By Geoffrey Cann
Are you charged with introducing some digital changes to some slice of the oil and gas industry? Wondering why it’s not working out so well?
The Pressure is Building
The oil and gas industry is under a growing set of pressures to modernize how it does business. Institutional investors are asking hard questions about how the industry is addressing digital change. The market rewards digital companies with outsized valuations, while the energy industry struggles. Next generation employees are voting with their feet and not applying to work in the industry. Critical suppliers like SAP are planning major shifts in their technology and setting timetables for their customers to adopt. Prices on carbon are forcing the industry to look everywhere for opportunities to eliminate needless carbon. Activists as young as 16 are mobilising a new wave of objection to the industry, using digital social tools to maximum effect.
And that’s just the digitally driven pressures. Alternative fuels with near zero production cost, and low distribution costs, are starting to eat the market, initially with power generation, but coming soon to transportation. The only growing market for oil is China, and they’ve already made clear their intent to embrace electrified transportation. Prices are stuck in the doldrums and depend on the management of supply by a set of untrustworthy players (OPEC and Russia).
In any case, your boss is going to be asked about digital at one point or another. It’ll first show up as a memo from some VP, then as a theme at the annual meeting, and finally as an agenda item on the quarterly results review. Your boss comes back from some meeting, volunteers you to drive some digital initiative, and you set out, only to see your efforts flounder.
The Only Excuse
The hard part of digital is not technology, but the need to change cultural norms. People trot out lots of reasons for not wanting to change, but in fact there’s only one good reason for not responding to digital pressures, and here it is:
I like things the way they are, thanks.
Let’s peel this apart to expose the three very human underlying drivers of greed, fear, and pride that make this such a potent framing.
People figure out how to make an existing system work to their advantage and maximise their benefit . They know the levers to pull, how they interrelate, where to hide their mistakes, how to pump up the results. Sandbagging is an art form everywhere. And when things go sideways, they know exactly who to blame. If they are successful, they have no incentive to change.
Many people are too close to their next promotion or, more typically in oil and gas, retirement, and they’re not going to lose their bonus on something they don’t understand. If something goes wrong, they might not be able to fix it, or they might not have time to fix it, and they’re not sure who to blame. And if it does work, it exposes the well-run machine that they’ve run for years as a fraud. It might even do them out of a job.
People are justly proud of their well-deserved reputations as top operators. But if they’re honest, many people don’t even know how to use their own phones. There is little chance they’re going to put that digital ignorance on display at work, a surefire way to get pushed out the door.
No, most people like things the way they are, thanks. It’s not a very good reason, but it’s all they’ve got, which is why people practice a much finer and nuanced game of resistance to change.
Three Steps to a No-Digital Future
I’ve spent a lot of time with well-meaning employees in oil and gas who are finely practiced in the diplomatic skills — telling someone to go to hell in such a way that he asks for directions. Here are the three steps that I see over and over again that keep digital programs from making any real progress.
CONTROL THE DIGITAL NARRATIVE
People who don’t like change initially attempt to control the narrative because talk is cheap.
Any presentations or training about digital have to take place on site, so that the change agent will have to work harder to influence the narrative, manage the conversation, promote fresh lines of thinking, and counteract subtle but dismissive language about digital.
The problem is that many key oil and gas facilities are well away from civilization. Some sites insist that vendors provide briefings for free, at awkward or inconvenient times, which will minimise the number and duration of such sessions, as well as the number and kinds of experts that attend. Lots of questions will go unanswered without the right expertise available.
You might note the value in visiting industry leaders as the best way to gauge the opportunities presented by digital. However, many oil and gas sites block requests for travel to conferences or to courses on the basis of cost, a ready excuse considering industry economics.
At some point you may be given funding to send people to training or conferences or on benchmarking tours. Sites pick the attendees, frequently not the most influential team members. There’s always something more important that they can be working on. Instead, employees of little consequence or low influence get the nod. Needless to say, someone not well regarded by their peers will be unable to convince the team that digital is something to embrace.
SLOW THE PACE
If you’ve had some success in laying the groundwork, you might discover the pace of change seems oddly slow compared to the pace of change in the digital industry. It turns out that enthusiasm for change is susceptible to delay.
Maintaining pace is hard. Any manager can come up with a myriad of reasons why timing is bad for your digital efforts. Perhaps some new equipment is being delivered, or some other corporate initiative that must take precedence is occupying people.
A common tactic used to slow down a digital effort is to require compelling evidence that the proposed digital solution is largely risk free. That means it has 5 or more customers, all of whom are in the same geography and in precisely the same line of business, and all willing to speak openly about their experiences. Good luck.
Other hard-to-satisfy requirements can add speed bumps to progress. Some sites will insist on APIs or interconnects with existing SCADA systems from the 1970s, or backwards compatibility with some DOS-based machine controller that only ol’ Jimmy can update.
It’s really tough to overcome mythical boogey men whose risks are painted as high impact and high probability (cyber threats are the current favorite). Putting all digital changes, regardless of what they are, through the full management of change (MOC) process, will tie them down for months.
The final and frequent digital killer in oil and gas is the lack of network connectivity in the field. Sites are quick to point out how satellite uplinks are too expensive, unreliable, or capacity constrained.
The third and final way your digital initiative will struggle is during execution.
You find that you need access to certain key resources, such as a highly experienced but supremely busy engineer. Negotiating their involvement is challenging because their performance metrics for the year are locked down and roll up to their boss. Freeing them up means some other commitment will not be met. You need a get out of jail card for them, and their boss, and others dependant on that commitment, or they won’t be available for the digital project.
Digital is about trying things to see what works and what doesn’t, but oil and gas is only about doing what works. Only those in R&D set out to do something that might not work. Workers in oil and gas generally have clear objectives to meet, and they know how to meet those objectives with the tools they have at hand. Getting them to try something different that might not work is not going to be greeted with enthusiasm.
Stopping digital projects too quickly is another key action that can plague progress. An oil company started a trial to adopt robotic process automation tools to carry out battery balancing. The bot failed dozens of times before its developers figured out all the nuances involved in this complex but routine task. Having critical help on hand at month end to bring bots back to life after failures was hugely disruptive to a business that does not run on agile methods. Many other oil companies simply halt development after just a handful of failed attempts.
Actions to Take
The shrewd digital project leader will consider carefully the human change element of the digital project. It’s far too easy to be seduced by clever digital technology only to leave behind the very real human challenge of coping with change. Some questions to ask:
- What is your vision for the change? What compelling picture of the transformed business can you paint that lets others embrace the change with you?
- What’s in it for the impacted? What positive benefits can you tie to the success of your digital initiative? How will productivity gains turn into personal growth and not job loss?
- How will the digital change journey be different? How will “fail fast” work in practice and who has their back when deadlines are missed in favour of a digital trial?
Most digital change efforts fail to deliver their promises, and while the technology is not fool proof, most of the challenges reside in addressing people issues.
Check out my new book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, available on Amazon, iTunes, Audible and other on-line bookshops.