Effortless innovation in the oil and gas industry; here’s how
Obsession with oil price is getting in the way of more substantial, systematic improvement in the oil industry.
Look on the web and there are endless articles on OPEC deals, oil price predictions, the length of the down turn and so on. There are few pieces about fundamental, underlying improvements to the industry to make it fit for a low oil price environment. The industry even has its own phrases that condition thinking; “lower for longer”, “lower for even longer” and “lower forever”. The first two imply a temporary state, the last one is at least pragmatic and can be a catalyst for substantive and positive change.
Of course, there has been some change since the downturn at the start of 2014. Countries and producing areas have seen massive reductions in revenue, thousands of people have lost their jobs, companies have gone out of business, investment and projects have been cancelled. Simultaneously, deflation has been relentlessly sought by the oil operating companies to make their activities viable and future developments meet financial metrics. Suppliers are busy chasing work knowing that it may not be profitable, but it’s better than having no work at all. For the supply chain, a race to the bottom has been started and the finishing line still isn’t in sight.
Cost cutting and deflation is of course the usual place to start for oil companies. It is tangible for the ever hawk eyed markets and it has worked in previous low price cycles when the procedure was:
1. Cut costs (reduce head count, cancel projects, seek deflation)
2. Wait (for oil price recovery)
3. Wait for a bit longer
4. Get back to business when the oil price rises
Here’s the thing; cost cutting may have been the place to start this time too but it doesn’t look like it will be enough. The pressures on oil prices are different this time; the rise of renewables, climate change and many disruptive technologies are continuing to develop whilst the oil industry waits. The world is moving on. If the industry is to rise and prosper it must not just cope temporarily, but be profitable at a low oil price.
Innovation is an area that remains critical and yet one where the oil and gas industry really struggles; risk aversion in operators is still common. It’s deeply ingrained, it’s cultural. The reasons for this are many, from the huge financial stakes to the behaviours of individuals who in the current climate are even more worried about risk and making a mistake. Ironically, many of the organisations with these individuals want to make big statements when it comes to innovation. They want to get everyone on board, plan a major announcement, talk about a great disruptive technology.
Yet it doesn’t have to be this way at all. The simplest actions done effectively and regularly by individuals can be innovative and many times more impactful than the big announcements.
“Change is a process not an event” (Barbara Johnson – Author)
What simple actions? Well, as humans and individuals we are creatures of habit, we have established ways of doing things. If we then think about innovation, the verb to innovate means; “make changes in something established, especially by introducing new methods, ideas, or products”.
So, if a person changes something simple but established (like a working habit) they will have started innovating. It really is that easy. In fact, it’s effortless.
Simple, effective actions by individuals achieve effortless innovation.
So, try doing something differently and innovating today. Break your habits, be open, ask a different question, positively challenge, don’t be content with nodding heads or waiting for the latest ‘initiative’, seek out a different perspective, talk to a new supplier, talk to a competitor, ask them about how they would do things and what technology is out there. Always look at what’s possible, see the opportunity, don’t flinch from risk but look at how to manage it.
Then do the same again the next day, and the one after that….
Don’t expect to see a change (in the industry) if you don’t make one.
If enough people in the industry make some simple changes, improvement will follow. In time we will see the substantive improvement the industry needs for a sustainable future. As an associate from a major operating company said to me the other day; this low-price cycle is likely to be the last opportunity the industry will have.