operating-expense-and-capital-expense.asp

     https://en.wikipedia.org/wiki/Rosetta_Stone

  • Beat the Market: Can Operational Excellence Increase EPS?

    Beat the Market: Can Operational Excellence Increase EPS?

    In a recent Houston Chronicle article, its author puts forth the premise that while oil and gas companies should do well in the stock market this year, don’t expect the energy services sector to fare as well.  As those who are either in the sector or track it (stock analysts) know all to well that when the price of oil dips, so do the Returns of those companies that provide equipment, labor and other services to the E&P sector.

    The crude oil commodity price has always been cyclical.  Often Boom—Bust, this leads to the hiring and firing of tens of thousands of employees and contractors.

    As many as 750,000 in the 1980s were fired (not to mention those businesses that provided products/services to these individuals and companies).  A lousy career choice that may limit new entrants who will not be guaranteed a salary during a short-term “shut down.”

    For years, this pundit has held the belief that due to technology advancements in both engineered products/services and information management that a return to the good ole days of $100 oil is not likely.  Economic actors in the sector must continue to adopt new business models and processes, not just to remain competitive but to stay in business.

    For example, Weatherford International, founded in the 1940s is endangered of being delisted by the New York Stock Exchange.  Baker Hughes continues to struggle as General Electric has announced its divestiture.

    We remain committed to the belief that oil is probably well within a trading range that will not provide price relief to the service sector.  That said, how can energy service survivors return shareholders reasonable value?

    The traditional business model of layoffs and equipment stacking is well underway.  Short term Stop the Bleeding which makes one wonder why this sector added 10,000 in just the last two years during a ‘weak’ recovery.

    The Future is Now

    The concept of the so-called digital oilfield has been around for decades.  This author was first formally involved with construct in the early 1990s when it was titled the Digital Oilfield of the Future.  Hasn’t the future arrived?

    In 2004 we released an industry supported research project, Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation.  Other articles, white papers, blogs and workshops continue to date.

    In the recent Houston Chronicle article, one interviewee believes that the energy service sector needs to Collaborate and Digitalize if they are to generate higher Earnings per Share. 

    This leads one to question, why after all these years is the disconnect the same as two decades ago?  We can no longer blame the Baby Boom generation as the brake on digitalization.  The Boomers have largely left the sector building.  Moreover, we can no longer blame the cost and maturity of information technology.

    So, if the blame game is over how can the sector attain and sustain these laudable process goals?  One can make a case that business/technology models and their value propositions were either fragmented or not understood by management.

    Having attended countless conferences, seminars, et al. over the years there does tend to be a narrow focus on each business need.  For example, downhole, big data, safety, decommissioning, digital oilfield, offshore, drones, onshore and so the list goes.  All vying for the same CAPEX.

    Those days may be over.  The Operational Excellence construct directly addresses all the field driven processes and technologies necessary to assure profitable performance.

    As with other initiatives, what is needed is an actionable methodology with a well understood value proposition.  Today, even smaller energy services companies can implement Operational Excellence.  A solution is available!

    Operational Excellence is the key to higher Earnings per Share and greater investor interest in the firm.  This is true for both public companies as well as private and their banking/investor relationships.

    What is Your Organizations Excuse for Not becoming Operationally Excellent?

    For more information about how to solve the weak Earnings per Share problem, check out our new Operational Excellence Platform.

      https://www.houstonchronicle.com/business/energy/article/Several-major-changes-on-the-horizon-for-troubled-13556827.php

      https://therrinstitute.com/wp-content/uploads/2019/01/Dr-Scott-M-Shemwell-Publications-and-Interviews-January-2019.pdf

  • Are Organizational Governance Models Broken: Why Can’t Management Get a Handle on Things?

    Are Organizational Governance Models Broken: Why Can’t Management Get a Handle on Things?

    Over 15 years ago, organizations such as Enron, Worldcom, Tysons, and others failed after massive managerial maleficence and even criminality.  Enron’s auditor, Arthur Andersen folded as well.

    The result of this carnage was the imprisonment of many, the death (apparent heart attack) of the disgraced former CEO of Enron, suicides, massive shareholder value destruction and the Sarbanes Oxley Act of 2002.  SOX, as the act was commonly called was supposed to fix fractures in organizational transparency!

    Later, Bernie Madoff, Robert Allen Sanford and others (Ponzi schemes) stole billions from trusting clients.  Where was the oversight for crimes of these magnitudes?

    Almost a decade ago, three major disasters causes incalculable death and destruction:

    • BP Deepwater Horizon aka Macondo—commencing April 20, 2010
    • San Bruno Pipeline Explosion—commencing September 9, 2010
    • Fukushima Daiichi Nuclear Incident—commencing March 11, 2011

    According to one 2018 report, “Close to half (46%) of senior oil and gas professionals believe that there has been under investment in inspection and maintenance of infrastructure and equipment in recent years.”  Has anything been learned about the risks posed by Critical Infrastructure to the Bottom Line and societal reputations?  What about continued loss of human life?

    Finally, our US political class tells us they cannot ‘securely’ run an election and that outside interference somehow tainted or even changed the 2016 national election.  Five plus months before the next national election, what has changed?

    Nuisance to Menacing

    Now a series of high profile Cyberbreaches (seemingly exponentially) continue as do management’s apparent attempts to hide the damage from affected customers and shareholders.  Is this lack of transparency a SOX violation?

    More regulations are not the answer.  Criminals and others with malice don’t pay much attention to laws.  They never have, whether mugging you in the park or stealing your identity online.

    Purportedly, the first ‘hack’ took place in 1903 when a demonstration of the Morse Code was disrupted and insulting messages were sent through the theater projector. Perhaps a mere nuisance then, today cyber malcontents desire vast fortunes, political intrigue and even social instability.

    In our November/December, 2017 Petroleum Africa article, A Governance Model for the Era of Digitalization: Achieving Operational Excellence Using Disruptive Data Management Techniques, we mentioned that at a conference in late 2017, an investment banker when responding to a discussion about the use of IoT as part of the digital oilfield (now how we run the business) “suggested words to the effect that if the enterprise is driven by these technologies then it is now an agenda item for the Board of Directors.”  This is consistent with this author’s previous statements to this effect.

    What’s Going On?

    In his 1984 book, Normal Accidents: Living with High-Risk Technologies, Charles Perrow put forth the theorem that in our complex world, “It takes just the right combination of circumstances to produce a catastrophe, just as it takes the right combination of inevitable errors to produce an accident.”

    We have written extensively about Governance and Operational Excellence, including methodologies for developing and sustaining both.  In 2014, we put forth the construct of Strong Bond Governance as well as ways Critical Infrastructure sectors can become High Reliability Organizations.

    Finally, we have developed and implemented a Best Practices Model for Operational Excellence that incorporates modern governance that address issues discussed herein.

    Normal Incident Theory indicates, that in any complex system accidents will happen.  This theory has been debunked just like Keynesian Economics.  Yet practitioners of both continue unswayed by empirical data.

    It appears that corporate governance models have fallen into the same trap, making assumptions that business and technology models are limited and reactive.  This appears to be a short-sighted approach with ample empirical evidence that these models are no longer relevant.

    Threats to shareholder value and even the safety and economic security of entire populations that depend on Critical Infrastructures are increasing for a variety of reasons.  Organizational Governance models must keep pace.  Clearly, this is now part of the fiduciary responsibility of Board members as well as the entire “C” suite of executives.

    Further Reading

    The author and others have published extensively on this subject.  The list of appropriate articles and papers is too extensive to list here.  However, readers are invited to peruse Dr. Shemwell’s extensive list of blogs and publications.  For more information on this and other subjects, please contact us.

  • Is Your Digitalized Organization Cybersecure?

    Is Your Digitalized Organization Cybersecure?

    Here is How to Find Out!

    It seems that everyday a new major cyber breach is announced.  The Rapid Response Institute and its Principals have addressed this issue many times through a variety of venues and publications.

    We recently conducted a workshop, “Implementing Digitalization: A Game Changing Transformation of the E&P Sector.”  The Cybersecurity of this sector transformation is critical to its success.

    Moreover, since “this is the way we run our business,” Cybersecurity is now a Board of Directors issue and an integral part of its fiduciary responsibility.

    As part of our continuing effort to add value to Operational Excellence and Risk Mitigation processes, it our pleasure to feature this recent Public Television interview.

    We encourage you to watch this 30 minutes discussion with one of the world’s leading Thought Leaders in the Management of Cybersecurity for Critical Infrastructure Sectors such as oil & gas, electric power generation & distribution, medicine and others as identified by the United States Department of Homeland Security.

    Patriot Act of 2001 defined critical infrastructure as those “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.”

    We believe you and your organization will find watching this video time well spent.  Also, should you wish to talk further with her please contact us and we will arrange this.

    Stay Cyber Safe!