By Geoffrey Cann
If you want to be a successful digital leader, you need to be able to sell your ideas to a reluctant oil and gas buyer. Here’s how.
To Be Human Is To Sell
Selling is so innately human we don’t even know when we’re selling or being sold. Have you ever been to a restaurant and found yourself ordering something you would usually not ever have at home, like some decadent dessert? The end of the main meal arrives and the server kindly brings you a fresh menu already open to the dessert page. They innocently ask “can I tempt you with some freshly brewed coffee?” Next thing you know you’re scarfing 2000 calories of cheesecake drizzled with butterscotch sauce. You were sold.
Selling your digital ideas to a manager in oil and gas is more complicated. Virtually everyone in oil and gas start out as digital doubters. This is a structural feature of the industry, part of the culture, linked to its safety and process adherence needs, and rooted in how the industry trains its people to manage risk.
One of the executives featuring in my next book describes the ‘yeah, but…’ dialogue she has when she first raises digital ideas with the digital doubters.
She: ‘This digital innovation will save you money and here’s how.’
They: “Yeah, I can see why you think this digital tool could help, but what about …’
The ‘yeah but’ can be almost anything, from cyber worries, to cost, to resourcing.
A few weeks ago, I spoke with the digital team at an oil company that is trying to introduce a digital innovation (in this case, a blockchain solution) to one of their business units and is running headlong into the digital doubters. There is a compelling use case, and the digital leaders are completely convinced, based on solid data, that blockchain will solve both an immediate problem and ultimately transform the industry. The digital doubters believe that their systems are so broken than any new technology is throwing good money after bad, and they’d rather wait for someone to launch an ERP project than try to repair what they have.
Yeah, but… The Typical Objections to Change
If you spend enough time with people in the industry, the ‘yeah but’ arguments emerge. The first ‘yeah but’ is that the status quo is good enough.
WE’RE FINE, THANKS
- Our systems are fine the way they are. Nothing’s broken.
- Our business practices are already leading the industry in _____ (pick your dimension — cost, quality, efficiency, productivity, carbon, turnover, reliability, safety).
- No one else in the industry is doing this so why should we?
- This isn’t a priority for us. We just need to produce more (if prices are high) or reduce costs (if prices are low).
- Our processes are safe and reliable. Your technology might not be. Cyber criminals can’t get at us today, and your technology might open a door for them.
IT WON’T WORK AND THERE’S NO POINT IN TRYING
Some digital doubters run completely in the opposite direction, even in the same meeting:
- Our systems are too broken and unreliable for modern tools.
- Our systems are from the 1999 (remember Y2K?) and too rudimentary for blockchain investment.
- Our data is rubbish and digital relies on clean data.
- We should first first implement a new ERP and then talk about modern tools.
NOT TODAY, NOT EVER
Another class of ‘yeah but’ relates to resource availability and capacity.
- We have no more capacity to embrace change. The pandemic has been enough.
- We have no one available to devote to projects at this time.
- We can’t afford to invest in innovative solutions.
- Our supply chain partners are not ready for process change. They’re not asking for change. This will just irritate them.
- Our plant equipment can’t interface with new digital technologies.
TOO BLEEDING EDGE
Finally, blockchain attracts its own unique set of ‘yeah but’ directed at distributed ledger technology, usually taken from popular media.
- According to many media stories, blockchain uses too much energy and is incompatible with our green goals.
- Blockchain is vulnerable to quantum computing and will not survive when quantum computing becomes widespread.
- Blockchain is too cutting edge for us.
The Strategic FOMO
FOMO (fear of missing out) is a powerful motivator in oil and gas. Once one player has proven the advantage of a solution, the balance of the industry quickly follows suit so that they don’t miss out. Commodity companies have no pricing power, no ability to hand rising costs to their customers. They can afford to miss out on a little, but if the gap widens too much, they eventually cannot keep pace with their peers.
STATUS QUO IS STATUS DEAD
The digital leader should be armed with the general set of strategic FOMO reasons, backed up with some evidence, why companies in oil and gas should invest in blockchain.
Our industry is changing rapidly (decarbonization of economies, growing use of renewables, entirely new fuels such as hydrogen are emerging, electrification of transportation, rising tax burden on emissions, capital pressures), and the status quo is not tenable.
Our existing business practices are at their limits in terms of business improvement and to advance we need new more agile tools.
Eventually we will be asked or forced to use blockchain (perhaps by a regulator or bank) and we need to move much faster than we would like (as with the pandemic).
Our supply chain partners are already investing in blockchain, and gaining valuable experience about its impacts on cost structures, product quality, product tracing, and margins.
The benefits that other organizations are capturing place us at a competitive disadvantage.
Young people don’t want to work with our status quo systems which they see as outdated, backward, and limiting.
Capital markets are expecting us to be using these tools, and our low stock price is in part reflective of our inability to leverage digital.
CATCH A SPEEDING BUS
Blockchain technology has an additional set of FOMO reasons that can help create the interest and the urgency.
- Other relevant organizations are moving ahead with this technology, including Repsol, Shell, Aramco, ConocoPhillips, Equinor, Exxon, and Chevron, and we are already behind.
- Blockchain is already part of global commerce. JP Morgan has set up the Partior System to transform interbank money movement.
- Regulators, including the US Dept of Homeland Security, are already running trials to understand how blockchain can be harnessed to supervise oil and gas.
- We are becoming obligated to manage our carbon exposure, and blockchain is the only known tool available that helps track carbon across nations, sources, and supply chains.
The Tactical Why
Front line managers and supervisors are likely unswayed by such lofty strategic goals. Their ‘yeah buts’ are often more concerned about mitigating the negative impacts of change on their business. After all, most are hired to run the business as is, and have little incentive or requirement to reinvent the business at the same time.
Here are some of the blockchain talking points that help address specific line of business ‘yeah buts’.
MANAGING THE DOWNSIDE RISKS
- Early adopters of blockchain systems say they are typically easy to use and learn. To users, they feel like just another form to be completed.
- The demand on our people to run a small trial is quite limited and with little material impact on operations.
- A trial to test blockchain’s potential can be run entirely inside the company with no impact on supply chain partners.
- Blockchain solutions do not require perfect data as a pre-condition. The typical outcome from a blockchain solution is higher quality, trusted data.
- We can run a trial without committing to a permanent course of action. We can back out if we need.
CAPTURING THE UPSIDE GAINS
- Blockchain solutions typically use data we already generate or collect anyway. They make the data more trustworthy.
- Blockchain solutions are shown to reduce the cost of low-value manual processes as documented by Repsol.
- Blockchain solutions eliminate rework, errors and disputes because data quality is higher.
- Blockchain solutions are proven to support product quality, recalls, and tracing, which is Stahl Chemical’s business case.
- Blockchain can reduce our compliance burden and reporting needs, demonstrated by Data Gumbo.
- As we gain experience, we can identify opportunities for greater benefits capture from more extensive business process improvements.
The Technology Why
Some managers will be worried that blockchain technologies trigger yet more technology debt, delayed benefits capture, and drawn out trials. Not true.
- Blockchain does not force upgrades to our backend networks or computer servers. Blockchain technology relies on existing general purpose computers, cloud services, and networks. These solutions leverage our existing tools like tablets, smart phones, laptops and computers through a web browser.
- The APIs we need to connect blockchain databases to our systems may have already been built by others, so we can reuse them, including our legacy tools like Excel. Trials can be relatively quick in 90 days. Vendors of key enterprise solutions (SAP, Oracle) are building blockchain support directly into their systems.
- Blockchain solutions can initially be software only with limited management of change hassle. We don’t need to drill holes in anything.
- Depending on blockchain set up (permissioned and private) blockchain systems use little energy. The energy used is more than offset by savings in process cost.
- Almost all blockchain hacks and thefts are actually due to password theft, a problem we already face with existing systems. Blockchain solutions are demonstrably more secure, safer, and more reliable than traditional systems.
Before you meet your next digital doubter, brainstorm all the possible ‘yeah but’ arguments they might harbour, and be ready to sell your way through them with thoughtful arguments and solid evidence.
Check out my book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, coming soon in Russian, and available on Amazon and other on-line bookshops.
Look for my next book, ‘Carbon, Capital, and the Cloud: A Playbook for Digital Oil and Gas’, coming next year.
Take Digital Oil and Gas, the one-day on-line digital oil and gas awareness course.