Category: Digitalization

  • Systemic Reasoning Errors: Stink’en Think’en

    Systemic Reasoning Errors: Stink’en Think’en

    The April 13-14, 2019 edition of the Wall Street Journal featured an opinion piece by Holman W. Jenkins, Jr., Russiagate and the Media’s News Denial.  The author makes the point, “Judgement is teachable.  Long ago, in relation to the Enron debacle, I pointed to the work of Harvard’s Max Bazerman and Northwestern’s David Messick, who theorized how systematic reasoning errors can lead to unethical business judgments.”  He goes on to discuss how the journalism sector may be suffering from this problem, vis-à-vis the Trump Administration.

    Cognitive bias errors impact the way people process and interpret information.  Our attempt to simplify can lead to nonobjective, illogical and poor decision making.  So, do these poor judgement issues concern me?

    The emerging digitalization model to attain and sustain Operational Excellence by definition is systemically complex.  A highly integrated ecosystem coupled with tens of thousands of data sensors and quasi-independent processing systems support field operations.  Moreover, risk mitigation models in such an environment are themselves complex.

    Human decision-making processes in this new environment will necessarily change from the traditional management of automated systems and data analysis.  Extensive training must be part of the transformational process.

    Additionally, Governance models may need revision as well.  What is the role of the Board and ‘C’ Suite (CIO vs. COO?) with the digitalization of the organization?

    Clarification.  The term ‘stinking thinking’ refers to tactics either unintentionally or insidiously used to create expectation biases.  The title uses a colloquial term Stink’en Think’en as a function of lousy thought processes; nothing more.

    The challenges we face are much more than technology driven.  As always, human Behaviors are at the core and Conditions in the near future may be dramatically different from the present.

    New Relationships will emerge as well.  We have previously discussed the R B C model.  It is good guidance for this transformation.

    How Does Your Organization Mitigate Systemic Reasoning Errors by Its Decision Makers?

    For More Information

    How Cognitive Biases Influence How You Think and Act is a very good article on this subject.  Interested readers may want to check it out.

    You can contact the author more information as well.

    End Notes

      https://www.psychologytoday.com/us/blog/the-media-psychology-effect/201311/stinking-thinking-and-expectation-bias

      https://www.amazon.com/gp/product/B00U0JKMT0/ref=dbs_a_def_rwt_bibl_vppi_i1

  • Event Horizon: Towards Singularity

    Event Horizon: Towards Singularity

    This month a group of astronomers announced they had captured the first image of a black hole, some 55 million light years from earth.  A novel use of high-performance computing enabled this imaging and seems to hold promise for future commercial applications.

    Moreover, there is a great deal of discussion and hope that astronauts will return to the Moon and even as sustained human presence on Mars.  Space Race 2.0!

    When the USSR Sputnik satellite was launched on October 4, 1957 it sparked a technological revolution that continues to this day across a wide number of disciplines.  According to the Jet Propulsion Laboratory, California Institute of Technology there are 20 common household items that are a direct result of space travel.

    Camera Phones Scratch-Resistant Lenses CAT Scans LEDs
    Landmine Removal Athletic Shoes Foil Blankets Water Purification Systems
    Dust Busters Ear Thermometers

    Home Insulation

    The Jaws of Life
    Wireless Headsets Memory Foam Frees Dried Food Adjustable Smoke Detector
    Baby Formula Artificial Limbs Computer Mouse Portable Computer

    Additionally, NASA has a robust Intellectual Property Licensing program.  This includes some at no cost as well.

    Scientists define an Event Horizon as the boundary defined in a region of space surrounding a black hole from which nothing, including light can escape.  This effectively hides the Singularity (infinite property) at the center of a black hole.  Thus, it is not possible to observe the collapse of the laws of physics at that point.

    The current (funded) fascination with Deep Space and Interplanetary Travel will most likely fuel a technological explosion that will dwarf the last 70+ years beginning with the German V-2 rocket.  These are exciting times for technologists.

    They are even more exciting for those tasked with developing and marketing new goods and services.

    How Will Your Organization Prepare for the Coming Technology Wave?

      http://astronomy.swin.edu.au/cosmos/E/Event+Horizon

      https://www.inverse.com/article/54833-m87-black-hole-photo-data-storage-feat

      https://www.jpl.nasa.gov/infographics/infographic.view.php?id=11358

  • I Hate These Things: Why Does This Always Happen to Me?

    I Hate These Things: Why Does This Always Happen to Me?

    We have long argued that people will change if they understand the new idea/technology value proposition—what’s in it for me?  For some, this question is more difficult to answer than others.

    Moreover, we are all stuck!  This age of digitalization may pass a few ‘off the grid’ hermits by, but for the rest of us there is no turning back.  So, what if I hate these computers and they never work as they should?  What’s a person to do?

    All of us have expressed some frustration with technology.  It doesn’t work well.  It does not appear that Human Factors were considered in the development process.  Various ‘Screens of Death,’ and so forth and so on.  Of course, glitches occur at the least opportune time.

    Turns out this frustration with technology is understood.  Dystechnia is defined as, “A barrier to organizational performance—a condition of flawed or failed efficacy in the use, deployment, or logistics of technology.”  Akin to other disorders of capacity, i.e., dyslexia it is basically the impairment of the ability to control a skill.

    In other words, the inability to manage a Condition.  This becomes a reason to resist technological advancements as ‘nothing is in it for me.’  In fact, it makes my life worse!

    The Technology Acceptance Model (TAM), circa 1989 addressed two perceptions driving adoption Behavior, ‘Perceived Usefulness’ and ‘Perceived Ease of Use.’  The what’s in it for me question.

    To change the Relationship that individuals have with technology, management must understand that those who resist may exhibit two traits:

    • Impaired capacity to apply the ‘new’ to daily tasks
    • Perception that it does not help them

    Those regular readers of this blog are aware of the R B C model (Relationship, Behavior, Condition).  From our Cross-Cultural Serious Game, the model was originally developed to address issues around cross cultural (international) negotiation processes.  Relationships are the focal point of this perspective, reflecting commonality of interest, balance of power and trust as well as intensity of expressed conflict.

    Behavior in this model is defined as a broad term including multi-dimensions and intentional as well as unintentional.  Finally, Conditions are defined as active and including circumstances, capabilities and skills of the parties, culture, and the environment.  Of course, time is a variable in this model as well.

    One key feature of the R B C Framework is its emphasis on interactive relationships while providing an environment for multiple levels of behavioral analysis.

    This makes it a useful tool to better understand technology take up resistance.  As with any forensic assessor, once we understand the Structural Dynamics we can implement approaches that will resolve efforts to thwart the ‘new.’

    How Does Your Organization Overcome Resistance to Change?

      https://www.urbandictionary.com/define.php?term=dystechnia

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

      www.rri-ccgame.com

      https://therrinstitute.com/wp-content/uploads/2017/10/structural_dynamics_-__version.pdf

  • Human—Machine Interface in the Age of Digitalization: Can the Machine be Trusted and When Should the Human Intervene?

    Human—Machine Interface in the Age of Digitalization: Can the Machine be Trusted and When Should the Human Intervene?

    On March 10, 2019 the second Boeing 737 Max 8 (in approximately 5 months) crashed in Ethiopia.  This incident has led to extensive investigations and as of this writing that model aircraft is grounded.

    This pundit cannot and will not hazard a guess as to ‘why’ this aviation incident happened and what its ramifications will be—not our area of expertise.  However, this raises another issue that seems to be buried in the headlines.

    Recently, the President of the United States is purported to have said, “Airplanes are becoming far too complex to fly.  Pilots are no longer needed, but rather computer scientists from MIT.  I see it all the time in many products.”

    In our era of Digitalization, this question/belief is one that many Boards and senior executives may be asking/holding.  It is our understanding that pilots can override the sophisticated autopilot (whose sensor may have been sending erroneous data).  This begs the question, what is the protocol for the Human taking over from the Machine?

    What level of training do pilots receive?  What are the ramifications to their career if they make the wrong decision?  These and other questions are being asked continuously.

    In this blog series as well as in numerous other articles/speeches, we have commented on this issue.  Interested readers should review several other Critical Mass Blog writings et al. so that information will not be repeated herein.

    The question posed in the title, ‘Can the Machine be Trusted and When Should the Human Intervene?’ can be answered and has been many times.  A combination of training and experience will give the human the confidence to make difficult decisions in times of stress.

    Recent examples include the landing of US Airways Flight 1549 on the Hudson in 2009, elite military successes, sports teams, and other feats where a small group took charge at difficult moments and as the saying goes, “saved the day.”

    Scaling Training and Especially Experience

    So how does an organization ‘broadly’ train its large global workforce as well as its ecosystem?  Moreover, how does the same workforce gain ‘experience?’

    The saying goes something like, “You can have 30 years of experience in your career or you have one year of experience 30 times.”  Unfortunately, many organizations consist of the latter—employees/contractors and this includes senior executives as well!

    Some organizations see training as a cost.  Many have tuition reimbursements programs and send employees to a myriad of conferences and workshops.  However, other than high level platitudes, what is the value of any of this to the employee and/or the organization?

    There is also plenty of evidence that traditional training programs do not provide long term knowledge and do not address the experience issue at all.

    Immersion

    Immersive training is one form of experience.  The individuals live the situation and realistic options she or he is faced with.

    Moreover, on-demand information feeding remote individuals addressing major field problems is important too.  These information feeds can (and probably should) include Subject Matter Expertise from those who came before the contemporary workforce.

    In other words, taking the knowledge of those with 30 years of experience and making it available to those with only a few at the task step level is essentially having that senior individual in the cockpit with the more inexperienced person.

    Sounds good on this ‘paper’ blog but is this model realistic?  It absolutely is and at a price point that makes the value proposition compelling.

    No longer a week-long instructor led workshop where the information is quickly forgotten but knowledge on-demand in a matter that the user can absorb during a critical moment.  One report about the recent airliner crashes was that the pilots were ‘looking up’ procedures in the event of …

    Who has time for that in life and death situations?  No one!  The answer must be in front of you in a ‘heads up display’ manner on demand.

    Enabling technology is available at reasonable price points.  Blowing stuff up and killing people because employees/contractors are ill equipped to do their job is unacceptable.

    Could Your Organization Withstand a Max 8 Incident?  If Not, What is Being Done to Mitigate this Risk?

     

    For more information on Risk Mitigation check out our Operational Excellence Platform.

      https://www.marketwatch.com/story/trump-today-president-says-airplanes-far-too-complex-to-fly-after-boeings-737-max-crash-2019-03-12

  • Decision Making in the Digitalization Age: Who Decides?

    Decision Making in the Digitalization Age: Who Decides?

    “Ergonomics (or Human Factors) is the scientific discipline concerned with the understanding of interactions among humans and other elements of a system, and the profession that applies theory, principles, data and methods to design to optimize human well-being and overall system performance.”

    According to Gartner, “Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”

    The concept of the “Human—Machine Interface” is well established for Industrial Control Systems (ICS) and is the way the human being directs the machine.  One wonders; however, if in the age of the Industrial Internet of Things (IIoT) whether this linear relationship is still true?

    If the Behaviors of quasi-independent systems are different than that of an ICS, the R B C model suggests that in these new Conditions, the Relationships between the Humans and these new Machines (digital business) will be different as well.  If this hypothesis is true, what are the implications going forward?


    We routinely let machines make life and death decisions.  Common examples include, airliner autopilots, automobile cruise control, and more recently the forthcoming self-driving cars.  Moreover, medical procedures are increasingly automated.  Boundless other instances exist as well.

    When it is appropriate for the human to intercede in automated decision-making processes?  What happens in a business setting if the human is wrong?

    High Reliability Management

    Management is evolutionary, not revolutionary.  Each generation and business model builds on thousands of years of human experience.

    The current High Reliability Management (HRM) model seems to address these emerging decision problems well.  The model consists of five traits:

    • Sensitive to operations
    • Reluctant to accept “simple” explanations for problems
    • Preoccupation with failure
    • Defer to expertise
    • Are resilient

    Applying these traits at the operational level allows the human to focus on the overall set of processes while allowing the machine to make its appropriate decisions.  With supervisory expertise coupled with an understanding that failure happens, policy can be set that enables the human to intervene as necessary without career repercussions.

    Moreover, IIoT is complex by nature and largely focuses on operational processes.  Implicit is the need to respond quickly to events, i.e., resilience.

    At the dawn of digitalization, management is already equipped with the tools to manage the largely automated enterprise.  How these tools are deployed is the difference from adding shareholder value vs destroying it.

    Do Intelligent Machines Have a Culture(s)?

    Hollywood has long presented cyborgs and other robotics as human like.  While we may be some years from truly independents machines, they do exhibit certain behaviors based on a given set of conditions.  This generates a relationship with human administrators.

    So, if organizational culture is the ‘way we do things,’ then one can surmise machines do have a culture (somewhat dependent on the human programmers).  If this hypothesis is supported, then the era of digitalization must add one more culture to its multi-cultural engagement processes.

    What is your Firm’s Decision Model in the Age of Digitalization?

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


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

      https://www.gartner.com/it-glossary/digitalization/

      Shemwell, Scott M. (1993). Management Theory—Evolution Not Revolution, Proceedings of the 11th Annual Conference of the Association of Management, 11 (2), pp. 74-78.

  • Fleeting Success: In Pursuit of Sustainability

    Fleeting Success: In Pursuit of Sustainability

    Winston Churchill is credited with saying, “Success is not final, failure is not fatal: it is the courage to continue that counts.”  The late Prime Minister nailed it; once again!

    Our journey through life, including our career is a marathon not a sprint.  While we celebrate success, often at happy hour or a party, we recognize it is only a moment.

    Early in this writer’s career, a multi-million-dollar deal closed after more than a year of effort.  A celebration ensued.  The next day the sales manager, “Asked what was next?”

    Attain and Sustain

    Organizational initiatives seem to procreate.  In some ways like the Tribbles of the original Star Trek series.  Cute furry things, the Tribbles multiple at such a rate as to almost consume the Enterprise.  Only the transporter beam saves the crew.

    Like the rah-rah of New Year’s Resolutions, the question is not will I go to the gym in January, but will I still set foot on the treadmill in June or even March.  The road to you know where is paved with good intentions.  It is the sustained energy of the execution that assures more successes than failures—and that failures are teachable moments.

    Culture is one of the current buzzwords, yet Cultural Transformation is the key to sustainability.  Courage requires the organization to pick itself up, so to speak and continue the journey to a sustained high level of Operational Excellence.

    Easy to Say

    According to Forbes, in 2018 “enterprises are expected to invest $1.3 trillion (USD) in digital transformation initiatives to apply digital capabilities to improve efficiencies, increase customer value and create new monetization opportunities.”  The article goes on to posit, that almost $900 billion of that spend will be wasted as goals are not attained.

    Why are these projects always seemed doomed to fail?  A quick Google search identifies a large body of knowledge over the years documenting these types of failure.  So, the beat goes on.

    Hard to Do

    There is also a body of work documenting the “should do’s” of organizational transformation.  In fact, this author has contributed several articles and books on this subject.  Most notably, Implementing a Culture of Safety: A Roadmap for Performance Based Compliance.

    A Missing Piece

    There is a lot of talk about Operational Excellence, Digitalization, High Reliability Organizations, Human Factors, Safety Culture et al.  As with the Forbes data, many are suffering the same fate.  No wonder senior management is skeptical of new spend for more ‘Tribble-itiatives.’

    For example, when a critical infrastructure sector discusses the transformation to a Safety Culture, the term is often expressed as singular, i.e., there is one industry safety culture.  However, all firms have their own ecosystems consisting of multiple and sometimes disparate entities.

    They have developed a culture that is a source of pride, competitive advantage, etc.  Their culture differentiates each organization from their peer group.

    The following figure presents the actual nature of a firm’s Safety Culture.  The reality is that a large organization’s “culture” is a combination of multiple cultural dimensions.  It is this ‘nature of culture’ that must be better understood if a transition process is to be successful and sustained.

    Readers should note that the multi-dimension structure is continuously changing as business, technology, and regulatory environments impact on the Relationships, Behaviors, and Conditions of the situation.  This dynamic requires continual managerial energy and training to sustain the change desired.

    Cross Cultural Engagement

    It would seem to be a daunting if not impossible task to effectively and efficiently train a large work force including relevant third-party suppliers on an ongoing basis.  Of course, the cost would be prohibited as well.

    Not so fast, e-learning serious games are now available to support the training requirements necessary to “sustain” the transformation.  Moreover, specific scenarios can quickly be developed to meet specific organizational requirements.

    The games are developed using Game Theory and Human Behavioral theories.  They simulate a real-world environment and have been shown to give great results over decades.  With Cloud technology, these training tools are now inexpensive and readily available to all.

    Why have your Organization’s Business Transformation Initiatives Failed?

    Check out our Cross Cultural Serious Game


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

      https://www.forbes.com/sites/forbestechcouncil/2018/03/13/why-digital-transformations-fail-closing-the-900-billion-hole-in-enterprise-strategy/#1f5923507b8b

      https://www.xlibris.com/Bookstore/BookDetail.aspx?BookId=SKU-0143303003

      Shemwell, Scott M. (2015, November 28). Comments and Thoughts Regarding the IAEA Technical Meeting on Developing Improvement Programmes for Safety Culture November 2-4, 2015. Vienna, Austria.

  • 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

  • Millennials Take On Our Increasingly Complex World

    Millennials Take On Our Increasingly Complex World

    Originally published in 2013.

    On January 1st at 0348 hours a young engineer employed by a service company is trying to address a problem she has encountered with a compressor on a drilling rig in the Deepwater Gulf of Mexico.  She graduated from college three years ago and went to work for a large energy services company.  However, several months ago she changed jobs and is now on her first offshore hitch as team leader with her new company, a similar size global energy services company.

    She is a competent engineer but is uncertain what the company policy is regarding a piece of rotating equipment that while seemingly malfunctioning does not appear to jeopardize safety, the environment or production at the present time.  But she worries that the situation could get worse.

    A quick call to the “graveyard” shift at the company onshore Operations Center is not reassuring.  Staffed by those who are too junior to be on vacation during the holiday season, the engineer she talked with had only been with company three years and actually had less field experience than she did.  His supervisor was not encouraging either.  Should he call and wake experts at this early hour?

    Adding to the problem, the compressor’s data plate was mostly unreadable.  And of course, a famous Texas blue northern was blowing through.  High winds, rain and cold temperatures further impaired proper equipment identification, much less working conditions.

    Both the field engineer and the operations engineer are aware that their company signed a Bridging Document with their customer as part of the new Safety and Environmental Management System (SEMS) regulatory requirements and both had attended the appropriate training for this project.  Both are knowledgeable that the Stop Work Authority (SWA) gives them the right and even the obligation to dramatically intervene with operations if they feel it necessary.

    As a new mom, the field engineer is concerned that she might develop a reputation in the company as a “flaky” female if her next decision turned out to be a mistake.  The engineer at the operations center was receiving real time data feeds from the rotating equipment but he could not “feel” the vibrations like the on-site individual could and the equipment was still within tolerances.

    Horns of a Dilemma

    The engineers in our story are competent, qualified individuals doing a great job.  Early in their careers, they are the vanguard of field operations.  Millennials by label, they are technologically savvy and among the best and the brightest in their fields.

    Things never go “bump in the night” during daylight hours in perfect weather, hence the colloquial term.  Moreover, the personal stress of a new mother concerned about her reputation and opportunities for promotion resulting from just another day at the “office” should not be underestimated by those desk bound or later and more secure in their careers.

    The real world of field operations can be very unforgiving even when the results turn out OK.  All of the individuals in our story have significant “skin in this game.”

    It is fine to “empower” people in the team building sessions.  It is an entirely different story in the middle of the proverbial stormy night when one’s career and reputation are on the line.  Field personnel must believe they company will stand behind their decisions, right or maybe less so.

    Enablement

    These best and brightest can only be as good as their supporting infrastructure.  These individuals not only face engineering issues, any actions they take must be in accordance with company policy, the Bridging Document and various regulatory compliance requirements as well.  This is a lot to put on the plate of an engineering team.

    However, since their childhood these individuals have been online.  Our field engineer mother looks in on her infant son at day care from her smart phone from a hundred miles offshore.  The operations center engineer routinely Skype’s with his girlfriend, a physician, who is in east Africa serving with Doctors Without Borders.

    These individuals are at the top of their technological game.  However, they lack the field engineering experience of their more seasoned colleagues.  This represents a demographic challenge for organizations in the middle of the Big Crew Change.  How do these young people come up to speed—quickly?

    Organizations not only depend on the individuals depicted in our story for their bottom line, shareholder value is at risk if they cannot prevent the next major mega-disaster.  And what if they can prevent a minor incident?

    Loss time, loss production, loss anything has economic consequences.  Most organizations run on margins that are thinner than they would like.  Oil companies are included in this group.  More importantly, energy service provider margins can be even lower.  This business model pushes our engineers to lower costs, reduce downtime and in some cases push the envelope.

    Millennial Transformation

    Out engineers appear to have the deck stacked against them.  Normal Accident Theory (NAT) with its roots in the Three Mile Island nuclear power plant incident suggests that tightly coupled technologies with invariant sequences and limited slack such as Deepwater drilling operations will have accidents in the normal course of events.  In other words there is a certain inevitability of a major incident on their watch.  Maybe not during this rotation but a certain possibility during their careers.

    However, these Millennials have a safety arsenal their parents did not—a new business model that capitalizes on their technology prowess.  The emerging field of High Reliability Theory (HRT) “emphasizes are a strategic prioritization of safety, careful attention to design and procedures, a limited degree of trial-and-error learning, redundancy, decentralized decision-making, continuous training often through simulation, and strong cultures that create a broad vigilance for and responsiveness to potential accidents.”

    Arm field engineers and graveyard operations watch colleagues with HRT driven policy and associated tools and then get out of their way.  A strategic or systemic safety model with a holistic perspective of the life cycle the process coupled with truly empowered key personnel trained with the latest learning tools in a strong Culture of Safety offer a new perspective for a new workforce.

    Aircraft pilots routinely retain and upgrade their skills in sophisticated flight simulators.  “What If” scenarios, whereby the team can learn by trial and error environment where the worst result is a computer animated “do-over.”  Other industry sectors train using this well documented successful approach.

    In a true Culture of Safety a mom would not worry about her job or career if she erred on the side of safe operations.  She would not be labeled nor would her co-worker in the Operations Center hesitate to wake up the experts New Year’s Eve.

    Finally, if the maintenance history and all updated equipment manuals were available on a Smart Tablet with training videos and animation support, trepidation by those new to the company/process would lessen.  Organizational policy, its Operations Management System and bridging documentation built into the workflow will enable better decision making in the High Reliability Organization of the near future.

    A decade ago the digital oilfield was labeled the Digital Oilfield of the Future.  Integrated Operations is a common model today.  The Millennial’s World-of-the-Future will mirror the concepts of an HRO.

    Will she be working for you or your competitor?

    End Notes

    http://www.doctorswithoutborders.org/

    Weick, Karl E., Sutcliffe, Kathleen M. and Obstfeld, David. (2008). Organizing for High Reliability: Processes of Collective Mindfulness. In Arjen Boin (Ed.), Crisis Management Volume III. (pp. 31-66). Los Angeles: Sage.

    Ibid.

  • Command and Control: Is this the Way to Run the modern Railroad?

    Command and Control: Is this the Way to Run the modern Railroad?

    The managerial model, Command and Control (C&C) dates back to the dawn of humanity when tribal chieftains dictated the behavior of the group.  It survives to this day in many forms.  Typically, one thinks of military operations as the current manifestation of C&C in the western world.

    According to Wikipedia, by one definition found in The US Department of Defense (DOD) Dictionary of Military and Associated Terms, “command and control functions are performed through an arrangement of personnel, equipment, communications, facilities, and procedures employed by a commander in planning, directing, coordinating, and controlling forces and operations in the accomplishment of the mission.”  This definition has evolved from a more simplistic version found in the Cambridge Dictionary, ”situation in which managers tell employees everything that they should do, rather than allowing them to decide some things for themselves.”

    One suspects that most laypeople believe the latter definition to be to be the typical approach to C&C in their organizations.  In today’s complex (often global) organizational ecosystem, that version is outdated.

    The International Command and Control Institute, publication (circa 2005) , Understanding Command and Control develops this management construct in great detail.  As the following figure suggests, even a simple C&C structure such as a heating/AC system is driven by a set of KPIs.

    This is indicative of the digitalization of the system versus the analog controls many of us can recall from our youth.  Adding another layer, today’s ‘Smart’ thermostat operates within a well-defined governance schema such as the Internet of Things.

    Strong Bond Governance

    We first made the case for “Strong Bond Governance” in our September 17, 2013 Governing Energy blog, Strong vs. Weak?  In Critical Infrastructure sectors such as energy, medicine, etc. as defined by the US Department of Homeland Security we make the case for the construct of High Reliability Management (HRM).

    The Strong Bond Governance (SBG) paradigm enables HRM.  SBG demands Board of Directors and C Suite engagement in operations.

    Not directly but by putting in place a governance structure.  This has not always been the case with a number of catastrophic man-made disasters as the result.

    In some ways, C&C mimics HRM.  However, there are some significant differences.  HRM sets in place a structure designed to meet the test of adversities.

    • Preoccupation with Failure—a recognition that ‘failure is an option’ and the organization must respond quickly and effectively to mitigate exposure and recover. C&C does not directly address is concern.

     

    • Reluctance to Simplify—today’s organizational ecosystems are complex. Reducing operational decisions to the so-called Power Point three bullets, High, Likely, Low is completely unsatisfactory and potentially exposes the firm to business or technical process catastrophe.  Likewise, C&C models do not directly address this approach.

     

    • Operational Sensitivity—the field is where organizational action is, and senior management must have a focus on this critical component of the business. C&C also has a focus on operations, especially in the military sector.

     

    • Resiliency—things will go ‘bump in the night.’ Organizations must but in place the processes and expertise to rapidly respond to goblins that will be encountered.  C&C does not address this process.

     

    • Deference to Expertise—engage those who have the ‘know how’ to solve problems and that is mostly likely not the management team. This is substantially difference than the C&C model

    HRM allows management to look at computer dashboard and get a snapshot of most if not all aspects of the organization.  However, this does not mean that these individuals can manage from afar.  Those closed to and more knowledge about this issue must take the lead.

    Concluding Thoughts

    Watching the news, History Channel and/or various movies, one can see that even the military no longer uses simplistic C&C.  Small semi-autonomous teams take on the bad guys.  To be sure there is a Mission, Rules of Engagement and other governance controls in place.

    This provides local commanders the latitude needed to accomplish the mission at a minimum of human (good guy/non-combatants) and other collateral damages.  Additionally, military aircraft employ ‘High Reliability Management’ techniques where the expertise of the entire crew is used rather than the Captain dictating operational performance.

    Asiana Flight 214 crashed attempting a landing at San Francisco in July 2013.  One causal component was deemed to be the C&C culture of the Korean pilots.  Cockpit Management might have saved this aircraft and the lives lost.

    Likewise, those organizations and their ecosystems in critical infrastructure sectors that use HRM enjoy safer and more productive track records than those that do not—better bottom line.  The October 2014 Ebola scare is an example where the public health sector employed HRM and limited the impact of a highly contagious deathly pathogen.

    There is a tendency when the stakes are high for management to take the ‘reigns.’  In other words, engage in micromanagement.  The usual results are often sub-optimal.  The ‘gut instinct’ towards simplistic C&C is a strong urge and this addiction must be put into remission.

    A well-established Strong Bond Governance, High Reliability Organization can weather any storm the markets or nature can throw at it.  However, this organization transformation must precede the advent of major challenges!

    Traditional C&C is not an OE Imperative

     

     

  • Selling Your Economic Value Proposition to the C Suite: Translating Technology to the Language of Business

    Selling Your Economic Value Proposition to the C Suite: Translating Technology to the Language of Business

    The challenge of building a Business Case for CAPEX investments with high intangible content, i.e., IoT, professional services and operational excellence, remains difficult.  Many also argue that disruptive new business models are making the old ways irrelevant.

    Hence, we simply must make the investment to remain competitive.  After all, everyone is doing it.  A matter of faith!  The returns are huge (just look at this white paper).

    To some extent technological based business model disruption has always been true, certainly throughout the industrial and cyber revolutions of the last 200 years or so.  However, one of the major issues with technological change is the nature of the cultural differences between the technologists and those who write the checks.

    We have previously described organizational culture as partly a function of an Interdisciplinary Common Vocabulary (ICV).  One can look at the gap between advocates of new technologies and/or business models and the “C” suite as the lack of shared ICV.  This gap may become egregious during economic downturns when financial concerns overtake strategy.

    Making Your Case

    As a junior sales representative and later ‘pitching’ CAPEX projects to management, I often presented the ‘Feature—Benefit’ of my suite of products and services.  My success rate was on par with my peers, but the case could be made that I was no better than average.  We all had weak value propositions.

    While I did not know it at the time, my sales ‘ah ha’ moment happened when the department of head for an Engineering, Procurement and Construction (EPIC) firm with a refinery rebuild project asked me if he would get promoted if he bought from me.  Dah, what did that have to do with anything I wondered.  I have great features and benefits.

    At least as good as my multiple competitors.  Moreover, I could lower my price and give him great value.

    Once we understood his CSFs, we won a multimillion dollar (high margin) deal.  His problem was not the technology.  All competitive specs and price points were tightly grouped.  Almost any reputable vendor would do.

    His key problem were project milestones!  He did not want a pile of products to be assembled.  He need solutions to meet deadlines and we could deliver against that critical path.  That was the value proposition he needed.  By the way, he got promoted!

    I have seen this phenomenon often, including earlier this month.  Sales people and internal proponents of new ideas often focus on the new hot stuff, for which many competitors vie.  The current crazes include IoT, Blockchain, Operational Excellence to name a few.

    How many suppliers of these technologies and methods are there and how are they differentiated?  Lots and poorly would be my bet and experience.

    C Suite Value

    The stereotypical ‘hard nose’ businessman or businesswoman is alive and well.  He and she live in the C suite and boardroom.  Preaching features and benefits, PPT bullet points of value or use case with glossary, poorly articulated and often unbelievable claims will make for a short meeting.

    Proponents of big, disruptive or simply expensive ideas can have their ‘ah ha’ moment too.  Who is the audience and what are their drivers that can you facilitate?  In a previous blog this author took umbrage with sales cold calls who wanted to meet, waste my time and “learn about my company.”

    In other words what I hear is, I don’t have time to do my homework before I meet the economic buyer.  Another deal closing strategy!  Not.

    In an invited Guest Editorial for the Professional Petroleum Data Management Association (PPDM) online magazine, Foundations we had the privilege to post a short article.  In How to Make The Case To the C-Suite: Selling Large Scale Data Management Project to the C Suite, we present a short overview of this process.  The magazine (Vol 5, Issue 2) is free; all one has to do is sign up as a Guest.

    The article tells the story of a hypothetical Chief Data Scientist as she prepares for a presentation to the Chief Financial Officer.  Readers will see that for some concerns management has, she has a lot of homework and preparation to do.  One would expect that much of this work is outside her comfort zone, but necessary.

    Driving Success

    In our hypothetical case, she has the prep work in addition to her so-called ‘day job,’ a problem most have.  Additionally, she must align with their ICV and move away from ‘data speak.’

    Since 2004, we have used our Economic Value Proposition Matrix ® (EVPM) to help guide this process for a wide range of large projects (including security).  A free version is available.  Your invited to check it out and contact us if you have any questions.

    When the economic cycle is at a low point, it is hard to sell new projects.  When the cycle is active, there are competing projects.  Throwing money at technology has failed time and time again and ruined many careers (the antithetical of ‘getting promoted’).  Building a solid business case in the ICV of senior executives is a step towards accelerating one’s career, closing a deal or enjoying a project rather than fighting every step.

    One final point, when one reads statements such as, “Our software will save you 50%” they are not true on their face and management never believes them.  So never make those claims no matter the authority of their source.  Sometimes the value can be greater.  To find out the secret look at our webpage for the answer.

    Good Selling to the Top Dogs!

    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.

  • 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!

  • Precedent Matters: Physical and Cyber Security Materiality

    Precedent Matters: Physical and Cyber Security Materiality

    Cyber-attacks continue, seemingly unabated. Major industrial incidents seem to remain regardless of efforts to curtail them as well.

    In many cases significant shareholder value is destroyed and perhaps never to be regained. Lives are lost and business models compromised.

    In isolated incidents, senior executives “retire.” Usually, it is business as usual until the next time with the promise not to do it again. However, there is precedent for punishing organizational maleficence.

    Regarding cyber security, the digitalization process underway places the process of managing information technologies into the arena of “core competency.” There are several definitions of the term. Digitalization is the process of using digital technologies as a way of doing everyday business. In other words, this process is material to the well being of the firm.

    While not an attorney nor offering advice, one can observe that in the late 1990s another software issue was so concerning that the U.S. Securities and Exchange Commission issued guidance for public companies and others regarding the risk and materiality of exposure to the so-called Y2K date rollover. Most affected firms had significant efforts underway to assure business was not disrupted and/or risk mitigation strategies were put in place.

    Shortly thereafter, the activities of Enron, MCI and others resulted in the Sarbanes Oxley Act of 2002. Section 404 of that act requires firms put in place “management systems” to assure adequate and effective internal controls and transparency regarding financial reporting.

    According to one source approximately $2.5 trillion in value can be unlocked by digitalization for the oil industry ecosystem. However, if cyber security is weak and SCADA and process controls systems are exposed lives may be lost and facilities may be irreparably damaged.

    One view is that today’s Industrial Internet of Things (IIoT) organization has greater exposure than any Year 2000 problem may have caused. Shouldn’t society and investors have protections in place equal to Y2K and SOX?

    There is precedent for holding organizational leadership accountable. Digitalization is a Board of Directors agenda item!