http://localhost:4503/content/ppg/en/blogs/governing-energy.html2016-05-20T03:53:06.118ZGoverning EnergyAdobe Experience ManagerGetting Resilientnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 9—May 9, 2016</p> <p><b>Prologue</b><br> This is the second in a three-part series.&nbsp; The last part will be published later this month.&nbsp; These three editions of the blog will address critical issues the energy sector must address in the current market environment—how to develop organizational Agility, Resilience and Sustainability.&nbsp; At the conclusion of this series readers will have access to our online Economic Value Proposition Matrix® model to assess the impact Organizational Agility, Resilience and Sustainability (OARS) can have on their business.</p> <p><b>Part Two</b><br> A major aspect of a High Reliability Organization is the ability to rebound after unexpected events.&nbsp; In today’s dynamic economy a high level of resilience is critical to both public and private organizations.</p> <p>We like to think of resilience as the ability to respond to incidents and limit their damage.&nbsp; The concept of the Bow Tie Risk Model is well defined.&nbsp; Essentially, a set of prevention processes (including sense and respond controls) are “barriers” to a business disruption or safety incident, etc.&nbsp; In the event of a disruption, the system (organization) responds to return the process to its stable state.</p> <p>The following version of the Bow Tie Risk Management Model addresses this process from the R B C construct. This model was discussed in the previous blog regarding agility.&nbsp; Additionally, the temporal component is one of the Condition variables. This is less of an engineering approach to a risk management in the process industries but a broader business process risk management model.</p> <p>It is important to note that there are three different yet perhaps overlapping time periods.&nbsp; First, the Ongoing effort to prevent a disruption or Event Horizon in this model.&nbsp; Second, the time the incident takes place.<br> It is tempting to think that the Event Horizon may be a single short period event such as a fire in a plant.&nbsp; Other scenarios can include disruptions that take place over a longer period of time.&nbsp; For instance, actions of some individuals over time that led to the demise of Enron.</p> <p>Last, even at a high level of resilience the organization’s recovery may take some time.&nbsp; Examples include western North American forest fires that can take considerable professional expertise, equipment, materials and time.<br> These time periods are often overlapping.&nbsp; During a forest fire, the Event Horizon most like will continue to unfold even as Resiliency Processes begin.</p> <p>A holistic Bow Tie Risk Management R B C Process Model suggests that Prevention Processes are largely governed as a set of Behaviors.&nbsp; Various processes and controls to prevent an incident are behavioral driven although Conditions and Relationships exist therein.</p> <p>Likewise, it is convenient to see the Event Horizon from the perspective of a number of Conditions, i.e., fire, governance failure, etc.&nbsp; Complex situations may have multiple Conditions interacting.&nbsp; Often a Black Swan event is a collection of small but systemic issues that unfold uncontrollably.</p> <p>Finally, the response component in a Bow Tie model is often referred to as “consequences.”&nbsp; In other words, a new set of Relationships is born out of the organizational resiliency.&nbsp; This information is provided as feedback to a new enhanced Prevention and Resiliency processes.</p> <p><b>The Resilient Line</b><br> Clearly prevention of an Event Horizon is the Ongoing goal of any organization.&nbsp; However, if the worst happens, there are two dimensions to resiliency or crisis management:</p> <p>•&nbsp;&nbsp; &nbsp;Time—to the extent Resiliency Process can limit the time of the Event Horizon, i.e., quickly putting a fire or addressing shareholder transparency failure,<br> •&nbsp;&nbsp; &nbsp;Damages—can be reduced (including injuries) and Mean Time to recovery can be accelerated</p> <p>Rapid return to production, reduce or no injuries and minimized equipment damage are Key Performance Indicators that add direct value to an organization and the reputation of a sector.</p> <p>This author had previously noted that the Public Health sector was able to “get ahead” of the US Ebola virus outbreak originating in Dallas.&nbsp; Hyped public fear could have resulting in a terrible human and economic situation.&nbsp; However, to the point raised here the Event Horizon unfolded over time with several infected individuals surfacing but the outbreak was contained and trust restored.</p> <p>As of this writing that sector is faced with a growing Zika virus outbreak.&nbsp; That Event Horizon is still unfolding; however, the Resiliency Process is well underway as is the feedback to the Prevention Processes.&nbsp; Once again, at stake is the Relationship between society and the Public Health Sector—more importantly lives may be at stake.</p> <p>As with Agility, Leadership is the most important quality for a high level of resiliency.&nbsp; Operational Excellence with its direct impact on the bottom line is at stake, not to mention the risk of human injury or worse.<br> What is the Value of Resiliency to Your Organization?</p> <p><b>About the Author</b><br> <i>Dr. Scott M. Shemwell has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of six books and has written extensively about the field of Operations Excellence.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years—his dissertation; Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study) is an early peer reviewed manuscript addressing the systemic structure of social relationships.</i><br> <br> </p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/05/getting_resilient.html2016-05-13T13:51:00.000Z2016-05-13T13:54:57.017ZGoing Agilenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 8—April 25, 2016</p> <p><b>Prologue</b></p> <p>This is the first in a three-part series. The remaining two parts will be published in May. These three editions of the blog will address critical issues the energy sector must address in the current market environment—how to develop&nbsp;<i>Organizational Agility, Resilience and Sustainability</i>. At the conclusion of this series readers will have access to our online Economic Value Proposition Matrix® model to assess the impact Organizational Agility, Resilience and Sustainability (OARS) can have on their business.</p> <p><b>Part One</b></p> <p>The construct of organizational agility has been around for over a decade.[i] Enabled by Information Technology by now all organizations should have achieved substantial agility. So what happened on the way to achieving agility?</p> <p style="text-align: center;"><b>Leadership! Leadership! Leadership!</b></p> <p>Organizations are seen as agile if they can respond to conditions and behaviors, make decisions and capitalize/respond to opportunities/incidents more rapidly than others. Demonstrating this ability is often the subject of IT enabled case studies and the focus of software sales initiatives.[ii]</p> <p>However, becoming agile is not a function of the software license a firm chooses. Rather, it is a function of the organizational mindset or its Culture.</p> <p>An organization cannot simply will itself to be agile, it must invest in the transformational process to change its culture. Before this investment is made, management must answer two questions. What is an agile organization? How will agility impact our bottom line and add stakeholder value?</p> <p>We have already partially answered the first question.&nbsp;<b>Conditions</b>, whether market, technology, regulatory or other can change very rapidly. As of this writing, the recent earthquake in Japan is affecting various automotive global supply chains.[iii]</p> <p>This incident was beyond control of that sector, or was it? Japan is a well-known earthquake prone geographic area. Preparation for the inevitable is critical.</p> <p>The&nbsp;<b>Behaviors</b>&nbsp;of the automotive companies affected can make difference not just in the short-term but sustained into the future.[iv] Supply chain disruptions are commonplace. How the firm responds is often a function of the&nbsp;<b>Relationship</b>&nbsp;it has with its vendors, government agencies and other sector constituents including customers and the public.</p> <p>The agileness of an organization is a function of its&nbsp;<b>R B C</b>&nbsp;model.[v] Strong linkages between the three elements indicate a high degree of agility. Conversely poor linkages or even broken linkages suggests poor or no communication amongst economic actors involved and lack of agility.</p> <p>No IT system can overcome the above problem. Rather the R B C processes must be identified, understood and documented before IT can become an enabling effort.</p> <p>Moreover, much of an organization’s agility is outside its so called IT Firewall. Information systems that do not tightly couple those third party linkages weaken responsiveness.</p> <p style="text-align: center;"><b>The Agile Line</b></p> <p>The “what’s in it for me” question must also be adequately answered. Transforming to an agile organization is not without costs in time, opportunity and cash flow. The economic value must be understood beforehand as well as sustained going forward.</p> <p>Industry and non-sector “good practices” can be a good anecdotal starting point; however, each firm must undergo an in-depth analysis of its particular situation. Questions must be asked across all departments.</p> <p>How would your department benefit if …? The answers to these type questions must be codified in economic terms.</p> <p>Simply saying, “adopting this agile process will save you 20%” is not satisfactory and often not demonstrable; hence it is unbelievable. The impact on cash flow, missed opportunities, etc. needs to be documented in understandable terms.</p> <p>The financial numbers must speak to the decision-maker or&nbsp;<b>Leader</b>. There is only one decision-maker. It may be the CEO, or it may be a Board of Directors issue but only one entity is the economic buyer. Once Leadership internalizes the value of agility, the transformational process begins.</p> <p style="text-align: center;"><b>What is the Value of Agility to Your Organization?</b></p> <p><b>About the Author</b></p> <p>Dr.&nbsp;<a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a>&nbsp;has over 30 years technical and executive management experience primarily in the energy sector. He is the author of six books and has written extensively about the field of Operations Excellence. Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management. He has studied cultural interactions for more than 30 years—his dissertation;&nbsp;<i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i>&nbsp;is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <p><b>End Notes</b></p> <p>[i]&nbsp;&nbsp;<a href="http://www.amazon.com/The-Agile-Enterprise-Reinventing-Organization/dp/0387243739">http://www.amazon.com/The-Agile-Enterprise-Reinventing-Organization/dp/0387243739</a></p> <p>[ii]&nbsp;&nbsp;<a href="http://www-01.ibm.com/software/rational/agile/casestudies/">http://www-01.ibm.com/software/rational/agile/casestudies/</a></p> <p>[iii]&nbsp;&nbsp;<a href="http://fortune.com/2016/04/17/toyota-earthquake-disruptions/">http://fortune.com/2016/04/17/toyota-earthquake-disruptions/</a></p> <p>[iv]&nbsp;&nbsp;<a href="http://www.forbes.com/sites/ciocentral/2012/03/13/japan-one-year-later-the-long-view-on-tech-supply-chains/#1f6d2777751a">http://www.forbes.com/sites/ciocentral/2012/03/13/japan-one-year-later-the-long-view-on-tech-supply-chains/#1f6d2777751a</a></p> <p>[v]&nbsp; Shemwell, Scott M. (1996).&nbsp;<u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/04/going_agile.html2016-04-26T16:47:00.000Z2016-04-26T16:51:12.384ZSharingnoemail@noemail.orgDr. Scott Shemwell<p>Volume 5 Number 7—April 7, 2016</p> <p>Almost all online communities have a focus on Sharing. Software, service and other providers seek to increase their visibility and ultimately generate more subscribers and revenue.&nbsp; Others see this as a marketing tool.</p> <p>Network Economics can generate exponential growth rapidly.[i] Organizations recognize this and seek to capitalize on it to growth stakeholder value.&nbsp; Others may see this as another kind of opportunity.</p> <p>In the Wild West of the Internet, ownership laws are routinely violated. Copyright materials are frequently copied, incorporated into blogs et al and not cited or acknowledged in any way. Plagiarism is rampant and unashamed.[ii]</p> <p>Non-disclosure agreements, Insider trading regulations and other instruments designed to assure the confidentiality of organizational information and knowledge have proliferated in our Knowledge Economy. Perhaps unwittingly violating these agreements, individuals often do not think when Retweeting, Sharing, Liking or Favoring certain social content.</p> <p>For example, responding to a Tweet, individuals with sensitive information may leak it in his or her response to an emotional statement by others. Human nature is such that we respond to threats, attacks or other statements to which we emotionally disagree.[iii]&nbsp; This phenomenon is very visible in the current U.S. Presidential election process.</p> <p>In an era of Big Data, if X number of individuals from a specific organization respond to a Post regarding a merger or acquisition on a social media site such as LinkedIn, from Analytics one might infer a certain stance or position on the subject. Perhaps innocent, this inadvertent leak may impact on the equity markets.</p> <p>If a social media based rumor turns out to be true (and there are often many rumors regarding impending actions) does the organization face any blowback or legal action? Perhaps not as there is usually a rumor mill about these types of issues.</p> <p>However, in the <i>olden days</i> rumors were usually not in writing. When they were, the results can be disastrous. Leaking written documents such as the Pentagon Papers in 1971 contributed to the doomed Presidency of Richard Nixon.[iv]</p> <p>WikiLeaks, Edward Snowden et al are more modern examples of catastrophic organizational information leaks.[v] Organizational damage can be huge, rapid and almost impossible to contain.</p> <p>Inadvertent disclosures are not limited to Insiders. During the first Iraq war one reporter sketched a map in the sand of future military operations on global television.[vi]</p> <p>In this modern era, disclosure that violates SEC and other regulatory requirements is easy. Malicious, inadvertent, or even stupid comments online can have lasting effects.</p> <p>Organizations may want to consider putting into place not just governance policies but technology enabled solutions that assure outgoing messages are not in violation of organizational policies. Precedent has been set as many organizations do not permit employees to visit certain websites from organizational networks, i.e., online shopping and so called adult entertainment.</p> <p style="text-align: center;"><b>What is your organization’s Governance regarding Sharing in the Social Media?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of six books and has written extensively about the field of Operations Excellence.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years—his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>&nbsp;</p> <p>&nbsp;</p> <p>[i]&nbsp; Shemwell, Scott M. (2011). The Lesson of the Chessboard. <a href="http://bookstore.xlibris.com/Products/SKU-0091802049/Essays-on-Business-and-Information-II.aspx">Essays on Business and Information II: <i>Maximizing Business Performance</i></a>. New York: Xlibris. p. 173.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[ii]&nbsp; <a href="http://www.convinceandconvert.com/content-marketing/is-social-media-creating-a-plagiarism-problem-infographic/">http://www.convinceandconvert.com/content-marketing/is-social-media-creating-a-plagiarism-problem-infographic/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iii]&nbsp; <a href="http://psychology.about.com/od/findex/g/fight-or-flight-response.htm">http://psychology.about.com/od/findex/g/fight-or-flight-response.htm</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iv]&nbsp; <a href="http://www.history.com/topics/vietnam-war/pentagon-papers">http://www.history.com/topics/vietnam-war/pentagon-papers</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[v]&nbsp; <a href="https://wikileaks.org/">https://wikileaks.org/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[vi]&nbsp; <a href="http://www.cnn.com/2003/WORLD/meast/03/31/sprj.irq.geraldo/">http://www.cnn.com/2003/WORLD/meast/03/31/sprj.irq.geraldo/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/04/sharing.html2016-04-07T20:58:00.000Z2016-04-07T21:00:33.195ZDetermining Valuenoemail@noemail.orgDr. Scott M. Shemwell<h1>&nbsp;</h1> <p>Volume 5 Number 6—March 21, 2016</p> <p>In our last blog posting we developed the dual construct of Cost Management and Productivity Enhancement.&nbsp; These are the cornerstones of any value proposition put forth in challenging market environments.</p> <p>Unfortunately, those who often develop the highest organizational value are not the best adapt at communicating the value proposition of their solution.&nbsp; For example, the television sitcom, <i>The Big Bang Theory</i> makes light of socially awkward Brainiacs.[i]&nbsp; A similar plot to a movie series in a previous era, the <i>Revenge of the Nerds</i> movies spoke to a similar inability to communicate with the masses.[ii]</p> <p>In both spoofs, the awkward prevailed.&nbsp; However, in real life this is often not the case.&nbsp; The Cost—Productivity Matrix is a four-part template; Speed &amp; Simplification, Operational Excellence, Innovation and Internet of Things (also referred to as the Industrial Internet of Things in a commercial environment).</p> <p>Each of these is a major paradigm in and of itself.&nbsp; Altogether, addressing their value added can be a formidable task.&nbsp; Yet, all must be addressed if the organization is to be prosperous today and in the future.</p> <p>To be successful, those with the knowledge of how a technological solution can add value must “<b>Translate Technology to the Language of Business,</b>” a tagline we have used for several years describing one of our software products (EVPM).[iii]&nbsp; The characters in <i>The Revenge of the Nerds</i> movies demonstrated success at this, albeit in an unlikely way for most of us.</p> <p>Scientist, chemists, medical personnel, computer programmers and engineers et al speak in terms of mathematics.&nbsp; This is the common denominator with those business executives who fund investments and projects.&nbsp; These individuals work in mathematical terms as well, often called finance!</p> <p>Throughout this four plus year blog series and in other pieces as well, we have argued that organization culture adds demonstrable value to an organization.&nbsp; It is a major element of competitive advantage or differentiator from others in non-commercial entities.</p> <p>We posit that mathematics is the fundamental idea.&nbsp; Physicists and computer programmers have advanced this for generations.&nbsp; So has the finance sector.</p> <p>For example, derivatives can be defined as a security whose value is dependent on another asset.[iv]&nbsp; Mathematically, a derivative is a way “to represent rate of change.”[v]</p> <p>At the fundamental level, both are the same.&nbsp; The underlying element is Structural Dynamics.[vi]&nbsp; Those underlying latent currents that drive all change.</p> <p>The mathematical culture of the technologist and the culture of the financer are not as far apart as often stereotyped.&nbsp; However, there is still a need of a Rosetta Stone to enable translation.</p> <p>Such a Rosetta Stone exists and is readily available.[vii]&nbsp; Communication and agreement between these two often thought of as different cultures has been established!</p> <p style="text-align: center;"><b>How does your Organization Communicate Value to Management?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of six books and has written extensively about the field of Operations Excellence.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years—his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.cbs.com/shows/big_bang_theory/">http://www.cbs.com/shows/big_bang_theory/</a></p> <p>[ii]&nbsp; <a href="https://en.wikipedia.org/wiki/Revenge_of_the_Nerds">https://en.wikipedia.org/wiki/Revenge_of_the_Nerds</a></p> <p>[iii]&nbsp; <a href="http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html">http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html</a></p> <p>[iv]&nbsp; <a href="https://en.wikipedia.org/wiki/Derivative_%28finance%29">https://en.wikipedia.org/wiki/Derivative_%28finance%29</a></p> <p>[v] &nbsp;<a href="https://simple.wikipedia.org/wiki/Derivative_(mathematics)">https://simple.wikipedia.org/wiki/Derivative_(mathematics)</a></p> <p>[vi]&nbsp; Shemwell, Scott M. (2015). <u>Structural Dynamics: Foundation of Next Generation Management Science</u>. Houston: RRI Publications. <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0</a></p> <p>[vii]&nbsp; <a href="http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html">http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/03/determining_value.html2016-03-31T13:41:00.000Z2016-03-31T13:48:45.163ZCosts and Productivitynoemail@noemail.orgDr. Scott M. Shemwell<h1><a name="_GoBack"></a>Governing Energy</h1> <p>Costs and Productivity</p> <p>Volume 5 Number 5—March 2, 2016</p> <p>Cost management has been a major requirement for energy firms weathering the current down cycle.&nbsp; What is not discussed as frequently is the requirement to increase productivity as well.</p> <p>In 2013, Jeffrey R. Immelt, the Chairman and CEO of GE identified four new drivers of productivity:</p> <p style="margin-left: 40px;">•&nbsp;How shale is changing the energy debate and the balance of energy power</p> <p style="margin-left: 40px;">•&nbsp;Industrial Internet</p> <p style="margin-left: 40px;">•&nbsp;Speed and simplification</p> <p style="margin-left: 40px;">•&nbsp;Manufacturing excellence[i]</p> <p>At IHS CERAWeek 2016 (attended by the author), he reiterated these points and added that both costs and productivity together were effectively a two key scenario.&nbsp; Readers will note that we have addressed the Two Key Solution twice before in this blog.[ii]</p> <p>In that context, the Two Key Scenario is “an example of systemically removed economic actors.”[iii]&nbsp; The model suggests that two separate but equal economic forces are required to work in unison to effect the desired outcome.</p> <p>According to the United States Department of Labor, Bureau of Labor Statistics (BLS), the annual productivity change in the nonfarm business sector was only 1.2 percent during the period 2007-2015.[iv]&nbsp; However, some argue that this number does not truly reflect productivity enhancements from Information Technology.</p> <p>Analogous to the current economic environment in the upstream energy sector, some Finnish economists believe the Internet of Things (IoT) can increase productivity by 1.4 percent despite a declining population.[v]&nbsp; This is almost a 120 percent improvement in the BLS productivity growth rate!</p> <p>As early as late 2014 and throughout much of 2015, this blog addressed the likelihood of a prolonged low commodity price point perhaps enabled by technologies, both production and information technology.[vi]&nbsp; This scenario appears to remained sustained by market forces.</p> <p>Similar to Taoist concept of Yin Yang, the two halves of Cost Management and Productivity Increase complete the philosophical wholeness necessary to sustain today’s organization.[vii]&nbsp; Realizing this management philosophy or model is the real challenge.</p> <p><img src="/content/dam/Pennenergy/online-articles/2016/03/governing_energy_march_3.JPG"></p> <p>If we integrate Cost Management with the four Productivity Drivers, we can visualize the following Cost—Productivity Matrix. &nbsp;Moreover, information technology has long been identified a business <i>process change agent</i>.</p> <p>Likewise, new sources of production such as shale and the extraction technologies developed are the second source of enablement.&nbsp; Finally, innovation is the fuel that energizes even very mature organizations.</p> <p>New revenue sources are critical to successful cost management and productivity growth.&nbsp; For example, 3M is long known for their innovation and new product development.[viii]</p> <p><img src="/content/dam/Pennenergy/online-articles/2016/03/governing_energy_march_3b.JPG"></p> <p>Built on this foundation, management must develop agile and resilient processes.&nbsp; Organizations are often complex and slow to move; however, behavioral tools exist to simplify decision making processes without losing the fidelity or latency of the economic drivers.</p> <p>In <i>The Second Machine Age</i>, the authors make the case that digital technologies are transforming entire industry (in fact all) sectors.[ix]&nbsp; This rapid explosion of technology will dramatically change the landscape just as the Steam Engine did for the Industrial Revolution.&nbsp; How individuals and organizations adjust or even lead in this environment will determine winners and losers in the economic game.</p> <p>Disruptive and structural change is happening to the energy industry.&nbsp; To meet these challenges, this broad yet actionable business model that will drive the changes in productivity and cost management necessary in the current economic environment.</p> <p>Helping to prepare to drive industry and organizational change management has been the hallmark of this blog series.&nbsp; The industry is at an inflection point and perhaps more importantly, the <i>slope of the change curve</i> is now steeper.</p> <p>Individuals and by extension organizations must take dramatic steps to assure economic survival.&nbsp; Strong Cost Management and Productivity Enhancement strategies and associated tactics are demanded.&nbsp; Importantly, behavioral and technical tools are robust, available and inexpensive.</p> <p style="text-align: center;"><b><i>What is your organization’s Yin Yang?</i></b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of six books and has written extensively about the field of Operations Excellence.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years—his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.gereports.com/post/93426062058/jeffrey-r-immelt-riding-the-productivity-waves-to-growth/">http://www.gereports.com/post/93426062058/jeffrey-r-immelt-riding-the-productivity-waves-to-growth/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[ii]&nbsp; Shemwell, Scott M. (2015, April 1). The Two Key Solution. <u>Governing Energy</u>. PennEnergy.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iii]&nbsp; _______ (2015, May 18). Bounding the Boundless. <u>Governing Energy</u>. PennEnergy.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iv]&nbsp; <a href="http://www.bls.gov/lpc/special_requests/nfbbardata.txt">http://www.bls.gov/lpc/special_requests/nfbbardata.txt</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[v]&nbsp; <a href="http://www.slideshare.net/fullscreen/AlexandriaKrause/the-internet-of-things-productivity-and-employment/7">http://www.slideshare.net/fullscreen/AlexandriaKrause/the-internet-of-things-productivity-and-employment/7</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[vi]&nbsp; Shemwell, Scott M. (2016). <u>Governing Energy: Organizational Governance—Issues of the 21st Century) 2014-2015 Edition</u>. Houston: RRI Publications.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[vii]&nbsp; <a href="http://personaltao.com/teachings/questions/what-is-yin-yang/">http://personaltao.com/teachings/questions/what-is-yin-yang/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[viii]&nbsp; <a href="http://www.bloomberg.com/bw/stories/2006-05-09/3ms-seven-pillars-of-innovation">http://www.bloomberg.com/bw/stories/2006-05-09/3ms-seven-pillars-of-innovation</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[ix]&nbsp; <a href="http://secondmachineage.com/about-2ma/">http://secondmachineage.com/</a><b><a href="http://secondmachineage.com/about-2ma/">about-2ma/</a></b></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/03/costs_and_productivi.html2016-03-03T22:10:00.000Z2016-03-03T22:17:05.985ZStop Work?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 4—February 16, 2016</p> <p>In the 1960s Yale University Professor Stanley Milgram conducted a number of controversial <b>Obedience</b> <b>Experiments</b> whereby &quot;teachers&quot; would deliver an electric shock to “students” when that individual (hidden in another room) gave an incorrect answer. The shocks would increase up to 450 volts when prompted by the Facilitator.[i]&nbsp; In reality, no shocks were given and the student was part of the experiment.</p> <p>Firmly but politely (some say yelled) the Facilitator would tell the <i>teachers</i> to continue despite concerns they raised.&nbsp; Sixty-five percent of the 40 participants in the study delivered the maximum shock level!&nbsp; Moreover, when asked about it later. 84% were glad to have participated in the study.[ii]</p> <p>While the study had many flaws, About.com summarized a few finding might be relevant for us today:</p> <ul> <li>The physical presence of an Authority Figure dramatically increased compliance with the instructions</li> <li>Since the institution (Yale) was held in high regard, participants believed the experiment was safe</li> <li>Teachers assumed that the Facilitator was a competent expert</li> <li>The Facilitator stated the while the shocks were painful, they were not dangerous</li> <li>Later experiments suggested that in the presence of rebellious peers, obedience levels dropped dramatically</li> <li>In 2009, a repeat yet still controversial but more controlled with less voltage experiment produced the same rate of obedience as the original</li> </ul> <p>One outcome from these studies suggests, “that situational variables may have a stronger sway than personality factors in determining obedience.”&nbsp; Other cases suggest that the presence of a strong Authority Figure will inhibit good communication and may contribute to incidents such as the crash of the Korean Airlines 747 in 1997.[iii]</p> <p>Regardless of the Milgram’s experiment poor methodology and ethical issues, there does appear to be anecdotal evidence that people tend to obey those perceived as organizational Authority Figures with expertise.[iv]&nbsp; Much of Organizational Science is based on this premise.[v]</p> <p>In the current economic climate, organizations are stressed.&nbsp; The need to be <i>agile</i> and <i>resilient</i> are pressing concerns.</p> <p>These pressures put considerable strain on individuals in the organization, some of which may be fearful of losing their jobs.&nbsp; If the first-line Authority Figure directing elements of field operation interprets managerial directives as deemed to allow poor decision making processes and behaves accordingly, Operational Excellence can be jeopardized.</p> <p>Employers are urged to give employees and contractors Stop Work Authority and assimilate this mindset into its organizational culture.[vi]&nbsp; Empowering individuals to stop revenue producing processes in the event they and they alone see something that warrants that action.&nbsp; The intent is to stop accidents and save lives and prevent injuries.</p> <p>Organizations in stress can develop conflicts among groups and individuals.[vii]&nbsp; It is even more critical in this type environment for supervisors to be clear regarding safety directives such as Stop Work Authority.</p> <p>For example, through body language or even direct statements a Field Facilitator Authority Figure “suggests” that it is critical that production be maintained, an individual afraid of losing his or her job may NOT take <i>gray area</i> Stop Work actions out of fear of the consequences.&nbsp; What if he or she is wrong, or the situational aspect of the decision is questionable and a more seasoned individual might have made a different decision?</p> <p>It is more important during economic downturns that organizations remain true to their core principals.&nbsp; Individuals will obey the Authority Figure present (whether onsite or virtually).&nbsp; These leaders must send the right message if Operational Excellence directives are to be adhered to.</p> <p style="text-align: center;"><b>Are Your Field Facilitators Actions Aligned with Organizational Objectives?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of six books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years—his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://psychology.about.com/od/historyofpsychology/a/milgram.htm">http://psychology.about.com/od/historyofpsychology/a/milgram.htm</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[ii]&nbsp; Ibid.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iii]&nbsp; <a href="http://www.nbcnews.com/business/korean-culture-may-offer-clues-asiana-crash-6c10578732">http://www.nbcnews.com/business/korean-culture-may-offer-clues-asiana-crash-6c10578732</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iv]&nbsp; <a href="http://www.everydaysociologyblog.com/2014/07/obedience-authority-and-domination.html">http://www.everydaysociologyblog.com/2014/07/obedience-authority-and-domination.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[v]&nbsp; Shemwell, Scott M. (1993). Management Theory - Evolution Not Revolution, <u>Proceedings of the 11th Annual Conference of the Association of Management</u>, <u>11</u> (2), pp. 74 - 78.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[vi]&nbsp; <a href="http://www.bsee.gov/uploadedFiles/BSEE/Final%20Safety%20Culture%20Statement.pdf">http://www.bsee.gov/uploadedFiles/BSEE/Final%20Safety%20Culture%20Statement.pdf</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[vii] &nbsp;Shemwell, Scott M. (1994). Organizational Conflict and Dispute Resolution, <u>Proceedings of the 12<sup>th</sup> Annual Conference of the Association of Management</u>, <u>12</u> (1), pp. 154 - 158.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/02/stop_work_.html2016-02-16T00:36:00.000Z2016-02-16T00:37:40.764ZSafety Revisitednoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 3—February 3, 2016</p> <p>I read a recent blog post that suggested the perhaps the oil and gas industry has gone too far in its safety driven actions.&nbsp; The argument goes something like, <i>perhaps the sector has over corrected post Macondo and value is not being derived from these efforts</i>.</p> <p>While there are concerns over the cost of safety and the hubris that “it only happens to the other guy,” these concerns are misplaced.&nbsp; One of the tenets of Operational Excellence is the so-called <i>Safety Dividend</i>.[i]</p> <p>We can represent the Safety Dividend <b>set</b> of all possible combinations of logical relationships in the finite collection of different safety variable sets.[ii]&nbsp; For example, economic value from investments in safety are available from a number of different sources/processes.</p> <p>A Venn diagram (also known as a set diagram or logic diagram) is a diagram that shows all possible logical relations between a finite collection of different sets.&nbsp; The Safety Dividend Venn Diagram as shown in the following figure.</p> <p style="text-align: center;"><img src="/content/dam/Pennenergy/online-articles/2016/02/safety_dividend.JPG"></p> <p>This figure reflects four major collections of sets defined as follows:</p> <ul> <li><b>Fewer Normal Incidents</b>—Included in this category are so-called “Slips Trips and Falls,” Lessons Learned from Near-Miss Reports, Unplanned Downtime, Equipment Failure, Fires et al.&nbsp; Incidents of this nature can and do result in personnel deaths even though to the organization they may be considered Normal.</li> </ul> <p>For purposes of this model we re-define Perrow’s Normal Accident to exclude major catastrophic incident such as No Low Probability—High Impact Incidents (LP-HI).&nbsp; Many often assume that since LP-HI are infrequent (arguably not the case) that risk models based on major incidents are not truly representations of daily operations.&nbsp; Therefore, we place LP-HI incidents in a separate category than Perrow.[iii]</p> <ul> <li><b>Better Social Relationships</b>—As noted often in this series since its inception in 2012, local communities, states, federal and the international community in general are much less tolerant of Accidents and the impact on society and the Environment.&nbsp; Significant investments are made assuring the “Privilege to Operate” is not put at risk and the company is a good “Corporate Citizen.”</li> <li><b>Fewer Regulatory Fines</b>—Regulatory fines are composed of three major costs; the fine itself, legal costs and the impact on the stakeholders’ perception of the firm.</li> <li><b>No Low Probability—High Impact Incidents</b>—This is the ultimate catastrophe such as a major blowout with high visibility.&nbsp; An incident of this nature can and has resulted in the demise of many careers and organizations.&nbsp; Black Swan events can be systemic in nature (see WSJ Black Monday, 1987).&nbsp; This suggests that unless the organization has a sustained and robust Systemic Culture of Safety a higher level of LP-HI risk may exist than management believes.[iv]</li> </ul> <p>This all adds up to an impact on the equity of the firm.&nbsp; In today’s volatile markets, fungible Capital is quick to ‘flee’ <i>perceived</i> higher risk situations.&nbsp; In addition to a lower stock market price, access to debt markets may be curtailed or at least become more expensive.</p> <p>Therefore, it is easy to calculate the Safety Dividend as a function of Return on Capital Employed (ROCE).&nbsp; ROCE is defined as ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed.[v]</p> <p>In an earlier blog, we developed our <i>Convergence of Exponential</i> model that <i>Maximizes Capital Efficiency</i>.[vi]&nbsp; Most of the variables in that model are a function of ROCE.&nbsp; Therefore, it follows that the Safety Dividend is a major contributor to equity performance.</p> <p>Previously we have reported that regulators have indicated that, “In this era of lower commodity price points, there is no relief on the requirement for safe and environmentally responsible operations.”[vii]&nbsp; This directly infers that the “Privilege to Operate” is a function of the Safety Dividend as well.</p> <p>We all know that safety is the critical issue in field operations.&nbsp; We also realize that in an environment with significant financial pressures on all aspects of all economic actors in the industry, pressure mounts to compromise certain processes and policies.&nbsp; Usually, we ‘get away with it’ and nothing happens.</p> <p>But not always!&nbsp; From small injuries or equipment failure to the unlikely but more likely than most believe disastrous LP-HI incident, all have measureable costs and impact on the value of the firm and its apply to do business.&nbsp; Stakeholders of all types can be negatively impacted.</p> <p style="text-align: center;"><b>What steps is your Firm taking to Maximize its Safety Dividend?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; Shemwell, Scott M. (2016, January 5). A Year for Strong Bond Governance? Governing Energy.</p> <p>[ii]&nbsp; <a href="https://en.wikipedia.org/wiki/Venn_diagram">https://en.wikipedia.org/wiki/Venn_diagram</a>&nbsp;&nbsp;</p> <p>[iii]&nbsp; <a href="http://www.jstor.org/stable/j.ctt7srgf">http://www.jstor.org/stable/j.ctt7srgf</a></p> <p>[iv]&nbsp; <a href="http://www.ce-conference.org/sites/default/files/smith_driscoll_kopp_bodai_-_modeling_extreme_risk.pdf">http://www.ce-conference.org/sites/default/files/smith_driscoll_kopp_bodai_-_modeling_extreme_risk.pdf</a></p> <p>[v]&nbsp; <a href="http://www.investopedia.com/terms/r/roce.asp">http://www.investopedia.com/terms/r/roce.asp</a></p> <p>[vi]&nbsp; Shemwell, Scott M. (2015, August 24). Technology Price Point Changes Everything. Governing Energy.</p> <p>[vii]&nbsp; Shemwell, Scott M. (2015, July 20). Cultural Simulation. Governing Energy.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/02/safety_revisited.html2016-02-03T15:28:00.000Z2016-02-03T15:34:11.467ZLeft Behindnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 2—January 25, 2016</p> <p>With less than 11 months to go before the election of the next U.S. President, as well as all Members of the House of Representatives, a number of Senators and a host of other elected positions, the so called political silly season is on steroids! Much is made of outlier candidates on both sides of the political aisle.[i]</p> <p>While, as of this writing not a single vote has been cast there appears to be significant interest in “non-establishment” candidates. Whether this translates to votes or not, only time will tell.</p> <p>Most agree that the American electorate is frustrated to say the least. However, the so called establishment often sells the same political packages that were successful in the past—Conventional Wisdom.</p> <p>This column has posited a number of times that the <i>times are changing</i>. Schumpeter’s Creative Destruction hypothesizes that economic systems restructure themselves from within.[ii] Endogenous variables are often difficult to recognize. The preverbal <i>forest for the trees</i>; observers cannot distinguish these forces until they manifest themselves in a dramatic manner—Housing Crisis of 2007/9.[iii]</p> <p>One suspects that the sheer intensity of Creative Destruction alive in the American political process this year will have some or possibly a major effect even if conventional candidates are nominated by both political parties. At a minimum, discussions are focusing on uncomfortable political topics.</p> <p>However, politics is not the <i>driver</i> but it is a <i>mirror of society</i>. Therefore, business executives are well advised to candidly assess what this hyper-visible process is suggesting to the broader economy.</p> <p>Structural Dynamics suggests that economic actors are not the best judge of the impacts of endogenous components of an economic sector.[iv] These drivers are almost impossible to recognize using conventional econometric and/or financial modeling. This is the reason so many forecasts are frequently missed and often by a lot.</p> <p>The <i>Custodians of the Status Que</i> run the risk of being left behind.&nbsp; Holding on to the past, whether a political campaign process or the implementation of new technology jeopardizes the very health of the economic entity (organization or society).</p> <p>Throughout most of this year Americans will see the Ying and Yang of the political winds. Regardless of the outcome in November, this society will have spoken its peace on a number of issues.</p> <p>One suspects that several, even many of these discussion points will impact on the global business community.&nbsp; Regardless of the political winner, the days following the election will bear witness to many pundits evaluating voter’s rationale. In most cases these experts will be wrong.</p> <p>The latent variables at work are underlying and not easily visible; however, their effect can be very demonstrable.[v] Results can be cataclysmic such as a stock market crash and only in hindsight are these forces measurable.</p> <p>Those not recognizing these fundamental societal forces will be left behind. Their careers and organizations they lead may be left behind as well. This is a very high price for Custodians of the Status Que stakeholders to pay.</p> <p><b>What are you doing to assure that you and your organization are not left behind?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://dictionary.reference.com/browse/outlier">http://dictionary.reference.com/browse/outlier</a></p> <p>[ii]&nbsp; <a href="https://en.wikipedia.org/wiki/Creative_destruction">https://en.wikipedia.org/wiki/Creative_destruction</a></p> <p>[iii]&nbsp; <a href="https://en.wikipedia.org/wiki/Subprime_mortgage_crisis">https://en.wikipedia.org/wiki/Subprime_mortgage_crisis</a></p> <p>[iv]&nbsp; Shemwell, Scott M. (2015). Structural Dynamics: Foundation of Next Generation Management Science. Houston: RRI Publications. <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0</a></p> <p>[v]&nbsp; <a href="https://johngarger.com/articles/methodology/latent-constructs-in-social-science-research">https://johngarger.com/articles/methodology/latent-constructs-in-social-science-research</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/01/left_behind.html2016-01-28T16:23:00.000Z2016-01-28T16:35:37.754ZA Year for Strong Bond Governance?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 5 Number 1—January 5, 2016</p> <p>This year begins the fifth calendar year for this blog—February 2, 2012 was the date of the first release.&nbsp; Over the last four years we have attempted to address contemporary business issues of interest.&nbsp; We expect to continue that approach moving forward.</p> <p>Our overriding focus has been on organizational governance and risk mitigation issues.&nbsp; In 2014 book we first put forth the <b>Strong Bond Governance</b> business model—“the Culture of Safety started with an anchor at the Board of Directors level.”[i]&nbsp; In this construct the commitment to safety is sacrosanct and indeed <b>is</b> the culture of the organization.</p> <p>Oil prices are expected to remain in the current trading range (perhaps even lower) for the foreseeable future.&nbsp; Economic actors in the sector including operators, service and engineering firms as well as manufacturers have had to adjust to the realities of this part of the business cycle.&nbsp; <i>Operational Excellence</i> is now the current watchword (Googling the term ‘Operational Excellence in Oil and Gas’ generates almost 1.2 million hits).</p> <p>In their 2012 article, <i>Operational Excellence: The Key to Success for Oil and Gas</i>, the authors state, “Indeed, companies in the oil and gas industry are looking to increase their bottom line by boosting their operating efficiency and reducing fixed cost.”[ii]&nbsp; In 2010, McKinsey included <i>Contractor Management</i> and the concept of a “Safety Dividend” in their perspective on Operational Excellence.[iii]</p> <p>2015 witnessed the demise or near demise of firms with governance models focused only on near term profits during the rising commodity price portion of the business cycle.[iv]&nbsp; This significant destruction of stakeholder value is repeated in every cycle.&nbsp; Other storied brands may soon disappear as well, i.e., Baker Hughes.</p> <p>The 2010 McKinsey article discusses a number of things management should do to achieve Operational Excellence and yet a similar article this year would list many of the same issues to be addressed.&nbsp; These include:</p> <p>· An inflated cost base<br> · Maturity of oil producing basins<br> · High maintenance costs (including downtime)<br> · Contractor management<br> · Safety<br> · Leadership</p> <p><i>Strong Bond Governance</i> is all about Leadership!&nbsp; Charting a course in these troubled waters in not just the job of the Chief Executive Helmsman, the Board of Directors sets the Strategic Course to be followed to add Sustained, Systemic Stakeholder Value.</p> <p>If the organizational ship is on “the rocks” so to speak those plotting the course as well as those driving the ship are accountable to constituent parties.&nbsp; The strategic course always starts at the top.</p> <p><b>How Strong is your Organization’s Governance Bond?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp;<a href="http://www.amazon.com/IMPLEMENTING-CULTURE-SAFETY-PERFORMANCE-COMPLIANCE-ebook/dp/B00ILXY7ZC/ref=asap_bc?ie=UTF8">http://www.amazon.com/IMPLEMENTING-CULTURE-SAFETY-PERFORMANCE-COMPLIANCE-ebook/dp/B00ILXY7ZC/ref=asap_bc?ie=UTF8</a></p> <p>[ii]&nbsp; <a href="http://www.dupont.com/products-and-services/consulting-services-process-technologies/articles/key-to-success-oil-gas.html">http://www.dupont.com/products-and-services/consulting-services-process-technologies/articles/key-to-success-oil-gas.html</a></p> <p>[iii]&nbsp; <a href="http://www.mckinsey.com/insights/energy_resources_materials/this_is_the_time_to_deliver_on_upstream_operational_excellence">http://www.mckinsey.com/insights/energy_resources_materials/this_is_the_time_to_deliver_on_upstream_operational_excellence</a></p> <p>[iv]&nbsp; <a href="http://www.haynesboone.com/~/media/files/attorney%20publications/2015/energy_bankruptcy_monitor_dec28.ashx">http://www.haynesboone.com/~/media/files/attorney%20publications/2015/energy_bankruptcy_monitor_dec28.ashx</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2016/01/a_year_for_strongbo.html2016-01-14T21:47:00.000Z2016-01-14T21:53:26.859ZQuantum Indeterminacynoemail@noemail.orgScott M. Shemwell<p>Volume 4 Number 24—December 18, 2015</p> <p>In 1935 Erwin Schrodinger posited that a cat in a closed box with vial of poison that may open at an unspecified time it is not known whether the cat is dead or alive to observers—the so called Observers Paradox.[i]&nbsp; Moreover, the act of observing itself can affect the outcome— Heisenberg's Uncertainty Principle.[ii]</p> <p>Similar to Schrodinger’s cat, this year has been one where the oil industry cat in a box has exhibited the same indeterminacy.&nbsp; Some cats (companies) are now dead (bankruptcy) and others still alive.&nbsp; Yet it industry itself seems to be beginning to exhibit a level of certainty.</p> <p>Conventional wisdom seems to suggest that low commodity price points will remain for the foreseeable future.&nbsp; 2016 planning and budgets announced reflect this belief.[iii]&nbsp; So we end this tumultuous tours year with a level of certainty that many (not all) of the cats still alive will largely remain among the living.</p> <p>No doubt 2016 will be one of continuing <i>Structural Dynamics </i>in the sector and those that support it, i.e., heavy equipment manufacturing.[iv]&nbsp; And observers and pundits focused on the sector will continue to get it both right and wrong.</p> <p>Analyst comments have and will effect stock market movements and we will continue to see this this effect.&nbsp; However, when assessing the condition of a cat one should recognize the lessons of Schrodinger and Heisenberg from quantum physics.&nbsp; Things may not be as they appear!</p> <p><b>How certain are you about the health of your cat?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>&nbsp;</p> <p>[i]&nbsp; <a href="https://en.wikipedia.org/wiki/Schr%C3%B6dinger%27s_cat">https://en.wikipedia.org/wiki/Schr%C3%B6dinger%27s_cat</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[ii]&nbsp; <a href="https://www.aip.org/history/heisenberg/p08.htm">https://www.aip.org/history/heisenberg/p08.htm</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iii]&nbsp; <a href="http://www.ogj.com/articles/2015/12/murphy-oil-slashes-2016-budget-to-less-than-1-billion.html">http://www.ogj.com/articles/2015/12/murphy-oil-slashes-2016-budget-to-less-than-1-billion.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>[iv]&nbsp; <a href="http://www.amazon.com/s?ie=UTF8&amp;page=1&amp;rh=n%3A283155%2Cp_27%3AScott%20Shemwell">http://www.amazon.com/s?ie=UTF8&amp;page=1&amp;rh=n%3A283155%2Cp_27%3AScott%20Shemwell</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/12/quantum_indeterminac.html2015-12-23T01:49:00.000Z2015-12-23T01:51:35.981ZEnergy Inflection Pointnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 23—December 2, 2015</p> <p>It is always a challenge for those within a process to develop a sense of exogenous forces that may deflect the tended path.&nbsp; Extolled to “think outside the box,” this cliché promises new thinking and the ability to step outside our process.</p> <p>But can we?&nbsp; Usually not! &nbsp;This partly because a robust methodology to ‘separate’ ourselves is not employed or even available.</p> <p>Since the mid 1990s the author has addressed this issue, releasing the Beta version of a methodology, <i>Structural Dynamics</i> in 2012 (available <a href="http://www.therrinstitute.com/assets/structural_dynamics_-__version.pdf">online</a>).[i]&nbsp; Structural Dynamics focuses on the underlying dynamic behaviors of all systems, physical and/or human behavior.&nbsp; In February 2015, the latest version was published in our Changing the Dialogue series.[ii]</p> <p><img src="/content/dam/Pennenergy/online-articles/2015/December/gov_energy_lift_12_2.JPG"></p> <p>The so-called Conventional Wisdom is being called to task around the globe.&nbsp; This has happened repeatedly and pundits put forth a number of reasons why.&nbsp; We are too busy, focused on this business quarter, too young, too old or have family obligations etc. that hold us back from opportunities that are outside our box.[iii]&nbsp; While this may be the case for many, Structural Dynamics suggests that we cannot typically “see” opportunities or changes in our process dynamic.</p> <p>2015 will no doubt go into the history books as one of turmoil in the global crude oil market, especially in the United States.&nbsp; Many pundits are predicting a more stable 2016 with crude oil pricing remaining “low” possibly until 2020—four more years.[iv]&nbsp; What if the price does not recover as many predict but stays in the current trading range indefinitely?</p> <p>In 1950 a gallon of gasoline was $0.18 and a new house cost $8,450.[v]&nbsp; Consumers in that era could purchase almost 47,000 gallons of gas for the price of a house.&nbsp; The average price of a home in October 2015 was $366,000.[vi]&nbsp; On December 1, 2015 the average cost of a gallon of gasoline was $2.04.[vii]&nbsp; Today’s consumer can purchase over 179,000 gallons for the price of a house.</p> <p>While not a scientific analysis, this rudimentary financial model suggests today’s consumer is living in an era with a great deal of <i>energy purchasing power</i>.&nbsp; Perhaps, we have passed an energy cost inflection point?</p> <p>The very success of the industry, i.e., shale, technology, etc. appears to have “bent the energy cost curve down.”&nbsp; Furthermore, it is likely that the sector will continue to drive down its cost structure.[viii]</p> <p>Oil market busts have happened before, so why were so many firms caught flat footed?[ix]&nbsp; In the 2015 edition of Structural Dynamics, sixteen questions are put forth to help management develop a set of data from observed events.&nbsp; An approach is also put forth to link these observations with the unseen or latent variables that can represent sector shifts.</p> <p>Admittedly a bit technical but this is a useful tool to help prevent the destruction of shareholder value.&nbsp; The owners deserve at least this much from their management team.</p> <p style="text-align: center;"><b>How do you know if the organizational/sector ground is shifting beneath your feet?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.therrinstitute.com/assets/structural_dynamics_-__version.pdf">http://www.therrinstitute.com/assets/structural_dynamics_-__version.pdf</a></p> <p>[ii]&nbsp; <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1448970196&amp;sr=1-1&amp;keywords=structural+dynamics+shemwell">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1448970196&amp;sr=1-1&amp;keywords=structural+dynamics+shemwell</a></p> <p>[iii]&nbsp; <a href="http://www.danpena.com/articles/conventional-wisdom/">http://www.danpena.com/articles/conventional-wisdom/</a></p> <p>[iv]&nbsp; <a href="http://www.marketwatch.com/story/oil-prices-will-rebound-much-faster-than-market-is-predicting-barclays-says-2015-10-15">http://www.marketwatch.com/story/oil-prices-will-rebound-much-faster-than-market-is-predicting-barclays-says-2015-10-15</a></p> <p>[v]&nbsp; <a href="http://www.thepeoplehistory.com/1950s.html">http://www.thepeoplehistory.com/1950s.html</a></p> <p>[vi]&nbsp; <a href="https://www.census.gov/construction/nrs/pdf/uspricemon.pdf">https://www.census.gov/construction/nrs/pdf/uspricemon.pdf</a></p> <p>[vii]&nbsp; <a href="http://www.fuelgaugereport.com/">http://www.fuelgaugereport.com/</a></p> <p>[viii]&nbsp; <a href="http://www.offshore-mag.com/articles/2015/12/technology-innovation-key-to-cost-reduction-capital-efficiency-says-analyst.html">http://www.offshore-mag.com/articles/2015/12/technology-innovation-key-to-cost-reduction-capital-efficiency-says-analyst.html</a></p> <p>[ix]&nbsp; <a href="http://blogs.wsj.com/moneybeat/2015/11/19/oil-producer-bankruptcies-piling-up/">http://blogs.wsj.com/moneybeat/2015/11/19/oil-producer-bankruptcies-piling-up/</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/12/energy_inflectionpo.html2015-12-02T18:43:00.000Z2015-12-02T18:48:36.893ZMediocracy is the Goal?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 22—November 20, 2015</p> <p>Software App developers have embraced the concept of MVP.[i]&nbsp; In their rush to get product to market many are expecting consumers to accept a minimal level of performance or Minimum Viable Product.</p> <p>An App released at the MVP level is not the traditional Beta version of software which is clearly in the pre-release testing stage.[ii]&nbsp; Rather, by definition it “<i>has enough value that people are willing to use it or buy it initially</i>.”[iii]</p> <p>In the bad ole days, product testing would assure some level of reliability/consistency.&nbsp; Recently, this author went on one of the travel advisor web sites to “rate” a hotel recently stayed at.&nbsp; After several attempts resulting in “mandatory fields not completed” which were filled in each time, I finally received, not an accepted message but the opportunity to integrate with one of the social media sites.</p> <p>So what?&nbsp; My objective is not service the financial goals of these large public companies.&nbsp; I simply wanted to give a family owned hotel that I though deserved it a good recommendation.</p> <p>Most of us have received the message “you have been randomly selected” or the result of CRM auto query to rate, to provide feedback (often in the middle of filling out a given form) and hence to provide a data point for Big Data.&nbsp; What is the value of this solicited data, especially when it interferes with a business transaction process?</p> <p>Begs another question what is the accuracy of Big Data when micro data is input using these tactics?&nbsp; Question the results of such processes!</p> <p>Marketers relying on this data may miss their mark.&nbsp; Might be similar to political surveys (polls) where respondents deliberately lie.</p> <p>Should the energy industry adopt this business model, the results might be more than suboptimal.&nbsp; Moreover, are you willing to purchase a self-driving automobile sold at the MVP release level?</p> <p>Finally, in an era of scary cyber threats, one wonders if MVP creates a cyber risk or security flaw in the software at this release level.&nbsp; In other words does MVP actually perform as advertised—<i>has enough value that people are willing to use it or buy it initially</i> at minimal risk.</p> <p>Rapid Time-to-Market has been the rage for generations.[iv]&nbsp; However, if during this soaring flight, if the products and solutions are <i>average</i> or even less is the customer receiving the value advertised?[v]</p> <p><b>What level of Mediocrity is Acceptable from your Vendors?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p><br> <p>&nbsp;</p> <p><p>[i]&nbsp; <a href="https://www.techopedia.com/definition/27809/minimum-viable-product-mvp">https://www.techopedia.com/definition/27809/minimum-viable-product-mvp</a></p> </p> <p><p>[ii]&nbsp; <a href="http://www.pcmag.com/encyclopedia/term/38567/beta-version">http://www.pcmag.com/encyclopedia/term/38567/beta-version</a></p> </p> <p><p>[iii]&nbsp; <a href="https://www.techopedia.com/definition/27809/minimum-viable-product-mvp">https://www.techopedia.com/definition/27809/minimum-viable-product-mvp</a></p> </p> <p><p>[iv]&nbsp; <a href="https://en.wikipedia.org/wiki/Time_to_market">https://en.wikipedia.org/wiki/Time_to_market</a></p> </p> <p><p>[v]&nbsp; <a href="https://en.wikipedia.org/wiki/Average_is_Over">https://en.wikipedia.org/wiki/Average_is_Over</a></p> </p> </p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/11/mediocracy_is_thego.html2015-11-24T15:19:00.000Z2015-11-24T16:24:17.860ZLost Luggage—A Systemic Risk Management Case Studynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 21—November 2, 2015</p> <p>Recently this writer flew from Houston, Texas USA to a major city in Europe that did not have a direct flight.&nbsp; This necessitated not only a plane change but an airline change to one of the US career’s partners.&nbsp; Both of these airlines are major organizations with a global presence.</p> <p>The weather the day of the flight from Houston was one of flooding type tropical rains that part of the world can have.&nbsp; The departing flight was approximately two hours late with the airline citing “operational disruptions.”&nbsp; One of these disruptions was the late arrival of crew from inbound flights.</p> <p>Since I was going to be in Europe for some time, I checked my main bag with my business suits and other clothing and items I would need at my meeting.&nbsp; Arriving on the east coast of the United States and missing my connecting flight (which actually left early), I was booked on a flight to another European city (not my final destination) where I was to transfer and reach my final destination only a couple hours late.&nbsp; Not bad considering the problems that day.</p> <p>For the new flight over the “pond” I was assured that my bag would be changed to that flight.&nbsp; Arriving and checking for the third leg, again I was assured it was on the plane as well.</p> <p>Upon arrival at my final destination, the luggage was not on the conveyor belt.&nbsp; At “Lost Baggage” they had no record of it at all!&nbsp; Using my itinerary documents this was reconstructed for their computer system.</p> <p>So how does this relate to systemic risk management?&nbsp; All of us have had luggage either delayed or completely lost—goes with the traveling territory.</p> <p>While watching the chaos in Houston and getting periodic texts updates from the carrier, it appeared to me that this operation or highly complex integrated parts had <i>no slack</i> in the system.&nbsp; One assumes the cost of these “operational disruptions” was in the millions of dollars</p> <p>One the initial leg to Europe my overhead reading light did not work.&nbsp; The flight attendant told me that that maintenance had been deferred because of the delays.&nbsp; Later during the dinner service she again stated that service would be slow today because they were understaffed—again the disruptions were blamed as the culprit.</p> <p>We commented earlier that the Normal Incident Failure (NIF) theory as discussed by Charles Perrow predicts eventual failure by highly complex tightly coupled systems such as today’s global airline sector.&nbsp; Moreover, High Reliability Management (HRM) processes do not accept their inevitability.[i]</p> <p>In this personal case study, a few comments come to mind:</p> <p style="margin-left: 40px;">· Bad weather is inevitable and part of the travel experience and no one wants to not be safe in this environment</p> <p style="margin-left: 40px;">· If change plan process is within a single carrier system, lost baggage is not as major an issue as perhaps in the past—assuring passengers and their check luggage are on the same aircraft is a security process</p> <p style="margin-left: 40px;">· When the second (or third or more) carriers are introduced into the process, risk can increase and system transparency decreases</p> <p style="margin-left: 40px;">· Operational disruptions are expensive, can lead to issues with customer satisfaction and deferred maintenance among other considerations.</p> <p style="margin-left: 40px;">· Despite decades and billions invested by this sector in Information Technology, it appears that systems and data are still not integrated.&nbsp; Some of the recent merger and acquisition processes may be partially to blame</p> <p>In the final analysis, no one in the system knew where the bag was or if it had even left Houston.&nbsp; However, chances are it made it to the first leg but when plane and destination changed assurances that the bag with the paper barcode destination of another city and flight number was not “tightly” connected to the passenger system change.</p> <p>As of this writing I still don’t have them and will go to a meeting not as well dressed for success as I had planned.&nbsp; Arriving 24 hours beforehand was apparently too tightly coupled to assure my business processes had appropriate risk mitigation.&nbsp; However, the carry-on bag mitigated this risk somewhat.</p> <p>This is a small micro-case that most of us can relate to.&nbsp; It does provide some interesting lessons learned for the larger processes where “operations disruption” causing deferred maintenance and customer dissatisfaction may more dramatically cause greater Enterprise Risk exposure or degradation.</p> <p>Moreover, the ongoing energy sector consolidation may lead to Information Technology issues that can impact on operational performance.&nbsp; In an era of increasing concerns about cyber security in the digital oilfield this may be a major Achilles tendon.</p> <p style="text-align: center;"><b>How does your organization address the systemic risk of Operational Disruptions?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; Shemwell, Scott. M. (2014, January 1). Into the Breach. <u>Governing Energy</u>. PennEnergy.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/11/lost_luggage_a_syste0.html2015-11-11T14:50:00.000Z2015-11-11T15:45:55.347ZCyber Operationsnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 20</p> <p>During the late 1990s, we needed to address infrastructure concerns vis-à-vis Y2K exposure of real time systems.&nbsp; Concerns that the lights would go out at midnight drove a high level of effort to assure that would not happen.[i]</p> <p>Today we face a more insidious cyber exposure.&nbsp; More than a decade ago we raised the issue of <i>Security Integration</i> (cyber and physical security).[ii]&nbsp; Following what many believed was a Y2K hoax; these issues did not appear to be timely “in the day.”</p> <p>Earlier this year, we learned that hackers could take over an automobile.[iii]&nbsp; Concerns about airliners were expressed as well.[iv]</p> <p>Process industries have invested heavily in real time systems, the so called digital oilfield, remote operations and other cyber system solutions often using Internet or Cloud infrastructure.&nbsp; As commented herein previously, the upstream oil and gas sector has dramatically changed its safety processes following Deepwater Horizon incident in 2010.[v]</p> <p>Likewise, the nuclear power sector made changes following Fukushima.[vi]&nbsp; Both heavily depend on new information management solutions.&nbsp; Other sectors have employed “Smart” devices and infrastructure or grid networks.</p> <p>In the era of the industrial <i>Internet of Things</i>, any number of opportunities for hackers exists.&nbsp; Moreover, are firms whose IT departments have hitherto been focused on back office ERP systems prepared to address this potential onslaught?</p> <p>Historically, organizations have developed cross-functional teams to address a myriad of business problems.[vii]&nbsp; Perhaps now is the time to stand up a permanent team composed of IT professionals, Operations and Risk Management experts?&nbsp; Such a team, working with cyber security experts would provide organizations with a “best practices” capability to resist attacks on producing assets.</p> <p>It is important the organizations develop a culture that embraces the new <i>Internet of Things</i> world yet understands its strength and vulnerabilities.&nbsp; Such a culture should have a High Reliability mindset towards hackers, both from outside the organization and its supply chain as well as inside.</p> <h2 style="text-align: center;"><b>Is your organization prepared to reap the value from cyber enabled operations?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; Shemwell, Scott M. (2011). Bug Lore—Lessons for the Online Economy! <a href="http://bookstore.xlibris.com/Products/SKU-0091802049/Essays-on-Business-and-Information-II.aspx">Essays on Business and Information II: <i>Maximizing Business Performance</i></a>. (pp. 181-235) New York: Xlibris.<br> [ii]&nbsp; <a href="http://www.energycentral.com/gridtandd/communicationsandsecurity/articles/957/Security-Integration">http://www.energycentral.com/gridtandd/communicationsandsecurity/articles/957/Security-Integration</a><br> [iii]&nbsp; <a href="http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/">http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/</a><br> [iv]&nbsp; <a href="http://www.cnn.com/2015/05/17/us/fbi-hacker-flight-computer-systems/">http://www.cnn.com/2015/05/17/us/fbi-hacker-flight-computer-systems/</a><br> [v]&nbsp; <a href="http://www.bsee.gov/Regulations-and-Guidance/Safety-and-Environmental-Management-Systems---SEMS/Fact-Sheet/">http://www.bsee.gov/Regulations-and-Guidance/Safety-and-Environmental-Management-Systems---SEMS/Fact-Sheet/</a><br> [vi]&nbsp; <a href="http://fukushimaupdate.com/">http://fukushimaupdate.com/</a><br> [vii]&nbsp; <a href="http://www.inc.com/encyclopedia/cross-functional-teams.html">http://www.inc.com/encyclopedia/cross-functional-teams.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/10/cyber_operations.html2015-10-21T14:39:00.000Z2015-10-21T14:44:12.920ZEconomics, Economics, Economicsnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 19</p> <p>As the price of oil has plunged, conventional wisdom is that the industry stopped.&nbsp; Nothing could be further from the truth although significant changes have been made in the industry procurement process.</p> <p>Vendors now have to <b>Demonstrate</b> value that is not <b>Overstated</b> and <b>Defendable</b>.&nbsp; Moreover, as we have mentioned in the past, those peddling technology must, “Translate Technology to the Language of Business.”[i]&nbsp; It’s all about the numbers!</p> <p>Moreover, in times of economic stress, the ultimate decision maker is often at a higher level in the organization than during so-called “normal” periods.&nbsp; In Western commercial organizations, almost by definition the higher the individual is in the structure the more bottom line driven they are—often because personal bonuses are structured that way.</p> <p>This author has developed formal numerical models that demonstrate the economic value of CAPEX for over a decade.&nbsp; This solution is rooted in digital oilfield investment justification.[ii]</p> <p>Over the past six months or so, this writer has seen a tenfold interest from both internal (organizational CAPEX justification) and external (suppliers selling solutions) in economic modeling to support investment decisions.&nbsp; One can surmise that procurement discussions are perhaps more frank and buyers must demonstrate that decision made reflect value to the organization that is not <b>Overstated</b>, is <b>Demonstrable</b> and <b>Defendable</b>.</p> <p>If this perspective is correct, more scrutiny is being applied to assure shareholder value is protected/assured/even grown in trying economic times.&nbsp; Those who seek to assure management that investments add value to the organization must demonstrate it.&nbsp; Economic numbers are the only way!</p> <h1 style="text-align: center;">&nbsp;</h1> <h1 style="text-align: center;"><b>How does your organization assure economic value is added from spend?</b></h1> <h1 style="text-align: center;">&nbsp;</h1> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h2>End Notes</h2> <p>[i]&nbsp; Shemwell, Scott M. (2014, November 20). Making the Complex Sale: Selling to Industrial/Enterprise Customers. <u>Petrolessons</u>. Houston.<br> [ii]&nbsp; <a href="http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html">http://www.therrinstitute.com/economic-value-proposition-matriz-%c2%ae.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/10/economics_economics.html2015-10-07T20:40:00.000Z2015-10-07T20:52:17.329ZPreserving Your Culturenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 18</p> <p>The upstream sector is in an era of consolidation, a typical response to the down cycle.&nbsp; While every sector has an ongoing merger, acquisition and divestiture component of its strategy large mega-mergers are rarer.</p> <p>Recent mega-acquisitions include: Halliburton’s intent to acquire Baker Hughes ($35 billion), Schlumberger’s bid for Cameron ($15 billion), Shell—BG ($72 billion) as well as others.[i]&nbsp; Doubtless, this trend will continue.[ii]&nbsp; What if anything will these mergers mean to the inherent competitive advantage provided by an organization’s culture?[iii]</p> <p>Acculturation is the process by which extended inter-cultural exposure changes the original culture of one or more of the interacting cultures.[iv]&nbsp; This can happen to an organization as it expands internationally or even when its demographics change as a result of new entrants into the workforce, i.e. Millennials replacing Baby Boomers.[v]</p> <p>One can expect that the collision of cultures resulting from a mega-merger will result in a new organizational culture for the new entity.&nbsp; There is anecdotal evidence that this has happened before.&nbsp; Indeed as of this writing the migration to Europe from the Middle East is fueling concerns regarding the future of the culture of those countries.[vi]&nbsp; Perhaps a future doctoral student will test this hypothesis.</p> <p>The industry is also in the midst of its own cultural revolution; that transformation to one of a Culture of Safety.&nbsp; Moreover, we have made the case before that the sector is actually composed of thousands of Cultures of Safety—one for each organization.[vii]</p> <p>The industry, regulators and society are well advised to ask the hard question.&nbsp; Will the new resulting culture from mega-mergers assure a high level Culture of Safety is maintained?</p> <p>The energy and other sectors have undergone significant M&amp;A activities for generations.&nbsp; It is a staple of Wall Street and one can argue it is largely successful process in the long term.</p> <p>Some believe, including this observer that many of these transactions are dilutive to the acquiring firm.&nbsp; However, there is no reason to believe that this pattern will change in the current market.&nbsp; Weaker firms often need an economic lifeline and the acquiring firms offer sustainability (and jobs).</p> <p>Management, the Market, Regulators and Society are all constituent parties in this dialogue.&nbsp; The resulting new culture will drive the economic behavior of that firm and to the extent it is a major economic actor, the industry as well.</p> <p>&nbsp;</p> <h1 style="text-align: center;"><b>How is your organization assuring its Cultural Competitive Advantage is Assured?</b></h1> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.oilandgasinvestor.com/acquisitions-divestitures-mergers-acquisitions">http://www.oilandgasinvestor.com/acquisitions-divestitures-mergers-acquisitions</a><br> [ii]&nbsp; <a href="http://www.ogfj.com/articles/print/volume-12/issue-5/features/trends-in-upstream-m-a.html">http://www.ogfj.com/articles/print/volume-12/issue-5/features/trends-in-upstream-m-a.html</a><br> [iii]&nbsp; <a href="http://www.forbes.com/sites/georgebradt/2012/02/08/corporate-culture-the-only-truly-sustainable-competitive-advantage/">http://www.forbes.com/sites/georgebradt/2012/02/08/corporate-culture-the-only-truly-sustainable-competitive-advantage/</a><br> [iv]&nbsp; Shemwell, Scott M. (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale. pp. 54, 55.<br> [v]&nbsp; _______ (2014). <u>Governing Energy: Organizational Governance—Issues of the 21<sup>st</sup> Century) 2012-2013 Edition</u>. Houston: RRI Publications. pp. 82, 83 <a href="http://www.amazon.com/dp/B00NB8C91Q">http://www.amazon.com/dp/B00NB8C91Q</a><br> [vi]&nbsp; <a href="http://www.socialeurope.eu/2015/06/five-reasons-why-migration-into-europe-is-a-problem-with-no-solution/">http://www.socialeurope.eu/2015/06/five-reasons-why-migration-into-europe-is-a-problem-with-no-solution/</a><br> [vii]&nbsp; Shemwell, Scott M. (2015, April 7). How Can Humans Effectively Manage Increasingly Complex Systems? <u>Deep Space Deep Ocean: Aramco Technology and Operational Excellence Forum</u>. The Woodlands.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/09/preserving_your_cult.html2015-09-22T20:32:00.000Z2015-09-22T20:48:12.276ZBig Adversity—Big Prosperitynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 17</p> <p>Some notable technologies that advanced to a mature phase during World War II include the computer, ballistic missiles, jet powered aircraft and of course nuclear energy.&nbsp; All of these capabilities existed or were known about prior to the commencement of hostilities but the adversity imposed by that period accelerated their development.</p> <p>What is less known about the period is that the belligerent nations still used horses even as logistics processes were partially motorized in between the two world wars.[i]&nbsp; And while horses continued to play a role throughout the war (often because combat losses of motorized equipment or lack of fuel), their days as mainstream transportation were numbered.</p> <p>Many societal changes were institutionalized during the wartime process and a return to the former era afterwards was unlikely.&nbsp; What followed was a period of unprecedented growth and prosperity including in Japan and West Germany (albeit as laggards).[ii]</p> <p>The traumatic global ordeal of the early 1940s set the stage for an economic boom that included the birth of the so called Baby Boomers who are now beginning to retire.&nbsp; As Nietzsche stated, “that which does not kill us makes us stronger” was certainly true in that era and perhaps to a lesser extent it applies to us today.[iii]</p> <p>The oil sector is enduring a yearlong economic bust.&nbsp; Many continue to hope that when prices recover, <i>things will get back to normal</i>.&nbsp; What if the era of the first part of this decade is over?</p> <p>As we have noted before in this series, technology may enable structural change in the sector.&nbsp; According to the Wall Street Journal, “the oil-price squeeze is driving operational efficiency and productivity to the top of all oil producers’ agendas, lowering development costs and increasing standards across the industry.”[iv]</p> <p>This is but one of the four factors the Journal attributes to an economic environment that may actually “help” US shale producers.&nbsp; The other three are essentially attributed to the <i>cooling of an overheated market</i> and associated directly measurable economic factors.[v]</p> <p>This period of economic adversity will pass.&nbsp; The larger question is not even when it will pass but what will the energy sector’s world will look like when this period is officially declared over.</p> <p>If history is a guide, one can surmise that it will not look like the past but may usher in an era of great prosperity for those properly positioned to benefit.&nbsp; Expect the effective use of now maturing technologies to play a significant role.</p> <h2><b>How is your firm preparing to prosper in the next energy era?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>&nbsp;</p> <p>[i]&nbsp; <a href="https://en.wikipedia.org/wiki/Horses_in_World_War_II">https://en.wikipedia.org/wiki/Horses_in_World_War_II</a><br> [ii]&nbsp; <a href="https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion">https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion</a><br> [iii]&nbsp; <a href="http://www.brainyquote.com/quotes/authors/f/friedrich_nietzsche.html">http://www.brainyquote.com/quotes/authors/f/friedrich_nietzsche.html</a><br> [iv]&nbsp; <a href="http://blogs.wsj.com/experts/2015/05/06/four-reasons-low-oil-prices-actually-help-u-s-shale-producers/">http://blogs.wsj.com/experts/2015/05/06/four-reasons-low-oil-prices-actually-help-u-s-shale-producers/</a><br> [v]&nbsp; Ibid.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/09/big_adversity_bigpr.html2015-09-03T16:37:00.000Z2015-09-03T17:20:52.455ZTechnology Price Point Changes Everythingnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 16</p> <p>When the first IBM PC (desktop) was unveiled in 1981, its price sans options was $1,565.[i]&nbsp; That is the equivalent of almost $4,100 in 2014.[ii]&nbsp; Today, an average laptop is available for slightly more than $200 and one could argue that there is little similarity between the current generation and its founding ancestor.</p> <p>This is even true for durable goods such as automobiles.&nbsp; The average cost of a new car in 1980 was around $7,000 and gasoline was 90 cents a gallon.[iii]&nbsp; In 2014, the average cost of a vehicle is little more than $31,000.[iv]</p> <p>This is approximately $11,000 more than the inflation predicted price but today automobiles are more reliable and “have optional features that people in the 50s, 60s and 70s would have considered science fiction.”[v]</p> <p>We can surmise that the Total Cost of Ownership (TCO) throughout the automobile “asset” life cycle is lower and that its current Usability Index is high.&nbsp; In other words, the <i>Driving Experience</i> is better than with earlier generations.</p> <p>In earlier editions, we have commented about the impact of technology is having on heavy industry resulting in lower cost structures.[vi]&nbsp; We extend this position herein and posit that a <i>unit of technology</i> cost or its marginal cost is approaching zero.</p> <p>As previously mentioned in this series, we developed the construct of the Expected Value of Marginal Information (EVMI) in 1997.[vii]&nbsp; This economic Utility Theory derived model holds true for other technologies deployed in industry.</p> <p>Therefore, we can infer that our <i>Energy Experience</i> can be better using the technology tools that have enabled disruptive and more effective processes.&nbsp; Additionally, today’s energy firm can have features only dreamed about by previous generations.</p> <p>One of these features is better Capital Efficiency (Return on Capital Employed).&nbsp; Similar to the boom in home offices, greater capital efficiency can enable smaller economic actors to undertake projects that in the past only major players could commence.&nbsp; One example might be the sustained shale plays despite much lower crude oil prices.</p> <p>The current market has sidelined many major capital investments in the deepwater.[viii]&nbsp; Granted, the project costs for deepwater are significantly higher; however, ROCE has been elusive more because of management costs rather than expensive deepwater technology and regulatory compliance requirements.[ix]</p> <p>ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed.&nbsp; Capital Employed = Total Assets – Current Liabilities.&nbsp; This key metric of the firm’s performance is driven not only by low cost operations but superior asset (reservoir) management.</p> <p>Finally, the long awaited and much discussed Big Crew Change is well underway if not drawing to a close.&nbsp; The discussion has long been around how to replace the knowledge leaving the industry.</p> <p>Perhaps the knowledge is not leaving the industry but simply being repositioned in smaller firms or as contractors and other professional service providers.&nbsp; If this is correct, this knowledge base will be available for the foreseeable future.</p> <p>The great Technology Enabler meeting the Big Crew Change may be changing the sector landscape.&nbsp; As depicted in the following graphic which is redrawn from the Convergence of Exponentials.[x]</p> <p style="text-align: center;"><img alt="How will your firm Maximize its Capital Efficiency?" src="/content/dam/Pennenergy/online-articles/2015/August/Shemwell%20August%202015%201.JPG"></p> <p>With an ever decreasing technology price point powered by performance from the Convergence of Exponentials knowledgeable teams can maximize Capital Efficiency.&nbsp; This disruptive force is changing the nature of this established sector.</p> <h1 style="text-align: center;"><b>How will your firm Maximize its Capital Efficiency?</b></h1> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="https://www-03.ibm.com/ibm/history/exhibits/pc25/pc25_birth.html">https://www-03.ibm.com/ibm/history/exhibits/pc25/pc25_birth.html</a></p> <p>[ii]&nbsp; <a href="http://www.davemanuel.com/inflation-calculator.php">http://www.davemanuel.com/inflation-calculator.php</a></p> <p>[iii]&nbsp; <a href="http://www.thepeoplehistory.com/80scars.html">http://www.thepeoplehistory.com/80scars.html</a></p> <p>[iv]&nbsp; <a href="http://money.usnews.com/money/personal-finance/articles/2015/01/02/a-glimpse-at-your-expenses-100-years-ago">http://money.usnews.com/money/personal-finance/articles/2015/01/02/a-glimpse-at-your-expenses-100-years-ago</a></p> <p>[v]&nbsp; <a href="http://jalopnik.com/5953080/how-inflation-has-jacked-up-the-prices-of-your-favorite-cars/">http://jalopnik.com/5953080/how-inflation-has-jacked-up-the-prices-of-your-favorite-cars/</a></p> <p>[vi]&nbsp; Shemwell, Scott M. (2015, March 20). Drilling Moore. <u>Governing Energy</u>. PennEnergy.</p> <p>[vii] &nbsp;_______ (2015, February 4). Towards Zero. <u>Governing Energy</u>. PennEnergy.</p> <p>[viii]&nbsp; <a href="http://www.ft.com/cms/s/0/dc94b628-9be7-11e4-b6cc-00144feabdc0.html#axzz3j6Xv2H9V">http://www.ft.com/cms/s/0/dc94b628-9be7-11e4-b6cc-00144feabdc0.html#axzz3j6Xv2H9V</a></p> <p>[ix]&nbsp; Barton, Christopher M. (2015, April 1). Best Practices Help Keep Deepwater Megaproject Capex in Check. <u>Hart Energy</u>.</p> <p>[x]&nbsp; Shemwell, Scott M. (2015, April 23). Titans of the 1940s, Today. <u>Governing Energy</u>. PennEnergy.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/08/technology_pricepoi.html2015-08-27T14:32:00.000Z2015-08-27T14:51:50.404ZThe New Normal?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 15</p> <p>If there was ever an overused cliché, the “New Normal” is it!&nbsp; We are told that any number of societal changes result from this paradigm shift (also overused) and that we must prepare ourselves for this step-change in our lives, jobs and even culture.&nbsp; Often simply a cyclical event, a New Normal does not materialize and once the danger has past, humans revert to a status quo—the Current Normal!</p> <p>In previous editions of this blog we have expressed the position that the crude oil commodity price point may have indeed entered into a <i>new normal</i> trading range.[i]&nbsp; Moreover, technology continues to be one of the differentiators between profitable firms and those that struggle when oil is below $50.[ii]</p> <p>While cost cutting is important and a traditional approach to cyclical downturns, this time some firms are tweaking and even revamping their fracing (technology based) solutions.[iii]&nbsp; One analyst even calls this, “a step-change in well performance.”</p> <p>The oil industry has long been known as a cyclical sector and market observers often express comments such as, “Margins Depend On Oil Prices.”[iv]&nbsp; But what if this is no longer a truism?</p> <p>Driven by technology and the good business practices of those nimble, rapid responsive organizations, margins may now depend more on the “Structural Dynamics” cost structure and less on the (short-term) price point.[v]&nbsp; The evidence is mounting that the industry may in fact have transformed to this new “structural” normal.[vi]</p> <p>However, can shale oil replace (by volume) the production of the Middle East and Deepwater offshore?&nbsp; This pundit suggests that this is To Be Determined.&nbsp; While this may be an unknown, the industry appears to be reacting as if shale is a major disruptive event.</p> <p>If this structural transformation is the case, how does the industry respond?&nbsp; History suggests that the basic response may be tepid in that management will believe in the ultimate rebound until such time as “the die is cast.”</p> <p>Farfetched?&nbsp; The changes, albeit turnover in Fortune 500 companies is high; however, its focus is more on the changes in fortunes of individual firms than the economy in general.&nbsp; According to one source, “It reflects a kaleidoscopic process of sectoral change and <i>greater efficiencies at the level of individual firms</i>, as well as some less sanguine economic developments.”[vii]</p> <p>This begs the question, are we seeing Schumpeter’s Creative Destruction at work in the fossil fuel industry today?[viii]&nbsp; If we are, history also suggests that incumbents will not see the Structural Dynamics underfoot.[ix]</p> <p>So perhaps we are entering a New Normal and “It is Different this Time.”[x]&nbsp; Those that cling to historical market models may do so at their peril.</p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>How is Your Firm Structuring for a Possible “New (<i>permanent</i>) Normal?”</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; Shemwell, Scott M. (2014, December 18). 2008—Redux. PennEnergy Governing Energy. Vol 3. No. 24.<br> [ii]&nbsp; ___________ (2015, January 22). Is it Different This Time?. PennEnergy Governing Energy. Vol 4. No. 2.<br> [iii]&nbsp; <a href="http://uk.reuters.com/article/2015/07/29/usa-oil-technology-idUKL1N1042J020150729">http://uk.reuters.com/article/2015/07/29/usa-oil-technology-idUKL1N1042J020150729</a><br> [iv]&nbsp; <a href="http://www.valueline.com/Stocks/Industries/Industry_Analysis__Petroleum_(Integrated).aspx#.VbvTJtJ0yM8">http://www.valueline.com/Stocks/Industries/Industry_Analysis__Petroleum_(Integrated).aspx#.VbvTJtJ0yM8</a><br> [v]&nbsp; Shemwell, Scott M. (2015). Structural Dynamics: Foundation of Next Generation Management Science. Houston: RRI Publications. <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0</a><br> [vi]&nbsp; <a href="http://www.reuters.com/article/2014/10/23/idUSL3N0SH5N220141023">http://www.reuters.com/article/2014/10/23/idUSL3N0SH5N220141023</a><br> [vii]&nbsp; <a href="http://www.wired.com/2012/06/fortune-500-turnover-and-its-meaning/">http://www.wired.com/2012/06/fortune-500-turnover-and-its-meaning/</a><br> [viii]&nbsp; Shemwell, Scott M. (2014, July 18). Institutional Imprint. PennEnergy Governing Energy. Vol 3. No. 14.<br> [ix]&nbsp; ___________ (2015).<br> [x]&nbsp; ___________ (2015, January 22).</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/08/the_new_normal_.html2015-08-04T16:54:00.000Z2015-08-04T17:25:08.422ZCultural Simulationnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 14</p> <p>This pundit has long advocated the use of games and process simulations not just as learning tools but as useful methods for exploring the results of complex scenarios in a comparative analysis.[i]&nbsp; Which scenario has the highest return with the lowest risk profile?</p> <p>Moreover, as when the invading aliens on the video game win, no one is seriously injured when the “Failure is not an Option” problem generates disappointment!&nbsp; Perhaps embarrassed or “put in one’s place”, hitting the <i>reset</i> button and trying again costs nothing other than the Human Marginal Cost of Mortification (HMCM).</p> <p>As with any learning experience, failure is often the best teacher.&nbsp; This is all fine and good unless the stakes are high.</p> <p><img width="511" height="149" src="/content/dam/Pennenergy/online-articles/2015/July/Shemwell%20quote.JPG">[ii]</p> <p>Almost a decade ago, we released the first version of Project Management Scenario Simulations.&nbsp; This was later codified into a formal methodology including a software suite.[iii]&nbsp; This enabled organizations to test various risk based scenarios before, “cutting steel.”</p> <p>In a recent survey, only 21% of the companies “self-reported” that their organization had attained the top level of Culture of Safety Maturity.[iv]&nbsp; Attainment for the Five Levels of COS Maturity:</p> <ul> <li>Level 5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21%</li> <li>Level 4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36%</li> <li>Level 3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26%</li> <li>Level 2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11 %</li> <li>Level 1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 06 %</li> </ul> <p>Moreover, when those top level organizations contract with partners or suppliers whose maturity is lower, by default the maturity level of that <i>project</i> can only be as high as the <i>highest maturity level of lowest organizational maturity</i>.</p> <p>Additionally, each organization has its unique culture which is often the source of competitive advantage; certainly organizational pride.&nbsp; By type, a large operator has a different culture than a large service company or manufacturer and so forth for all large medium and smaller firms in the sector.[v]</p> <p>Effectively, these organizational/inter-personal <i>Culture<b>s</b></i> of Safety must interact on a project to create ONE effective CULTURE of Safety for that particular operation.&nbsp; To better understand and develop Operations Management Systems that incorporate cultural differences, <b><i>one tried and true method is to build models.</i></b></p> <p><b>Cultural Interactions</b></p> <p>In this era of lower commodity price points, there is no relief on the requirement for safe and environmentally responsible operations.[vi]&nbsp; With these constraints on the business model, <i>rehearsing</i> cultural scenarios offers opportunities to address complex functions without making costly business mistakes.</p> <p>Cultural gaming tools are available to help minimize the risk associated with cross-cultural Cultures of Safety.&nbsp; As computer simulation solutions, they are less costly than <i>prohibited costly human errors</i> in this area.[vii]</p> <h2 style="text-align: center;"><b>How does your organization assure an effective project Culture of Safety?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; Shemwell, Scott M. (2006, September). Assessing Drilling Risk. <u>Digital Energy Journal, </u>Issue 3, pp. 10-11.<br> [ii]&nbsp; Morecroft, John. D. W. (1994). Executive Knowledge, Models, and Learning. In Morecroft, John D. W., and Sterman (Eds.), Modeling for Learning Organizations (pp.3-28). Portland: Productivity Press.<br> [iii]&nbsp; The Rapid Response Institute. (2010, January). Project Management Simulation Guidelines: A New Risk Mitigation Process. Author.<br> [iv]&nbsp; Shemwell, Scott M. (2015, April). Culture of Safety: Industry Self-Assessment. <u>A PennEnergy Research Center Report</u>.<br> [v]&nbsp; _______ (2015, April 7). How Can Humans Effectively Manage Increasingly Complex Systems? <u>Deep Space Deep Ocean: Aramco Technology and Operational Excellence Forum</u>.&nbsp; The Woodlands.<br> [vi]&nbsp; _______ (2014, December 18). 2008—Redux. <u>Governing Energy</u>. PennEnergy.<br> [vii]&nbsp; The Rapid Response Institute. (Available Q3 2015). Culture of Safety Cross Cultural Negotiation Game.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/07/cultural_simulation.html2015-07-20T13:49:00.000Z2015-07-20T13:52:59.284ZThe Boomers Have Left the Buildingnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 13</p> <p>At a recent conference, the typical Big Crew Change mantra was often repeated.&nbsp; This pundit has made the same statement often as well.</p> <p>One member of the audience offered the view that the Baby Boomers have already exited.&nbsp; He argued that the oldest in his staff was approximately 35.&nbsp; This makes sense as the industry has been discussing this in the <i>present tense</i> for some time.</p> <p>The Baby Boom generation is usually defined as those post World War II babies born between 1946 and 1964.[i]&nbsp; As of this writing, this makes the oldest 69 and the youngest 51.</p> <p>The recent slump is likened to the sharp crude oil slumps such of 1985-86, 1997-98, 2000-01 and 2008-09.[ii]&nbsp; In all cases, not only was there a Reduction in Force (RIF) but significant reduction in the number of new entrants to the oil and gas workforce.</p> <p>As shown in the following graphic from the Bureau of Labor Statistics, the Seasonally Adjusted employment figures for the industry (oil and gas extraction, NAICS Code 211) suggests significant shrinkage over the working career of the Boomers.[iii]</p> <p>Some percentage of the individuals subject to RIFs did not return after prolonged downturns.&nbsp; By necessity, they found other career paths.</p> <p><img alt="The Boomers Have Left the Building" src="/content/dam/Pennenergy/online-articles/2015/July/Boomers%201.JPG"></p> <p>Boomers at the tail end (born after 1955) most likely did not enter the oil and gas workforce at all.&nbsp; This is supported by the 2005 World Petroleum study that found:</p> <p style="margin-left: 40px;">The average age of the staff in E&amp;P is 50 years</p> <p style="margin-left: 40px;">The industry has lost 1.1 million employees since 1981</p> <p style="margin-left: 40px;">40-50 percent will retire in five years (<i>circa 2010</i>)[iv]</p> <p>&nbsp;</p> <p>These data suggests that the Baby Boomers may have effectively left the industry already.&nbsp; If this premise is correct, current conventional wisdom regarding the Big Crew Change may find some companies unprepared for the Boomer’s Final Act.</p> <p>For example, according to one 2015 source, 50% of the current workforce will retire in the next 10 years.[v]&nbsp; Asymptotically this leaves a very few to transfer whatever knowledge is deemed to lie with this demographic.</p> <p>Planning an Encore from retired Boomers may be a Fool’s Errand.&nbsp; Many may chose not to leave the golf course.</p> <p>Play writers refer to the final act of a play as the Catastrophe.[vi]&nbsp; Hopefully, your knowledge transfer program goes better than that.</p> <h2 style="text-align: center;"><b>What is your organization’s plan to transfer the Boomer’s knowledge?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.investopedia.com/terms/b/baby_boomer.asp">http://www.investopedia.com/terms/b/baby_boomer.asp</a><br> [ii]&nbsp; <a href="http://fingfx.thomsonreuters.com/2015/02/05/1612277de1.pdf">http://fingfx.thomsonreuters.com/2015/02/05/1612277de1.pdf</a><br> [iii]&nbsp; <a href="http://data.bls.gov/pdq/SurveyOutputServlet">http://data.bls.gov/pdq/SurveyOutputServlet</a><br> [iv]&nbsp; <a href="http://www.world-petroleum.org/docs/docs/speeches/wpc%20Presentation%20the%20Aging%20Workforce%202.swf">http://www.world-petroleum.org/docs/docs/speeches/wpc%20Presentation%20the%20Aging%20Workforce%202.swf</a><br> [v]&nbsp; <a href="http://info.drillinginfo.com/the-big-crew-change-infographic/">http://info.drillinginfo.com/the-big-crew-change-infographic/</a><br> [vi]&nbsp; <a href="http://www.playwriting101.com/chapter03">http://www.playwriting101.com/chapter03</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/07/the_boomers_havelef.html2015-07-07T20:34:00.000Z2015-07-07T20:38:42.832ZNew Systemic Realitiesnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 12</p> <p>In the last edition, we raised the possibility that the risk distribution curve models many use may be fatality flawed.&nbsp; If this argument has merit, then Systemic Risk management as practiced by many have exposures that can lead to unwelcome surprises.</p> <p>Moreover, in this series as well as other publications we have argued that the <b>R B C</b> model has value managing the fluid situations we find ourselves in today.[i]&nbsp; Mathematically, the <b>R</b>elationships variable is latent and therefore not directly observable.[ii]</p> <p>This suggests that the risk frequency distribution is a function of <b>B</b>ehavior and/or <b>C</b>onditions variables.&nbsp; At the risk of oversimplifying complexity, we can focus on <b>C</b>onditions when seeking to reveal the shape of our risk curve.&nbsp; We can make this assumption because <b>B</b>ehavior often follows <b>C</b>onditions.[iii]</p> <p>For example, the level of training is a function of <b>C</b>onditions. &nbsp;A placard at the former Naval Fighter Weapons School read, “Under pressure, you do not rise to the occasion; rather you sink to your level of training.”[iv]</p> <p>We will need to assess the <i>sum total </i>of the <b>C</b>onditions <i>variables</i> as the foundation of our <b>I</b>ndividual <b>R</b>isk <b>P</b>robability <b>D</b>istribution (IRPD).&nbsp; In one sense this makes our task easier since we can eliminate the <b>B</b>ehavior set of variables.</p> <p>However, <b>C</b>onditions may include: Circumstances, Capability, Culture and the Environment.[v]&nbsp; For a large project with multiple economic actors and an even higher population of individuals, the resulting <b>Conditions Matrix</b> may be large and complex with many elements.</p> <p>Therefore, a simple Conditions Matrix graphic or table may not be a sufficient method to understand the IRPD.&nbsp; In these cases risk mitigation models may require a set of <i>difference equations</i> to better understand the exposures.[vi]</p> <p>As we have noted that within the industry Culture of Safety, there exists thousands of organization Cultures of Safety; this is true with IRPDs as well.[vii]&nbsp; Moreover, each project may have its own IRPD.</p> <p>An IRPD may have a “Fat Tail” as described previously.[viii]&nbsp; If this is the case, the risk associated with that particular activity must be addressed differently than if the IRPD has a more statistically Normal Distribution.</p> <p>Big Data proponents suggest that the data should define the problem.&nbsp; We can argue the same model here.</p> <p>Let the <b>C</b>onditions you find determine the IRPD.&nbsp; You may be surprised that the curve fit with a Normal Distribution is poor.&nbsp; Moreover, guard against statistical techniques that enhance fitness or reduce data fidelity.</p> <p>For example, if straight line fit is poor in some case an exponential curve will show better data fit.[ix]&nbsp; While the resulting graph may be visually pleasing, it may mask hidden dangers.</p> <p>In the rush to meet deadlines and financial metrics, we re-purpose materials frequently.&nbsp; Often this business model is satisfactory and the most cost effective.&nbsp; However, each IRPD should be developed on the specific merits (<b>C</b>onditions) of that project or activity.</p> <h2 style="text-align: center;">&nbsp;</h2> <h2 style="text-align: center;"><b>How does your organization address the new systemic risk realities?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; Shemwell, Scott M. (2012, November 19). What a Difference a Year Makes. <u>Governing Energy</u>. PennEnergy.<br> [ii] &nbsp;_______ (2015). <u>Structural Dynamics: Foundation of Next Generation Management Science</u>. pp. 56, 57. Houston: RRI Publications. <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0</a><br> [iii]&nbsp; _______ (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. p. 46 Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.<br> [iv]&nbsp; <a href="http://www.eremedia.com/tlnt/why-winners-win-in-the-end-its-all-about-the-training">http://www.eremedia.com/tlnt/why-winners-win-in-the-end-its-all-about-the-training</a><br> [v] &nbsp;Shemwell, Scott M. (1996). p. 47.<br> [vi]&nbsp; <a href="https://ccrma.stanford.edu/~jos/fp/Difference_Equation_I.html">https://ccrma.stanford.edu/~jos/fp/Difference_Equation_I.html</a><br> [vii] &nbsp;Shemwell, Scott M. (2015, April 7). How Can Humans Effectively Manage Increasingly Complex Systems? <u>Deep Space Deep Ocean: Aramco Technology and Operational Excellence Forum</u>.&nbsp; The Woodlands.<br> [viii]&nbsp; _______ (2012, June 8). Fat Tail. <u>Governing Energy</u>. PennEnergy.<br> [ix]&nbsp; <a href="http://www.qsm.com/faq/poor-curve-fit-actual-defect-data">http://www.qsm.com/faq/poor-curve-fit-actual-defect-data</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/06/new_systemic_realiti.html2015-06-18T18:58:00.000Z2015-06-18T19:03:12.556ZFat Tailnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 11—June 8, 2015</p> <p>Alan Greenspan, the former chairman of the Federal Reserve Board famously once quipped about “irrational exuberance” in the equity markets of the dot.com era.[i]&nbsp; Turns out, he was right!</p> <p>In his recent book, he develops an interesting perspective regarding the risk management techniques that the finance industry used in the lead up to the 2008 financial collapse; arguably even more destructive than the Great Depression of 1929.[ii]&nbsp; One risk mitigation model challenged is the <i>high consequence—low probability</i> model often used to describe Macondo like incidents.</p> <p>If one looks at a statistical normal distribution, there is a symmetrical shape to the so called “Bell curve” with the tails, or likelihood of an event occurring under that area of the curve relatively small or virtually nil.&nbsp; The following graphic depicts this probability distribution.</p> <p><img width="448" height="253" src="/content/dam/Pennenergy/online-articles/2015/June/Shemwell%20June%201.JPG">[iii]</p> <p>However, what if the probability of an incident is not statistically normal?&nbsp; If the likelihood of an incident fits another distribution curve, the probability of a <i>high consequence—low probability</i> incident may not be as infrequent as believed.</p> <p>The so-called “Fat Tail” suggests that the probability of an incident or event can move beyond 3 Standard Deviations.[iv]&nbsp; This is graphically depicted below.</p> <p><img src="/content/dam/Pennenergy/online-articles/2015/June/Shemwell%20June%202.JPG">[v]</p> <p>Chairman Greenspan challenged the conventional wisdom of the financial markets, expressing concern that Black Swan events may not be as rare as believed.&nbsp; Perhaps, the energy sector should challenge its conventional bell curve based risk models as well.</p> <p>If risk mitigation strategies are designed to address probability distributions that are unlikely representations of real world situations, they may not be providing adequate assurances that organizational strategies are well founded.&nbsp; High Reliability Management suggests that vigilance regarding possible failure scenarios is fundamental to Organizational Health.[vi]</p> <p>Part of that vigilance may include reconsidering the size of probability distribution tails. &nbsp;Changes in strategy and operations may be required to better address the likelihood and impact on <i>high consequence</i> incidents whose probability may not be as <i>low</i> as many believe.</p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>How does your organization update its Risk Management process?</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://en.wikipedia.org/wiki/Irrational_exuberance">http://en.wikipedia.org/wiki/Irrational_exuberance</a><br> [ii]&nbsp; Greenspan, Alan. (2013). <u>The Map and the Territory: Risk, Human Nature, and the Future of Forecasting</u>. Penguin: New York.<br> [iii]&nbsp; <a href="http://nationalpainreport.com/wp-content/uploads/2013/10/joy-selak-chart-500x297.jpg">http://nationalpainreport.com/wp-content/uploads/2013/10/joy-selak-chart-500x297.jpg</a><br> [iv]&nbsp; <a href="http://www.investopedia.com/terms/t/tailrisk.asp">http://www.investopedia.com/terms/t/tailrisk.asp</a><br> [v]&nbsp; <a href="http://www.cdc.gov/ophss/csels/dsepd/ss1978/lesson2/images/figure2.10.jpg">http://www.cdc.gov/ophss/csels/dsepd/ss1978/lesson2/images/figure2.10.jpg</a><br> [vi]&nbsp; Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. (p. 47). New York: Xlibris.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/06/fat_tail.html2015-06-08T17:37:00.000Z2015-06-08T17:43:17.188ZBounding the Boundlessnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 10</p> <p>One of the difficulties of systemic risk management is to put a boundary or constraints around the problem.&nbsp; This is a major aspect of framing the initial challenge one is trying to solve.</p> <p>One assertion about weather systems is the so-called “butterfly effect” whereby a butterfly flapping its wings in Brazil is one of the causal events for storms in Texas later.”[i]&nbsp; Additionally, economists define an <i>externality</i> as positive or negative economic consequence experienced by unrelated third parties.[ii]</p> <p>While the butterfly in Brazil most likely has no impact on the weather a continent away, externalities are common.&nbsp; For example, pollution released form industrial complexes can impact local residents even if they are not employed by that firm or even work in the sector.[iii]</p> <p>Systemic risk management is a function of<i> Behavioral Economics</i>, the decision making model that incorporates societal, cultural, emotions and other human biases into the process as opposed to the classic <i>rational economic actor</i> theory.[iv]&nbsp; The holistic nature of systems analysis presents the problem of the title.</p> <p>Culture of Safety driven systems may include humans, machines, multiple processes and the environment.[v]&nbsp; None of these may act with economic rationality.&nbsp; In fact, risk management systems such as the Bowtie recognize possible multiple points of failure and the necessity of redundant and <i>systemically removed</i> barriers and incident management processes.</p> <p>By systemically removed we mean an exogenous variable or one outside and not dependent on the system.&nbsp; For example, redundancy may not remove the system dependencies, i.e., multiple sets of rams on the Blowout Preventer.&nbsp; While one may not fail, if all do for a variety of reasons, the system is compromised.&nbsp; The open hole bridging model is an exogenous self-killing of the wellbore independent of the BOP.[vi]&nbsp; However, both are dependent on the quality of the well and reservoir models and in this sense are within model boundaries.</p> <p>The Two Key Solution is an example of systemically removed economic actors.&nbsp; Two physically separate and independent decision makers must agree before a decision it taken.[vii]&nbsp; This works unless there is a level of collusion between the two, in which case they are within system boundaries as well.</p> <p>While the butterfly may not be responsible for server weather, system planners must thoroughly assess the components of the system and their interactions.&nbsp; When externalities impact a system, they become endogenous within a newly defined system.</p> <p>The R B C model is a useful tool helping the systemic modeler to define where logical and realistic boundaries exist.[viii]&nbsp; A boundary is a <b>R</b>elationship in an environment or set of <b>C</b>onditions, exhibiting <b>B</b>ehaviors.</p> <p>When these behaviors are meaningful, they must be considered in the systems analysis.&nbsp; A Sensitivity Analysis may help shed light on these boundary relationships and updated according to changes.</p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>How does your organization bound your physical, organizational and virtual systems?</b></h2> <p style="text-align: center;">&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.livescience.com/17455-butterfly-effect-weather-prediction.html">http://www.livescience.com/17455-butterfly-effect-weather-prediction.html</a><br> [ii]&nbsp; <a href="http://www.investopedia.com/terms/e/externality.asp">http://www.investopedia.com/terms/e/externality.asp</a><br> [iii]&nbsp; Ibid.<br> [iv] Shemwell, Scott M. (2015). <u><a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">Structural Dynamics: Foundation of Next Generation Management Science</a></u>. Houston: RRI Publications.<br> [v]&nbsp; _______ (2014, August). <u>The Emergence of a Culture of Safety Online Class</u>. PennEnergy. <a href="http://ogjresearch.stores.yahoo.net/the-emergence-of-a-culture-of-safety-class.html">http://ogjresearch.stores.yahoo.net/the-emergence-of-a-culture-of-safety-class.html</a><br> [vi]&nbsp; <a href="http://www.bsee.gov/Technology-and-Research/Technology-Assessment-Programs/Reports/400-499/408AA/">http://www.bsee.gov/Technology-and-Research/Technology-Assessment-Programs/Reports/400-499/408AA/</a><br> [vii]&nbsp; Shemwell, Scott M. (2015, April 1). The Two Key Solution. <u>Governing Energy</u>. PennEnergy.<br> [viii] _______ (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/05/bounding_the_boundle.html2015-05-18T14:05:00.000Z2015-05-18T14:07:32.107ZOn Technologynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 9</p> <p>The 2015 Offshore Technology Conference (OTC) is being held amidst another sharp collapse in the crude oil price.&nbsp; As discussed in this blog and by others, reduction in force (RIF) or layoffs are underway and may continue.&nbsp; Moreover, industry restructuring continues as the sector seeks the new economic equilibrium.</p> <p>Mandates to reduce costs abound; however, along with these directives is the superior commandment, “do not compromise safety, compliance or operational performance.”&nbsp; Process transformation, i.e., a more efficient supply chain, cannot be accomplished by force of will alone.</p> <p>Implementing a Culture of Safety, assuring Compliance and Risk Mitigation as well as maintaining and even enhancing Operational Performance require appropriate enabling technologies.&nbsp; While information technology (IT) has long been a process change enabler, other technologies such as those used by the risk mitigation Bowtie model are required.&nbsp; The model has three basic components:</p> <p style="margin-left: 40px;">Prevention Controls<br> Business Upset or Unplanned Incident<br> Recovery including Escalation Processes[i]</p> <p>For example, certain technologies enable products and solutions to prevent a safety related incident such as a fire and others used to mitigate the impact and control the result of a possible incident.&nbsp; In our complex industrial world, technologies of all types are central to Risk Mitigation strategies.</p> <p>Moreover, technological advancement is accelerating and dramatically changing the way we do business.[ii]&nbsp; The challenge of the Convergence of Exponentials is not just the understanding of the technological rate of advancement, but the effective management of this innovation to add business value.[iii]</p> <p>The OTC will showcase new technologies and vendors will hawk their wares.&nbsp; The challenge is to harness these capabilities in the current market conditions while meeting the covenants of <i>not compromising safety, compliance or operational performance</i>.</p> <h2 style="text-align: center;"><b>How does your organization take full advantage of new technologies?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.skybrary.aero/index.php/Bow_Tie_Risk_Management_Methodology">http://www.skybrary.aero/index.php/Bow_Tie_Risk_Management_Methodology</a><br> [ii]&nbsp; <a href="http://www.forbes.com/sites/gregsatell/2013/04/02/4-ways-in-which-technology-is-transforming-business/">http://www.forbes.com/sites/gregsatell/2013/04/02/4-ways-in-which-technology-is-transforming-business/</a><br> [iii]&nbsp; Shemwell, Scott M. (2015, April 23). Titans of the 1940s Today. <u>Governing Energy</u>. PennEnergy.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/05/on_technology.html2015-05-04T18:11:00.000Z2015-05-04T18:56:24.315ZTitans of the 1940s Todaynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 8</p> <p>Re-watching the 2013 movie, ”The Challenger (Disaster)” I was struck by Richard Feynman’s response to a comment, that with 2.5 million parts in the Space Shuttle the Presidential Commission on the Space Shuttle Challenger Accident may never find an answer.[i]</p> <p>“2.5 million, small potatoes. &nbsp;Really, look I don't know much about space rockets but I know a little about probability; something I developed called <b><i>path integral formulation</i></b>—its quantum mechanics. &nbsp;Basically, what it means is you can figure out the probability of something occurring not just when you got 2.5 million events but an infinity of possibilities. &nbsp;Over large, the number of cause will pass for whatever happened to Challenger an explanation can be found. &nbsp;What we doing here if we don't think it’s possible?”[ii]</p> <p>Path Integral Formulation or the sum of all possibilities simply put:</p> <ol> <li>Consider all possible paths for quantum particles traveling from one point another including nonlinear paths,</li> <li>Place an “absolute value” type of number for each path and finally,</li> <li>The sum of all possible paths describes the probability of a particle at point B at a given time—“a path integral or sum over histories.”[iii]</li> </ol> <p>&nbsp;</p> <p>Clearly, there is more to this quantum mechanics probability theorem than can be stated herein, nor is the expertise of the author and his decades old Bachelor in Physics degree able to address anything but the highest level review of Dr. Feynman’s solution.</p> <p>However, it appears that this construct has merit in our classical physics world of safe operations.&nbsp; As with another 65 year old hypothesis, Requisite Variety, the argument made is that our sophisticated, automated decision making systems must be able to address all possible failure paths that a 2.5 million parts or more machine (system) may generate.[iv]</p> <p>These hypotheses dating back to the time of this author’s birth may hold the key to 21<sup>st</sup> century complex systems management.[v]&nbsp; Moreover, the von Neumann (electronic computing) Architecture, circa 1946 is the basis of the current crop of Smart Devices.[vi]</p> <p>While constrained by classical or Newtonian physics, massively high performance, economic decision support systems should be able to asymptotically approach Requisite Variety or Path Integral Formulation solutions.&nbsp; Today’s managerial and technical systems enable these models.</p> <p>Unknowable 2.5 million part systems are from a bygone era.&nbsp; Moore’s Law is now 50 years old.[vii]&nbsp; Originally applied to semiconductor performance, it has been extended to other technologies and processes.[viii]&nbsp; Other systemic laws apply as well.</p> <p>Without Moore’s Law the number of components and their functions even if advanced (low slope) linearly during the 30 year life of the Space Shuttle of then to the current sophisticated systems would have many more parts and associated functions.&nbsp; With the possible exception of the International Space Station this has not happened.</p> <p>Almost 1,300 Boeing 777 (introduced 1995) are in service and each has about 3 million parts provided by about 500 different contractors and suppliers.[ix][x]&nbsp; Over 250 Boeing 787 Dreamliner (introduced 2011) aircraft are in service and each has about 2.3 million parts.[xi]&nbsp; Collectively, for these two aircraft alone, almost 4.5 billion components are in service every day.</p> <p>Granted, this may not be a direct comparison—apples to apples, so to speak.&nbsp; However, the analogy is that the level of complexity since 1988 has dramatically increased and society must <i>understand</i> this in order to manage complex systems.</p> <p>In 2004, the author first posited that the <i>Convergence of Exponentials</i> would lead to significant change.[xii]&nbsp; In 2009, this construct was further refined and further advanced over the intervening years.[xiii]&nbsp; These converging axioms include:</p> <ul> <li><b>Moore’s Law</b>—the number of transistors (power) on a microprocessor doubles every 18 months</li> <li><b>Metcalfe’s Law</b>—usefulness of a network equals the square of the number of users</li> <li><b>Gilder’s Law</b>—bandwidth rises three times faster than the power of the computer</li> </ul> <p>&nbsp;</p> <p>The effect of this convergence in 2015 and beyond is that the<i> Velocity of Information</i> (similar to the economic theory, Velocity of Money, it is the frequency at which information is exchanged) is dramatically increasing.&nbsp; This effectively enables modern management decision making to approach the criteria set forth by Requisite Variety and Path Integral Formulation.&nbsp; Effectively, the management tools are available today as technology enables the thinking of 1940s leadership.</p> <p><img width="510" height="388" src="/content/dam/Pennenergy/online-articles/2015/April/Shemwell%20Pic%20April.JPG"></p> <p>The Internet of Things (connectivity among a massive number of smart devices) will continue to present challenges to management to assure safe, environmentally proactive and productive operations.&nbsp; One can argue that the tools to manage this next iteration of the Convergence of Exponentials are readily available.</p> <h2 style="text-align: center;"><b>Does your management say it can’t be done and if so what is your response?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.imdb.com/title/tt2421662/">http://www.imdb.com/title/tt2421662/</a><br> [ii] <a href="http://maximusandme.blogspot.com/2013/11/the-challenger-disaster.html">http://maximusandme.blogspot.com/2013/11/the-challenger-disaster.html</a><br> [iii] <a href="http://www.einstein-online.info/spotlights/path_integrals">http://www.einstein-online.info/spotlights/path_integrals</a><br> [iv] Shemwell, Scott M. (2014, December 11). Requisite Variety. <u>Governing Energy</u>. PennEnergy.<br> [v] <a href="http://en.wikipedia.org/wiki/Path_integral_formulation">http://en.wikipedia.org/wiki/Path_integral_formulation</a><br> [vi] Shemwell, Scott M. (2005). Disruptive Technologies—Out of the Box <u>Essays on Business and Information Technology Alignment Issues of the Early 21st Century</u>. New York: Xlibris. p. 127.<br> [vii] <a href="http://www.forbes.com/sites/roberthof/2015/04/17/at-50-moores-law-has-only-started-to-disrupt-everything-we-do/">http://www.forbes.com/sites/roberthof/2015/04/17/at-50-moores-law-has-only-started-to-disrupt-everything-we-do/</a><br> [viii] Shemwell, Scott M. (2015, March 20). Drilling Moore. <u>Governing Energy</u>. PennEnergy.<br> [ix] <a href="http://globalfastenernews.com/main.asp?SectionID=26&amp;SubSectionID=39&amp;ArticleID=10822">http://globalfastenernews.com/main.asp?SectionID=26&amp;SubSectionID=39&amp;ArticleID=10822</a><br> [x] <a href="http://en.wikipedia.org/wiki/Boeing_777">http://en.wikipedia.org/wiki/Boeing_777</a><br> [xi] <a href="http://787updates.newairplane.com/787-Suppliers/World-Class-Supplier-Quality">http://787updates.newairplane.com/787-Suppliers/World-Class-Supplier-Quality</a><br> [xii] Shemwell. Scott M. (2004, January 31). Desperately Seeking Technology: 21st Century Needs of the Downstream, Petrochemicals, and Retail Petroleum Industry Segments. <u>Presentation to the Intel global sales force</u>. Anaheim.<br> [xiii] _______________ (forthcoming). <u>Rapid Response Management: Thriving in the New World Order</u>. Houston: RRI Publications.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/04/titans_of_the_1940s.html2015-04-23T17:52:00.000Z2015-04-23T17:59:03.231ZThe Two Key Solutionnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 7</p> <p>In our book published last year, the late Dutch Holland penned a section, <i>Joint Authorization, e.g., Two-Key Requirements</i>.[i]&nbsp; The fundamental premise of the <i>two key requirement </i>solution demands that two separate but equal decision makers be spatially or otherwise disconnected so that only when both individuals agree can a high consequence operation be undertaken.&nbsp; In practice, nuclear launch officers are physically distant so that one individual cannot activate the launch system by turning both keys simultaneously.</p> <p>This requirement makes a lot of sense for an activity that begins a physical process such as a missile launch.&nbsp; Dr. Holland includes other process examples such as planning, decision escalation process and management of certain types of changes.[ii]</p> <p>It is less clear how this requirement would work with other high criticality activities such as when one pilot leaves the flight deck of a commercial airliner.&nbsp; However, in the aftermath of the crash of Germanwings Flight 9525 where it is alleged that a suicidal co-pilot refused to allow the Captain back to the flight deck by locking the door, the concept may have some merit.[iii]</p> <p>Secure cockpits, one flight attendant in the cockpit when one pilot is out, using the drink cart to physically block the door when it is open and passengers restraining a malcontent passenger all make sense in our terror consumed world.&nbsp; While making sure that two individuals are always in the cockpit assures that if the remaining pilot becomes incapacitated the other person can at least open the door.&nbsp; However, what happens if a deranged pilot attacks and subdues that flight attendant?</p> <p>This author first addressed the issue of rogue behavior of one or a small number and its potential huge impact on society in 1999.[iv]&nbsp; This subject was developed in greater detail as it relates to the current issue facing complex organizations in the referenced book section titled, T<i>he power of a single player: One man, one disaster</i>.[v]</p> <p>While no system is foolproof and certainly all are at risk to a determined foe, the 21<sup>st</sup> century response to a two key requirement might be based on technology.&nbsp; Biometrics, such as retinal scan, facial recognition, etc. may be a simple and economic solution.</p> <p>Air crew members can easily “log in” to an aircraft when they board it.&nbsp; If all members are identified by such a system, any two could open the door if necessary.&nbsp; This system could not be overridden by anyone in the cockpit.</p> <p>The obvious question, “Could a potential terrorist force crewmembers to use their biologics to open the door?&nbsp; Perhaps, but it is less likely.&nbsp; Passengers have a vested interest in the safe operation of an aircraft.</p> <p>Passengers are a routine barrier to potential aircraft incidents.&nbsp; If your age is over 12-15 (depending on carrier) and physical capable of performing the process of removing the emergency exit door you are authorized to sit in seats next to the emergency exits. [vi] &nbsp;&nbsp;That passenger is effectively deputized to be part of the flight crew. &nbsp;And who would forget the heroics of the passenger of United Flight 93.[vii]</p> <p>History has shown that when commotion arises in the cabin, passenger will step forward and intervene.[viii]&nbsp; This mitigates the risk that a terrorist can “force” the cabin crew to override a bio-two key.</p> <p>The upstream oil and gas industry uses the Bowtie method to assess risks, establish barriers to the risks and ascribes reactions to the top event (suicidal pilot).[ix]&nbsp; A new barrier for all industries operating critical heavy equipment may be a bio-two key.</p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>Do your organizational processes require two keys and what are they?</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. (pp. 55-59). New York: Xlibris.<br> [ii] Ibid.<br> [iii] <a href="http://www.latimes.com/world/la-fg-german-jet-crash-door-20150325-story.html#page=1">http://www.latimes.com/world/la-fg-german-jet-crash-door-20150325-story.html#page=1</a><br> [iv] Shemwell, Scott M. (2011). <u>Essays on Business and Information II: Maximizing Business Performance</u>. (pp. 214-215). New York: Xlibris.<br> [v] Holland, Winford “Dutch” E. and Shemwell, Scott M. (pp. 35-36.)<br> [vi] <a href="http://en.wikipedia.org/wiki/Exit_row">http://en.wikipedia.org/wiki/Exit_row</a><br> [vii] <a href="http://www.history.com/topics/flight-93">http://www.history.com/topics/flight-93</a><br> [viii] <a href="http://www.cnn.com/2015/03/17/travel/united-airlines-flight-unruly-passenger/">http://www.cnn.com/2015/03/17/travel/united-airlines-flight-unruly-passenger/</a><br> [ix] <a href="http://www.sciencedirect.com/science/article/pii/S0304389405003808">http://www.sciencedirect.com/science/article/pii/S0304389405003808</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/04/the_two_key_solution.html2015-04-01T19:38:00.000Z2015-04-01T19:43:25.007ZDrilling Moorenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 6</p> <p>The Wall Street Journal recently reported that Mark Hill, VP Sales, North America for Allegro Development (software firm) suggested that rapid reduction in the time and cost to drill and complete a well coupled with the increased volume of hydrocarbon recovered was the industry version of Moore’s Law.[i]</p> <p>Coined by Gordon Moore (former Intel CEO) circa 1970, it suggests that computer processing power will double every two years.[ii]&nbsp; It was later revamped to read, “Double every 18 months.”[iii]</p> <p>Not as well known, Moore’s Second Law, aka Rock’s Law indicates that while the cost of a unit of computing power falls, the capital cost to the semiconductor manufacturer increases exponentially.&nbsp; This stands to reason as these companies must invest in R&amp;D, new facilities, workforce competencies, etc.[iv]</p> <p>So if the energy industry is now subject to Moore’s Law what does that mean?&nbsp; If the (economic) marginal cost of drilling one foot or the marginal cost of producing one barrel of oil is falling in accordance with this model, then the <i>capital</i> required to enable these price points will be substantial.</p> <p>The semiconductor industry survives and thrives as their “chips” are now everywhere.&nbsp; SEMI (global industry association) predicts that sales of semiconductor manufacturing equipment will increase from $31.8 billion (actual) in 2013 to $43.7 billion (forecast) in 2016.[v]</p> <p>One would expect that those making these levels of capital expenditures in semiconductor production are aggressively managing costs.&nbsp; One way the sector manages costs is through automation.&nbsp; For example, production is highly automated including the visual inspection process.[vi]</p> <p>In 1973 and 1979, OPEC as the global swing producer caused “oil shocks” as petroleum supplies were withheld from the market.[vii]&nbsp; Beginning in late 2014, that same consortium, led by Saudi Arabia does not appear to be having the same success.[viii]</p> <p>The Mobility revolution is dramatically changing our world.&nbsp; Legacy semiconductor and software sector economic actors are changing and new entrants abound.&nbsp; These technologies are enabling the energy sector in new ways as well.</p> <p>In our 2004 Roadmap to Enterprise Optimization study, we paraphrased one senior executive’s comments, “<i>The digital oil field is getting more digital and less oil</i>.”[ix]&nbsp; A decade later, this statement is confirmed.</p> <p>The semiconductor and its customer sector, hardware and software firms demand and pay high salaries for the managerial, technical and financial (among others) talent and it competes for these individuals at the global level.&nbsp; The energy industry is similar.</p> <p>Both of these global sectors depend on talent and a high level of workforce competency.&nbsp; As such, traditional approaches to cyclical downturns such as massive reductions in the workforce may not be the best approach.</p> <p>This is not to suggest that eliminating redundancies, reorganizing and restructuring are not appropriate tools, they are.&nbsp; However, investment in <i>Human Capital </i>and the tools that enable the maximum return on investment from this <i>capital</i> are also appropriate.</p> <p>The demand for petroleum and derivative products is expected to grow dramatically (by volume) between today and 2040, largely driven by growth in population to approximately 9 billion people and their demands for increased standards of living.&nbsp; Annual growth in oil is slightly less than one percent (.8%) and natural gas 1.6%.[x]&nbsp; Supply growth is expected to be led by newer extraction technologies as well as deepwater, tight oil and natural gas liquids.[xi]</p> <p>For the energy extraction sector, Rock’s Law suggests that the capital investment necessary will be in new technologies and <i>Human Capital</i>.&nbsp; Moreover, it is likely that Mobility and automation will play major roles in future industry funding models.</p> <p>The industry can also capitalize on knowledge other sectors have and will continue develop in Mobility and automation.&nbsp; This should reduce the associated costs and risks and is similar to the approach being taken in the Culture of Safety, Human Factors and High Reliability.</p> <p>Inherent to all components of the Capital Expenditure Matrix is <i>Human Capital</i>.&nbsp; It is this investment that will have the highest return.[xii]&nbsp; Fundamentally, <i>Human Capital</i> is the 21<sup>st</sup> century equivalent of 20<sup>th</sup> century requirements for large industrial economies of scale.</p> <p>The industry may be undergoing a structural change.&nbsp; Is Shale and its extraction methods the industry equivalent of the integrated circuit?&nbsp; One suspects it might be.&nbsp; If this hypothesis is correct, surviving firms will be making dramatic changes as predicted by Structural Dynamics.[xiii]</p> <p>&nbsp;</p> <h2 style="text-align: center;"><b>What will your organization strategy be if oil prices do not return to previous levels?</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] Ridley, Matt. (2015, March 14-15). Fossil Fuels Will Save the World <i>(Really)</i>. <u>Wall Street Journal</u>. p. C1.<br> [ii] <a href="http://www.mooreslaw.org/">http://www.mooreslaw.org/</a><br> [iii] <a href="http://en.wikipedia.org/wiki/Moore's_law">http://en.wikipedia.org/wiki/Moore's_law</a><br> [iv] Ibid.<br> [v] <a href="http://www.semi.org/node/52451">http://www.semi.org/node/52451</a><br> [vi] <a href="http://www.sciencedirect.com/science/article/pii/S0166361514001845">http://www.sciencedirect.com/science/article/pii/S0166361514001845</a><br> [vii] <a href="http://chenry.webhost.utexas.edu/public_html/elephants/OilShock201979-Final.pdf">http://chenry.webhost.utexas.edu/public_html/elephants/OilShock201979-Final.pdf</a><br> [viii] <a href="https://consortiumnews.com/2015/01/13/behind-the-saudi-oil-price-gambit/">https://consortiumnews.com/2015/01/13/behind-the-saudi-oil-price-gambit/</a><br> [ix] Shemwell, Scott M. &amp; Murphy, D. Paul. (2004, September). Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation. Authors.<br> [x] <a href="http://cdn.exxonmobil.com/~/media/Reports/Outlook%20For%20Energy/2015/2015-Energy-Outlook-Presentation.pdf">http://cdn.exxonmobil.com/~/media/Reports/Outlook%20For%20Energy/2015/2015-Energy-Outlook-Presentation.pdf</a><br> [xi] Ibid.<br> [xii] Shemwell, Scott M. (2012, March 16). Millennials Arrive. Governing Energy. PennEnergy.<br> [xiii] _______ (2015). <u>Structural Dynamics: Foundation of Next Generation Management Science</u>. Houston: RRI Publications. <a href="http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0">http://www.amazon.com/Structural-Dynamics-Foundation-Generation-Management-ebook/dp/B00U0JKMT0</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/03/drilling_moore.html2015-03-20T19:46:00.000Z2015-03-20T19:55:32.717ZCultural Collisionnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 5</p> <p>Energy industry pundits, including this one have extolled the aerospace safety culture as one to emulate.&nbsp; It is true that the lessons learned from that sector as well as others can add value and perhaps prevent similar incidents by others.</p> <p>Many readers may be aware that on January 9, 2015, United Airlines sent a safety warning message to its more than 12,000 pilots.&nbsp; The basic thrust of the message, “<i>the common thread with all of these [incidents] is that they were preventable</i>.” [i]</p> <p>According to the Wall Street Journal, United’s safety concerns are rooted in a number of internal matters.&nbsp; Briefly, performance variables comprise both human interaction and technical flying skills.</p> <p style="margin-left: 40px;"><b>Behavioral</b></p> <p style="margin-left: 40px;">Increased retirements as well as significant new hiring<br> Lack of respect for the Captain’s authority<br> Shorten Training<br> Integration of cultures following the merger with Continental<br> Asset class (air craft types) integration after merger</p> <p>The memo apparently states that these behavioral issues pose a, “<i>significant risk to the operation</i>.”&nbsp; These safety issues are largely cultural in nature and reflect changing societal norms as well as the integration of two organizations with different cultures.</p> <p style="margin-left: 40px;"><b>Skills</b></p> <p style="margin-left: 40px;">Inflight emergency evasion<br> Landing with fuel reserves below minimum<br> Improper landing and takeoff procedures[ii]</p> <p>It appears that United should be able to address these safety related issues in-house.&nbsp; In other words, they do not depend on actions from government agencies, suppliers or customers to remedy the poor practices uncovered.</p> <p>Currently, the oil and gas industry is undergoing a structural transformation.&nbsp; As discussed in a previous blog, the commodity price trading range is at a step level change downward and may stay there for a long time.[iii]</p> <p>This puts increasing pressure on already strained field operations.&nbsp; Moreover, the workforce demographics are changing.&nbsp; The long awaited Big Crew Change is well underway as well as the changing dynamics with the arrival of the millennials.[iv]</p> <p>We have previously addressed cultural differences between operators and their supply chain partners.[v]&nbsp; The United memo points directly to <i>cross-cultural cockpit management</i> as a contributor to the corporation’s safety concerns.&nbsp; This is an important lesson for an industry that is restructuring and greatly depends on its supply chain.</p> <p>Moreover, both the airline and energy sectors are highly regulated with a major focus on safety and there does not appear to be a track record whereby regulators have reduced scrutiny during economic downturns.&nbsp; The more likely scenario is that the regulatory environment will remain strong and operations must adjust accordingly.</p> <p>The proactive approach that this airline’s leadership is taking is a ‘good practice’ that all industry economic actors should emulate and is in accordance with the first axiom of a Culture Safety—Leadership![vi]&nbsp; Understanding and addressing cultural collisions can lessen the chance of an actual collision.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How proactive is your organization’s leadership?</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of five books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.wsj.com/articles/united-sent-safety-warning-to-pilots-1424900742">http://www.wsj.com/articles/united-sent-safety-warning-to-pilots-1424900742</a><br> [ii] <a href="http://www.upi.com/Top_News/US/2015/02/28/United-Airlines-warns-pilots-after-major-safety-events-and-near-misses/5881425121949/">http://www.upi.com/Top_News/US/2015/02/28/United-Airlines-warns-pilots-after-major-safety-events-and-near-misses/5881425121949/</a><br> [iii] Shemwell, Scott M. (2015, January 22). Is it Different This Time? <u>Governing Energy</u>. PennEnergy.<br> [iv] _______ (2013, Fall). Millennials Take On Our Increasingly Complex World. <u>PennEnergy Energy<i>Workforce</i></u>. pp. 7-9.<br> [v] _______ (2014, November 7). Agile, Resilient, Sustainable Ecosystem. <u>Governing Energy</u>. PennEnergy.<br> [vi] <a href="http://www.therrinstitute.com/assets/cos-maturity-model---2d-edition---adobe-online.pdf">http://www.therrinstitute.com/assets/cos-maturity-model---2d-edition---adobe-online.pdf</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/03/cultural_collision.html2015-03-03T20:58:00.000Z2015-03-03T21:04:15.961ZPositively Negativenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 4</p> <p>All of us are probably aware the people can become complacent in routine situations, no matter how fraught with risk it might be.&nbsp; For instance, driving at higher than posted speeds on the Houston freeway system is routine—during the non-peak hours.&nbsp; Indeed, driving significantly below “traffic” speed can have its own consequences.</p> <p>So we become complacent and commute in a relatively dangerous situation on a daily basis.&nbsp; Usually, nothing happens and we arrive at our destination.</p> <p>Perhaps there is another perspective on this routine behavior.&nbsp; In his book, <i>Drift into Failure: From Hunting Broken Components to Understanding Complex Systems</i>, the author Sidney Dekker refers to a construct, The Normalization of Deviance.”[i]</p> <p>Put forth by Diane Vaughan who argued that risk is continuously constructed and renegotiated.&nbsp; In other words, potential dangers are acknowledged, rationalized and then accepted as the new normal.&nbsp; Under apparently similar circumstances the behavior continues.[ii]&nbsp; Each time the conduct is successful, the gap between the actual risk and the individual decision maker’s (or team) perspective of the risk growths.</p> <p>As this reinforcing behavior continues it is easy to see why the traffic speed ‘seems to’ continuously increase.&nbsp; Accidents only happen to the other guy!</p> <p>One can posit that we are not simply complacent but are active participants in the often dramatic changes in the “apparent” risk profile of a given activity.&nbsp; As the Type A individual is rewarded with each iteration; Atta Boy, bonus, promotion, etc. others may mimic this behavior.</p> <p>Moreover, the details that may cast doubt of the process viability often go unreported and perhaps unmeasured or even unknown.&nbsp; Thus the organization’s culture becomes inherently, even latently less risk averse.</p> <p>Readers may note that this blog has refers to latent variables previously.&nbsp; A Latent Variable is one that is not directly measureable but is inferred.&nbsp; Its behavior can only be measure through the observation of linked variable(s).&nbsp; The Structural Dynamics construct directly addresses how management can confront this quandary.[iii]</p> <p>Oil and gas operations are under tremendous cost and production pressure as of this writing.&nbsp; The specter of lower, sustained crude pricing is real.&nbsp; Natural gas commodity prices have been soft for years.</p> <p>The temptation of The Normalization of Deviance’s immediate rewards may induce organizations and even the industry to accommodate a level of risk that it does not believe it is accepting.&nbsp; In this game of musical chairs, the music may stop on your watch.</p> <p>This New Normal may undo a lot of hard fought stakeholder value gains.&nbsp; Guard against too much of a ‘can do’ attitude doing more with less.</p> <p style="text-align: center;">&nbsp;</p> <h2 style="text-align: center;"><b>How does your organization assure individual and team behaviors are not changing your acceptable risk profile?</b></h2> <p>&nbsp;</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] Dekker, Sidney. (2011). Drift into Failure: From Hunting Broken Components to Understanding Complex Systems. <u>Ashgate</u>.<br> [ii] Ibid.<br> [iii] Shemwell, Scott M. (2012, June). Structural Dynamics: The Foundation of Next Generation Management Science—βeta Version of the Construct. Version 1.0. <u>Author</u>.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/02/positively_negative.html2015-02-20T19:23:00.000Z2015-02-20T19:25:17.375ZTowards Zeronoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 3</p> <p>Mathematicians tell us that, “The distance between the curve and the asymptote tends to zero as they head to infinity.”[i]&nbsp; From the ancient Greek, Zeno we learn the ‘dichotomy’ paradox—the repeated division into two leads to an infinite number of steps to cover a finite distance to which one can never arrive.[ii]</p> <p>In 1997, this author introduced the construct of the Expected Value of Marginal Information (EVMI), which was defined as the (Expected value of the best decision with new information obtained at no cost), minus the (Expected value of the best decision without new information).&nbsp; Economist will know that this model has its roots in economic utility theory.[iii]</p> <p>Moreover, the late Nobel laureate R. H. Coase posited the hypothesis that the existence of the <i>firm</i> is justified when its internal set of transactions costs are less than the cost of using external resources.[iv]&nbsp; In this model, costs are not just monetary but the total cost of doing business—those economic costs including opportunity cost.</p> <p>What do these axioms have in common?&nbsp; In a word—<b>zero</b>!</p> <p>In our Fahrenheit world, we define zero degrees as the freezing point of water or 32 degrees.&nbsp; Even on the Kelvin scale, absolute zero is defined as the degree where there is minimal particle movement—approximately minus 459.69 degrees Fahrenheit.[v]&nbsp; True zero remains elusive.</p> <p>Therefore, we can expect that zero is an unobtainable value.&nbsp; However, the above examples suggest:</p> <ul> <li>In the physical and mathematical worlds systems tend towards a very small value</li> <li>The expected value of new information has real value even when it is very small</li> <li>Business models may drive transaction costs very low</li> </ul> <p>We raise these points, particularly the last two bullets to posit that in our physical and behavioral world the construct of zero is foundational.&nbsp; Another example, in the era of the Internet and mobility devices we have grown used to <i>free</i> data and information.</p> <p>Organizations that continually focus on lowering costs are well positioned to assure sustained operations and profit in an era where transaction costs are trending toward zero.&nbsp; By extension, this suggests that in our new economy, <i>pricing power</i> is limited and when strong it will not be sustainable.</p> <p>For most firms, a strategy to become and remain the <i>economic</i> <b>low cost producer</b> may be the best strategy.&nbsp; We use the term economic to reflect the sum total of all costs, monetary and other including human costs.</p> <p>Low cost producers historically have focused on the small details of the business.&nbsp; Much like High Reliability Organizations must focus on operational details.[vi]</p> <p>Today’s firms in the energy value chain are required to do both.&nbsp; Successful ones will return shareholder value.&nbsp; Others may face a more uncertain future.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How well is your organization positioned to be the low cost producer?</b></h2> <p><b>&nbsp;</b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.mathsisfun.com/algebra/asymptote.html">http://www.mathsisfun.com/algebra/asymptote.html</a><br> [ii] <a href="http://plato.stanford.edu/entries/paradox-zeno/">http://plato.stanford.edu/entries/paradox-zeno/</a><br> [iii] Shemwell, Scott M. (1997, September). The Economic Value of Timely Information and Knowledge, Key to Business Process Integration Across Boundaries in the Oil &amp; Gas Extended Value Chain. <u>Proceedings of the Gulf Publishing 3<sup>rd</sup> International Conference and Exhibition on Exploration &amp; Production Information Management</u>. Houston.&nbsp; Reprinted with permission<br> [iv] Shemwell, Scott M. (2002, February). Economic Theory Supports E-Business Model. <u>Executive Briefing: Business Value from Technology</u>.&nbsp; Reprinted in <a href="http://www.amazon.com/Scott-Shemwell/e/B00KNBEQS8">Essays on Business and Information II: <i>Maximizing Business Performance</i></a>. New York: Xlibris.<br> [v] <a href="http://dictionary.reference.com/browse/absolute+zero">http://dictionary.reference.com/browse/absolute+zero</a><br> [vi] Shemwell, Scott M. (2014). <u>Governing Energy: Organizational Governance—Issues of the 21<sup>st</sup> Century) 2012-2013 Edition</u>. Houston: RRI Publications. pp. 34-35. <a href="http://www.amazon.com/dp/B00NB8C91Q">http://www.amazon.com/dp/B00NB8C91Q</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/02/towards_zero.html2015-02-04T19:33:00.000Z2015-02-04T19:38:14.803ZIs it Different This Time?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 2</p> <p>There is a saying in Texas that goes something like, “This is not my first rodeo” meaning that we have been down this path before.&nbsp; For those who have made their careers in the upstream oil and gas sector, riding a bull may be tamer than adjusting to the ups and now downs of the crude commodity price points.</p> <p>Industry response includes organizational restructuring, reduction in force, divestitures and acquisitions, office consolidation and so on.&nbsp; Of course, these and other actions are currently underway.[i]</p> <p>Another refrain often heard in times of market chaos, “This time is different.”&nbsp; Not surprisingly, this statement is routine overstated or even false.[ii]</p> <p>However, there is an argument emerging that perhaps this time, the crude oil market drivers may be different.&nbsp; Pundits are positing that the North American shale oil revolution and its global potential are fundamentally new (different) economic drivers.[iii]&nbsp; A corollary position is that major historic suppliers of crude oil have launched a price war in an attempt to defend market positions.[iv]</p> <p>If one assumes that these two premises are correct (<i>over</i> supply driven), sustainability and/or attaining the position of low cost producer will determine success.&nbsp; Roughly, this argument goes that shale finding and production costs are higher.&nbsp; If that is the case shale and perhaps other unconventional sources may fade in the face of determined market actors.</p> <p>The counter position emerging is that shale and even production of heavy Canadian crude are actually the low cost producers.&nbsp; While still in flux, it is becoming increasingly apparent that shale oil production cost may be significant lower than previously believed.[v]</p> <p>Perhaps even less understood is the position Canadian heavy oil producers have that they can operate profitably at much lower prices.&nbsp; At a high level, this extraction process has a high capital cost (CAPEX) similar to building a downstream refinery (new ones have not been built in years but they are constantly upgraded) which is a process manufacturing facility.</p> <p>Existing heavy oil process manufacturing capital investments are already sunk cost—new ones on hold.&nbsp; Moreover, these facilities can have decade’s long production life with current cost around $35 per barrel or even less.[vi]&nbsp; This mirrors downstream production where cost management is a Key Performance Indicator.</p> <p>Additionally, engineering and service contract prices are falling in response to market realities.&nbsp; Finally, technology is credited with playing a significant role in the low breakeven price.[vii]</p> <p>Previous oil bust cycles are usually followed by market recovery.&nbsp; However, if the true industry production cost for unconventional crude is below $35 per barrel on a sustainable basis, then it may be <i>different this time</i>.</p> <p>There is a contrarian perspective to these hypotheses—this is just another cycle driven by over production and “this too will pass.”[viii]&nbsp; Time is the only variable that will determine whether there is a fundamental change in global crude markets or if this is simply one more boom—bust cycle.</p> <p>However, successful economic actors will not depend on the old oilman’s prayer, “Lord, give me one more boom and I promise not to screw it up this time.’’&nbsp; Those that help themselves will take charge and position their organizations accordingly.</p> <p>There has been a discussion for at least a decade or two that the great promise of Integrated Operations, aka Digital Oilfield was the evolution of the oilfield from one of a historic mineral extraction, high-risk set of activities to one of the <i>field as a factory</i>.[ix]&nbsp; In other words, process manufacturing.</p> <p>Global oil and gas markets are susceptible to more diverse, complex and integrated variables including geopolitical risks than addressed herein.&nbsp; However, if unconventional operators are the low cost producers, then the market game has fundamentally changed.</p> <h2 style="text-align: center;"><b>How is your company positioned if it really is different this time?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.ogfj.com/articles/2014/12/bp-to-spend-1b-on-restructuring-and-job-layoffs.html">http://www.ogfj.com/articles/2014/12/bp-to-spend-1b-on-restructuring-and-job-layoffs.html</a><br> [ii] <a href="http://www.nber.org/papers/w13882">http://www.nber.org/papers/w13882</a><br> [iii] <a href="http://www.voxeu.org/article/shale-oil-and-gasoline-prices">http://www.voxeu.org/article/shale-oil-and-gasoline-prices</a><br> [iv] <a href="http://www.marketwatch.com/story/can-saudis-beat-north-dakota-in-an-oil-price-war-2014-10-08">http://www.marketwatch.com/story/can-saudis-beat-north-dakota-in-an-oil-price-war-2014-10-08</a><br> [v] <a href="http://en.wikipedia.org/wiki/Oil_shale_economics">http://en.wikipedia.org/wiki/Oil_shale_economics</a><br> [vi] <a href="http://www.wsj.com/articles/as-oil-slips-below-50-canada-digs-in-for-long-haul-1421114641">http://www.wsj.com/articles/as-oil-slips-below-50-canada-digs-in-for-long-haul-1421114641</a><br> [vii] <a href="http://www.cnbc.com/id/102234051">http://www.cnbc.com/id/102234051</a><br> [viii] <a href="http://oilprice.com/Interviews/The-Real-Cause-Of-Low-Oil-Prices-Interview-With-Arthur-Berman.html">http://oilprice.com/Interviews/The-Real-Cause-Of-Low-Oil-Prices-Interview-With-Arthur-Berman.html</a><br> [ix] <a href="http://www.energistics.org/Assets/nov04ammsshemwell.pdf">http://www.energistics.org/Assets/nov04ammsshemwell.pdf</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/01/is_it_different_this.html2015-01-22T15:08:00.000Z2015-01-22T15:20:30.278ZReaffirmationnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 4 Number 1</p> <p>At the start of every new year many make so called New Year’s Resolutions.&nbsp; Losing weight, exercise more, stop smoking, be a better person are some of the more common and oft repeated declarations.</p> <p>Over the next few weeks, we will all be bombarded with weight loss and gym/exercise advertisements.&nbsp; This process begins every January and since advertisers are not in the habit of spending significant dollars year after year on <i>pitches</i> that do not work, one would surmise they are effective.&nbsp; This implies that a large number of consumers desire such products and services.</p> <p>Behavioral economics suggests that the <i>rational economic actor</i> may not be as lucid in his or her decision making process as once accepted.[i]&nbsp; Societal pressures, organizational culture and other more emotional factors often cloud human decisions.[ii]&nbsp; Could this be a root cause driving a high rate of resolution failure?[iii]</p> <p>How many of you work for organizations that issue New Year’s resolutions?&nbsp; One suspects the number is low.&nbsp; Why wouldn’t a collection of humans make the same pledges individuals typically aspire to?</p> <p>Perhaps it is good many firms do not acknowledge such goals since the resolution success rate less than 10 percent.[iv]&nbsp; However, one can argue that the Chairman’s annual Letter to the Shareholders is such an affirmation of the firm’s values and goals for the new fiscal year.</p> <p>The challenge of behavioral change is well documented.[v]&nbsp; Not surprising, without ongoing stimulus our good intentions of January fall by the wayside.&nbsp; Whether driven by an individual’s wish to improve their life or an organization’s desire to pursue a new direction, a continuous energy source is necessary to sustain behavioral change.[vi]</p> <p>Reflection on our past efforts coupled with renewed energy to attain new or even previous goals is a worthy effort.&nbsp; January 1 marks the annual milestone in continuing journeys.&nbsp; A periodic review and course correction, if necessary is not only appropriate but is required by the fiduciary responsibility to ourselves as well as our organization.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How does your management energize the reaffirmation process?<br> &nbsp;</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://financial-dictionary.thefreedictionary.com/Rational+economic+man">http://financial-dictionary.thefreedictionary.com/Rational+economic+man</a><br> [ii] <a href="http://en.wikipedia.org/wiki/Behavioral_economics">http://en.wikipedia.org/wiki/Behavioral_economics</a><br> [iii] <a href="http://www.statisticbrain.com/new-years-resolution-statistics/">http://www.statisticbrain.com/new-years-resolution-statistics/</a><br> [iv] Ibid.<br> [v] <a href="http://www.goodreads.com/author/show/476541.Dutch_Holland">http://www.goodreads.com/author/show/476541.Dutch_Holland</a><br> [vi] Shemwell, Scott M. (2012, June). Structural Dynamics: The Foundation of Next Generation Management Science—βeta Version of the Construct. Version 1.0. <u>Author</u>.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2015/01/reaffirmation.html2015-01-02T16:57:00.000Z2015-01-02T17:10:49.365Z2008—Reduxnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 24</p> <p>World petroleum markets have undergone commodity price shocks since these goods were first brought to market in quantity over one hundred and fifty years ago.[i]&nbsp; As part of the global recession of 2008, the price of oil fell from approximately $145 per barrel to about $40 before the end of that market-rattling year.[ii]&nbsp; A similar process is unfolding during the last quarter of 2014.</p> <p>In the summer of 2014, West Texas Intermediate (WTI) crude oil traded at over $105 per barrel.&nbsp; As late as October it was above $90.&nbsp; By December, it hovered in the high $50’s per barrel.[iii]</p> <p>To some observers, this is a manipulated market and to others it is supply and demand driven.&nbsp; Regardless of the drivers, those economic actors in the market must deal with high volatility from time to time.</p> <p>A rapidly falling market presents operations with significant challenges.&nbsp; The common mantra, “do more with less” can become gospel.&nbsp; How this message is delivered and subsequently implemented can be the difference between possibly a bad year and a terrible, career and/or company ending year.</p> <p>Nothing changes in a down market except the commodity price point.&nbsp; Safety, the environment, performance requirements, regulations, etc. remain the same.&nbsp; However, managerial actions must change and decisions taken reflect the market realities.</p> <p><img width="301" height="196" src="/content/dam/Pennenergy/online-articles/2014/12/Shemwell%2012%202014%201.JPG" style="float: right;">Originally published in 2004, the decline curve graphic suggests that to remain profitable as a field ages, the costs of operations must decrease faster than the rate of production decline.[iv]&nbsp; A dramatic, quick reduction in commodity price points essentially has the same economic effect of the field.</p> <p>The focus on that study was the emerging (at the time) digital oilfield.&nbsp; However, modern producers use a basket of technologies to drive their business models.</p> <p>Technology does make a difference.&nbsp; The perceived market glut is partly due to the use of technologies of all kinds including information technology.&nbsp; Enabling process change improved efficiencies and safer operations are well documented and have offered those organizations using them with a “<i>healthy buffer against failing prices</i>.”[v]</p> <p>Organizational Agility, Resilience and Sustainability are the hallmark of well-managed oil and gas operators and their energy services and manufacturing supply chain partners.&nbsp; Rapidly responding to changing environments, whether market driven or in retort to an incident are the normal response of High Reliability Organizations.&nbsp; The protection of shareholder value demands no less.</p> <p>As with any market downturn there will be winners and losers.&nbsp; Mergers and bankruptcies, a level of unemployment and local recessions are likely.&nbsp; Agile and resilient firms are best positioned for survival when the bust part of the business cycle is deep and fast.</p> <p>Finally, as the saying goes, “we’ll be back.”&nbsp; ExxonMobil recently forecasts 35% higher global demand by 2040.&nbsp; The demographics of an expanding global population and desire for increased standards of living throughout all economies are substantial economic drivers.[vi]</p> <p>Yet one wonders, how many more boom-bust cycles will there be before then?&nbsp; Expect them and plan accordingly.<br> &nbsp;</p> <h2 style="text-align: center;"><b>What is your organization’s Rapid Response Management plan?</b></h2> <h3><br> About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_the_United_States">http://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_the_United_States</a><br> [ii] <a href="http://www.rff.org/Publications/WPC/Pages/The-2008-Oil-Price-Shock-Markets-or-Mayhem.aspx">http://www.rff.org/Publications/WPC/Pages/The-2008-Oil-Price-Shock-Markets-or-Mayhem.aspx</a><br> [iii] <a href="http://www.businessinsider.com/oil-prices-drop-december-10-2014-12">http://www.businessinsider.com/oil-prices-drop-december-10-2014-12</a><br> [iv] Shemwell, Scott M. &amp; Murphy, D. Paul. (2004, September). Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation. <u>Strategic Decision Sciences</u>. Authors. P. 110.<br> [v] <a href="http://www.houstonchronicle.com/business/energy/article/As-oil-prices-fall-companies-produce-more-for-5923956.php#/0">http://www.houstonchronicle.com/business/energy/article/As-oil-prices-fall-companies-produce-more-for-5923956.php#/0</a><br> [vi] <a href="http://www.ogj.com/articles/2014/12/exxonmobil-forecasts-35-higher-world-energy-demand-by-2040.html?cmpid=EnlDailyDecember102014">http://www.ogj.com/articles/2014/12/exxonmobil-forecasts-35-higher-world-energy-demand-by-2040.html?cmpid=EnlDailyDecember102014</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/12/2008_redux.html2014-12-18T19:52:00.000Z2014-12-18T19:54:35.926ZRequisite Varietynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 23</p> <p>Readers of this blog may recall that we have put forth the Relationships, Behavior and Conditions model as a construct to enable the energy industry to achieve a Culture of Safety.&nbsp; This is a dynamic systems model of complex interactions.&nbsp; In this edition, we will extend this discussion further.</p> <p>Collective human experience has shown over millennia that the more complex the system, the more difficult it is to understand the relationships and their behaviors.&nbsp; Therefore, as system density increases, it acquires greater <i>variety</i>, that is systemic behavior becomes more uncertain.[i]</p> <p><img width="208" height="180" src="/content/dam/Pennenergy/online-articles/2014/12/Governing%20Energy%20December%202014.JPG" style="float: right;">In 1952, W. Ross Ashby first described requisite variety.&nbsp; This axiom states that, “<i>R’s capacity as a regulator cannot exceed R’s capacity as a channel of communication</i>.” &nbsp;In other words, ex(T)ernal (D)isturbances to the system that go unregulated may drive system (E)ssential variables outside appropriate limits.&nbsp; Communications between these variables are represented in the arrows (→) in the graphic. [ii]</p> <p>In non-technical terms, “<i>the variety in the control system must be equal to or larger than the variety of the perturbations in order to achieve control.</i>”[iii]&nbsp; Similar to Game Theory, a table of possible outcomes or payoff matrix can be either Good or Bad.[iv]</p> <p>It is not our intention to drift too far into Behavior Economics or Cybernetics (control and communications).&nbsp; The point is that the complex human and machine systems that govern high tech field operations cannot be properly controlled if we do not understand them and have the appropriate level of control systems in place—“<i>it is necessary to have such a number of actions that is equal to the number of system’s states.</i>”[v]</p> <p>Operations Management Systems (OMS) should consider this established principle to assure appropriate system controls are in place and functioning properly.&nbsp; This is the essence of Strong Bond Governance model put forth for managing critical infrastructure such as energy operations.[vi]</p> <h2 style="text-align: center;"><b>Does your organization’s system regulation have requisite variety?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf">http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf</a><br> [ii] <a href="http://www.panarchy.org/ashby/variety.1956.html">http://www.panarchy.org/ashby/variety.1956.html</a><br> [iii] <a href="http://www.wyrdology.com/mind/creativity/variety.html">http://www.wyrdology.com/mind/creativity/variety.html</a><br> [iv] <a href="http://pcp.vub.ac.be/Books/AshbyReqVar.pdf">http://pcp.vub.ac.be/Books/AshbyReqVar.pdf</a><br> [v] <a href="http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf">http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf</a><br> [vi] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). <a href="http://www.amazon.com/IMPLEMENTING-CULTURE-SAFETY-PERFORMANCE-COMPLIANCE-ebook/dp/B00ILXY7ZC/ref=asap_B00KNBEQS8_1_1?s=books&amp;ie=UTF8&amp;qid=1418247422&amp;sr=1-1">Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</a>. New York: Xlibris.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/12/requisite_variety.html2014-12-11T18:27:00.000Z2014-12-11T18:30:49.415ZBecoming a Part of Speech—Pluses & Minusnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 22</p> <p>Conventional marketing wisdom suggests that becoming a verb can be a very good thing.&nbsp; “Google it,” is an oft repeated statement when searching for information on almost any subject.&nbsp; Becoming a household name is generally viewed as a good thing.&nbsp; However, becoming a generic term may “mean losing the legal power of a trademark.”[i]</p> <p>It can be argued that the power of the verb is greater than the marketing power of a trademark.&nbsp; The market dominance of a genericised trademark such as Xerox as the decade’s long term for photo copying probably sold more copy machines than strict trademark legal defense ever would.[ii]</p> <p>As a general rule, this author believes that when the company or a product becomes part of the vernacular the benefits outweigh the drawbacks.&nbsp; Aggressive trademark defense may actually detract from the brand in this case.</p> <p>However, there is a dark side.&nbsp; The World War II Norwegian politician who collaborated with the Nazis, Vidkum Quisling became a part of speech.&nbsp; Quisling, the noun is now often used to describe someone as a traitor or collaborator.&nbsp; The verb form of the word is <i>to quisle</i>.[iii]</p> <p>Most recently, an American economist has joined the club or rogues.[iv]&nbsp; Following the release of several videos, it did not take long for the slang to begin.&nbsp; More than just an attempt at humor, his revelations cast serious doubt on major political figures and their motives.&nbsp; Like all political red meat, expect more to come.</p> <p>According to the news, he is losing major contacts and it is likely that his reputation and ability to obtain future consulting are probably compromised.&nbsp; Moreover, as with the positive power of “Google it,” “Grubered” will probably stick with less desire effects for this professor.[v]</p> <p>The genericisation of a product or brand can have sustained benefits even when society in general grammatically tramples intellectual property.&nbsp; The opposite sustains and often ridicules individuals and brands.&nbsp; Mr. Quisling has been dead since 1945, and many using the term in contemporary times may not even know that the word quisling is an individual’s family name.</p> <h2 style="text-align: center;"><b>How does your company protect its Brand?</b></h2> <h3><br> About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.fastcompany.com/3004901/google-what-it-means-when-brand-becomes-verb">http://www.fastcompany.com/3004901/google-what-it-means-when-brand-becomes-verb</a><br> [ii] <a href="http://en.wikipedia.org/wiki/Generic_trademark">http://en.wikipedia.org/wiki/Generic_trademark</a><br> [iii] <a href="http://en.wikipedia.org/wiki/Quisling">http://en.wikipedia.org/wiki/Quisling</a><br> [iv] <a href="http://www.politico.com/story/2014/11/obamacare-jonathan-gruber-architect-112886.html">http://www.politico.com/story/2014/11/obamacare-jonathan-gruber-architect-112886.html</a><br> [v] Ibid.</p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/11/becoming_a_part_ofs.html2014-11-25T16:12:00.000Z2014-11-26T19:37:47.436ZAgile, Resilient, Sustainable Ecosystemnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 21</p> <p>High Reliability Management (HRM) places a premium on resiliency, the ability to recover in times of adversity.&nbsp; This can be a challenge for any individual organization; however, the upstream petroleum sector requires an extensive supply chain.&nbsp; Resilience is by definition is exogenous in this and other critical sectors.</p> <p>Industry executives and regulatory agencies have understood this exposure.&nbsp; They are explicitly demanding that contractors of all sizes meet new safety, environmental and performance metrics.&nbsp; Moreover, both parties recognize that the Tier 2 and their contractors and suppliers may be the weakest link in the supply chain.</p> <p>The concept of a supply chain visualizes a linear and hierarchy model of the industrial age of the 19<sup>th</sup> century and earlier.&nbsp; Raw materials are transported to factories and finished goods such as an automobile are the output into the marketing and sales cycle.</p> <p>Linear models such as Just-in-Time (JIT) manufacturing are still prevalent and have their strengths and weaknesses.[i]&nbsp; In 2011, the Great Tohoku Earthquake and Tsunami severely affected the global automobile manufacturing sector.[ii]&nbsp; The <i>agility</i> and <i>resilience</i> of that industry was tested on a global scale.</p> <p>All supplier Tiers were negatively impacted for weeks, especially for Japanese automobile manufacturers and their suppliers from the affected areas.&nbsp; US based automakers were less affected initially, due to long logistics tail of products in route to the United States.&nbsp; As after any major incident, that industry needed to make adjustments including expanding geographical diversity of key components.[iii]</p> <p>One could argue that this wake-up call extended JIT into a global ecosystem for the industry or more correctly, a set of ecosystems as each automobile manufacturer establish their own.&nbsp; In this model, Tier 1, 2, and 3 suppliers may find themselves part of several ecosystems.&nbsp; Moreover, governments are ecosystem partners with strong concerns about employment as well as tax revenue.</p> <p>The current upstream offshore wake-up call rang in 2010.[iv]&nbsp; The response over the last four plus years has been expansive and global; however, there is still much to accomplish to create a Culture of Safety across the sector.</p> <p>This author has put forth the Relationships, Behaviors, and Conditions (RBC) model as one approach towards managing this change.&nbsp; We have argued that this multi-dimensional methodology mitigates systemic risk, including from the supply chain.[v]</p> <p>Agility and resilience are behaviors.&nbsp; One can also view sustainability as a situation or condition.&nbsp; The resulting set of relationships is not just aligned with a Culture of Safety, it is engrained as the foundation of a high reliable and safe sector.</p> <p>Supply chains are no long linked sets of organizations and activities.&nbsp; More properly, they have the traits of complex interrelated organisms confined by industry cosmos—an ecosystem.[vi]</p> <p><img width="585" height="437" src="/content/dam/Pennenergy/online-articles/2014/11/Shemwell%20blog%20pic%201.JPG"></p> <p>Multi-cultural, global, complex and interrelated, one organization cannot truly operate at a high level of reliability if one or more key members of their ecosystem are found wanting.&nbsp; Operators now have a greater dependency on their ecosystems than ever before.&nbsp; In other words, the focus on Tier 1 partners is no longer enough.&nbsp; Unseen risks may lurk in Tier 2 and beyond.[vii]</p> <h3>Be Afraid</h3> <p>The oil industry is entering another part of its ongoing cycle as West Texas Intermediate (WTI) dips below $80/bbl.[viii]&nbsp; As margins shrink pressure on operators as well as their supply chain increase—cost cutting has been the traditional industry response.</p> <p>CEOs throughout the ecosystem have a fiduciary responsibility to their shareholders.&nbsp; They are charged with growing shareholder value and protecting that value during downturns by reducing the direct costs of operations.</p> <p>A reduction-in-force, deferred maintenance, consolidation and facility/fleet mothballing are common actions.&nbsp; However, safety, environmental stewardship and performance are just as important and perhaps more so during economic downtimes.</p> <p>Fewer people with more to do places additional stress on personnel and their equipment.&nbsp; By extension, facilities may suffer as well.&nbsp; Such a scenario can make incidents more likely.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How strong is your firm’s ecosystem?</b></h2> <h3><br> About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of four books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html">http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html</a><br> [ii] <a href="http://fas.org/sgp/crs/misc/R41831.pdf">http://fas.org/sgp/crs/misc/R41831.pdf</a><br> [iii] Ibid.<br> [iv] Shemwell, Scott M. and Dowlearn, Robert T. (2010, October). A Date Which Will Live… <u>Oilfield Technology Magazine</u>. pp. 16-20.<br> [v] Ibid.<br> [vi] <a href="http://www.merriam-webster.com/dictionary/ecosystem">http://www.merriam-webster.com/dictionary/ecosystem</a><br> [vii] <a href="http://www.corporate-value.com/our-expertise/Transportation,-Defense,-%26-Security/risk-management-upstream-businesses">http://www.corporate-value.com/our-expertise/Transportation,-Defense,-%26-Security/risk-management-upstream-businesses</a><br> [viii] <a href="http://www.bloomberg.com/energy/">http://www.bloomberg.com/energy/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/11/agile_resilient_su.html2014-11-07T15:53:00.000Z2014-11-07T15:57:38.265ZVeterans Administrationnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 20</p> <p>Recently, this author was in two taxicabs.&nbsp; A young single mom, a recent US Army veteran who took me to the airport in the very early morning hours, drove the first one.&nbsp; Raising a young boy and going to school, she was driving the taxi to help the owner due the volume of traffic from the Regatta of that weekend, according to her.&nbsp; One surmises that the extra cash from the job may have been an economic driver as well.</p> <p>Upon arrival back in Houston, the cab back to the marina where my automobile was located was also driven by a veteran of a slightly earlier era.&nbsp; This mid-career individual was very articulate and appeared very knowledgeable and even wise.&nbsp; Extremely talkative, he raised and took defendable positions on several sensitive issues from society’s current dialogue—not the normal conversation one would expect to have with a cabbie.</p> <p>These two conversations early one Sunday morning were enlightening in many ways.&nbsp; Both of these individuals were very personable, highly intelligent and by my brief observation hard working.&nbsp; I can honestly say, I enjoyed their company and talking with them shortened my journey.</p> <p>However, several thoughts raced through my head as I exited the last taxi, paid the man and he shook my hand.&nbsp; It appeared that he might be under-employed.&nbsp; If that is the case, I asked myself why is it <i>still</i> so hard for veterans to find jobs.</p> <p>This point is not a new one and others have expresses similar concerns over the past few years.&nbsp; Moreover, as a veteran myself it was initially difficult for me to navigate the corporate jungle.&nbsp; To say that in my early twenties, just out of the Army with no corporate experience, I was clueless might be an understatement.&nbsp; Fortunately, I managed to land an entry-level position with one of the two energy service companies where my direct military experience fit well.</p> <p>The energy sector is a logical next step in their careers for discharged military personnel of all ranks and Military Occupation Specialties (MOS).[i]&nbsp; The first taxi cab driver had worked in military communications and the second in logistics.&nbsp; These are two skills the industry desperately needs.</p> <p>The industry has an outreach program and many recent veterans are employed throughout it, both in the operator and services sectors.&nbsp; Can we do more?&nbsp; Always!</p> <p>Readers may draw the logical conclusion that the subject of this piece is to hire vets!&nbsp; Evidence suggests that vets are highly prized talent and most add value to their employers and enjoy successful careers.</p> <p>However, there is another question.&nbsp; Many vets, perhaps these two living in Texas and documented by my personal experience at the beginning of my career do not know how to find a civilian job.&nbsp; They may not even understand the functions of an oil company, an energy services company or an engineering firm.&nbsp; Nor what kinds of people they employ.</p> <p>Much has been written about the so-called Big Crew Change, labor shortages in certain states such as North Dakota as well as the apparently shrinking labor pool et al. and it will not be further addressed herein.&nbsp; However, perhaps the industry can look in its own backyard and reach out to those vets who may not understand how corporations can use their service skill set.&nbsp; This effort would be an extension to the current initiatives that are successful helping vets making the transition.</p> <p>Veterans whose “separation from active military service” may be a decade or more ago still can offer valuable knowledge and skills the industry needs.[ii]&nbsp; Both kinds of resources are out there, I know I just met two in one morning.</p> <p>“Thank you for your service,” either begins or ends many conversations with veterans, especially on television shows.&nbsp; Yet for many of these young (and even not so young) people, their <i>service</i> to their families and society is really just beginning.</p> <p>This blog and other written material and speeches by this author have addressed the continuous improvement of processes as well as use of good or even so-called “best practices” the industry undertakes in operations.&nbsp; One of the key components of the recent SEMS regulations is personnel competency and proficiency.</p> <p>Perhaps Veteran’s hiring processes could be extended to those vets who may not have the luxury of understanding that their MOS has a direct linkage to the Knowledge, Skills, Abilities (KSA) needed now.&nbsp; Not in the sense of direct mapping of skills from one job to another but as a function of technical knowledge, problem-solving skills, ability to learn, work ethic and maturity that vets bring.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How does your organization administer its veteran’s affairs to take full advantage of these available resources?<br> &nbsp;</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector. &nbsp;He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://usmilitary.about.com/od/enlistedjobs/tp/armyenlistedjobs.htm">http://usmilitary.about.com/od/enlistedjobs/tp/armyenlistedjobs.htm</a></p> <p>[ii] <a href="http://www.vetsfirst.org/military-separation-guide/">http://www.vetsfirst.org/military-separation-guide/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/10/veterans_administrat.html2014-10-20T15:29:00.000Z2014-10-20T15:35:16.663ZWorkflow Alignmentnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 19</p> <p>Dateline September 25, 2014, Dallas, Texas.&nbsp; According to a recent media report, the information regarding the Ebola virus infected individual’s travel history to Liberia was initially disclosed to the nurse per the proper emergency room protocol.&nbsp; Subsequently it appears that the attending physician was unaware of this key piece of information.[i]&nbsp; In other words, the set of tasks required to properly diagnose and treat the patient was not properly completed.</p> <p>Apparently, this voluntarily provided information was not communicated to the physicians due to “a flaw in the hospital’s electronic health record (EHR) workflows.”[ii]&nbsp; In other words, while it appears both nursing and physician protocols were followed by the individuals involved; the data integration between these knowledge workers had a gap.&nbsp; Subsequently, the software was updated and this gap was closed.[iii]</p> <p>While we will never know how events in Dallas would have unfolded if the knowledge of the patient’s travel were available to the entire medical decision making process.&nbsp; However, the trials that have transpired (to-date) are having broad and complex impacts globally.&nbsp; The medical profession is widely acclaimed to have a strong Culture of Safety; however, the lapse in Dallas exposed system vulnerabilities.[iv]</p> <p>This problem was not the health care information technology (IT); its probable cause was a failure in the design of the patient care management system.&nbsp; As such, it is a failure of high reliability management processes.&nbsp; Or is it?</p> <p>High Reliability Management (HRM) has been discussed in these pages a number of times as well as our recent book, <i>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</i>.[v]&nbsp; HRM seeks to create a culture that is mindfulness that failures can take place, complex processes should not be simplified, operations is the focal point, resiliency or the ability to respond and recover is critical and organizations are flexible enough that individuals can take initiative.[vi]</p> <p>One of the most overused terms, <i>A Crisis in Confidence</i> is unfolding in Dallas as of this writing.&nbsp; This concern is broader than simply a failure of one hospital.&nbsp; How the population perceives the result of the Public Health Care System response to this system failure will have a major impact on its credibility.[vii]</p> <p>While we do not know the end game of this problem, one suspects that the health care sector will exhibit the traits of HRM and cure the problem.&nbsp; This is not to say that political pundits on both sides will not attempt to parley these fears for their benefit.&nbsp; However, Public Health practitioners and management will most likely prevail over the current challenge.</p> <p>Does this seem similar to the deepwater offshore drilling industry, the nuclear industry, the space shuttle program and others?&nbsp; Good practices and other organizational learning from one sector may have applicability in others.&nbsp; Good systems management is the fundamental backbone of HRM regardless of the industry sector or life threatening event.</p> <p>Much has been written and discussed regarding the plentiful benefits of Big Data to organizations of all sizes.&nbsp; Often overlooked is the system design process.</p> <p>The nursing staff has a different set of workflow processes and data requirements than the physician.&nbsp; Good systems design (including updates to reflect changing conditions) which must include data sharing should not be under appreciated.</p> <p>The oil and gas industry is in the process of changing their Operations Management Systems (OMS) to include the new safety requirements.&nbsp; Lessons learned from Dallas include a review of the data sharing requirements of rapidly changing business processes.</p> <p>The Relationships, Behaviors, Conditions (RBC) model previously discussed by the author in this blog as well as other publications is a good construct for organizations implementing HRM.[viii]&nbsp; It is important to remember that Relationships can change based on changing Conditions and this often results in new Behaviors.</p> <p>The system is not static and it now necessary for the physician to understand the recent travel of a patient.&nbsp; This may result in changes to tasks in a workflow with the subsequent impact on other workflows.&nbsp; IT systems must represent the tasks required to accomplish a complex job and workflows must be continuously aligned as necessary.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How does your organization assure that workflows across departments are aligned and data is shared as required to complete the set of tasks?</b></h2> <h3><br> About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.dallasnews.com/news/metro/20141001-dallas-hospital-knew-man-had-been-to-w.-africa-didnt-isolate-him-for-ebola-testing.ece">http://www.dallasnews.com/news/metro/20141001-dallas-hospital-knew-man-had-been-to-w.-africa-didnt-isolate-him-for-ebola-testing.ece</a><br> [ii] <a href="http://www.huffingtonpost.com/2014/10/02/dallas-ebola-patient-hospital-error-electronic-health-record-flaw_n_5924698.html">http://www.huffingtonpost.com/2014/10/02/dallas-ebola-patient-hospital-error-electronic-health-record-flaw_n_5924698.html</a><br> [iii] Ibid.<br> [iv] <a href="http://www.nursingworld.org/MainMenuCategories/ANAMarketplace/ANAPeriodicals/OJIN/TableofContents/Vol-16-2011/No3-Sept-2011/Teaching-and-Safety.html">http://www.nursingworld.org/MainMenuCategories/ANAMarketplace/ANAPeriodicals/OJIN/TableofContents/Vol-16-2011/No3-Sept-2011/Teaching-and-Safety.html</a><br> [v] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. New York: Xlibris.<br> [vi] Ibid.<br> [vii] <a href="http://www.hhs.gov/ash/initiatives/quality/system/">http://www.hhs.gov/ash/initiatives/quality/system/</a><br> [viii] <a href="http://www.amazon.com/Governing-Energy-Organizational-Governance-Century-ebook/dp/B00NB8C91Q/ref=la_B00KNBEQS8_1_5/179-1492846-1205359?s=books&amp;ie=UTF8&amp;qid=1412372804&amp;sr=1-5">http://www.amazon.com/Governing-Energy-Organizational-Governance-Century-ebook/dp/B00NB8C91Q/ref=la_B00KNBEQS8_1_5/179-1492846-1205359?s=books&amp;ie=UTF8&amp;qid=1412372804&amp;sr=1-5</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/10/workflow_alignment.html2014-10-06T15:41:00.000Z2014-10-06T20:17:58.090ZMan Machine Codependencynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 18</p> <p>One of the emerging trends in automobile design is the intelligent-car.&nbsp; This vehicle comes close to driving itself by alerting the driver to vehicles in blind spots, providing assistance backing up and automatic breaking as examples.&nbsp; Some even put forth the construct of “self-driving.”[i]</p> <p>As beneficial as these advancements are, there can be drawbacks.&nbsp; With the advent of automatic transmissions and the almost complete loss of traditional standard or “stick shift” how many of today’s drivers can actually drive the traditional sports car?&nbsp; In this case, the implications appear to be minor as not many automobiles even have the standard transmission as an option. [ii]&nbsp; In other instances the ramifications maybe more acute.</p> <p>We also see this phenomenon in mathematics where students trained using calculators and spreadsheets may struggle to understand the basic math operations.&nbsp; Slide rule generation undergraduates were forced to develop an understanding of the mathematical structure/relationships of the problem being solved due to the limitations of that technology.</p> <p>For example, for this (then) student the use of the slide rule required me to devolve the problem into its component parts.&nbsp; This process led to a better understanding of the problem and its mathematical structure as well as helping establish an <i>order-of-magnitude</i> for the expected solution.&nbsp; Routine use of terms such as, significant digits, scientific notation, estimation and Powers-of-Tem have now been lost in the lexicon of many today.[iii]</p> <p>Following a seminar on the sIide rule, one University of California, San Diego student remarked, “<i>I like being engrossed in the calculations, instead of just punching them into my calculator.&nbsp; I make less mistakes, and find I know what I am talking about …</i>”[iv]</p> <p>Another way to frame this discussion is as <i>cognitive training</i>.&nbsp; Sometimes referred to as “brain exercise” this approach helps individuals improve their core abilities as well as develop the self-control necessary for the successful completion of a function or process.[v]</p> <p>Software systems may not calculate properly.&nbsp; Many may not be aware that any computer is basically a Babbage “Analytical Engine” circa the mid 1800’s.[vi]</p> <p>Most now take the output of digital calculators as gospel.&nbsp; But, what if these current algorithm developers miss something?&nbsp; Do many really understand the structure of the problem they are attempting to solve?</p> <p>Another example, earlier versions of a popular spreadsheet had known statistical inaccurate algorithms.&nbsp; One professor is reported to have told his students not to bet their jobs on its accuracy.[vii]</p> <p>Now, statistics is widely used in Big Data and Bet-Your-Career, even Bet-Your-Company decisions.&nbsp; Moreover, we trust our very lives to the accuracy of software calculations and the quality of the data input into the system.</p> <p>In 2009, Air France Flight 447, an Airbus A330 disappeared over the Atlantic Ocean during a routine flight from Rio de Janeiro to Paris.[viii]&nbsp; The subject of a recent documentary, the apparent ice buildup on the aircraft pitot tubes (sensor used to determine airspeed) and the autopilot disengaging required the pilots manual fly the aircraft.[ix]</p> <p>Apparent confusion in the cockpit, one pilot pulled the aircraft up thinking he was at a lower altitude and need to climb.&nbsp; He stalled the Airbus while the other finally understanding the situation urged him to descend and gain airspeed.[x]&nbsp; Perhaps, the pilot was disoriented due to bad weather, nighttime, or lack of sleep.</p> <p>However, when forced by circumstances to manual pilot the aircraft one might surmise that like the software algorithm developer who relies too much on the accuracy of automated mathematics there might have been a degradation of fundamental flying skill set.</p> <p>Our digital world provides all with a quality of life and entertainment only dreamed of by previous generations.&nbsp; However, there is an inherent risk if we rely on technology too much.&nbsp; We may lose our abilities to understand the problem we are solving, and whether the technology accurately supports that process.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How does your organization assure that its workforce retains fundamental problem solving capability?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.extremetech.com/extreme/132812-mit-develops-intelligent-car-co-pilot-that-only-interferes-if-youre-about-to-crash">http://www.extremetech.com/extreme/132812-mit-develops-intelligent-car-co-pilot-that-only-interferes-if-youre-about-to-crash</a><br> [ii] <a href="http://www.roadandtrack.com/boot/whats-really-killing-the-manual-transmisson">http://www.roadandtrack.com/boot/whats-really-killing-the-manual-transmisson</a><br> [iii] <a href="http://sliderulemuseum.com/Manuals/M175_Pickett_TeachingGuide_601.pdf">http://sliderulemuseum.com/Manuals/M175_Pickett_TeachingGuide_601.pdf</a><br> [iv] <a href="http://sliderulemuseum.com/SR_Class/SlideRuleTalk-MIT.pdf">http://sliderulemuseum.com/SR_Class/SlideRuleTalk-MIT.pdf</a><br> [v] <a href="http://drjanestewart.wordpress.com/2011/05/11/what-is-cognitive-training/">http://drjanestewart.wordpress.com/2011/05/11/what-is-cognitive-training/</a><br> [vi] Shemwell, Scott M. (1993). Management Theory - Evolution Not Revolution, Proceedings of the 11<sup>th</sup> Annual Conference of the Association of Management, 11 (2), pp. 74 - 78.<br> [vii] <a href="http://www.forecastingprinciples.com/files/McCullough.pdf">http://www.forecastingprinciples.com/files/McCullough.pdf</a><br> [viii] <a href="http://en.wikipedia.org/wiki/Air_France_Flight_447">http://en.wikipedia.org/wiki/Air_France_Flight_447</a><br> [ix] <a href="http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html">http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html</a><br> [x] <a href="http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html">http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/09/man_machine_codepend.html2014-09-22T16:44:00.000Z2014-09-22T16:48:28.966ZEmptynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 17</p> <p>Confidence is everything!&nbsp; People need to trust the institutions and organizations that they depend upon, whether for their livelihood, family unit, commercial organizations or government structures.</p> <p>When confidence, nay trust is broken the human response can be swift and even terminal.&nbsp; In a previous edition of this work (June 2012), the fate of the DC-10 aircraft (circa 1970) was posited as a Cautionary Tale.&nbsp; Repeated accidents relegated this aircraft to freight as the public became “fear of flying” this asset.</p> <p>Some 40 years later, passengers appear to be fleeing a modern airline for many of the same reasons.&nbsp; Malaysian Airlines has lost two aircraft in less than six months.&nbsp; On March 8, 2014, Malaysia Airlines Flight 370 disappeared, remains a mystery and may never be solved.[i]</p> <p>In July, Malaysia Airlines Flight 17 became the apparent victim of hostilities.[ii]&nbsp; In this case, questions have been raised as to the wisdom of the flight plan across the Ukraine when other carriers had rerouted.[iii]</p> <p>Commercial airlines have been lost before from perceived or actual military action.[iv] &nbsp;In 1978, Korean Airlines Flight 902 was shot down by the Soviet Union for allegedly violating sovereign airspace and presenting an apparent military threat to that nation.&nbsp; While an interesting political position, one might see the strategic weakness of this military response to commercial airline airspace intrusion.</p> <p>However, when the flying public is concerned about their safety, the impact on the business model can be immediate and severe.&nbsp; This would appear to be the case with Malaysian Airlines.</p> <p>This problem is not limited to the airline industry.&nbsp; Certain automobiles, e.g., Ford’s Edsel and Pinto are examples when entire model lines were withdrawn after customer confidence was lost.&nbsp; Ford is not the only manufacturer to produce so-called “lemons,” many claim that title as well.[v]</p> <p>The Gulf of Mexico drilling moratorium in 2010 is an example whether the US offshore drilling industry suffered a similar fate.&nbsp; One might argue that this is different because the US government drove this shutdown.[vi]&nbsp; The counterpoint is that politicians echo their constituents’ desires.</p> <p>Six other commercial airliners have disappeared and never been found, including a Boeing 727 in 2003.&nbsp; While the flying public always seems to bounce back from adversity, there is always a short-term impact at a minimum.&nbsp; For example, according to the IATA, it took three years for the industry to recover (as measured by revenue) after the September 11, 2001 terrorist attacks.[vii]</p> <p>Apparently, like many firms before Malaysian Airlines has marshalled a Crisis Management process that appears will have a far-reaching effect on that organization.[viii]&nbsp; Time will tell whether this restructure will be successful.&nbsp; However, one surmises it will be costly.</p> <p>Crisis management is just that.&nbsp; Organizations must move quickly to assure that constituent confidence is quickly reestablished when brought into question.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How does your organization assure that stakeholders do not face a Crisis of Confidence in your Business Model?</b></h2> <h3><br> About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.cbsnews.com/malaysia-airlines-flight-370/">http://www.cbsnews.com/malaysia-airlines-flight-370/</a><br> [ii] <a href="http://www.cbsnews.com/news/malaysia-airlines-cutting-6000-jobs/">http://www.cbsnews.com/news/malaysia-airlines-cutting-6000-jobs/</a><br> [iii] <a href="http://www.nbcnews.com/storyline/ukraine-plane-crash/who-had-authority-ban-air-travel-over-ukraine-n159636">http://www.nbcnews.com/storyline/ukraine-plane-crash/who-had-authority-ban-air-travel-over-ukraine-n159636</a><br> [iv] <a href="http://en.wikipedia.org/wiki/List_of_airliner_shootdown_incidents">http://en.wikipedia.org/wiki/List_of_airliner_shootdown_incidents</a><br> [v] <a href="http://www.forbes.com/2004/01/26/cx_dl_0126feat.html">http://www.forbes.com/2004/01/26/cx_dl_0126feat.html</a><br> [vi] <a href="http://www.nytimes.com/2010/10/13/us/13drill.html?pagewanted=all&amp;_r=0">http://www.nytimes.com/2010/10/13/us/13drill.html?pagewanted=all&amp;_r=0</a><br> [vii] <a href="http://www.iata.org/pressroom/documents/impact-9-11-aviation.pdf">http://www.iata.org/pressroom/documents/impact-9-11-aviation.pdf</a><br> [viii] <a href="http://www.independent.co.uk/news/world/asia/malaysia-airlines-state-fund-plans-overhaul-of-national-airline-9655896.html">http://www.independent.co.uk/news/world/asia/malaysia-airlines-state-fund-plans-overhaul-of-national-airline-9655896.html</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/09/empty.html2014-09-03T18:55:00.000Z2014-09-03T19:01:00.264Z100noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 16</p> <p>August marks the 100-year anniversary of two seminal events that not only impacted the last century in a dramatic fashion but continue to influence our lives today.&nbsp; The Guns of August fired in early August 1914 and set the world ablaze for the first of two world wars.&nbsp; Empires and monarchs fell and millions died.&nbsp; Many do not realize that the modern Middle East political environment was partially the fall out of the end of the “sick man of Europe”—Ottoman Empire and the resulting political restricting by the Allies.[i]&nbsp; Moreover, the peace set the stage for an even greater conflict less than 25 years later.</p> <p>Not so well known is the opening of the Panama Canal on August 15, 1914.&nbsp; Long operated by the Americans, in 1977, President Carter signed a treaty turning the canal over to Panama that was effective on December 31, 1999. [ii]</p> <p>During the past 15 years, the Panama Canal has been transformed from a “staid state owned public utility, with it quasi-socialist ‘zone’ for employee, to a modern business that aims to maximize revenues and compete internationally.” &nbsp;One source gives the credit for this to former Panamanian President Guillermo Endara (1989-1994) who led the efforts to depoliticize canal operations through a constitutional amendment. [iii]</p> <p>Decisions made generations ago can have consequences long into the future.&nbsp; High quality decisions are important.&nbsp; Staying the “proper” course sustains value even in the midst of major structural change.</p> <p>These lessons are also important to corporate executives whose vision may be limited to shorter horizons.&nbsp; This political (US midterm elections in November) season will most likely find pundits stating words to the effect that, “elections have consequences.”&nbsp; The same can be said of strategic decisions.<br> &nbsp;</p> <h2 style="text-align: center;"><b>How wise are your organization’s long-term strategic decisions?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.telegraph.co.uk/history/world-war-one/inside-first-world-war/part-six/10607658/ottoman-empire-first-world-war.html">http://www.telegraph.co.uk/history/world-war-one/inside-first-world-war/part-six/10607658/ottoman-empire-first-world-war.html</a><br> [ii] <a href="http://www.history.com/this-day-in-history/panama-canal-open-to-traffic">http://www.history.com/this-day-in-history/panama-canal-open-to-traffic</a><br> [iii] O’Grady, Mary Anastasia. (2014, August 18). The Panama Canal Celebrates 100 Years. <u>The Wall Street Journal</u>. p. A11.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/08/100.html2014-08-28T13:41:00.000Z2014-08-28T13:43:33.195ZCulture’s Consequencesnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 15</p> <p>One of the seminal works on cross-cultural behaviors is Geert Hofstede’s 1980 book, <i>Culture's Consequences: International Differences in Work—Related Values</i>.&nbsp; In this work, he develops a number of <i>invisible</i> cultural differences from two surveys (over 116,000 responses) conducted in 1968 and 1972.</p> <p>He identified and labeled four main dimensions--Power Distance, Uncertainty Avoidance, Individualism, and Masculinity for 40 countries.&nbsp; These data have been updated and expanded since and details as well as definitions are available from The Hofstede Center.[i]</p> <p>Statistical data can be descriptive, inferential and more recently predictive.&nbsp; Keeping it simple, the Hofstede dimensions provide some insight into high-level cultural behaviors.&nbsp; We recognize that an individual may not fall within one or more standard deviations and thus may behave somewhat different from the statistical norm.&nbsp; This does not make the assessment any less useful when looking at the overall population of a given country or perhaps subcultures within.</p> <p>Since this initial data was acquired and the dimensions defined, a case can be made that cultural interactions are so substantial that simple descriptive analysis no longer provides the granularity necessary to meet the statistical significant test.&nbsp; Perhaps, multivariate analysis is the inferential statistical technique that should be applied to cultural data sets.[ii]&nbsp; In any event, as with any statistical assessment an abundance of caution is in order.</p> <p>Most recognize and it has been discussed in these pages before, cross-cultural differences can lead to major misunderstandings and actions whose unintentional consequences can be catastrophic in some cases.&nbsp; One example was our assessment of possible cultural based miscommunication during the 2013 crisis on the Korean Peninsula. [iii]&nbsp; That blog also noted the possible impact cultural based miscommunication might have had on events leading up to World War I—the 100<sup>th</sup> anniversary marked this month.[iv]</p> <p>This author is not advocating that a similar survey and set of cultural dimensions be developed for the oil and gas industry.&nbsp; However, this global industry and its multi-dimensional cultural richness is undergoing a transformation to one of a Culture of Safety.&nbsp; More correctly, a set of Cultures of Safety.</p> <p>An organization’s culture is part of this competitive advantage.&nbsp; It differentiates the entity from others--sometimes starkly but more often subtly.&nbsp; Therefore, by extension each organization and perhaps global divisions within a large organization will have slightly different implementations of a Culture of Safety.</p> <p>The quality of cross-cultural communication can vary widely.&nbsp; As with any decision or approach there can be unintended consequences.&nbsp; Don’t let a lack of understanding of the firm’s culture as it relates to customer and supply chain culture generate unsafe unintended consequences.</p> <h2 style="text-align: center;"><b>What are the operational consequences of your organization’s culture?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://geert-hofstede.com/">http://geert-hofstede.com/</a><br> [ii] <a href="http://www.unt.edu/rss/class/mike/6810/IntrotoMV.pdf">http://www.unt.edu/rss/class/mike/6810/IntrotoMV.pdf</a><br> [iii] Shemwell, Scott M. (2013, April 16). It Must Be Spring. PennEnergy Governing Energy. Vol 2. No. 8<br> [iv] <a href="http://www.bbc.co.uk/remembrance/timeline/">http://www.bbc.co.uk/remembrance/timeline/</a></p> <p>&nbsp;</p> <p>&nbsp;</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/08/culture_s_consequenc.html2014-08-12T15:28:00.000Z2014-08-12T15:31:13.940ZInstitutional Imprintnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 14</p> <p>This last Fourth of July, I watched the televised concert and celebration from Washington, D.C.&nbsp; It seemed that for that brief moment political and other differences were cast aside as Americans and non-Americans gathered to say happy birthday USA.</p> <p>Many believe that Americans have lost faith in their institutions whether religious, corporate or government.&nbsp; Sometimes it appears that these pundits may have a point.&nbsp; However, perhaps we need to redefine what we mean by the word, institution.</p> <p>In his 1942 book, Capitalism, Socialism, and Democracy (a time when democracies and by extension capitalism were on the defense) the Austrian economists Joseph Schumpeter wrote, “The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. &nbsp;This process of Creative Destruction is the essential fact about capitalism.”[i]</p> <p>The term, Creative Destruction, suggests that the new is built from the old and while the destructive process is difficult, even traumatic ever-stronger societies are the result.&nbsp; Moreover, this process is continuous so each generation experiences it.</p> <p>Perhaps what many Americans are seeing are existing establishments in the midst of Creative Destruction.&nbsp; Churches are founded, disappear or evolve.</p> <p>Corporations can have exceptionally short lives.&nbsp; For example, the stock listings on the Dow Jones Industrial Average have change 53 times since its inception in 1885.[ii]&nbsp; This is an average of less than 2.5 years per group listing for this most prestigious index.</p> <p>Government agencies are not immune to transformation as well.&nbsp; Recent events with the Veteran’s Administration will most like result in changes to that entity.&nbsp; Post 9/11, the creation of the Department of Homeland Security reorganized and integrated all or part of 22 different departments and agencies of the U.S. Federal government.[iii]</p> <p>Animals and human have a critical period of learning early in life.&nbsp; Whether children effortlessly learning a language or ducklings bonding (imprinting) with humans.&nbsp; This neural mechanism is fundamental to the survivability of the young.[iv]</p> <p>In the midst of strife, turmoil and seemingly even decay, Americans celebrated not the establishments that govern them but their core American Institution—the Declaration of Independence.&nbsp; “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness,” is the imprint on this still young country.</p> <h2 style="text-align: center;"><b>What organizational edifices hinder your core Institution?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i] <a href="http://www.econlib.org/library/Enc/CreativeDestruction.html">http://www.econlib.org/library/Enc/CreativeDestruction.html</a><br> [ii] <a href="http://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average">http://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average</a><br> [iii] <a href="http://www.dhs.gov/creation-department-homeland-security">http://www.dhs.gov/creation-department-homeland-security</a><br> [iv] <a href="http://www.sparknotes.com/biology/animalbehavior/learning/section3.rhtml">http://www.sparknotes.com/biology/animalbehavior/learning/section3.rhtml</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/07/institutional_imprin.html2014-07-18T18:19:00.000Z2014-07-18T18:21:04.392ZGround Stop Chaosnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 13</p> <p>Recently, weather caused substantial problems with air travel in which this author was caught.&nbsp; Recognizing that airlines, air traffic control and others cannot control the weather and none of us want to be exposed to unnecessary risk, the unfolding events were interesting to say the least.</p> <p>As most travelers know, once the daily flight schedules are substantially impacted by negative events they almost never recover until at least the next day.&nbsp; For example, this writer had already checked his baggage at the San Francisco airport on October 17, 1989 and was headed to the gates when the Loma Prieta earthquake hit.<a name="_ednref1" href="#_edn1"></a>[i]</p> <p>Clearly the airport and other infrastructure stopped.&nbsp; Fortunately, my business host (and his lovely wife) allowed me to spend the night at their condo without electricity (walking up many flights in his downtown condo sans toothbrush et al.).</p> <p>The next day with some difficulties, my (reunited) baggage and I returned to Houston, much relieved to go home but with strong feelings for those whose hometown would take weeks and months to return to normal.</p> <p>Twenty-five years later, a much less traumatic event seemingly caused more angst among many travelers.&nbsp; One male passenger decided to challenge in a loud tone the airline employees delivering the message that things were delayed and not going well.&nbsp; Things stayed polite, but at one point one male employee expressed a comment along the lines of, “What do you expect me to do about it?”&nbsp; While for some tensions remained high, others took to their electronic communication devices and/or the bar.</p> <p>This traveler’s flight was rescheduled (usually in 30 minute intervals for approximately five hours before finally being cancelled).</p> <p>However, the real problem began when this author attempted to retrieve his checked luggage and drive home.&nbsp; First, the typical forms necessary to find the bags.</p> <p>Hours later, I was told that the process was still underway and that the actual search for the luggage had not yet started.&nbsp; Frustration beyond belief, as this was just a thunderstorm not an earthquake that destroyed a city.</p> <p>Finally, a young male baggage handler started to take control of the lost baggage “tickets” and found the bags.&nbsp; He was later joined by his colleagues (men and women) and they made things happen!&nbsp; Baggage was cleared and this author and others went home.</p> <p>Decades ago, as a young lieutenant in the US Army, an experienced sergeant “bailed me out.”&nbsp; My apologies, as I do not remember his name, this individual moved in on chaos and made sense out of it and made things happen while I was trying to follow “the book.”</p> <p>From my perspective, these airline employees did not “throw the book out” but they simply stepped up!&nbsp; For example, concerning access to the secure areas and their access cards, none of them in the hours I watched this process violated the “don’t tailgate” dictate (posted)—meaning don’t let anyone follow you into the secure areas.</p> <p>Hats off to these individuals!&nbsp; I do not believe that any of them violated corporate policy or security requirements, but once the magnitude of the problem was identified, these individuals made things happen—this author got his luggage back!&nbsp; However, management may want to review their standard operating processes (SOP) so that herculean efforts by their people are not the norm.</p> <h2 style="text-align: center;"><b>Are your people empowered to make things happen in times of adversity?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://earthquake.usgs.gov/regional/nca/1989/">http://earthquake.usgs.gov/regional/nca/1989/</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/07/ground_stop_chaos.html2014-07-02T14:21:00.000Z2014-07-02T14:22:56.702ZPrice of Failurenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 12</p> <p>A recent blog celebrated the management guru truism that organizations learn from failure and that individuals should be provided an environment where failure is acceptable and part of the learning organization process.&nbsp; This author might take exception to that management “rule.”</p> <p>We all grow as people and it is true, in the opinion of this writer that sometimes we learn more from failure than from success.&nbsp; In many cases, it is ok to foster a culture that rewards those you reach for the stars and occasionally miss.</p> <p>However, some industries require organizations to manage to a high degree of reliability—High Reliability Organizations.[i]&nbsp; In these sectors the price of failure can threaten the very survivability of the firm itself.</p> <p>So can these different approaches to empowering people be reconciled?&nbsp; The answer might surprise you; both can be highly aligned and generate an organizational culture where a “focus on failure” is highly prized.</p> <p>First let’s posit a matrix of hypotheses (researchers will forgive the lack of null hypotheses for brevity and to provide focus).</p> <p>&nbsp;&nbsp;&nbsp; - One of the processes described in the High Reliability Mindful Infrastructure is a “Preoccupation with Failure.”[ii]&nbsp; From the perspective of the (R) Relationships, (B) Behavior, and (C) Conditions Framework (previously discussed in this blog series and elsewhere) this preoccupation with failure might be considered the Relationship variable.[iii]</p> <p>&nbsp;&nbsp;&nbsp; - BSEE has presented and the industry has accepted nine tenets of a robust safety culture.[iv]&nbsp; A subset of them include:</p> <p>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 3—Personal Accountability<br> &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 5—Continuous Learning<br> &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 6—Raising Concerns<br> &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 7—Effective Communication<br> &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 8—Trust and Respect<br> &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; - Number 9—Inquiring Attitude</p> <p>We could probably make the case that the other three points should be included but readers will get the point.&nbsp; These are a set of Behaviors.</p> <p>&nbsp;&nbsp;&nbsp; - SEMS II Stop Work Authority[v]&nbsp; Finally, this is a Condition variable.</p> <p>Again at the risk of offending mathematicians everywhere, we posit that that this is effectively a set of difference equations (output based on past and present data)[vi] or perhaps differential equations (similar but continuously varying).[vii]&nbsp; This is an extension of the R B C Model expressed mathematically as follows:</p> <p><img width="247" height="143" src="/content/dam/Pennenergy/online-articles/2014/06/Shemwell%20June%20equations.JPG"></p> <p>It follows that Failure can be expressed as a function of R B C and therefore it can be treated equivalently by those organizations that encourage extended reach even if a new product launch flops and those High Reliability Organizations where failure is not an option.</p> <p>We may further develop the math later, but sociologically solving this set of simultaneous equations (<i>a set of equations that are all satisfied by the same values of the variables</i>[viii]) effectively supports the hypotheses that <i>understanding failure does not mean one must experience it to learn from its potential consequences</i>. &nbsp;</p> <p>We need to foster an environment of individualism within the context of organizational constraints.</p> <h2 style="text-align: center;"><b>How does your organization define failure and its consequences?</b></h2> <h3><b>About the Author</b></h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3><b>End Notes</b></h3> <p></p> <p></p> <p>[i] <a href="http://amp.aom.org/content/15/3/70.short">http://amp.aom.org/content/15/3/70.short</a><br> [ii] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014<u>)</u>. <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. New York: Xlibris.<br> [iii] Shemwell, Scott M. (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.<br> [iv] <a href="http://www.bsee.gov/uploadedFiles/BSEE/BSEE_Newsroom/Speeches/2013/COS%20Speech.pdf">http://www.bsee.gov/uploadedFiles/BSEE/BSEE_Newsroom/Speeches/2013/COS%20Speech.pdf</a><br> [v] <a href="http://www.pecsafety.com/stop-work-authority-a-key-safety-management-tool/">http://www.pecsafety.com/stop-work-authority-a-key-safety-management-tool/</a><br> [vi] <a href="https://ccrma.stanford.edu/~jos/fp/Difference_Equation_I.html">https://ccrma.stanford.edu/~jos/fp/Difference_Equation_I.html</a><br> [vii] <a href="http://en.wikipedia.org/wiki/Differential_equation">http://en.wikipedia.org/wiki/Differential_equation</a><br> [viii] <a href="http://dictionary.reference.com/browse/simultaneous+equations">http://dictionary.reference.com/browse/simultaneous+equations</a></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/06/price_of_failure.html2014-06-18T15:29:00.000Z2014-06-18T15:34:06.861ZWhat Management Wants to Hearnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 11</p> <p>As of this writing, the US Veteran’s Administration is under increasing scrutiny.&nbsp; One physician interviewed on television indicated that management did not want to hear about problems.&nbsp; Have we heard this story before?</p> <p>I am not sure that this culture is one incorporating the Tenets of Safety we have discussed in this blog before—read satire.[i]&nbsp; Actually, it is just the opposite; a case can be made that it violates all nine canons.&nbsp; All the more troubling is that the medical industry is often held out as one that is very good at implementing and sustaining High Reliability.[ii]</p> <p>The VA discussion suggests that once veterans have an appointment with a medical professional, their medical care is of high quality so it is simply a bureaucratic process problem.&nbsp; Isn’t getting to see a physician part of the medical care process?</p> <p>The <i>systemic nature of large complex organizations</i> (and their ecosystems) requires that management have a holistic perspective towards addressing and fixing process problems.&nbsp; Through the blinders of “the actual medical care is high quality,” the VA response intimates that the organization does not meet the test of a High Reliability Organization—perhaps management does not even understand what an HRO is.</p> <p>Regardless, this organization’s customer is ill served and its reputation is badly tarnished.&nbsp; The customer experience is poor and even the top individual practitioners’ character may be negatively impugned.</p> <p>An Emperor’s New Clothes culture will end up exposing an organization to unacceptable risks and maybe even ridicule.[iii]&nbsp; Years, even decades of only hearing about the good stuff rots the foundation of even the best and most well intended organizations.</p> <h2 style="text-align: center;"><b>Does your organizational culture “shoot” the messenger of bad news?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.bsee.gov/uploadedFiles/BSEE/BSEE_Newsroom/Speeches/2013/COS%20Speech.pdf">http://www.bsee.gov/uploadedFiles/BSEE/BSEE_Newsroom/Speeches/2013/COS%20Speech.pdf</a><br> [ii] <a href="http://www.jointcommission.org/highreliability.aspx">http://www.jointcommission.org/highreliability.aspx</a><br> [iii] <a href="http://www.andersen.sdu.dk/vaerk/hersholt/TheEmperorsNewClothes_e.html">http://www.andersen.sdu.dk/vaerk/hersholt/TheEmperorsNewClothes_e.html</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/06/what_management_want.html2014-06-03T13:40:00.000Z2014-06-03T13:48:12.177ZCulture of Fearnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 10</p> <p>Companies generally portray people as “our number one asset.”&nbsp; However, senior executives often behave in a manner that negates that statement.&nbsp; Treating human assets badly as if they are disposable sends a message of intimidation.</p> <p>Despite the words in the Chairman’s Letter to Shareholders, the Standard Operating Procedures, and so forth and so on, a message may be sent—be afraid be very afraid.&nbsp; You may be next!&nbsp; In other words, we really don’t value our employees.</p> <p>These companies often professes that they have a Culture of Safety. &nbsp;NOT!&nbsp; This behavior negates all the words and slogans.</p> <p>How does one take a Stop Work step in an organization of this culture?&nbsp; Answer is—employees won’t.&nbsp; The action of one highly placed individual (legally an agent, not a majority owner of the firm) may be jeopardizing shareholder value.</p> <p>Plan B—in a tight labor market, top talent will see through this canard and leave.&nbsp; Fear is a great motivator—we are programmed for Fight or Flight.</p> <p>Either response; a company can expect a myriad of both, has the opportunity to destroy the intensions of the Board of Directors and put them at risk—does Directors and Officers (D&amp;O) insurance cover this? &nbsp;Probably, but you get the point.</p> <p>One can argue that this approach is a significant failure of governance.&nbsp; This author has argued this point before.[i]&nbsp; Predictive Analytics are all the rage now, so this author’s prediction is—such firms will live through highly visible governance failures within five years.</p> <p>In any event, shareholder value is put a risk.&nbsp; A Culture of Fear will generate aberrant employee behavior that has a high likelihood of going against the Nine Tenets of Safety but forth by BSEE.[ii]</p> <h2 style="text-align: center;"><b>Are executives in your organizations walking the talk or just talking the talk?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] Shemwell, Scott M. (2011, October) Asset/Equipment Integrity Governance: Operations–Enterprise Alignment—A Case for Board Oversight. Author.<br> [ii] <a href="http://ohsonline.com/articles/2013/05/01/bsee-chief-spells-out-nine-values-for-safety-success.aspx?admgarea=news">http://ohsonline.com/articles/2013/05/01/bsee-chief-spells-out-nine-values-for-safety-success.aspx?admgarea=news</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/05/culture_of_fear.html2014-05-20T20:41:00.000Z2014-05-20T20:42:58.407ZNo Newbies!noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 9</p> <p>The industry and society in general continues a major demographic change as the older so called Baby Boomers retire as the Millennials enter the workforce.&nbsp; This “Shift Change” may expose organizations to an unacceptable level of risk.</p> <p>New entrants must be trained and deemed competent to take over the tasks of the previous tenant.&nbsp; Moreover, they must meet a certain minimum high bar to even be considered a contributing member of the team.</p> <p>For example, medical students begin working with patients early in their careers but only after attaining a high level understanding of the job requirements.&nbsp; Years later they will become Board Certified Physicians but the initial level of proficiency must still be quite high.</p> <p>Aviation is another High Reliability sector whereby the first solo by a pilot is followed only after extensive training and experience with an instructor (mentor).&nbsp; Only after a long vetting process does one <i>captain</i> an international “heavy” commercial airliner.</p> <p>Takeoff, navigation and safe landing are a set of necessary expertise before leaving the ground the very first time alone.&nbsp; Both the pilot’s safety as well as those on the ground depend on this high minimum threshold—not to mention damage or loss of the aircraft asset.</p> <p>In the recent Wall Street Journal (WSJ) article, <i>Nuclear Family: Navy Sub Culture Relies on Rules, ‘Odd Couple’ Matches</i> the journalist advances the theme that it is ‘Not OK to Be New.’<a name="_ednref1" href="#_edn1"></a>[i]&nbsp; The critical systems and living conditions aboard a modern submarine requires a high minimum technical, leadership and teaming level of expertise from all hands.</p> <p>Young Ensigns are not given any real responsibilities but prior to promotion they are expected have upped their game significantly—they hit the ground running so to speak as a newly promoted Lieutenant Junior Grade.&nbsp; One surmises that if they cannot demonstrate this ability they may not be the opportunity to continue along this career path.</p> <p>The WSJ writer states what is often known but not expressed, this model is inherent in the nuclear submarine culture.&nbsp; Isn’t that true for the other sectors mentioned herein?&nbsp; Isn’t it true for the oil and gas industry and your organization?</p> <h2 style="text-align: center;"><b>How does your organization assure that the high entry level bar is met for critical positions?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://online.wsj.com/news/articles/SB20001424052702303873604579495792882460298?mg=reno64-wsj&amp;url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB20001424052702303873604579495792882460298.html">http://online.wsj.com/news/articles/SB20001424052702303873604579495792882460298?mg=reno64-wsj&amp;url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB20001424052702303873604579495792882460298.html</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/05/no_newbies_.html2014-05-07T14:27:00.000Z2014-05-20T20:43:11.799ZThe Tax Man Commethnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 8</p> <p>For those of us in the United States, April 15<sup>th</sup> is the last day to file and pay your federal income tax for the prior calendar year.&nbsp; This is taxation on income earned regardless of its source.&nbsp; It is not a tax on the <i>wealth</i> of an individual—generally perceived to be monetary and real property by nature.</p> <p>According to one wise unknown prognosticator, “The real measure of your wealth is how much you’d be worth if you lost all your money.”[i]&nbsp; This author posits that this definition of wealth is embodied in a number of definitions of societal culture.[ii]&nbsp; Restated, one’s culture is a major component of his or her wealth!</p> <p>Politicians routinely seek to tax individual wealth.[iii]&nbsp; One can argue that the estate tax is exactly that!&nbsp; So is precedent set?</p> <p>As one of my college math professors often stated, “Because XYZ is (insert equation here); therefore, it is intuitively obvious that …”&nbsp; I must confess, that logic often escaped me at the time.</p> <p>Culture should be taxed!&nbsp; Say it isn’t so, how can that be?&nbsp; Well it is happening now.</p> <p>France’s “Culture Tax” on intellectual content hosted by media and ‘smart’ devices is justified as a need to subsidize the “cultural industries” digital transition of French audio visual content providers.[iv]&nbsp; This slippery slope suggests that wealth created by one class of economic actors can be taxed by another faction.</p> <p>Organizational culture is a major source of competitive advantage.&nbsp; It is one of the major differentiators of stakeholder value.&nbsp; This author has argued in this series and elsewhere that a strong safety culture is valuable and organizational transparency is another source of value.</p> <p>If this competitive advantage is taxed in an attempt level the playing field, it is likely that firms will not enter and may even exit such environments.&nbsp; Such a cultural tax is effectively an extension of “nationalization.”[v]</p> <p>Firms must be ever vigilant that their Intellectual Property (IP) is protected.&nbsp; Culture is a major tenet of this IP wealth.</p> <h2 style="text-align: center;"><b>What is your company doing to defend the value of its culture?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes<br> </h3> <p></p> <p></p> <p></p> <p>[i]&nbsp; <a href="http://tinybuddha.com/blog/the-real-measure-of-your-wealth/">http://tinybuddha.com/blog/the-real-measure-of-your-wealth/</a><br> [ii]&nbsp; <a href="https://www.tamu.edu/faculty/choudhury/culture.html">https://www.tamu.edu/faculty/choudhury/culture.html</a><br> [iii]&nbsp; <a href="http://en.wikipedia.org/wiki/Wealth_tax">http://en.wikipedia.org/wiki/Wealth_tax</a><br> [iv]&nbsp; <a href="http://www.businessweek.com/articles/2013-12-26/frances-culture-tax-could-hit-youtube-and-facebook">http://www.businessweek.com/articles/2013-12-26/frances-culture-tax-could-hit-youtube-and-facebook</a><br> [v]&nbsp; <a href="http://www.businessdictionary.com/definition/nationalization.html">http://www.businessdictionary.com/definition/nationalization.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/04/the_tax_man_commeth.html2014-04-16T14:11:00.000Z2014-04-16T14:12:42.761ZCultural Sinisterynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 7</p> <p>Grammarians will forgive the made up word in the title—it is meant to convey a sense of how culture can be used for ominous purposes as well as noble deeds.&nbsp; The Europe of the 1930s is a subject of the political dialogue as of this writing.</p> <p>Whether nationalism is being resurrected (perhaps it has never left us) is not the subject of this piece.&nbsp; Rather, one’s culture can become a tool for the unthinkable.[i]</p> <p>The German military had historically pledged allegiance to the state.&nbsp; However, in 1934 the oath was changed from allegiance to the country to one of allegiance to an individual.&nbsp; Feeling duty bound officers obeyed him even as he led the country and the world to destruction.[ii]</p> <p>Pundits talk of cultural transformation and/or change all the time as if management can will it on the organization.&nbsp; However, Nilofer Merchant noted in her 2011 blog, “If the strategy conflicts with how a group of people already believe, behave or make decisions it will fail.”[iii]</p> <p>Changing behavior is a challenge.&nbsp; Losing weight, stop smoking, start exercising, be a nicer person are all good New Year’s resolutions that for most (88%) have fallen off by this time of year.&nbsp; Vague aspirations not tied to specific behavioral modifications are not internalized or institutionalized by us humans.&nbsp; Making new behavior habit is the key.[iv]</p> <p>This author still hears industry conversations that suggest that the need for a culture of “more” and systemic safety is overblown.&nbsp; Can it be that this resistance and even denial is based on the overall industry long standing beliefs and behaviors?</p> <p>The clarion call to leaders changing the culture is keep the pressure on.&nbsp; Old habits die hard.&nbsp; And yes, use the Idiosyncrasies of your culture that can provide transformation advantage in a positive way.</p> <h2 style="text-align: center;"><b>What stands in your organization’s way of making safer operations habitual?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of three books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.&nbsp; He has studied cultural interactions for more than 30 years--his dissertation; <i>Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study)</i> is an early peer reviewed manuscript addressing the systemic structure of social relationships.</p> <h3>End Notes</h3> <p>[i] <a href="http://alphahistory.com/nazigermany/hitler-and-the-reichswehr/">http://alphahistory.com/nazigermany/hitler-and-the-reichswehr/ </a><br> [ii] <a href="http://en.wikipedia.org/wiki/Hitler_oath">http://en.wikipedia.org/wiki/Hitler_oath</a><br> [iii] <a href="http://blogs.hbr.org/2011/03/culture-trumps-strategy-every/">http://blogs.hbr.org/2011/03/culture-trumps-strategy-every/</a><br> [iv] <a href="http://blog.bufferapp.com/the-science-of-new-years-resolutions-why-88-fail-and-how-to-make-them-work">http://blog.bufferapp.com/the-science-of-new-years-resolutions-why-88-fail-and-how-to-make-them-work</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/04/cultural_sinistery.html2014-04-03T13:29:00.000Z2014-04-03T13:31:18.615ZSustainability?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 6</p> <p>Pundits talk about change and the need for all of us to respond to environmental forces whether business or life driven.&nbsp; Early adopters are quick to try new things and invest reasonable amounts in the <i>potential</i> future.&nbsp; The fundamental challenge is whether or not the energy expended makes the <i>new</i> the reality.</p> <p>As a physics student, this author learned that applied energy will cause an electron jump to a higher orbit.&nbsp; However, once that energy was withdrawn, the electron returns to its original orbit steady state.&nbsp; This allegory was applied to human behavior in this blog, <i>Repetita Placent</i>, Volume 2 Number 9—May 2, 2013.</p> <p>So the challenge becomes sustaining the higher energy level.&nbsp; It is easy to conduct a “rah rah” session.&nbsp; A workshop, offsite or team building initiative will get everyone on the same <i>page</i>; today.&nbsp; But what about tomorrow?</p> <p>Cultural transformation is physics.&nbsp; Energy must be applied and sustained.&nbsp; When management believes that a temporal investment is enough, they will be disappointed.&nbsp; A perpetual outlay is required.</p> <p>Commitment is hard.&nbsp; It requires a decision with recognition that accountability is integral.&nbsp; Human energy cannot be withdrawn or else, the value drops to a lower level.</p> <p>When an organization embarks on a change management program, it must recognize that transformation is truly that.&nbsp; Allowing individuals, departments or the enterprise to retreat cannot be an option.&nbsp; The energy cannot be withdrawn or the old order will reemerge.</p> <h2 style="text-align: center;"><b>How does your firm assure transformation sustainability?<br> </b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/03/sustainability_.html2014-03-17T14:08:00.000Z2014-03-17T14:11:13.587ZNonlinearnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 5</p> <p>We humans embrace change and we have made this point in these <i>virtual</i> pages several times.&nbsp; However, we struggle with disruptive transformations.&nbsp; For example, natural disasters force change upon unwilling and sometimes unsuspecting participants. &nbsp;Yet most overcome and when interviewed later many actually see the positive in life changing incidents.</p> <p>This author has made the case for a couple of decades at least that much of management thought is more along the lines of evolution as opposed to revolution.&nbsp; Most management gurus build upon the work of their managerial forefathers. [i]&nbsp; Management principles advance in a linear fashion.</p> <p>Economist Joseph Schumpeter’s <i>Creative Destruction</i> suggests a level of mutation that results from the rebuilding of process norms.[ii]&nbsp; Some data suggests that this process accounts for more than 50 percent of the growth in productivity.[iii]</p> <p>So the evidence suggests that innovation or nonlinear change adds the most value, yet managerial philosophy tends to move in a less dramatic manner.&nbsp; In other words, human nature has not changed much if at all when measured at the fundamental levels.</p> <p>For almost four years, the energy industry has been undergoing a linear/nonlinear transformation to a new culture; one of a Safety Culture as defined by the nine characteristics issued by BSEE.[iv]&nbsp; This process is linear in that managerial practices are evolving as good practices.[v]</p> <p>This process is nonlinear in the sense that desired end state is a cultural transformation that will be enabled by new technologies.[vi]&nbsp; The digital engineer of this new Culture of Safety will perform his or her work in a much different manner than today.</p> <p>Much as our horse and buggy forefathers would not recognize today’s metropolitan traffic, this generation will not recognize tomorrow’s Culture of Safety drilling operation.&nbsp; However, human instincts and fundamental drivers will not have changed.</p> <p>In our technologically driven society, this tension at the margin will continue.&nbsp; The linear and nonlinear will coexist and act as accelerators as well as brakes on change management processes.</p> <h2 style="text-align: center;"><b>How is your organization implementing nonlinear cultural change?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i] Shemwell, Scott M. (1993). Management Theory - Evolution Not Revolution, <u>Proceedings of the 11<sup>th</sup> Annual Conference of the Association of Management</u>, <u>11</u> (2), pp. 74 - 78. <a href="http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution">http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution</a><br> [ii] <a href="http://www.econlib.org/library/Enc/CreativeDestruction.html">http://www.econlib.org/library/Enc/CreativeDestruction.html</a><br> [iii] <a href="http://economics.mit.edu/files/1785">http://economics.mit.edu/files/1785</a><br> [iv] <a href="http://www.bsee.gov/uploadedFiles/BSEE/Safety/Robust%20Safety%20Culture%20Poster.pdf">http://www.bsee.gov/uploadedFiles/BSEE/Safety/Robust%20Safety%20Culture%20Poster.pdf</a><br> [v] Shemwell, 1993.<br> [vi] <a href="http://www.amazon.com/IMPLEMENTING-CULTURE-SAFETY-PERFORMANCE-COMPLIANCE-ebook/dp/B00ILXY7ZC/ref=sr_1_3?s=books&amp;ie=UTF8&amp;qid=1393686437&amp;sr=1-3&amp;keywords=dutch+holland+phd">http://www.amazon.com/IMPLEMENTING-CULTURE-SAFETY-PERFORMANCE-COMPLIANCE-ebook/dp/B00ILXY7ZC/ref=sr_1_3?s=books&amp;ie=UTF8&amp;qid=1393686437&amp;sr=1-3&amp;keywords=dutch+holland+phd</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/03/nonlinear.html2014-03-03T15:09:00.000Z2014-03-03T15:11:43.360ZCyber Tnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 4</p> <p>Almost a decade ago this author put forth the concept of a Chief Security Officer, an individual responsible for both physical and cyber security of the global enterprise.[i]&nbsp; One of the points made in support of that position was the long-standing dispersed information management that was integrated with plant operations.</p> <p>In another piece of that era, an economic risk framework was put forth that incorporated quantitative as well as qualitative data and information into a decision support model.&nbsp; <i>Aspects of such a model might include:</i></p> <ul> <li><i>An assessment of the relative exposure and identification of vulnerability entrance points</i></li> <li><i>Stochastic modeling of event possibilities and the development of sensitivities to possibilities that can then be quantified as a range</i></li> <li><i>Predictive modeling of a set of possible eventualities and their impact on the organization</i></li> </ul> <p><i>Such a model can be built using available software tools incorporating the specific data and information to which an individual firm may expect to be exposed.&nbsp; Finally, modeling the once-in-a-lifetime cataclysmic event that only the most pessimistic expect and developing response plans to Armageddon is possible, and, importantly, is being done in the power industry today.<b>[ii]</b></i></p> <p>The threat to control systems is not new.&nbsp; <i>In early 2000, an employee from an Australian software manufacturer was fired, and when he was turned down for a job with the local government, he retaliated using wireless technology illegally acquired from his former employer to release millions of gallons of raw sewage</i>.[iii]</p> <p>Flash forward ten years and Cyber Terrorism has been taken to a new level.&nbsp; This is not to say nothing has been done, but that the challenges rise at a meteoric rate.</p> <p>Historically, there has been an “air gap” between control systems and other IT systems on Mobil Offshore Drilling Units (MODUs).&nbsp; In other words a physical barrier or disconnect.&nbsp; However, poor system management procedures and a growing hunger for data may compromise this barrier.[iv]</p> <p>Poor IT governance has led to significant damage from cyber-attacks.&nbsp; It appears that the retailer, Target cybersecurity team raised concerns prior to cyber-attack last year.&nbsp; Perhaps lost in the volume of warning received, yet it is apparent that the company’s payment network did not have sufficient isolation from the rest of the firm’s IT systems.[v]</p> <p>So we raise the question once again.&nbsp; Is it time for a CSO reporting directly to the CEO?&nbsp; Much like the focus of enterprise risk management, this would focus, fund and measure the firm’s exposures to physical and cyber terrorism.&nbsp; This individual would also be responsible to assure <i>zonal isolation</i> for IT networks.</p> <h2 style="text-align: center;"><b>Does your firm’s governance model assure the isolation of control systems?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.energycentral.com/gridtandd/communicationsandsecurity/articles/957/Security-Integration">http://www.energycentral.com/gridtandd/communicationsandsecurity/articles/957/Security-Integration</a><br> [ii] Shemwell, Scott M. (2004, April) Integrated Physical and Cyber Security: A High Value Proposition for the Power Industry. <u>Author</u>.<br> [iii] Ibid.<br> [iv] <a href="http://www.digitalenergyjournal.com/n/Cyberattacks_to_drill_rigs_understanding_the_threats/1eccd4a9.aspx">http://www.digitalenergyjournal.com/n/Cyberattacks_to_drill_rigs_understanding_the_threats/1eccd4a9.aspx</a><br> [v] <a href="http://online.wsj.com/news/articles/SB10001424052702304703804579381520736715690?mg=reno64-wsj&amp;url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304703804579381520736715690.html">http://online.wsj.com/news/articles/SB10001424052702304703804579381520736715690?mg=reno64-wsj&amp;url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304703804579381520736715690.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/02/cyber_t.html2014-02-17T18:42:00.000Z2014-02-17T18:45:44.964ZMaturity Modelnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 3</p> <p>The last two words of the last issue are <i>maturity curve</i> as it relates to organizational governance.&nbsp; This follows a point of view that human thinking as well as technology develops and matures over time.&nbsp; Regarding management, from Wikipedia, “The term &quot;maturity&quot; relates to the degree of formality and optimization of processes, from ad hoc practices, to formally defined steps, to managed result metrics, to active optimization of the processes.”[i]</p> <p>The Capability Maturity Model (CMM) was first described in 1989 book <i>Managing the Software Process</i> as a software development process maturity framework.[ii]&nbsp; It has subsequently become a general model to aid many business processes.[iii]</p> <p>Its roots can be traced back to a need to manage complex software development processes beginning with the broad use of computer systems, circa 1960s.&nbsp; The model began its transition into its current form in the 1980s when the US Department of Defense needed a method for “evaluating the capability of software contractors as part of awarding contracts.”[iv]&nbsp; The requirement to integrate software projects across an enterprise transformed the early CMM into the current Capability Maturity Model Integration (CMMI) installment.[v]</p> <p>In 2004, the author applied the maturity concept to the then emerging field of the digital oilfield.[vi]&nbsp; At the time, there was a one size fits all approach to IT systems and it became clear that some oil assets did not require the full integrated system many vendors were selling.&nbsp; This model sought to align IT with business requirements—does this sound familiar?&nbsp; The resulting Asset Maturity Model (AMM) remains a unique framework for assessing the <i>degree of formality and optimization of processes, from ad hoc practices, to formally defined steps, to managed result metrics, to active optimization of the </i>digital oilfield aka, Integrated Operations processes</p> <p>In 2011, PennEnergy and the author were researching how the industry was implementing the new Safety and Environmental Management System (SEMS) requirements for US Outer Continental Shelf (OCS) drilling operations.[vii]&nbsp; SEMS made and continues to make formidable changes to the upstream technical and business processes.</p> <p>As part of that research effort along with the changes that were being made to Standard Operating Procedures (SOP) suggested that modifications would be required to organizational governance models.&nbsp; For example, while it has always been the case, regulatory compliance is now <i>explicitly mandated</i> at the operator and supply chain level.</p> <p>As such, the industry has made changes to the manner the Well Construction Interface Document Guidelines are being used.[viii]&nbsp; Bridging documents are now extended to all suppliers of goods and services used in OCS drilling operations.&nbsp; Logically, this can be expected to extend to all US (and perhaps globally) drilling operations in the future.&nbsp; Therefore, it was logical to extend the AMM and apply it to new governance requirements—Asset/Equipment Integrity Governance. (AEIG).</p> <p><i>AEIG captures all aspects of organizational governance as extended to the supply chain and operations/production process.&nbsp; It provides management with a quantifiable approach that incorporates the subjective knowledge of the organization and other constituents into a singular model.<b>[ix]</b></i>&nbsp; The first of the AEIG four pillars is organizational maturity.</p> <p>Enterprise risk and financial exposure is at an all-time high.&nbsp; AEIG suggests to markets that, “Strong governance demonstrates a <b>strength of purpose</b>” or as noted in the last edition—Strength of Ideas.[x]</p> <h2 style="text-align: center;"><b>What is the maturity level of your governance model and should it be higher?</b><b></b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i] <a href="http://en.wikipedia.org/wiki/Capability_Maturity_Model">http://en.wikipedia.org/wiki/Capability_Maturity_Model</a><br> [ii] <a href="http://www.amazon.com/Managing-Software-Process-Watts-Humphrey/dp/0201180952">http://www.amazon.com/Managing-Software-Process-Watts-Humphrey/dp/0201180952</a><br> [iii] <a href="http://en.wikipedia.org/wiki/Capability_Maturity_Model">http://en.wikipedia.org/wiki/Capability_Maturity_Model</a><br> [iv] Ibid.<br> [v] <a href="http://www.sei.cmu.edu/cmmi/">http://www.sei.cmu.edu/cmmi/</a><br> [vi] <a href="http://www.worldoil.com/November-2004-Knowing-the-economic-value-of-information.html">http://www.worldoil.com/November-2004-Knowing-the-economic-value-of-information.html</a><br> [vii] <a href="http://www.bsee.gov/Regulations-and-Guidance/Safety-and-Environmental-Management-Systems---SEMS/Safety-and-Environmental-Management-Systems---SEMS/">http://www.bsee.gov/Regulations-and-Guidance/Safety-and-Environmental-Management-Systems---SEMS/Safety-and-Environmental-Management-Systems---SEMS/</a><br> [viii] American Petroleum Institute. (2013, November). <u>Well Construction Interface Document Guidelines (API Bulletin 97, First Edition)</u>. Washington, D.C.: Author.<br> [ix] <a href="http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf">http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf</a><br> [x] Ibid.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/02/maturity_model.html2014-02-04T14:40:00.000Z2014-02-04T14:42:52.763ZStrength of Ideasnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 2</p> <p>History is replete with examples where ideas have overcome significant hurdles.&nbsp; One example is the conversion of the Roman Empire to Christianity in 312 AD.[i]</p> <p>Some may argue that this was almost three hundred years after the Crucifixion and that it was a societal transition not simply a decreed event.&nbsp; The counter point is that a transformation along the magnitude from one of a pagan society to Christianity in less than three centuries of the almost 200,000 years of human existence is very quick indeed.[ii]</p> <p>The Twentieth Century entertainer and one time Vaudeville performer, Eddie Cantor famously said, “It takes 20 years to make an overnight success.”[iii]&nbsp; More recently and popularized by Malcolm Gladwell in his book <i>Outliers</i> (published 2008), the so-called 10,000 hour rule suggests that it takes about 10 years to master a field of expertise—the principle actually dates to a 1993 study.[iv]</p> <p>As early as 1993, this author was arguing that good ideas like good wine or scotch gets better with age.&nbsp; This hypothesis is that the current state of the practice of management is a function of all the human organizational knowledge that preceded it.[v]&nbsp; Some readers may recall that this was during an era when many new management techniques emerged from a number of practitioners claiming new and often profound business understanding.</p> <p><i>On a separate note this article, Management Theory - Evolution Not Revolution has been down loaded almost 15,000 times and I have long suspected it is often referenced in high school and college student papers.</i></p> <p>Another example, the Smart Phone disrupted the cell phone market and challenges the PC for computing dominance.&nbsp; Achieving critical market share towards the end of the last decade, it too can trace its roots to IBM/ BellSouth in 1993.[vi]</p> <p>Good ideas honed by passionate and committed people do change the world.&nbsp; Disruptive beliefs, knowledge and/or technologies have given us the society we enjoy today.&nbsp; They often just don’t happen overnight.</p> <p>Circa the 1970’s a popular poster was of a cat hanging by it paws from a tree branch.&nbsp; Tagged, “Hang in there,” it intention was one of motivation.[vii]&nbsp; So stay after your New Years’ Resolutions and nurture those great ideas.&nbsp; According to the French scientist, Louis Pasteur, “Fortune favors the prepared mind.”[viii]</p> <p>So it goes with good governance.&nbsp; Organizational governance models are driven by these same behavioral models.&nbsp; Make this New Year the one your firm’s governance model advances up the maturity curve.</p> <h2 style="text-align: center;"><b>How will you nurture your good ideas this New Year?</b></h2> <h2>&nbsp;</h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.bbc.co.uk/history/ancient/romans/christianityromanempire_article_01.shtml">http://www.bbc.co.uk/history/ancient/romans/christianityromanempire_article_01.shtml</a><br> [ii]&nbsp; <a href="http://www.librarything.com/topic/72547">http://www.librarything.com/topic/72547</a><br> [iii] <a href="http://www.brainyquote.com/quotes/authors/e/eddie_cantor.html">http://www.brainyquote.com/quotes/authors/e/eddie_cantor.html</a><br> [iv] <a href="http://www.wired.com/opinion/2013/05/so-you-know-that-10000-hours-makes-an-expert-rule-bunk/">http://www.wired.com/opinion/2013/05/so-you-know-that-10000-hours-makes-an-expert-rule-bunk/</a><br> [v] <a href="http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution">http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution</a><br> [vi] <a href="http://www.techhive.com/article/199243/a_brief_history_of_smartphones.html">http://www.techhive.com/article/199243/a_brief_history_of_smartphones.html</a><br> [vii] <a href="http://en.wikipedia.org/wiki/Hang_in_there,_Baby">http://en.wikipedia.org/wiki/Hang_in_there,_Baby</a><br> [viii] <a href="http://www.brainyquote.com/quotes/quotes/l/louispaste159478.html">http://www.brainyquote.com/quotes/quotes/l/louispaste159478.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/01/strength_of_ideas.html2014-01-16T18:52:00.000Z2014-01-16T18:58:29.274ZInto the Breachnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 3 Number 1</p> <p>At the end of the year 2013 we learned that shopping at a major US retail company could end up compromising very personal financial information and perhaps enable thieves to steal from you.&nbsp; Earlier we discovered that the new healthcare.gov website did not meet certain technical standards much less the expectations of the public.&nbsp; Finally, many gifts purchased online did not arrive before Christmas generating negative comments about both the affected retailers and shipping companies.</p> <p>Cyber security and operational performance are critical in today’s online society and the energy (digital oilfield) and other critical industries are no exceptions.&nbsp; However, as previously discussed in this blog Normal Incident Failure (NIF) theory predicts eventual failures in complex systems.[i]&nbsp; However, High Reliability Management (HRM) suggests that NIF are not pre-ordained.[ii]</p> <p>Many of the notable, high profile incidents of the energy industry have also been dissected in these pages as well.&nbsp; In our imperfect human world public organizational shortcomings happen.</p> <p>What happens next may determine how the public and governments <i>feel</i> about the incident.&nbsp; Crisis management and rapid response aside, a lack of honest and forthcoming information from the top levels of the affected organization is often the tipping point from a bad situation to a disastrous one.</p> <p>The culture of an organization determines how it responds to adversity.&nbsp; “How we do things around here,” dictates our instinctual response during times of crisis.[iii]&nbsp; The trait cannot be counseled by crisis management consultants or the legal department.</p> <p>Humans routinely respond in emergencies and save others from certain injury of death.&nbsp; These responders typically say that their “gut kicked in” or their “training” made their decision to act unconscious.</p> <p>As the energy industry transitions to a culture of safety, one sign of success will be management’s instinctive response to a future incident.&nbsp; If talking points and legalize are the first words then there is still work to be done.</p> <h2 style="text-align: center;"><b>&nbsp;</b></h2> <h2 style="text-align: center;"><b>What is your organization’s instinctive response during crisis management?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i]&nbsp; Perrow, Charles. (1999). <u>Normal Accidents: Living with High-Risk Technologies</u>. New Jersey: Princeton.<br> [ii]&nbsp; Holland, Winford “Dutch” E. and Shemwell, Scott M. (in press<u>)</u>. <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. New York: Xlibris.<br> [iii] Ibid.</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2014/01/into_the_breach.html2014-01-02T15:08:00.000Z2014-01-02T15:10:24.178ZReflectionnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 24</p> <p>As we close out the Gregorian calendar year, it is common practice to reflect on the past year and note our accomplishments as well as review our short comings.[i]&nbsp; With this edition, this blog closes our second year addressing contemporary issues surrounding governance models and transparency.</p> <p>During this period our world has undergone major transformations.&nbsp; The upstream oil and gas industry continues to strengthen its safety processes, in the United States heath care has been renovated and globally security remains challenging among others.</p> <p>The Gregorian calendar is just one method of marking time.&nbsp; On January 31, 2014 the Chinese year 4712 begins.[ii]&nbsp; Other cultures and religions celebrate the New Year on other dates as well.[iii]</p> <p>One constant throughout is the “clash of cultures.”&nbsp; In this series we have discussed issues of cultural change and cultural interaction a number of times.&nbsp; Moreover, in our forthcoming book we will deep dive into the cultural transformation process heavy industry must undergo to assure compliance with societal demands.[iv]</p> <p>Driven by a number of factors including technology, .i.e. social media, we can expect the rate of change and cross cultural interaction to remain high and perhaps accelerate.&nbsp; Moreover, the nuances of a given culture are more apparent than ever.</p> <p>This suggests that communication between cultures will continue to be demanding.&nbsp; However, tools are available enable more effective communications among disparate groups.[v]</p> <h2 style="text-align: center;"><b>How will your organization’s governance model handle accelerated cross cultural interactions?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i] &nbsp;<a href="http://www.timeanddate.com/calendar/gregorian-calendar.html">http://www.timeanddate.com/calendar/gregorian-calendar.html</a><br> [ii]&nbsp; <a href="http://www.infoplease.com/spot/chinesenewyear1.html">http://www.infoplease.com/spot/chinesenewyear1.html</a><br> [iii]&nbsp; <a href="http://en.wikipedia.org/wiki/List_of_calendars">http://en.wikipedia.org/wiki/List_of_calendars</a><br> [iv] &nbsp;Holland, Winford “Dutch” E. and Shemwell, Scott M. (in press<u>)</u>. <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. New York: Xlibris.<br> [v] Shemwell, Scott M. (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/12/reflection.html2013-12-16T15:26:00.000Z2013-12-19T21:20:40.882ZA Jury of Your Peersnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 23</p> <p>During the first week of December 2013, the criminal trial starts for a former BP engineer accused of destroying evidence during the probe of the 2010 Deepwater Horizon incident.[i]&nbsp; Sometime in the future we will know its outcome and what if any punishment this individual will face.&nbsp; Moreover, this trial is billed as the “first” which suggest others may follow.</p> <p>In our recent release of the second edition of the seminal research study, The State of SEMS we reviewed the early SEMS Audit results, due November 15, 2013.&nbsp; While seventy-two operators submitted audits on time, BSEE ordered five companies to halt offshore operations since the missed the deadline.[ii]</p> <p>In addition, seven other companies that submitted audit plans but not the results have been ordered to complete the assessments immediately and <b><i>certify under penalty of perjury</i></b> that they have SEMS programs in place.&nbsp; Fines of up to $40,000 per day can result.[iii]</p> <p>Conventional wisdom says that “we work in a dangerous industry and will always have accidents in the normal course of business.”[iv]&nbsp; Pundits go on to believe that as a rule-of-thumb individual employees are not exposed to jail time in the course of their daily business.</p> <p>Conventional wisdom has been turned on its head.&nbsp; Clearly, individual employees are being held accountable for actions in the criminal court system; regardless of their attorneys’ believe charges should not have been filed.&nbsp; Moreover, permits to operate have been revoked and substantial fines are likely.</p> <p>It is time for new business and ethical models.&nbsp; The Normal Accident Theory is being challenged by new models of High Reliability Management techniques.[v]&nbsp; This wake-up call should reverberate across global industry boundaries.</p> <h2 style="text-align: center;"><b>Are actions you take every day exposing you and your company to legal proceedings?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i]&nbsp; <a href="http://www.bloomberg.com/news/2013-12-02/ex-bp-engineer-begins-first-criminal-trial-from-oil-spill.html">http://www.bloomberg.com/news/2013-12-02/ex-bp-engineer-begins-first-criminal-trial-from-oil-spill.html</a><br> [ii]&nbsp; Shemwell, Scott M. (2013, November). The State of SEMS: The Industry Transformation to a Culture of Safety--An Overview of Current Deepwater Safety and Environmental Management Systems Practices and Trends (2<sup>nd</sup> Ed.). <u>A PennEnergy Research Center Report</u>. <a href="http://ogjresearch.stores.yahoo.net/the-state-of-sems.html">http://ogjresearch.stores.yahoo.net/the-state-of-sems.html</a><br> [iii]&nbsp; Ibid.<br> [iv]&nbsp; Perrow, Charles. (1999). <u>Normal Accidents: Living with High-Risk Technologies</u>. New Jersey: Princeton University Press.<br> [v]&nbsp; Holland, Winford “Dutch” E. and Shemwell, Scott M. (in press<u>)</u>. <u>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</u>. New York: Xlibris.</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/12/a_jury_of_your_peers.html2013-12-02T19:03:00.000Z2013-12-02T19:22:24.078ZSocial Media Goes BCnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 22</p> <p>By all accounts the Initial Public Offering (IPO) of Twitter (<a target="_blank" href="http://markets.financialcontent.com/pennwell.ogj/quote?Symbol=321%3A22371814" adhocenable="false">TWTR</a>:NYSE) on November 7, 2013 was a great success.&nbsp; One interesting item; beginning September 12, Twitter used Twitter to publicize this process.&nbsp; With modest valuation expectations, this firm dodged all the pitfalls of Facebook’s debut. [i]&nbsp; Historians may look back on this period as the date social media became mainstream.</p> <p>Social media is used for a wide variety of purposes.&nbsp; Two include the collection and dissemination of information during times of crisis.</p> <p>For almost a decade, Open Source data has been used in support of security.&nbsp; Much of this effort has been developed to support government and military operations and is now commercially available.[ii]&nbsp; Additionally, colleges and universities use social media tools to alert the student and general populations to “real time” situations such as the Virginia Tech campus shooting in 2007.[iii]</p> <p>As with other technologies there are benefits and potential pitfalls.&nbsp; For example, during the Virginia Tech incident, misinformation was broadcast as rapidly as good information.</p> <p>In both cases these means are part of the Business Continuity (BC) process.&nbsp; Whether locking a campus down or alerting an oil and gas facility in North Africa of an impending terrorist attack, social media is now incorporated into Enterprise Risk Management. [iv]</p> <p>We have touched on two examples.&nbsp; Other mainstream uses include how employees manage confidential information, corporate espionage, organization reputation attack, marketing, community outreach and many others.</p> <h2 style="text-align: center;"><b>Does your organization have a social media policy as part of its risk management and business continuity program?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i]&nbsp; <a href="http://www.nydailynews.com/news/national/twitter-public-new-york-stock-exchange-article-1.1509472">http://www.nydailynews.com/news/national/twitter-public-new-york-stock-exchange-article-1.1509472</a><br> [ii]&nbsp; Kuiper, Marcus A. and Shemwell, Scott M. (2013, February). Mitigating Operational Risk Using the Power of Social Media. <u>Petroleum Africa Magazine</u>. pp. 28-31.<br> [iii]&nbsp; <a href="http://www.computerworld.com/s/article/9017027/Virginia_Tech_shooting_shows_benefits_pitfalls_of_social_networking_sites">http://www.computerworld.com/s/article/9017027/Virginia_Tech_shooting_shows_benefits_pitfalls_of_social_networking_sites</a><br> [iv]&nbsp; Pickren, Ann. (2013, Fall). Social Media: Risk and Reward for BC Professionals. <u>Disaster Recovery Journal</u>. pp. 14-16.</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/11/social_media_goesbc.html2013-11-18T18:40:00.000Z2013-11-18T18:43:01.147Z(Ax = b) > C^4noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 21</p> <p>Most Type-A business personalities believe that they are at the top of the game when it comes to multi-tasking.[i]&nbsp; There constant sense of urgency in a very competitive environment can cause them to over book commitments and some may be seen rushing from one meeting to another.</p> <p>However, there is an argument to be made that humans do not multi-task well at all.&nbsp; If we were good at, why do most school zones bar talking on a cell phone while driving?[ii]&nbsp; Moreover, as previously noted in this series distracted airline pilots have missed critical items in routine checklists resulting in the loss of life in some cases.[iii]</p> <p>Furthermore, this series has addressed the increasing complexity of regulatory compliance management required from all members of the supply chain.[iv]&nbsp; However, we all know our world has additional dimensions of complexity as well.</p> <p>Writing about the management of large organizations, the consulting firm, McKinsey has identified four types of complexity firm’s face.[v]&nbsp; We would like to extend that archetypal to field operations and specifically <i>asset integrity management</i> and its governance model.</p> <p><img width="593" height="129" src="/content/dam/Pennenergy/online-articles/2013/November/Shemwell%201.JPG"></p> <p>With the demands on management to “juggle” many tasks and requirements in an increasingly multifaceted climate, new managerial tools are needed.&nbsp; It is important to note that simply simpler solutions are not satisfactory.&nbsp; It is essential that the High Fidelity of complexity not be lost.</p> <p>Decision makers at all levels require Ergonomic (Human Factor[vi]) systems that do not try to abridge complex situations, but enable individuals and teams to understand the full dimension of the issue at hand.&nbsp; This model was first identified by the author in his doctoral dissertation.[vii]</p> <p><i>Solving the title: This is a mathematical expression/equation. </i><b><i>Ax = b</i></b><i> is an expression for simultaneous equations.<b>[viii]</b>&nbsp; <b>C<sup>4</sup></b> is an expression of the four types of Complexity multiplied by each other.<b>[ix]</b>&nbsp; It is meant to suggest that the “amount” of Complexity can be quite high.</i></p> <p><i>Pure mathematicians will forgive this “play-on-math”. &nbsp;However, the title suggests that tools such as simultaneous equations can provide solutions to high complexity environments and hence, the use of the “greater than (&gt;)” operator.</i></p> <h2 style="text-align: center;"><b>How does your organization simplify the decision-making process without losing high fidelity?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; McLeod, S. A. (2011). <i>Type A Personality - Simply Psychology. </i>Retrieved from <u><a href="http://www.simplypsychology.org/personality-a.html">http://www.simplypsychology.org/personality-a.html</a></u><br> [ii]&nbsp; <a href="http://www.thenewatlantis.com/publications/the-myth-of-multitasking">http://www.thenewatlantis.com/publications/the-myth-of-multitasking</a><br> [iii]&nbsp; Governing Energy. (2012, August 2). <u>Flaps &amp; Slats</u>. Tulsa: PennEnergy.<br> [iv]&nbsp; Governing Energy. (2012, September 4). <u>It’s Very Complicated</u>. Tulsa: PennEnergy.<br> [v]&nbsp; <a href="http://www.mckinsey.com/insights/organization/putting_organizational_complexity_in_its_place">http://www.mckinsey.com/insights/organization/putting_organizational_complexity_in_its_place</a><br> [vi] Proctor, Robert W. and Van Zandt, Trisha. (2008). <u>Human Factors in Simple and Complex Systems</u>. (Second Edition). Boca Raton: CRC Press. p. 9.<br> [vii]&nbsp; Shemwell, Scott M. (1996). <u>Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study)</u>. Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.<br> [viii]&nbsp; <a href="http://www.math.uconn.edu/~pellico/Lecture%202%20T%207-10.pdf">http://www.math.uconn.edu/~pellico/Lecture%202%20T%207-10.pdf</a><br> [ix]&nbsp; <a href="http://www.mathsisfun.com/definitions/exponent.html">http://www.mathsisfun.com/definitions/exponent.html</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/11/_ax_b_c4.html2013-11-07T15:10:00.000Z2013-11-07T15:21:26.497ZDon’t Nuke It!noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 20</p> <p>Over the past several years many pundits, including this commentator have warmly supported the use of good practices from other industry sectors, including the nuclear power generation segment.&nbsp; A complex and highly regulated sector it would seem to have much to teach deepwater drilling operations as this sector’s economic actors implement Safety and Environmental Management Systems (SEMS).</p> <p>However, in several editions of this blog we have argued that sector good practices many not linearly translate across sectors.&nbsp; While organizational learning can come from a variety of sources, due diligence must be performed to determine the level of correlation and applicability to one’s company.</p> <p>The nuclear power generation sector is high profile, very regulated and demands a very high level of performance 24/7.&nbsp; It would seem to be a very good place to look emulate.&nbsp; It might be but with a few notable exceptions.</p> <p>The concept of High Reliability Management (HRM) is receiving new scrutiny in light of major global incidents that are exposing critical infrastructure at the societal <i>impact</i> level.&nbsp; The concept of High Reliability Organizations is not new and has been broached in an earlier edition of this blog.&nbsp; Academic research on this business model dates to at least 1987.</p> <p>In light of the increasingly complex nature of offshore drilling, it may be time to revisit this construct and the lessons learned by other sectors.&nbsp; Moreover, we will challenge direct comparisons and posit adjustments that may more appropriate for a High Reliability Drilling Operation (HRDO).</p> <p>In their book, the authors assess the Diablo Canyon nuclear power plant in California and compare it to a generic HRM process.&nbsp; In the following table, we use their tradition HRO as it relates to Diablo Canyon as part of a comparative analysis with HRDO.</p> <p><i>Disclaimer:&nbsp; The Traditional HRO Management features shown in the right column are applicable to a nuclear power plant and is quoted directly (in italics) from the cited source.&nbsp; The left column, High Reliability Management (HRM) for Drilling Operations are adapted from the cited generic table.&nbsp; Finally, HRDO features that differ from nuclear plant operations are in <b>bold</b> for the convenience of the reader.</i></p> <p><img src="/content/dam/Pennenergy/online-articles/2013/October/Shemwell%20October%20graphic.JPG"></p> <p>This is too broad a subject to be adequately covered in the blogging format.&nbsp; This brief high level analysis is only meant as a cautionary tale as the industry seeks to learn and adopt “good practices” from others.</p> <p>Business models and academic constructs must be carefully considered for relevance and adopted only after careful thoughtful review.&nbsp; This is true not only for cross-sector good practices; inter-segment good practices must be subjected to the same scrutiny as well.</p> <h2 style="text-align: center;"><b>What is your organization’s due diligence process for adopting “good practices”?</b></h2> <p>Readers interested in learning more about High Reliability Management and its use in the energy sector are invited to contact the author.</p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i] Roe, Emery and Schulman, Paul R. (2008). <u>High Reliability Management: Operating on the Edge</u>. California: Stanford Business Books. p. 61.</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/10/don_t_nuke_it_.html2013-10-17T14:01:00.000Z2013-10-17T14:15:04.181ZDisciplinenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 19</p> <p>Any given project requires a structure and the discipline to adhere to that constitution.&nbsp; Without enforceable <i>structural dynamics</i>, projects are often late and over budget.[i]&nbsp; So it is with organizational governance models.</p> <p>Strong Governance Bond models are only as sound as the stakeholders, through the Board of Directors, are willing to demand.&nbsp; As with most things in life, the Board of Directors must “Walk the Talk” if they are to effectively implement the required Strong Governance Bond model necessary to protect shareholder value and assure other stakeholders that the organization is doing the right thing(s) the right way.</p> <p>A little under 90 days after this publication we will all enter the New Year with its traditional New Year’s Resolutions to lose weight, save more money, be better people, etc.&nbsp; Resolutions are easy to say and hard to actually accomplish.</p> <p>Many of us begin with good intentions, e.g., the increased population at the local health club during January.&nbsp; However, sustainability is a function of the level of discipline applied—health club population by June.</p> <p>As of this writing the BP Macondo incident is a Ghost of three and a half years Past.&nbsp; In the opinion of this commentator and others, the Ghost of the here and now or Present is a sector in transition.&nbsp; Changes to in the law regarding safety and environmental management are finalized, yet by some measures their reception to date is somewhat tepid.</p> <p>To be sure the major economic actors have implemented the new regulations into their operations.&nbsp; However, many of the challenges that remain are with the supply chain and their ability/interest to up their game.</p> <p>The Ghost of the Future will not depend on regulatory requirements as they will be generally adhered to.&nbsp; Rather, it will be about the capability of the major economic actors to provide the governance <i>structural dynamics</i> discipline necessary to assure thousands of suppliers do not enable scenarios of the Ghost of the Past.</p> <h2 style="text-align: center;"><b>What governance discipline does your organization have in place?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf">http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf</a></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/10/discipline.html2013-10-02T21:00:00.000Z2013-10-02T21:01:35.572ZStrong vs. Weak?noemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 18</p> <p>It may be obvious that one would choose strong over weak.&nbsp; But before we answer a perceived question, perhaps the actual question should be posed.</p> <p>“It depends.”&nbsp; Ask a management consultant for a definitive answer and you most likely will hear that statement, sometimes in the form of a question.&nbsp; Ask an IT guy, “How much computing power do you need?” and you will most likely get the same response.</p> <p>In their forthcoming book, <i>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</i>, the authors put for a Strong vs. Weak Bond Governance Model.[i]&nbsp; The book makes the case that when <i>godlike</i> incidents akin to the impact of warfare on society by corporation are possible, a strong bond governance model is appropriate.&nbsp; In other words, direct and sustained interest in field operations by top management and even the board of directors.</p> <p>The Strong vs. Weak Governance Bond construct is taken from nature—chemical and atomic bonding.&nbsp; All molecules and atoms have a weak attraction.&nbsp; Strong bonds; however, only exist at the atomic level.&nbsp; The molecular and atomic Behaviors as a function of Conditions result in Relationships constrained by the nature of the bond.</p> <p>In this series, we continue to make the argument that the energy sector, particularly oil and gas meet the test for Strong Governance Bond based on the “magnitude of the decisions” being made at all levels.&nbsp; This is not to say that engineering decisions will be made by the CEO.</p> <p>A strong model is used by High Reliability Organizations (HRO) and as part of that model, trained; knowledgeable personnel are empowered to make the right decisions in the field.&nbsp; The strong model provides an organization with the capability to become and remain and HRO.</p> <p>From their book, <i>Implementing a Culture of Safety</i> the authors note, “The High Reliability Organization (HRO) model is one that enables rapid adaption in increasingly complex <i>Conditions</i>.&nbsp; An HRO has processes that provide cognitive infrastructure that enables simultaneous adaptive learning and reliable performance.”</p> <p>Finally, a Weak Governance Bond may be appropriate for business models that do not require HRO.&nbsp; Examples include joint ventures and conglomerates.</p> <p>In subsequent editions, we will develop the construct of High Reliability Management in greater detail.&nbsp; How it is implemented in an organization <i>depends</i> on certain Conditions as well.</p> <h2 style="text-align: center;"><b>Is your Governance Bond appropriate for the organization’s business model?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the Managing Director of The Rapid Response Institute; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; Holland, Winford “Dutch” E. and Shemwell, Scott M. (forthcoming). ). <i>Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance</i>. New York: Xlibris.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/09/strong_vs_weak_.html2013-09-18T18:30:00.000Z2013-09-18T18:31:46.908ZCulture as Philosophynoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 17</p> <p>In the last edition, we discussed cultural transformation through the lens of physical operations.&nbsp; This text addresses culture from a metaphysical perspective.</p> <p>In his book, <i>A Philosophy of Culture</i>, Morton White argues that metaphysic and epistemology are empirical disciplines.[i]&nbsp; One can narrowly define <i>epistemology</i> as the study of knowledge and justified belief.[ii]&nbsp; Metaphysical is derived from the Greek, <i>meta ta physika</i>—after the things of nature.[iii]</p> <p>In other words, their existence is verifiable by observation or experience as opposed to theory or logic.[iv]&nbsp; Morton goes on to present his case that the philosophy of culture is more inclusive than philosophy of science in that it encompasses the broader aspects that make up a shared set of beliefs or civilization.[v]</p> <p>When an organization or industry (civilization) becomes one of a Culture of Safety, by definition it meets the test of metaphysics and/or epistemology.&nbsp; It will exhibit traits of a knowledge and belief system that so identify it.</p> <p>The journey to a Culture of Safety is a set of processes that can be measured and managed.&nbsp; The resulting Philosophy of a Culture of Safety will be broad, encompassing a full stage of societal behaviors indicative of vigorous systemic activity.&nbsp; Not simply one of slogans and a more passive premise about safety.</p> <p>Cultural change can be traumatic and appear impossible at times.&nbsp; However, like other transformations human kind has made over the millennium, the resulting new thinking about safety can advance our social order.</p> <h2 style="text-align: center;"><b>Is the philosophy of safety in your organization empirical or logical?</b></h2> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://ndpr.nd.edu/news/24993-a-philosophy-of-culture-the-scope-of-holistic-pragmatism/">http://ndpr.nd.edu/news/24993-a-philosophy-of-culture-the-scope-of-holistic-pragmatism/</a><br> [ii]&nbsp; <a href="http://plato.stanford.edu/entries/epistemology/">http://plato.stanford.edu/entries/epistemology/</a><br> [iii]&nbsp; <a href="http://www.pbs.org/faithandreason/gengloss/metaph-body.html">http://www.pbs.org/faithandreason/gengloss/metaph-body.html</a><br> [iv]&nbsp; <a href="https://www.google.com/#q=define+empirical">https://www.google.com/#q=define+empirical</a><br> [v]&nbsp; Morton White. (2005). A Philosophy of Culture: The Scope of Holistic Pragmatism, Princeton University Press.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/09/culture_as_philosoph.html2013-09-03T18:35:00.000Z2013-09-18T18:32:20.300ZCrossing the Cultural Transformation Chasmnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 16</p> <p>In his famous treatise, Geoffrey Moore’s Crossing the Chasm indicated a level of critical mass has been attained to leap across an invisible market barrier.[i]&nbsp; So it is with cultural transformation.</p> <p>Crossing the so-called cultural Rubicon, we move past the point of no return to the past.&nbsp; As the oil and gas industry wrestles with the transformation to a Culture of Safety, how do executives know they have arrived?</p> <p>According to Wikipedia, “In philosophy of science, <i>dualism</i> often refers to the dichotomy between the <i>subject</i> (the observer) and the <i>object</i> (the observed).”[ii]&nbsp; Perhaps management is able to attain an organizational astral dual state whereby the observer can observe the observer.&nbsp; Since we all know that “circular loops do not compute,” it is unlikely that any of us will attain this perspective, bound as organizations in a physical plane.</p> <p>There may not be an Ah-Ha moment.&nbsp; Yet again their might be.</p> <p>Most of us have struggled significant problems in our life.&nbsp; How can I pass a test in school when it is not clear to me what the professor is talking about?&nbsp; How can I get my kid to do the right thing?&nbsp; Why can’t the customer see the value proposition I bring to her?</p> <p>Then all of a sudden, seemingly out of nowhere we get the answer.&nbsp; Often in retrospect we wonder why we had not seen it earlier as it was so obvious.</p> <p>Colloquial sayings usually have some basis in fact.&nbsp; Ah Ha has come to mean a sudden realization of some fact.</p> <p>Another comment, “I have been working twenty years to become an overnight success” has been rephrased a number of times since Eddie Cantor coined it.[iii]&nbsp; In his book, Outliers, Malcolm Gladwell puts forth his Ten Thousand Hour Rule with asserts that it takes 10,000 hours to become an expert in a field—basically ten years.</p> <p>Somewhere in adoption cycles, the process goes critical and is self-sustaining.&nbsp; The same is true for change management as well.</p> <p>You may not know the exact point in time when your organization crosses the Cultural Transformation Chasm, but you will probably notice results quickly.&nbsp; Critical mass scenarios have a tendency to make themselves known and even intrude into the status quo.</p> <p>Nuclear fission, explosive technology such as Social Media and Mobility Devices and even winning the lottery demonstrably announce their arrival.&nbsp; In these cases, the understanding curve from early adopters to laggards is short.</p> <p>As with much of life, one may not be able to explain why, but we know.&nbsp; We may not be able to define the Cultural Transformation Chasm, but we will know it when we see it.</p> <h2 style="text-align: center;"><b>What signs will your organization exhibit when it has crossed the Cultural Transformation Chasm?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://en.wikipedia.org/wiki/Crossing_the_Chasm">http://en.wikipedia.org/wiki/Crossing_the_Chasm</a><br> [ii]&nbsp; <a href="http://en.wikipedia.org/wiki/Dualism">http://en.wikipedia.org/wiki/Dualism</a><br> [iii]&nbsp; <a href="http://www.brainyquote.com/quotes/authors/e/eddie_cantor.html">http://www.brainyquote.com/quotes/authors/e/eddie_cantor.html</a></p> <p></p> <p></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/08/crossing_the_cultura.html2013-08-16T20:05:00.000Z2013-08-16T20:07:50.226ZThe Guns of Augustnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 15</p> <p>President John Kennedy is purported to have required that all of his Cabinet members read the book, The Guns of August.[i]&nbsp; This series has addressed this book previously from the standpoint that events can overrun any set of decision makers; <i>It Must Be Spring</i>, April 16, 2013.</p> <p>There are other lessons to learn from the author, Barbara Tuchman.[ii]&nbsp; In 1914 the world sped headlong into the greatest tragedy (then to date) mankind had ever seen.&nbsp; Great monarchies fell, Communism cemented hold and the stage was set for an even greater calamity a mere 20 years later.</p> <p>Bottom line—communication between parties was shall we say, impaired.&nbsp; Talking past each other, making stereotypical assumptions combined with the hubris of an early version of the <i>me generation</i>, great powers ended in a military conflict using nineteenth century tactics against twentieth century technology (machine guns).[iii]</p> <p>Caught in this no man’s land, millions of troops and civilians on the ground paid the early price, while the generals and political operatives paid later.&nbsp; Many in both groups paid the ultimate price and all paid dearly.&nbsp; One can argue that 99 years later, the influence of that conflict remains.</p> <p>Most of us are not leading armies into battle or making <i>bet-your-country</i> decisions.&nbsp; However, most of us make <i>bet-your-company</i> decisions on a regular basis and <i>bet-your-career</i> decisions almost daily.</p> <p>Ill-informed assumptions without supporting relevant and timely data have often led to ruin.&nbsp; Ms Tuchman’s message is that if it can happen to the so-called elites, who many believed to be the best and the brightest, it can happen to all of us.</p> <h2 style="text-align: center;"><b>How does your organization assure that the guns of August aren’t pointed inward?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the Managing Director of The Rapid Response Institute; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i] <a href="http://pulitzerpalaver.blogspot.com/2009/12/guns-of-august-winner-non-fiction-1963.html">http://pulitzerpalaver.blogspot.com/2009/12/guns-of-august-winner-non-fiction-1963.html</a><br> [ii] <a href="https://www.loa.org/volume.jsp?RequestID=356">https://www.loa.org/volume.jsp?RequestID=356</a><br> [iii] <a href="http://lists.project-wombat.org/pipermail/project-wombat-fm-project-wombat.org/2012-October/002432.html">http://lists.project-wombat.org/pipermail/project-wombat-fm-project-wombat.org/2012-October/002432.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/08/the_guns_of_august.html2013-08-05T18:53:00.000Z2013-08-05T18:56:38.075ZDilemmanoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 14</p> <p>On July 6, 2013 Asiana Airlines flight from Seoul, South Korea crashed while landing at San Francisco International Airport.[i]&nbsp; As of this writing, the final report is probably months out; however, a recent Wall Street Journal Op-Ed posits an interesting perspective.</p> <p><i>Bring in the Robots </i>suggests that increased automation in the airline cockpit may lead to a “deskilling” of pilots with the subsequent increase in the likelihood of errors.[ii]&nbsp; The article goes on to address potential criminality issues but clearly makes the case that contemporary automation systems may be superior to human <i>best efforts</i>.</p> <p>This man-machine interface is not limited to air travel.&nbsp; Almost all complex industrial operations are a function of intelligent systems and human interface.&nbsp; Human rely on machines to make a myriad of decisions and we think nothing about the results attained from non-human decisions.</p> <p>For example, calculators and spreadsheets routinely “crunch numbers” and most accept the results without question.&nbsp; However, are the calculations mathematically correct?&nbsp; At least so far machines are only as good as their human programmers.</p> <p>The Wall Street Journal commenter makes a case that perhaps machines are smarter and better equipped than an individual operator to make split second life or death decisions.&nbsp; Perhaps, but isn’t it better to make sure that human decision-making that depends on advance systems are not “deskilled” and are better equipped to overrule the computer?</p> <p>At least for the foreseeable future, the human can supersede machine decision-making.&nbsp; The use of machines is commonplace and their use even complacent.&nbsp; Those tasked with managing these systems are challenged to understand (often split second decisions) when the machine is making the correct decision and when the human must interject.</p> <p>This is not a simplistic problem but one based on expertise learned (in some cases) over decades.&nbsp; The US National Transportation Board and its South Korean peer will undoubtedly come to a conclusion and issue changes to air worthiness requirements.&nbsp; It will be interesting to see how the man-machine interface is addressed in that final ruling.</p> <p>The challenges for others, is to learn from those industry practices and changes to assure that similar incidents do not occur.&nbsp; The contemporary man-machine interface can be demanding and one can surmise it will get even more difficult in the future.&nbsp; How organizations deal with this issue has a direct impact on the organization’s bottom line and shareholder value.</p> <h2 style="text-align: center;"><b>Who makes the best decisions in your organization, the machine or the human?</b></h2> <h3>&nbsp;</h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.cbsnews.com/8301-201_162-57592529/plane-crash-at-san-francisco-airport-2-dead/">http://www.cbsnews.com/8301-201_162-57592529/plane-crash-at-san-francisco-airport-2-dead/</a></p> <p>[ii]&nbsp; <a href="http://online.wsj.com/article/SB10001424127887323823004578595323218709446.html">http://online.wsj.com/article/SB10001424127887323823004578595323218709446.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/07/dilemma.html2013-07-18T15:18:00.000Z2013-07-18T15:25:18.029ZSending the Messagenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 13</p> <p>Leadership begins at the top.&nbsp; How the upper management sets the environment is how the organization will respond.&nbsp; Executive leadership is faced with two major challenges when implementing transformative change; staying the change course and assuring its verbal/non-verbal messages and those of key personnel do not send mixed messages.</p> <p>One of the main challenges transforming an organization into one of a Culture of Safety is the sustainability of top management.&nbsp; Changing an organization or industry sector’s culture is a long process.</p> <p>One study from the health care industry suggested that the transformation to a Culture of Safety might take a full generation or up to 20 years.[i]&nbsp; While many believe this transformation can be completed much faster than that, the point is that it may transcend the stewardship of multiple top executives and board members.&nbsp; This is particularly an issue when many senior personnel are recruited from outside the firm.</p> <p>We all know cases where management and/or other key players are not truly onboard.&nbsp; With a <i>wink-and-a-nod</i> the message is sent that is OK to work around the edges of regulations, business processes or other procedures designed to assure top performance in a safe and environmentally friendly manner.&nbsp; The attitude is often one of <i>just waiting this out so we can get back to the way we have always done things.</i></p> <p>Building a new sustained culture means staying on message forever.&nbsp; As Winston Churchill is noted for saying, “Never give in–never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. &nbsp;Never yield to force; never yield to the apparently overwhelming might of the enemy.”[ii]&nbsp; So it is with organizational transformation.</p> <h2 style="text-align: center;"><b>How does your organization assure that its positive messages are sustained?</b></h2> <h3 style="text-align: center;"><b>&nbsp;</b></h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i] <a href="http://www.emscultureofsafety.org/wp-content/uploads/2012/12/Strategy-for-a-National-EMS-Culture-of-Safety-NEMSAC-DRAFT.pdf">http://www.emscultureofsafety.org/wp-content/uploads/2012/12/Strategy-for-a-National-EMS-Culture-of-Safety-NEMSAC-DRAFT.pdf</a><br> [ii] <a href="http://townhall.com/columnists/johnhawkins/2013/01/19/the-40-greatest-quotes-from-winston-churchill-n1492794/page/full">http://townhall.com/columnists/johnhawkins/2013/01/19/the-40-greatest-quotes-from-winston-churchill-n1492794/page/full</a> (some argue that this is not the exact transcript of the speech, but readers will get the point)</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/07/sending_the_message.html2013-07-03T19:09:00.000Z2013-07-03T19:21:36.506ZBig Data: Ethics and Moralsnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 12</p> <p>As noted in the news recently, in the era of Big Data society is becoming increasingly dependent on high ethical standards and controls by increasingly larger organizations.&nbsp; The root of the current debate over storage of phone records by the U.S. government is the “level” of an individual’s right to privacy.</p> <p>For years Customer Relationship Management (CRM) systems have provided marketing and sales with a vast array of information on individual consumers and their relationships.[i]&nbsp; Internet search engines have extended this capability dramatically.[ii]&nbsp; It is probably healthy that society is now having this debate and societal norms will most likely evolve as Big Data becomes more prevalent.[iii]</p> <p>As societal norms on this subject advance, organizations will have to implement <i>principles of right conduct</i> or <i>ethics</i> consistent with the legal framework and the organization’s cultural values.[iv]&nbsp; Perhaps more challenging in this diverse world will be managing the <i>moral compass</i> of individual employees and other third parties involved with collecting, analyzing and making decisions in the Big Data world.</p> <p>We know from the news and life in general that individual morals vary greatly.&nbsp; While there is much value in a diverse workforce, governance models must now extend deep into the organization and its supply chain.&nbsp; The blog has posited a solution before—see <a target="_blank" href="http://www.pennenergy.com/index/blogs/governing-energy/2012/09/it-s-the-data-stupid.html" adhocenable="false"><b>It’s the Data, Stupid!</b>, September 17. 2012</a>.</p> <p>There are a number of examples where one individual or a small group has caused cataclysmic damage to an organization.&nbsp; A notable example is the Baring’s Bank collapse in 1995 at the hands of single rogue currency trader.[v]&nbsp; The failure of a small engineering team led by BP (Deepwater Horizon) resulted in almost $40 billion in damages to that company, the death of 11 individuals and seemingly more to come.[vi]</p> <p><b>Big Data is not immune to human frailties!</b></p> <p>One can surmise that as with other disruptive technology driven transformations there will be a period of uncertainty as people develop acceptable behaviors and differentiate from those that are nominally unacceptable.&nbsp; Recent examples include social media, smart phones as well as the now 50+ year old Internet.[vii]</p> <p>Some readers may remember that as late as the early 1990s advertising and general use of the Internet was a culturally unacceptable norm—it was largely the domain of academia and government.[viii]&nbsp; Today, most suppliers of consumer driven online solutions see marketing as a significant revenue stream.</p> <p>Regardless of one’s perspective, Big Data has been here for a while and will continue to develop.[ix]&nbsp; Our society will adopt this resource and adapt accordingly.</p> <p>With the advent of Cloud Computing, many if not all organizations will take advantage of Big Data to drive the revenue stream, reduce cost and even enhance security.[x]&nbsp; Managing big data sets will become part of every firm’s performance metrics.</p> <p>Organizations must extend their governance models to embrace Big Data.&nbsp; Risk for failure to act can include litigation, negative bottom line impact, damage to reputation and other detrimental issues including the demise of the firm and the destruction of shareholder value.</p> <p>As Big Data ethical standards emerge, governance models must take into consideration individual behavior.&nbsp; Rogue IT personnel and analysts can impact organizations in ways their financial and engineering predecessors have.&nbsp; Why wait to re-learn those lessons?</p> <h3 style="text-align: center;"><b>How is your organization governing Big Data?</b></h3> <h3 style="text-align: center;"><b>&nbsp;</b></h3> <h3><b>About the Author</b><br> </h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.webopedia.com/TERM/C/CRM.html" target="_blank">http://www.webopedia.com/TERM/C/CRM.html</a><br> [ii] <a href="http://siliconangle.com/blog/2013/01/31/big-data-search-engines-are-big-right-now-stremor-announces-heuristic-engine/" target="_blank">http://siliconangle.com/blog/2013/01/31/big-data-search-engines-are-big-right-now-stremor-announces-heuristic-engine/</a><br> [iii]&nbsp; <a href="http://www.mckinsey.com/insights/business_technology/big_data_the_next_frontier_for_innovation" target="_blank">http://www.mckinsey.com/insights/business_technology/big_data_the_next_frontier_for_innovation</a><br> [iv]&nbsp; <a href="http://grammarist.com/usage/ethics-morals/" target="_blank">http://grammarist.com/usage/ethics-morals/</a><br> [v]&nbsp; <a href="http://www.time.com/time/specials/packages/article/0,28804,1937349_1937350_1937488,00.html" target="_blank">http://www.time.com/time/specials/packages/article/0,28804,1937349_1937350_1937488,00.html</a><br> [vi]&nbsp; <a href="http://wallstcheatsheet.com/stocks/will-bp-soon-put-deepwater-horizon-disaster-to-rest.html/" target="_blank">http://wallstcheatsheet.com/stocks/will-bp-soon-put-deepwater-horizon-disaster-to-rest.html/</a><br> [vii]&nbsp; <a href="http://walthowe.com/navnet/history.html" target="_blank">http://walthowe.com/navnet/history.html</a><br> [viii]&nbsp; <a href="http://www.internetsociety.org/internet/what-internet/history-internet/brief-history-internet#Transition">http://www.internetsociety.org/internet/what-internet/history-internet/brief-history-internet#Transition</a><br> [ix]&nbsp; <a href="http://www.dataminingblog.com/big-data-only-for-big-companies/">http://www.dataminingblog.com/big-data-only-for-big-companies/</a><br> [x]&nbsp; Kuiper, Marcus A. and Shemwell, Scott M. (2013, February). Mitigating Operational Risk Using the Power of Social Media. <u>Petroleum Africa Magazine</u>. pp. 28-31.</p> <p>&nbsp;</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/06/big_data_ethics_and.html2013-06-17T17:44:00.000Z2013-06-17T17:49:58.070ZDemons Among Usnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 11</p> <p>In the first season (1960) of Rod Serling’s television show, the Twilight Zone, he aired the episode; <i>The Monsters are Due on Maple Street</i>.[i]&nbsp; Readers are invited to watch this show online; however, the crux of the story is that aliens manipulate certain events preying on human paranoia.&nbsp; This causes residents on a street in American suburbia to turn on one another, resulting in murder and the complete breakdown of the societal norms of that community.</p> <p>Much has changed since that era of black and white (tube) television and many like to suggest that society is in a new normal of social media, 3D widescreen home theaters and a slew of modern conveniences developed over the insuring half century.&nbsp; However, this author would like to submit that human nature has not changed or at least has not evolved far from that Leave It to Beaver period.[ii]</p> <p>We are all still products of our biases, suspicions, jealousies and even competitiveness despite our desire to scale Maslow’s Hierarchy of Needs.[iii]&nbsp; At the base levels of this pyramid is our fundamental need to survive and be secure.&nbsp; In times of stress, we all must directly address these foundational requisites.</p> <p>After a major storm, in addition to reviewing the devastation and loss of life, the media also reports on two bi-polar behaviors.&nbsp; Those risking life and limb jumping in to save strangers and helping to rebuild with no thought of self, much less reward or publicity.&nbsp; On the other hand, some take this opportunity to add to the mayhem.&nbsp; Looting, vandalism and even physical acts of violence are their byproducts.</p> <p>The story ends with two aliens acknowledging that the events on Maple Street had been a test and that humans were easy to turn on each other.&nbsp; Their approach to subjugation would incorporate this lesson into the plans to invade earth.</p> <p>In his closing narrative, Serling says that &quot;<i>The tools of conquest do not necessarily come with bombs, and explosions, and fallout. &nbsp;There are weapons that are simply thoughts, attitudes, prejudices, to be found only in the minds of men. &nbsp;For the record, prejudices can kill and suspicion can destroy. &nbsp;And a thoughtless, frightened search for a scapegoat has a fallout all its own, for the children, and the children yet unborn. &nbsp;And the pity of it is...that these things cannot be confined to the Twilight Zone</i>.”[iv]</p> <p>This timeless story has relevance in our modern world.&nbsp; How many of us know individuals or internal groups that consciously seek to undermine organizational success?&nbsp; Many act as the residents of Maple Street when faced with uncertainty, change or other events.&nbsp; The term, “<i>throwing (insert name) under the bus</i>” is a direct result of the acceptance for an <i>everyone for him/herself</i> mentality.</p> <p>The challenge is to develop an organizational culture that brings out the best of individuals during times of trauma.&nbsp; One would fear that without top leadership to drive this type of behavior, the grandchildren of residents of Maple Street may be in your employ.</p> <p style="text-align: center;"><b>How will you respond if internal paranoia is undermining your organization’s performance?</b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.hulu.com/watch/440892">http://www.hulu.com/watch/440892</a><br> [ii]&nbsp; <a href="http://www.tv.com/shows/leave-it-to-beaver/">http://www.tv.com/shows/leave-it-to-beaver/</a><br> [iii]&nbsp; <a href="http://psychology.about.com/od/theoriesofpersonality/a/hierarchyneeds.htm">http://psychology.about.com/od/theoriesofpersonality/a/hierarchyneeds.htm</a><br> [iv]&nbsp; <a href="http://en.wikipedia.org/wiki/The_Monsters_Are_Due_on_Maple_Street">http://en.wikipedia.org/wiki/The_Monsters_Are_Due_on_Maple_Street</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/06/demons_among_us.html2013-06-03T18:33:00.000Z2013-06-03T18:35:17.326ZPocket Changenoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 10</p> <p>Conventional wisdom holds that, “people resist change.”&nbsp; In fact, a cottage industry has been built upon this core premise.&nbsp; One common model that addresses this resistance to change is the Five Stages of Grief.[i]&nbsp; Denial, Anger, Bargaining, Depression and finally Acceptance are the elements that describe this process.</p> <p>Certain industries, e.g., energy are typically conservative by nature.&nbsp; One can argue that high capital costs and a dangerous working environment lead to a more measured adoption of the new.&nbsp; Is conventional wisdom wrong?</p> <p>Flip a coin taken from your pocket and there are two possibilities—heads or tails.&nbsp; The common process resolves wagers, determines first possession in athletic contests and is a well-known probability game.[ii]</p> <p>As with a coin, there are two sides to change.&nbsp; In the 1980s, the first IBM PC “Killer App” was the spreadsheet software program, Lotus 1-2-3.[iii]&nbsp; The acceptance rate in 1983 was over 13 times the original forecast.&nbsp; Similar stories tell the tales of other high value agents of change.</p> <p>Clearly, the rate of change for a low cost software program can be faster than that of major changes to energy production infrastructure.&nbsp; Hypothesis—in both cases change is driven by the inherent economic value proposition.</p> <p>Human beings are born change agents!&nbsp; Indeed, our very survival depends on the individual’s ability to adapt.</p> <p>The human life-cycle is a <i>change matrix</i>; aging, experience/knowledge and areas of interest are just a few of the parameters that evolve and morph from one perspective to another.&nbsp; One could argue that we thrive on change, not shrink from it.</p> <p>It is convenient to blame the perceived reluctance to embrace a new proposition or product/service as a function of resistance to change.&nbsp; However, perhaps the value proposition is not well articulated.&nbsp; When asking others to change, perhaps we need to change our behavior first and make sure we express the reasons why in terms that are understood.</p> <p>Finally, randomness is not synonymous with robust change management processes.&nbsp; The next Killer App will touch that inherent human desire to change.&nbsp; Its adoption curve will be business “process” relevant with our primordial behaviors driving it forward.</p> <p style="text-align: center;"><b>Is your organization’s approach to change management akin to a coin flip?</b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://grief.com/the-five-stages-of-grief/">http://grief.com/the-five-stages-of-grief/</a><br> [ii]&nbsp; <a href="http://math.stackexchange.com/questions/195359/when-to-stop-in-this-coin-toss-game">http://math.stackexchange.com/questions/195359/when-to-stop-in-this-coin-toss-game</a><br> [iii]&nbsp; <a href="http://hightechhistory.com/2010/01/26/history-of-lotus-1-2-3/">http://hightechhistory.com/2010/01/26/history-of-lotus-1-2-3/</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/05/pocket_change.html2013-05-16T15:33:00.000Z2013-05-16T15:34:52.372ZRepetita Placentnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 9</p> <p>Anyone that follows US politics is familiar with the Sunday morning political television shows whereby the so-called “talking heads” interview various public figures on issues of the day.&nbsp; So common are the use of “talking points” that the term has become part of the lexicon and even the butt of jokes.</p> <p>According to behaviorists, humans are comfortable with repetition.[i]&nbsp; In other words repetition pleases.&nbsp; In his seminal book on economics, <i>The Economics of Freedom[ii]</i>, Frédéric Bastiat identified this principle over 150 years ago.[iii]</p> <p><i>Bis repetita placent</i> is Latin for “the things that please are those repeated.”[iv] &nbsp;We see this human trait everyday as we develop our playlist; engage in pleasing behaviors, etc.&nbsp; Over time, pleasurable behaviors can become habits (good or bad).</p> <p>The upstream oil and gas industry is in the process of transforming the industry culture to one of a Culture of Safety.&nbsp; Engraining desired behaviors is a function of management staying on message and repeating its talking points in a coherent manner.&nbsp; Over time the acculturation process evolves to a new culture.</p> <p>As a student in physics, I learned that if one applies appropriate energy to an electron it becomes energized and moves to a higher atomic orbit.&nbsp; However, with light often a byproduct, the atom quickly returns to its previous stable state.[v]</p> <p>Consistently applied managerial energy is the only power source that can excite the organization and move it to the next level.&nbsp; Moreover unlike the atom, organizations can be transformed and remain at the higher enlightened (pleasurable) level.</p> <p>Bastiat also noted; <i>Repetita docent</i>—repetition teaches.&nbsp; Politicians understand this and seek to teach the electorate.&nbsp; Elections are often won or lost based on their success or failure to continually instruct potential voters.&nbsp; Similarly, staying on a consistent, understandable and believable message is a Critical Success Factor (CSF) as the oil and gas industry transforms itself.</p> <h3 style="text-align: center;"><b>Are your oft repeated talking points teaching your intended audience?</b></h3> <h3 style="text-align: center;"><b>&nbsp;</b></h3> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p></p> <p>[i]&nbsp; <a href="http://changingminds.org/principles/repetition.htm">http://changingminds.org/principles/repetition.htm</a><br> [ii]&nbsp; <a href="http://studentsforliberty.org/wp-content/uploads/2010/04/The-Economics-of-Freedom-PDF.pdf">http://studentsforliberty.org/wp-content/uploads/2010/04/The-Economics-of-Freedom-PDF.pdf</a><br> [iii]&nbsp; <a href="http://en.wikipedia.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat">http://en.wikipedia.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat</a><br> [iv]&nbsp; <a href="http://latin-phrases.co.uk/dictionary/b/">http://latin-phrases.co.uk/dictionary/b/</a><br> [v] <a href="http://www.brooklyn.cuny.edu/bc/ahp/SDPS/SD.PS.electrons.html">http://www.brooklyn.cuny.edu/bc/ahp/SDPS/SD.PS.electrons.html</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/05/repetita_placent.html2013-05-02T15:18:00.000Z2013-05-02T15:21:03.337ZIt Must Be Springnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 8</p> <p>Conventional wisdom holds that every spring a bellicose North Korea emerges from winter hibernation and threats its neighbors.&nbsp; Seemingly starved for attention it feasts at the table of world fear.</p> <p>This year marks the 60<sup>th</sup> Anniversary of the beginning of hostilities of this still unresolved conflict on that divided peninsula.[i]&nbsp; What makes this year’s &quot;<i>Korean Spring</i>&quot; different?</p> <p>Many observers argue this year’s “starved” hunger comes from an unknown North Korean leader.&nbsp; Comfortable paths hone over half a century may be tested by both this unknown player as well as new thinking on the part of his South Korean nemesis.[ii]&nbsp; The risk profile is thus raised!</p> <p>Faced with an earlier nuclear crisis, President John F. Kennedy was influenced by Barbara Tuchman’s book, the “Guns of August” whereby a set of chain reactions led to World War I.[iii]&nbsp; The lack of communication between parties, be it absence of physical infrastructure i.e., telephone “hotline” or a misunderstanding based on culture differences can lead to geometrically cascading events over an abyss.</p> <h3>Measureable Latents</h3> <p>Strictly speaking, a latent variable is not directly measureable. &nbsp;However, modern behavior economics provides us with tools that illuminate previously hidden causalities.</p> <p>Since early 1980s, this author has been investigating cross-cultural issues as they relate to international business deals, particularly in Asia.[iv]&nbsp; Additionally, there is an extensive body of work by this and other authors regarding cross cultural behaviors.&nbsp; One would not be surprised at the conclusion from this effort that there are significant cultural differences between the United States and Asian societies.</p> <p><img width="348" height="289" style="float: right;" src="/content/dam/Pennenergy/online-articles/2013/April/Korean%20Spring.JPG">For purposes herein, the work done by Geert Hofstede on cultural dimensions can provide a snapshot of some of the issues faced in cross-cultural interactions that can lead to misunderstandings and actions by parties that may be counterproductive.&nbsp; This chart shows the difference of five cultural dimensions between the United States and South Korea (data does not exist for North Korea but is assumed to be similar).[v]&nbsp; Interested readers can visit Professor Hofstede’s web site for further information and definitions of his cultural dimensions.</p> <p>This cursory perspective suggests that there are key differences between these two societies.&nbsp; Perhaps in the normal course of events this delta may simply make negotiations challenging, but when <b><i>Brinksmanship</i></b> is the game, one hypothesis is they can contribute to disaster.&nbsp; Knowledge of these dimensional constructs can enlighten one about an adversary and his or her emotional drivers.</p> <p>World War I was not the only historical event resulting from missteps between societies.&nbsp; The 1962 Cuban Missile Crisis is another as well as the 1983 NATO war game, Able Archer which caused the Soviet Union to suspect a preemptive nuclear attack by the western nations.[vi]&nbsp; In both of these cases, cooler heads (on both sides) prevented the unthinkable.</p> <p>Today, some argue that the United States suffers a similar myopia in contemporary Afghanistan.&nbsp; Behavioral economics suggests the human condition will continue to suffer from cross cultural misunderstandings.</p> <h3>Energy Infrastructure Risk</h3> <p>On the surface and other than the obvious impact of broad hostilities to the global economy, one might not immediately see the events on the Korean peninsula as directly impacting on the oil and gas industry.&nbsp; This assessment would be short sided.</p> <p>South Korean shipyards are significant suppliers to the global offshore oil and gas community.[vii]&nbsp; One could argue that the industry’s risk profile is too exposed if there is any significant business interruption in Northeast Asia.&nbsp; Moreover, if the industry cannot deliver the drilling rigs and supporting infrastructure to meet demands for crude oil, a reduction in global economic output is likely.</p> <p>From a portfolio perspective, one must question whether individual companies and even the industry in general are exposed unnecessarily.&nbsp; As with the Japanese Tsunami of 2011, the impact on global markets from a regional disruption can be broad and long lasting.</p> <h3>Market Cap Risk</h3> <p>Finally, terrorist incidents have a direct and measureable impact on individual corporations and their market sectors.&nbsp; For example, a 2005 study by Ohio State University, “Terrorism and the Stock Market” categorized 75 terror related incidents and found that the average loss for each firm was $401 million in market capitalization.[viii]</p> <p>This can be significant shareholder exposure.&nbsp; Incidents subsequent to that study suggest that an environmental impact from catastrophic incidents can raise the market capitalization risk bar much higher.</p> <p>The greatest risk may be covert.&nbsp; Terrorism aimed at the South Korean shipyards.&nbsp; Is this a worst case scenario?</p> <p>We raise these issues not as a critic but as part of the global energy dialogue.&nbsp; Geopolitical risk assessment is part of every major organization’s enterprise risk management process.&nbsp; The recent events on the Korean peninsula should cause us all to pause and perhaps rethink our asset portfolio and associated supply chain.</p> <p>The nature of today’s global supply chain processes finds critical components and key knowledge sometimes residing in unlikely places.&nbsp; Make sure your firm’s risk mitigation strategy incorporates this perspective.</p> <p style="text-align: center;"><b>Does your firm have more exposure to events in Korea than is readily apparent?</b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://www.army.mil/koreanwar/textonly.html">http://www.army.mil/koreanwar/textonly.html</a><br> [ii]&nbsp; <a href="http://www.nytimes.com/2013/04/10/world/asia/south-korean-leader-seeks-to-end-vicious-cycle-with-north.html?pagewanted=all&amp;_r=0">http://www.nytimes.com/2013/04/10/world/asia/south-korean-leader-seeks-to-end-vicious-cycle-with-north.html?pagewanted=all&amp;_r=0</a><br> [iii]&nbsp; <a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/08/09/AR2006080901514.html">http://www.washingtonpost.com/wp-dyn/content/article/2006/08/09/AR2006080901514.html</a><br> [iv]&nbsp; <a href="http://www.scribd.com/doc/13395182/Abstract-Cross-Cultural-Negotiations-Between-Japanese-and-American-Businessmen-A-Systems-Analysis">http://www.scribd.com/doc/13395182/Abstract-Cross-Cultural-Negotiations-Between-Japanese-and-American-Businessmen-A-Systems-Analysis</a><br> [v]&nbsp; <a href="http://geert-hofstede.com/countries.html">http://geert-hofstede.com/countries.html</a><br> [vi]&nbsp; <a href="http://en.wikipedia.org/wiki/Able_Archer_83">http://en.wikipedia.org/wiki/Able_Archer_83</a><br> [vii]&nbsp; <a href="http://www.offshoreenergytoday.com/tag/korea/">http://www.offshoreenergytoday.com/tag/korea/</a><br> [viii]&nbsp; <a href="http://www.investopedia.com/articles/07/terrorism.asp">http://www.investopedia.com/articles/07/terrorism.asp</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/04/it_must_be_spring.html2013-04-16T20:25:00.000Z2013-04-16T20:32:44.946ZA Fool’s Errandnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 7</p> <p>Every year on April 1<sup>st</sup>, pranksters emerge often producing funny consequences and on occasion mayhem.&nbsp; Crossing this line is sometimes not clear to certain participants.&nbsp; One individual’s mindless prank can cause another’s crisis.</p> <p>How many of us have seen what appears to be a harmless office joke illicit tears from the recipient?&nbsp; Quickly noting that it was not funny, most protagonists shrink from the scene.&nbsp; On occasion, a bully once tasting the victim’s proverbial blood continues to prod.</p> <p>Unfortunately, the term “going postal” has become a colloquial term for workplace violence often directed against coworkers and managers.[i]&nbsp; Office stresses leading to violence can result from a poor performance appraisal, firing / demotion, the taunting from coworkers or change.</p> <p>While there is no excuse for this individual behavior, the RBC model can provide insight into organizational cultures that may foster destructive performance.&nbsp; Readers of this series are familiar with the author’s perspective on the RELATIONSHIPS, BEHAVIORS, and CONDITIONS (RBC) model that was originally developed to address issues around cross cultural (international) negotiation processes.[ii]</p> <p>More recently, the RBC model has been extended to focus on the Management of Change (MOC) process unfolding in many industry sectors.&nbsp; As a fundamental model of the human experience, RBC enables management to develop a perspective that here to for was the domain of psychologists.</p> <p>Does this approach demand that management now become “shrinks?”&nbsp; Not hardly, but it does suggest that organizations have a responsibility to categorize the pranksters versus the true malcontents.&nbsp; Moreover, true team building pranks need to be tempered within specific boundaries.</p> <p>Change for some individuals is hard, even threatening.&nbsp; These people may not have an outlet for their frustrations within acceptable societal norms.&nbsp; They may act upon these exasperations in ways most would not even envision.</p> <p>Destructive performance does not have to manifest itself as a visible malcontent.&nbsp; More often, it is an insidious behavior that consciously or unconsciously seeks to undermine the very corporate entity that spawned it.&nbsp; Like a cancer, it seeks to destroy the host organization.</p> <p>In today’s extended firm, the term employee is also defined as those employed by supply chain partners and their vendors.&nbsp; These individuals may not have strong ties to the success of the firm.&nbsp; Some may even deliberately seek to cause harm and disruption.</p> <p>According to Google, a Fool’s Errand is defined as “A task or activity that has no hope of success.”&nbsp; Hypothesis: there is no room for a fool’s errand in today’s organizations.</p> <p>Malcontents can be deadly or at very least detract from shareholder value.&nbsp; This issue is no longer just a Human Resources concern but now one of governance in today’s changing environment.</p> <p style="text-align: center;"><b>Is your organization on a Fool’s Errand when addressing employee malcontents?</b><b></b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; <a href="http://en.wikipedia.org/wiki/Going_postal">http://en.wikipedia.org/wiki/Going_postal</a><br> [ii]&nbsp; <a href="http://www.therrinstitute.com/uploads/The_Blast_Heard_Around_the_World_-_January_2011.pdf">http://www.therrinstitute.com/uploads/The_Blast_Heard_Around_the_World_-_January_2011.pdf</a><br> &nbsp;</p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/04/a_fool_s_errand.html2013-04-02T17:50:00.000Z2013-04-02T17:59:15.968ZTulipsnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 6</p> <p>As the northern hemisphere approaches the season of spring, flowers of all kinds begin to blossom precipitously in the warmer weather.&nbsp; In the state of Texas, azaleas, bluebonnets and other flower are in bloom as of this writing.&nbsp; Soon the state will be awash in new life as witnessed by the abundance of colorful flora.</p> <p>With such bounty, one would suspect that the price point for flowers is relatively low and available to most income levels.&nbsp; That is not always the case. &nbsp;Many readers may not be familiar with the Dutch Tulip Bubble of 1637.</p> <p>The tulip was introduced in Holland in 1593; originally for research purposes.&nbsp; After several bulbs were illicitly sold, a brisk Dutch tulip trade ensued.&nbsp; Several decades later tulip insanity broke out and at its height, tulip bulbs were deemed too valuable to plant with some priced as high as the cost of a thousand pounds of cheese.[i]</p> <p>The tulip bubble reached its zenith during the winter of 1636-37.&nbsp; At the time, tulip traders were making almost three quarters of a million US dollars (today’s equivalent).&nbsp; The ride ended when a single buyer failed to pay for his tulip purchase.&nbsp; The ensuring panic drove prices down to only a hundredth of their previous value.[ii]</p> <p>So it seems that <i>irrational exuberance</i> is a normal part of the human condition.[iii]&nbsp; Bubbles and their subsequent crashes have been evidenced by the 1929 stock market crash, the 2000 dot.com bubble, as well as the 1996 stock market difficulties just after the Chairman of the US Federal Reserve uttered that phase.[iv]</p> <p>After the oil price crash of 2008, the author released his first monograph of the Changing the Dialogue series, <i>Rapid Response Management: Thriving in the New World Order</i>.[v]&nbsp; <b><i>Rapid Response Management is organizational construct or mental model that enables the organization and its key partners to rapidly sense changes and respond accordingly--quickly</i></b>.</p> <p>The essay opens with a quote from Winston Churchill that is still fitting today, “It is no use saying, ‘We are doing our best’.&nbsp; You have got to succeed in doing what is necessary.”&nbsp; As with the human behavioral lessons from seventeenth century, words from this World War II leader can still help guide the Board of Directors.</p> <p>Today, the US Federal Reserve Quantitative Easing monetary policy is growing the M1 and M2 money supply (definitions in the cited reference) at over 11 percent per annum for the former and almost 7 percent for the later.[vi]&nbsp; Moreover, there is some concern that these types of initiatives by central banks may contribute to inflationary trends, including global agricultural sectors with their subsequent impact on food prices particularly for consumers in the emerging markets.[vii]</p> <p>All indications are that the world remains economically volatile.&nbsp; Organizations that trade in commodities or require them for core business processes are exposed to potential rapid run-up in “spot” market prices as well as their possible rapid collapse.</p> <p>Many firms continue to be trapped in this cycle because of inadequate risk-based governance models.&nbsp; While no one can predict future market performance, appropriate risk mitigation is critical.&nbsp; This includes changing managerial Key Performance Indicators (KPI) and other metrics as market condition dictate—quickly!</p> <p>Organizational culture cannot be changed on the fly.&nbsp; As with other crisis driven managerial actions, governance models must reflect and embody these <i>not-so-new</i> realities as <i>the way the organization does business</i>.</p> <p style="text-align: center;"><b>How does your firm’s governance model account for likely rapid market movements?</b><b></b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p></p> <p>[i]&nbsp; <a href="http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/">http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/</a><br> [ii]&nbsp; Ibid.<br> [iii]&nbsp; <a href="http://www.irrationalexuberance.com/definition.htm">http://www.irrationalexuberance.com/definition.htm</a><br> [iv]&nbsp; <a href="http://www.irrationalexuberance.com/index.htm">http://www.irrationalexuberance.com/index.htm</a><br> [v]&nbsp; <a href="http://www.therrinstitute.com/uploads/Rapid_Response_Management_-_Thriving_in_the_New_World_Order_2.0_-_January_2009.pdf">http://www.therrinstitute.com/uploads/Rapid_Response_Management_-_Thriving_in_the_New_World_Order_2.0_-_January_2009.pdf</a><br> [vi]&nbsp; <a href="http://www.federalreserve.gov/releases/h6/current/">http://www.federalreserve.gov/releases/h6/current/</a><br> [vii]&nbsp; <a href="http://www.zerohedge.com/news/2012-10-10/food-inflation-surge-goldman-warns">http://www.zerohedge.com/news/2012-10-10/food-inflation-surge-goldman-warns</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/03/tulips.html2013-03-18T18:43:00.000Z2013-03-18T18:45:22.908ZBranching Consequencesnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 5</p> <p>Most of us have heard of <i>unintended consequences</i>, those causal effects that were not expected.&nbsp; These happen all the time for a number of reasons.&nbsp; Often, the cause and effect relationship is not well understood or it is incorrect.</p> <p>Moreover, statisticians refer to latent variables as ones that are not directly observable.[i]&nbsp; In other words, some behavioral effects may not be measureable until after the fact.&nbsp; Therefore, it would appear that humankind is doomed to suffer unintended consequences regardless of the level of expertise or planning undertaken.</p> <p>Process engineers are very familiar with cascading alarm events.&nbsp; For example, a failure/alarm at one part of process manufacturing such as a chemical plant will often result in alarms and automatic process control actions in multiple other parts of the system.&nbsp; Identifying the root cause is often a challenge with alarms of equal priority simultaneously occurring.&nbsp; A robust <i>Alarm Management Strategy</i> is required for the safe operations of these plants.[ii]</p> <p>Geometric or exponential growth or decay rates results in significant changes of statistical populations.[iii]&nbsp; Biological population growth and radioactive decay are examples.&nbsp; When negative events such as an industrial accident or failure in organizational governance, i.e., BP, Enron, and others occur the consequences can rapidly overwhelm management’s ability to manage them effectively.</p> <p>Additionally, it would be a mistake to view this from a linear deterministic system perspective.&nbsp; There are certain Structural Dynamics, defined as the <i>morphology or patterns of motion toward process equilibrium of interpersonal systems</i>, at work in any process or system.&nbsp; Systems are actually a combination of multiple sub and often nonlinear systems with varying degrees of integration. [iv]</p> <p>To name a few, the organizational stakeholder network extends across shareholders, local communities, global competitors and regulatory bodies at all levels of government.&nbsp; This is a subset of nested constituencies that in today’s social media environment can be substantial and broad in scope.</p> <p>Unintended consequences can explode geometrically across the organization’s interpersonal systems.&nbsp; They can branch down unanticipated avenues similar to lightning following multiple conductors during a thunderstorm.</p> <p>Organizational governance models cannot adopt Wac-A-Mole solutions to address branching consequence developments.[v]&nbsp; Modern governance requires an understanding of the firm’s Structural Dynamics and develops approaches to rapidly address systems out of equilibrium as a result of an incident.&nbsp; Additional details about a useful governance model that addresses branching consequences are available in the Changing the Dialogue series monograph, Asset/Equipment Integrity Governance: Operations—Enterprise Alignment.[vi]</p> <p style="text-align: center;"><b>How has your organization prepared to manage unforeseen branching consequences resulting from an incident?</b><b></b></p> <h3>About the Author</h3> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h3>End Notes</h3> <p>[i]&nbsp; Shemwell, Scott M. (2012, July 2). <u>The Iceberg Principle</u>. Governing Energy<br> [ii]&nbsp; <a href="http://www.emersonprocessxperts.com/articles/ICR/Alarm-Management-Strategy.pdf">http://www.emersonprocessxperts.com/articles/ICR/Alarm-Management-Strategy.pdf</a><br> [iii]&nbsp; <a href="http://stats.oecd.org/glossary/detail.asp?ID=6685">http://stats.oecd.org/glossary/detail.asp?ID=6685</a><br> [iv]&nbsp; <a href="http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf">http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf</a><br> [v]&nbsp; <a href="http://en.wikipedia.org/wiki/Whac-A-Mole">http://en.wikipedia.org/wiki/Whac-A-Mole</a><br> [vi]&nbsp; <a href="http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf">http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/03/branching_consequenc.html2013-03-04T20:28:00.000Z2013-03-04T20:29:50.710ZSafety Boardnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 4</p> <p>The Center for Offshore Safety is charging the upstream energy industry to transform itself to one of a Culture of Safety.[i]&nbsp; In other words, risk management from a systemic perspective.[ii]</p> <p>Change management professionals have long argued that in order for change to become permanent, it must be driven from the top of the organization.&nbsp; This industry renovation will be no different.</p> <p>Throughout this series, indeed the theme of this soliloquy has been the changing nature of institutional governance.&nbsp; To date, this blog has mainly focused on events and learning from events.&nbsp; This knowledge must become actionable as organizations move up the Maturity of Understanding curve.[iii]</p> <p>Much has been written about organizational change management, including a forthcoming book, <i>Implementing A Culture of Safety Offshore: On Target—On Time—On Budget</i> which I am the coauthor along with the eminent authority on change management, Winford E (Dutch) Holland, Ph.D.[iv]&nbsp; The unique challenges faced when an entire industry is transformed rapidly are not unique to the upstream sector.</p> <p>Notable others including the U.S. Navy nuclear submarine program and the nuclear power generation segment.&nbsp; Some in the drilling and production segment are looking to these two in particular for learning and good practices that are applicable.</p> <p>None of this transformational change can be enabled without strong leadership.&nbsp; The Board of Directors is uniquely positioned to enable a transformation charter.&nbsp; The Committee of Sponsoring Organization of the Treadway Commission describes the role of the Board from the standpoint of effective enterprise risk oversight.&nbsp; The COSO report stresses the following requirements:</p> <p>- Expectations of the Board in enterprise-wide risk oversight are at an all-time high<br> - Balancing enterprise risk management while adding value is a significant challenge facing Boards<br> - Board engagement in this area is critical<br> &nbsp;&nbsp;&nbsp; - Risk is a function of the organizational culture<br> &nbsp;&nbsp;&nbsp; - Active role in effectiveness of risk management systems<br> &nbsp;&nbsp;&nbsp; - Identify excessive exposure in the organizations’ portfolio<br> &nbsp;&nbsp;&nbsp; - Keep appraised of the most significant risks and appropriateness of management’s response<br> - Robust engagement by the Board strengthens the organization’s resilience to significant exposures[v]</p> <p>COSO released it original <i>Internal Control—Integrated Framework</i> in 1992.&nbsp; Since then, there has been a substantial body of knowledge developed in this area.[vi]&nbsp; Of importance to this discussion, COSO has its roots in the financial governance side.&nbsp; Therefore, field operational risk management converges with financial risk management.&nbsp; Perhaps obvious but sometime not understood in practice.</p> <p>As has been previously suggested in this series, extending the governance model directly to field operations is now required.&nbsp; It is no longer satisfactory to incorporate management leadership simply in the company’s Standard Operating Procedures (SOP).</p> <p>The Board’s responsibility for effectively field operations cannot be delegated to management any more than the financial reporting requirements.&nbsp; Transformation to a Culture of Safety should strength organizational resilience to significant risk exposures.</p> <p style="text-align: center;"><b>How does your Board of Directors assure stakeholders that the transformation to a Culture of Safety will be successful?</b><b></b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p></p> <p></p> <p>[i]&nbsp; <a href="http://www.centerforoffshoresafety.org/">Establishing a Culture of Safety</a></p> <p></p> <p>[ii]&nbsp; Shemwell, Scott M. (2011, May 12). Navigate the Compliance Matrix: Compliance Tools as the First and Last Line to Regulatory Defense. <u>The Energy Summit</u>. The Houston Club.</p> <p></p> <p>[iii]&nbsp; <a href="http://www.slideshare.net/drjparon/developing-questions-to-support-the-six-levels-of-understanding#btnNexthttp://www.slideshare.net/drjparon/developing-questions-to-support-the-six-levels-of-understanding">Six Levels of Understanding</a></p> <p></p> <p></p> <p>[iv]&nbsp; <a href="http://www.hollandmanagementcoaching.com/">http://www.hollandmanagementcoaching.com/</a></p> <p></p> <p></p> <p>[v]&nbsp; <a href="http://www.coso.org/documents/COSOBoardsERM4pager-FINALRELEASEVERSION82409_001.pdf">Effective Enterprise Risk Oversight: The Role of the Board of Directors</a></p> <p></p> <p></p> <p>[vi]&nbsp; <a href="http://www.coso.org/documents/coso_framework_body_v6.pdf">COSO Internal Control—Integrated Framework, December 2011</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/02/safety_board.html2013-02-18T22:15:00.000Z2013-02-18T22:19:28.517ZChecking Doctorsnoemail@noemail.orgDr. Scott M. Shemwell<p><b>Checking Doctors</b></p> <p>Volume 2 Number 3</p> <p>Pilots use them and now doctors do as well.&nbsp; Mission critical is by definition an activity that must not fail.&nbsp; Partial success in such an environment may not be good enough and often has management visibility and even legal consequences.</p> <p>After placing at the top of his or her pre-med Bachelor level degree and four years of medical school, a period of on-the-job training ensues.&nbsp; After another four or more years as an Intern then Resident, a physician certainly can be deemed to an expert is his or her field.</p> <p>Research has shown that even these highly trained and motivated individuals dealing with complex (often life or death) situations on a daily basis benefit from the use of checklists.&nbsp; Checklists assure that bases are covered quickly and concisely with the most obvious and common sense and immediate solutions tried first.<a name="_ednref1" href="#_edn1"></a>[i]</p> <p>The medical doctor author of <i>The Checklist Manifesto</i> makes several salient points:</p> <p style="margin-left: 40px;"><b>The Problem</b>—highly trained professionals are so busy in their respective areas, that sometimes basic and preventable mistakes are made.</p> <p style="margin-left: 40px;"><b>The Solution</b>—many of today’s tasks are too complex to be carried out from memory alone.&nbsp; The pilot’s checklist is a systemic approach to daily operations.</p> <p style="margin-left: 40px;"><b>Validation</b>—seemingly trivial, good checklists have been shown to work.&nbsp; They can get the routine and obvious off the table quickly so the focus can be on the “hard” stuff.</p> <p>According to the World Health Organization there are over 13,000 different diseases, syndromes and types of injuries.&nbsp; The medical industry has developed about 6,000 drugs and 4,000 medical/surgical procedures. <a name="_ednref2" href="#_edn2"></a>[ii]&nbsp; We all know that each drug and procedure can generate side effects and each has its own risk profile.</p> <p>However, even the best checklist is of no use if it is not followed.&nbsp; In the August 2, 2012 edition of this blog we lamented the ill-fated Northwest Airlines flight where experienced pilots did not follow a standard takeoff checklist due to confusion.&nbsp; This is the basic premise of the checklist—<i>take the routine and obvious off the table</i>.</p> <p>Proposition—highly trained and experienced pilots and medical doctors recognize the value of checklists.&nbsp; Isn’t this methodology equally applicable to industry sectors where safety and environmental management are paramount?&nbsp; Life and death as well as significant capital and operations expenditures are the daily fare of highly trained and experienced petroleum personnel.</p> <p>Moreover, as with these other professions, the world of the petroleum professional is getting more complex not less.&nbsp; Good checklist methodology mitigates risks to the individual, the firm, the industry and society in general.</p> <p>It is time to implement this proven technology at all levels of the corporation.&nbsp; Organizational governance demands no less.[iii]</p> <p style="text-align: center;"><b>How does your knowledge based organization assure that complex solutions go right?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://blog.ej4.com/wp-content/uploads/2012/06/The-Checklist-Manifesto.pdf">The Checklist Manifesto: How to Get Things Right</a></p> <p>[ii]&nbsp; Ibid.</p> <p></p> <p></p> <p>[iii]&nbsp; <a href="http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf">http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/02/checking_doctors.html2013-02-04T19:41:00.000Z2013-02-04T19:44:23.419ZGovernance Refreshnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 2</p> <p>The European Sovereign Debt Crisis would appear to be an incidence of governance gone awry.&nbsp; The European Union and it monetary currency, the euro established by the Maastricht Treaty in 1992 were originally designed against strict criteria for membership.</p> <p>According to Wikipedia, “to participate in the currency, member states are meant to meet strict criteria, such as a budget deficit of less than three per cent of their GDP, a debt ratio of less than sixty per cent of GDP (both of which were ultimately widely flouted after introduction), low inflation, and interest rates close to the EU average.”[i]&nbsp; To the casual observer this statement would appear to be at odds with the current state of some EU members.</p> <p>Partnerships, consortia, key supplier relationships and other forms of organizational bondage often suffer over time as well.&nbsp; Frequently, governance models designed a decade or two ago have not kept up.</p> <p>As with most strategic, operations, project or other long term plans, occasionally they must be refreshed to reflect changes in relationships, behaviors and/or conditions—RBC model.&nbsp; The Relationships, Behaviors, and Conditions (RBC) model has its roots a tool for assessing cross-cultural negotiations.&nbsp; It has been discussed previously in this blog; <i><a adhocenable="false" href="http://www.pennenergy.com/index/blogs/governing-energy/2012/11/What-a-Difference-a-.html">What a Difference a Year Makes</a></i>, November 19, 2012 and earlier in <i>Centralized—Decentralized</i>, April 16, 2012.[ii]</p> <p>The RBC model is fundamentally a multilevel analytic perspective of human behavior.[iii]&nbsp; As we have shown in the December 5, 2012 blog, <i><a adhocenable="false" href="http://www.pennenergy.com/index/blogs/governing-energy/2012/12/Acculturation.html" target="_blank">Acculturation</a></i>, melded groups will form their own culture which will most likely be different than that of the parent organizations.</p> <p>Original governance models developed at the beginning of some endeavor will be subject to RBC variables. &nbsp;It is important, particularly in multi-party or cross culture entities that governance and other managerial processes be re-evaluated and updated as appropriate.</p> <p>Failure to do so may result in a governance model for a situation that no longer exists.&nbsp; Results from such a situation will not be optimal, at best.</p> <p style="text-align: center;"><b>What process does your organization to assure its governance models are current?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes<br> </h2> <p>[i]&nbsp; <a href="http://en.wikipedia.org/wiki/Euro">http://en.wikipedia.org/wiki/Euro</a></p> <p></p> <p>[ii]&nbsp; <a href="http://www.pennenergy.com/index/blogs/governing-energy.html">http://www.pennenergy.com/index/blogs/governing-energy.html</a></p> <p></p> <p></p> <p>[iii]&nbsp; <a href="http://orgsci.journal.informs.org/content/4/2/269.short">http://orgsci.journal.informs.org/content/4/2/269.short</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/01/governance_refresh.html2013-01-17T16:10:00.000Z2013-01-17T16:14:03.646ZRenewalnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 2 Number 1</p> <p>Every New Year, individuals and organizations take time to reflect on lessons learned and refocus on the future.&nbsp; In January 2012, this author met with the publisher and editors of PennEnergy to begin this blog.&nbsp; Our intent was to focus on those areas that are sometimes underserved regarding the need to extend the governance model directly to field operations.</p> <p>As we begin the second volume, we reflect on how much progress has been made with the foreknowledge of how much there is yet to do.&nbsp; Perhaps no difference from any other human endeavor whether the annual commitment to lose weight again or the beginning of another corporate fiscal year.</p> <p>Throughout this past year, this author reviewed learning, knowledge and good practices from other sectors that might have applicability in heavy industry segments.&nbsp; Discussions included aviation mishaps, human behavior, use of information technology, mental models and the challenges the offshore petroleum sector faces with the Safety and Environmental Management Systems (SEMS).&nbsp; Hopefully nuggets of value were contributed to the dialogue.</p> <p>We expect to continue this approach this year.&nbsp; In addition, we plan to discuss business and mental models on the subject in greater detail from time to time.</p> <p>In 1993, this author published <i>Management Theory—Evolution Not Revolution</i>. [i]&nbsp; The basic premise of this academic, peer reviewed article is that human knowledge in a field grows over time.&nbsp; The article is still relevant; as of this writing it has been viewed over 12,600 times as well as <i>readcast</i> and <i>embedded</i> on the online library, Scribd. [ii]</p> <p>This model applies to field operations and organizational governance as well.&nbsp; Capitalizing on the knowledge of those that preceded us is a prudent and cost effective practice.</p> <p>There is a substantial body of applicable knowledge in ISO (International Organization for Standardization) [iii] as well as The Institute of Asset Management, [iv] Project Management Institute [v] and other organizations.&nbsp; It is beneficial to review these bodies of knowledge for applicable ideas.</p> <p>Some might accuse this line of thinking as academic or esoteric and not applicable to the real world of business.&nbsp; I would argue otherwise.&nbsp; When sound engineering practices are ignored or shortcuts taken, the bridge often falls down.</p> <p>So it is with sound managerial practices.&nbsp; Organizations fail at their mission and sometimes fail completely when basic knowledge learned over human history is ignored or repudiated because of perceptions of being too bookish.&nbsp; The other often cited excuse is, “I don’t have time.”&nbsp; Boards may take a dim view of this rationale this year.</p> <p style="text-align: center;"><b>What other <i>Bodies of Knowledge</i> can you take time to learn from?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution">http://www.scribd.com/doc/13395793/Management-Theory-Evolution-Not-Revolution</a><br> [ii]&nbsp; <a href="http://www.scribd.com/">http://www.scribd.com/</a><br> [iii]&nbsp; <a href="http://www.iso.org/iso/home/about.htm">http://www.iso.org/iso/home/about.htm</a><br> [iv]&nbsp; <a href="http://theiam.org/">http://theiam.org/</a><br> [v]&nbsp; <a href="http://www.pmi.org/">http://www.pmi.org/</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2013/01/Renewal.html2013-01-02T20:04:00.000Z2013-01-02T20:06:33.243ZA Perfect Matchnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 1 Number 22</p> <p>Since April 2010, billions of dollars have been spent to transform the upstream oil and gas sector into one of a Culture of Safety.<a href="#_edn1" name="_ednref1"></a>[i]&nbsp; The industry has launched major initiatives in partnership with the US government (BSEE) and other groups with applicable knowledge.</p> <p>The Center for Offshore Safety was established with the mission of promoting the highest level of safety in the offshore well construction process and has established mandatory safety and environmental management system (SEMS) standards based on API RP-75.<a href="#_edn2" name="_ednref2"></a>[ii]&nbsp; This effort is supported by an industry sponsored SEMS Toolkit to help operators navigate these new requirements.<a href="#_edn3" name="_ednref3"></a>[iii]&nbsp; SEMS also requires an audit, not unlike Sarbanes-Oxley for these safety and environment processes.<a href="#_edn4" name="_ednref4"></a>[iv]</p> <p>Other initiatives include the formation of rapid response organizations such as the Marine Well Containment Company (MWCC), whose mission is to provide well containment equipment and technologies in the deep water U.S. Gulf of Mexico.<a href="#_edn5" name="_ednref5"></a>[v]&nbsp; A similar capability is provided by the Helix Well Containment Group.<a href="#_edn6" name="_ednref6"></a>[vi]</p> <p>The <i>tip of the industry spear</i> for these and other efforts to attain the Culture of Safety is the individual operating and/or maintaining the equipment and assets necessary to find and produce oil and gas.&nbsp; Recognizing this, increased training and proficiency is a major component of SEMS.</p> <p>So how does this highly trained individual, laboring to manage or maintain a critical facility asset such as a pump or compressor know he or she is actually working on the correct piece of equipment?&nbsp; Moreover, if hazardous material is involved is it properly identified?</p> <p>The U.S. Department of Defense implemented item Unique IDentification several years ago.&nbsp; It is an asset identification system that includes unique item identifier (UII) technology as well as Serialized Item Management (SIM).&nbsp; SIM is defined as the collection of business processes used to provide actionable information about individual assets.<a href="#_edn7" name="_ednref7"></a>[vii]</p> <p>Three legs of the Culture of Safety stool should include; SEMS and associated processes, Well and spill containment, and Item Unique IDentification.&nbsp; This governing model assures that the full capabilities and knowledge base of the first two legs can be applied on assets and equipment as appropriate.&nbsp; This should help decrease mistakes and reduce downtime.&nbsp; The resulting stool will be stable and level.</p> <p>Industry efforts to upgrade deepwater operations have included looking at best or good practices from other industry sectors (nuclear) as well as government agencies such as NASA and the military.&nbsp; Item Unique IDentification should be considered as well.</p> <p>If facility assets and equipment are not properly identified, the entire industry effort over the past three years may be put at risk.&nbsp; If another major incident is caused by equipment failure, this beleaguered industry will potentially pay a very high price and suffer yet another loss of public confidence.</p> <p>Enterprise risk management strategies must have a unique identification process in place for all critical assets.&nbsp; This seemingly minor issue assures a perfect match between the maintenance process and the right piece of equipment.</p> <p style="text-align: center;"><b>How does your risk mitigation strategy assure a perfect match?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.centerforoffshoresafety.org/">http://www.centerforoffshoresafety.org/</a><br> [ii]&nbsp; <a href="http://documents.api.org/rrserver/browser?title=/75_E3">http://documents.api.org/rrserver/browser?title=/75_E3</a><br> [iii]&nbsp; <a href="http://www.centerforoffshoresafety.org/toolkit.html">http://www.centerforoffshoresafety.org/toolkit.html</a><br> [iv]&nbsp; <a href="http://www.centerforoffshoresafety.org/documents.html">http://www.centerforoffshoresafety.org/documents.html</a><br> [v]&nbsp; <a href="http://www.marinewellcontainment.com/index.php">http://www.marinewellcontainment.com/index.php</a><br> [vi]&nbsp; <a href="http://www.hwcg.org/">http://www.hwcg.org/</a><br> [vii]&nbsp; <a href="http://acquisition.navy.mil/home/acquisition_one_source/item_unique_identification_iuid">http://acquisition.navy.mil/home/acquisition_one_source/item_unique_identification_iuid</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2012/12/A-Perfect-Match.html2012-12-17T21:40:00.000Z2012-12-17T21:43:58.653ZAcculturationnoemail@noemail.orgDr. Scott M. Shemwell<p>Volume 1 Number 21</p> <p>Cross-cultural interaction has been a subject addressed by this author as well as a host of others.&nbsp; Google the term “cross culture” will generate almost 500 million hits.&nbsp; Many see this issue as a problem to solve.&nbsp; A collision between cultures where perhaps one will dominate over the other.</p> <p>Western societies are faced with the imminent retirement of the so-called Baby Boom generation, those born after the last world war until about 1964. [1]&nbsp; The oil and gas industry refers to this process as the “Big Crew Change.” [2]</p> <p>The Boomers are to be replaced by the Millennials.&nbsp; Steeped in social media, video games and tablets the conventional view is that this new generation is the polar opposite to those who will train them.&nbsp; Organizations are rightfully concerned at the potential disruptions this transition may drive.&nbsp; Concerns include safety as well as possible negative impacts on shareholder value.</p> <p>Perhaps these anxieties are overblown.&nbsp; The news often reports that kidnap victims or hostages bond with the abductors over time.&nbsp; Perhaps this is the natural tendency we all have towards self-preservation and attempts to make our daily lives more pleasant.&nbsp; Never having been in this situation, this author cannot comment on the motivations of those who find themselves so challenged.</p> <p>The point being, humans adapt.&nbsp; We have seen this phenomenon repeatedly throughout history.&nbsp; Individuals and societies often adopt traits from others that they find useful, pleasant or economically valuable.</p> <p>Hypothesis: the collision of two the cultures, the old and the new will result in the cultural modification of both through the adaption and/or borrowing of traits between the two.&nbsp; Cultures <i>merge</i> as a result of prolonged contact.&nbsp; This process is called acculturation. [3]</p> <p>This is not a new development.&nbsp; Boomers have influenced the previous culture since their inception when they overran the elementary school system, changed the way the culture looks at social issues, etc.&nbsp; Boomers are now having an acculturation type impact on retirement.</p> <p>Industry can take solace because acculturation should drive a new culture with perhaps the best traits of both the old and the new.&nbsp; This will not happen automatically and acculturation can be managed.</p> <p>About one hundred and fifty years ago, Alfred Tennyson wrote, “The old order changeth yielding place to new . . ..” [4]&nbsp; Mortality is an undeniable part of the human condition.</p> <p>Is acculturation a biological or physiological trait that assures human survival?&nbsp; Perhaps a question for another forum, but human behavior suggests that transition from one generation to another is a well-established part of our nature.</p> <p>The collision between the old and the new need not be injurious.&nbsp; It is refreshing and one that can rejuvenate an organization.&nbsp; As with other functions of the organization, if management can channel this energy it may attain a completive advantage.</p> <p>A new corporate culture will emerge in the near future.&nbsp; Hopefully, it will be a combination of the best of both.</p> <p style="text-align: center;"><b>How will you organization attain value from the coming cultural collision?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p>[1]&nbsp; <a href="http://geography.about.com/od/populationgeography/a/babyboom.htm">http://geography.about.com/od/populationgeography/a/babyboom.htm</a></p> <p>[2]&nbsp; <a href="http://europe.theoildrum.com/node/2369">http://europe.theoildrum.com/node/2369</a></p> <p>[3]&nbsp; <a href="http://www.merriam-webster.com/dictionary/acculturation">http://www.merriam-webster.com/dictionary/acculturation</a></p> <p>[4]&nbsp; <a href="http://www.goodreads.com/quotes/404311-the-old-order-changeth-yielding-place-to-new-and-god">http://www.goodreads.com/quotes/404311-the-old-order-changeth-yielding-place-to-new-and-god</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2012/12/Acculturation.html2012-12-05T21:56:00.000Z2012-12-05T22:00:46.355ZWhat a Difference a Year Makesnoemail@noemail.orgScott Shemwell<p>Volume 1 Number 20</p> <p>On November 15, the deepwater drilling sector quietly passed an important first anniversary, the implementation of the Safety and Environmental Management System (SEMS) regulation.<a href="#_edn1" name="_ednref1"></a>[i]&nbsp; One year ago, SEMS evolved (some argue perhaps hastily) from a long history of risk management processes the industry had developed over decades and became law.<a href="#_edn2" name="_ednref2"></a>[ii]</p> <p>Perhaps more important than the passing of new regulations on the industry is the transformation the industry is undertaking.&nbsp; With the focus on a Culture-of-Safety, major changes in the core business processes are underway.</p> <p>The Culture of Safety has a number of definitions across a wide organizational spectrum—both public and private entities.&nbsp; According to one organization from the health industry, “<i>In a culture of safety, people are not merely encouraged to work toward change; they take action when it is needed.&nbsp; Inaction in the face of safety problems is taboo, and eventually the pressure comes from all directions—from peers as well as leaders.</i>”<a href="#_edn3" name="_ednref3"></a>[iii]</p> <p>The Management of Change (MoC) is challenging.&nbsp; For those executives that have been through this process (sometimes several times), the process is akin to a dental root canal.&nbsp; Transforming organizational culture is beyond difficult.&nbsp; Transforming industry culture is . . .</p> <p>Simply changing by managerial fiat has shown not to result in longstanding organizational cultural conversion.&nbsp; “Selling” the new culture to those steeped in the old requires fresh thinking and neoteric marketing models.</p> <p>Effectively, this process is a cross-cultural negotiation.&nbsp; In other words, the transaction process between one culture (the need for new thinking) and another (the desire to retain the status quo).&nbsp; It may be as simple or as complicated as that.</p> <p>This author first addressed the challenges of the Relationships, Behaviors, and Conditions (RBC) cross-cultural negotiation model in his doctoral dissertation that assessed the selling/buying process between western and eastern cultures.<a href="#_edn4" name="_ednref4"></a>[iv]&nbsp; In January 2011, the RBC framework was extended to encompass the cultural transformation process the deepwater drilling industry would undertake.<a href="#_edn5" name="_ednref5"></a>[v]&nbsp; Similarly, widely different perspectives.</p> <p>The industry is committed to a new and sustainable Culture of Safety, not just in deepwater drilling activities but also across all field operations processes.&nbsp; Changing decade’s old thinking will be done!&nbsp; Society, through its elected officials and regulatory agencies demands nothing less.</p> <p>What’s at risk is the <i>license to operate</i>—the revenue lifeblood!&nbsp; Failure is not an option.&nbsp; How the industry gets there is the only uncertainty.</p> <p>Lessons learned from cross-cultural behavioral analysis are as important to this process as learning process safety management (PSM) good practices from other industry sectors, i.e., nuclear.&nbsp; One can argue that cross-cultural negotiation models developed for international business development provide a good framework to “sell” industry participants on the new requirements.</p> <p><b>How does your organization meet cross-cultural driven transformational challenges?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</p> <h2>End Notes</h2> <p>[i]&nbsp; <a href="http://www.bsee.gov/Inspection-and-Enforcement/Enforcement-Programs/Safety-and-Environmental-Management-Systems---SEMS/Safety-and-Environmental-Management-Systems---SEMS.aspx">http://www.bsee.gov/Inspection-and-Enforcement/Enforcement-Programs/Safety-and-Environmental-Management-Systems---SEMS/Safety-and-Environmental-Management-Systems---SEMS.aspx</a><br> [ii]&nbsp; <a href="http://www.theoildrum.com/node/9041">http://www.theoildrum.com/node/9041</a><br> [iii]&nbsp; <a href="http://www.ihi.org/knowledge/Pages/Changes/DevelopaCultureofSafety.aspx">http://www.ihi.org/knowledge/Pages/Changes/DevelopaCultureofSafety.aspx</a><br> [iv]&nbsp; <a href="http://www.scribd.com/doc/13395182/Abstract-Cross-Cultural-Negotiations-Between-Japanese-and-American-Businessmen-A-Systems-Analysis">http://www.scribd.com/doc/13395182/Abstract-Cross-Cultural-Negotiations-Between-Japanese-and-American-Businessmen-A-Systems-Analysis</a><br> [v]&nbsp; <a href="http://www.therrinstitute.com/uploads/The_Blast_Heard_Around_the_World_-_January_2011.pdf">http://www.therrinstitute.com/uploads/The_Blast_Heard_Around_the_World_-_January_2011.pdf</a></p> <p></p> <p></p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2012/11/What-a-Difference-a-.html2012-11-19T17:30:00.000Z2012-11-19T17:41:58.306ZFrom Desktop to Hardhatnoemail@noemail.orgScott Shemwell<p>Volume 1 Number 19</p> <p>Many of us have attended workshops, been part of internal taskforces and other office based activities to identify, quantify and implement changes in the <i>way we do business</i>.&nbsp; We often leave motivated and ready to execute the next great leap only to find that weeks and months later little if anything has resulted from our efforts.</p> <p>Sometimes this phenomenon is type casted as resistant-to-change by individuals, departments and even the enterprise in general.&nbsp; Sometimes resistance-to-change can in fact be great and is perhaps the culprit.</p> <p>However, there can be another scenario.&nbsp; The result of a brief workshop can only provide a vision or at best a very broad framework for the next steps.&nbsp; Like any project, a scope of work, set of deliverables, time line and budget must be established.&nbsp; Additionally, tasks and resources (human and otherwise) must be made available in a timely fashion.</p> <p>Enter the <i>executive sponsor</i>.&nbsp; Ask any consultant or experienced team member and they will tell you an executive sponsor is critical to the success of a project.&nbsp; Seems straightforward, so why do so many initiatives still fail?</p> <p>Three (minimum) criteria must be met for the executive sponsorship to be successful.&nbsp; These include:</p> <p>&nbsp;&nbsp;&nbsp; <b>--</b> Is the initiative truly <i>aligned</i> with organizational objectives and strategy?</p> <p>&nbsp;&nbsp;&nbsp; -- Does the sponsor have a true vested interest in the success of the project?&nbsp; In other words, what's in it professionally/personally for her?&nbsp; What is his downside?&nbsp; Will he or she put in the time necessary to assure success?</p> <p>&nbsp;&nbsp;&nbsp; -- Are human resources truly made available as needed or is project this something they must accomplish in addition to everything else they do—their so-called <i>day job</i>?</p> <p>It is relatively easy for a pundit to identify pitfalls with organizational change.&nbsp; The actual implementation of change is harder.</p> <p>In a previous edition of this blog we referred to the importance of <i>execution</i>, where flying an aircraft or managing your daily business.&nbsp; Poor execution can lead to catastrophic failure but more often, it is insidious in that shapes a pattern of overall sub-optimal performance that becomes the organizational “new” norm.</p> <p>Executives tend to drive to bottom line—if the initiative is not truly aligned and provides value to the organization's business imperatives and if top executives are not committed (personal skin in the game), do not proceed with the initiative.</p> <p>Chances of failure in scenarios with weak executive sponsorship are high.&nbsp; Frustration on the part of initiative team members will be high.&nbsp; Interest in pursuing the next great initiative will be diminished.&nbsp; Perhaps a negative spiral against the new ensues.</p> <p>Value is derived from executed initiatives not those on the bookshelf.&nbsp; Perhaps it is kismet that only a small number of initiatives see the light of operational day.</p> <p style="text-align: center;"><b>How does your organization verify that new initiatives are properly executed and actually contribute to the bottom line?</b></p> <h2>About the Author</h2> <p>Dr. <a href="http://www.linkedin.com/in/scottsh">Scott M. Shemwell</a> has over 30 years technical and executive management experience primarily in the energy sector.&nbsp; He is the author of two books and has written extensively about the field of operations management.&nbsp; Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations and business excellence and regulatory compliance management.</p> http://localhost:4503/content/ppg/en/blogs/governing-energy/2012/11/From-Desktop-to-Hard.html2012-11-05T17:02:00.000Z2012-11-05T17:04:25.497ZSafety, Safety, Safetynoemail@noemail.orgPennEnergy<br />Volume 1 Number 18<br /><div class="MsoNormal"><br /></div><div class="MsoNormal">The oft spoken Realtor clich&eacute;, <i>location, location, location</i> is used as a slogan and metric for the value of any given real (estate) property. Moreover, as the United States is at the peak of the political &ldquo;silly&rdquo; season with the Presidential election just days away, politicians and their surrogates are repeating their talking points&mdash;over and over and over.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">While seemingly silly and even trite these days, slogans and tag lines continue to work. Catchy sayings and repeated stances stick in our conscious. Even today, some 70 years later who among us has not heard the World War II slogan, &ldquo;loose lips sink ships?&rdquo;<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Advertisers and politicians know that repeatedly saying something (even if it stretches belief--propaganda<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a>) is an effective way to &ldquo;cement&rdquo; the message in the intended audience. When listeners believe what they hear and internalize its thought, dislodging that position can prove difficult.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Marketing people talk about &ldquo;mind share&rdquo; or that informal measure of the level of casual discussion about an idea, product, celebrity, or other media enabled exposure.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a> Colloquially, the &ldquo;hot top!&rdquo; Admittedly, some subjects have legs or the sustained level of interest while others can be fleeting.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In the previous edition, we discussed the organization&rsquo;s Culture of Safety and its paramount importance. In the current environment, safety certainly has substantial mind share. The challenge is to insure that 3, 5 or even 70 or more years later it still does&mdash;the embodiment of the organization&rsquo;s culture!<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">As boring as political talking points can be and as sick of hearing them we are late in an election cycle, they do assure that all party spokespeople are on the same page. This tried and true method for teaching the electorate about the party&rsquo;s perspective works and sometimes works very well.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Employees and suppliers are the electorate. The behavioral science applied to advertising and political campaigns works and it can function to assure the firm&rsquo;s sustainable Culture of Safety.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">How does your organization keep SAFETY top of mind?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2>End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://www.eyewitnesstohistory.com/lslips.htm"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.eyewitnesstohistory.com/lslips.htm</span></a> <o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> <a href="http://mason.gmu.edu/~amcdonal/Propaganda%20Techniques.html"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://mason.gmu.edu/~amcdonal/Propaganda%20Techniques.html</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%2017%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://www.businessdictionary.com/definition/mindshare.html"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.businessdictionary.com/definition/mindshare.html</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-43292531637409374332012-10-19T15:49:00.000Z2016-05-12T20:12:49.904ZIV&Vnoemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 17<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Independent Verification and Validation (IV&V) is a combined third party process of verification and validation that evaluates whether a product, service or system meets its intended set of specifications. It is frequently part of a quality management process such as ISO 9000.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> Organizations such as NASA have taken a leading role in this effort particularly with mission critical software.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The Verification process checks whether a product, service or system meets its specifications and complies with appropriate regulations during the development or manufacturing process. The Validation process assess whether or not the final product met the design specifications.<o:p></o:p></div><div class="MsoNormal"><i><br /></i></div><div class="MsoNormal"><i>Stated another way, validation can also be expressed by the question &lsquo;are you building the right thing?&rsquo; and verification by &lsquo;are you building it right?&rsquo;<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><b><span style="font-size: 11pt; line-height: 115%;">[iii]</span></b></span></span></span></a><o:p></o:p></i></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The construct, <i>A Culture of Safety</i>, defines operational safety as a core value. Individual and organizational behaviors in this culture emphasis safety as the top priority or Critical Success Factor (CSF).<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> As the result of recent, high profile industrial accidents across the energy value chain, most organizations are revisiting their safety policies and associated training programs. In some instances, companies are looking to organizations with high value mission critical processes such as NASA and the U.S. nuclear submarine programs for &ldquo;best practices&rdquo; that may have relevance in the energy sector.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Effective November 15, 2011, the new Bureau of Safety and Environmental Enforcement (BSEE) Safety and Environmental Management Systems (SEMS) regulations require an audit.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a> As of this writing, the audit can be conducted by the organization internally and self-reported. However, forthcoming revisions to SEMS commonly referred to as SEMS II are expected to require full arms-length auditing akin to the financial audit process used by public companies.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_edn6" name="_ednref6" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vi]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Moreover, the SEMS audit is an audit of the management systems necessary to support safe and environmentally friendly processes. It is <u><span style="font-variant: small-caps;">not</span></u> a review of technical products, services or systems. For some organizations, this may result in a gap in their safety program.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The implementation of IV&V may fill this gap and further assure shareholders as well as local communities and regulatory bodies of the commitment to a culture of safety. Those firms that do not currently use an IV&V or similar process may want to consider its value proposition.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">When it comes to field safety, the definition of mission critical and been greatly extended. As with other organizational processes, it may be time to revisit and revise the way firms verify and validate technical processes.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">How does your firm assure its operation&rsquo;s stakeholders that it is doing the right things, the right way?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</div><div class="MsoNormal"></div><h2>End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/IV&amp;V"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://en.wikipedia.org/wiki/IV&V</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/Independent_Verification_and_Validation_Facility"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://en.wikipedia.org/wiki/Independent_Verification_and_Validation_Facility</span></a> <o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://softwaretestingfundamentals.com/verification-vs-validation/"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://softwaretestingfundamentals.com/verification-vs-validation/</span></a><o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a> <a href="http://www.nrc.gov/about-nrc/regulatory/enforcement/safety-culture.html"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.nrc.gov/about-nrc/regulatory/enforcement/safety-culture.html</span></a><o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a> <a href="http://www.iadc.org/sems-toolkit/"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.iadc.org/sems-toolkit/</span></a><o:p></o:p></div></div><div id="edn6"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Oct%202%202012.rtf#_ednref6" name="_edn6" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vi]</span></span></span></span></a> <span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><a href="http://www.corporatecomplianceinsights.com/sems-ii-changing-the-culture-offshore/">http://www.corporatecomplianceinsights.com/sems-ii-changing-the-culture-offshore/</a></span></div></div></div><div><div id="edn1"><div class="MsoEndnoteText"></div></div><div id="edn5"><div class="MsoEndnoteText"></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-5428993876011268712012-10-04T18:39:00.003Z2016-05-12T20:12:50.185ZIt&rsquo;s the Data, Stupid!noemail@noemail.orgPennEnergy<br />Volume 1 Number 16<br /><br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal">Mankind has been managing documents since the Library of Alexandria; circa 300 BC began a serious effort to collect the world&rsquo;s knowledge.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> Prior to that, stone tablets and cave writings contributed to the knowledge base.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Fast forward to the 1980s, electronic document management (EDM) systems emerged to help manage the rapidly growing collection of electronic documents and images. While upgraded to include html, email and text messaging these systems have remained functionally the same over the past 30 years.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Depending on their size and scope of operations, modern firms are challenged with managing tens of millions of documents&mdash;in some cases orders of magnitude more. Whether, papers, spreadsheets, CAD, images or other sources of information, these materials are effectively <i>electronic pieces of paper</i>. For a number of operational and legal reasons, even text messages must be saved and accounted for.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The consequences of failure to manage this material for firms and even individuals can be dire. Readers may be aware that a former BP engineer was arrested earlier this year (2012) for allegedly erasing two (2) text messages deemed relevant to 2010 oil spill.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The over two thousand year old library system of storing and retrieving document is in drastic need of an overhaul. A fundamental change in the way society manages it knowledge base is necessary if we are not to finally succumb to the ocean of documents that like a tidal wave or avalanche devour all in their path.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In my <i>Changing the Dialogue</i> series monograph, <u>Asset/Equipment Integrity Governance: Operations&mdash;Enterprise Alignment: A Case for Board Oversight</u>, the Integrated Compliance Management Framework is built upon Compliance Policy Automation.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> This construct directly addresses the ARRAY OF COMPLIANCE faced by today&rsquo;s firms.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Making this actionable in daily operations is challenging and new tools are required. In non-technical language, new versions of business rules engines effectively convert regulatory and internal company Standard Operating Procedures (SOP), et al. into data driven procedural methodologies with audit tracking capabilities.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">For example, by one account the new 2,700-page United States health care law has already generated some 13,000 <span style="font-variant: small-caps;">new</span> pages of regulations.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a> This is a lot of electronic pieces of paper to be read, understood and made actionable by each organization in that industry. Moreover, this is not a static environment and changes and new legal interpretations will be ongoing.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Typically, one might expect operations, engineering and product development, legal, risk management, financial and other departments including the Office of the CEO to be directly involved in the operation of the business. These and others must assure that the organization adheres to all regulations. Finally, Board oversight demands that the firm not be put at risk. All of these critical processes demand timely and accurate information.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The old ways of collecting papers, spreadsheets, and other supporting materials is insufficient and opens the firm up to scrutiny. Just as manufacturing was automated in the past to achieve efficiencies, standardization and lower cost business models, compliance management demands we automate the &ldquo;data&rdquo; management process and delegate document management as we know it to history.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Finally, many authors and pundits have extended any number of statements with the word &ldquo;stupid&rdquo; taken from a US presidential campaign last century. The intent is to accentuate the statement. We might change it somewhat as documents are dumb and the data driven procedural processes are smart.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">Is your firm treading water in an ocean full of document sharks?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2>End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/Library_of_Alexandria"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://en.wikipedia.org/wiki/Library_of_Alexandria</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/Document_management_system"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://en.wikipedia.org/wiki/Document_management_system</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://www.forbes.com/sites/walterpavlo/2012/04/25/bp-engineer-arrested-on-oil-spill-related-charges-wrong-guy/"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.forbes.com/sites/walterpavlo/2012/04/25/bp-engineer-arrested-on-oil-spill-related-charges-wrong-guy/</span></a> <o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a> <a href="http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf</span></a><o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%2017%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a> <a href="http://www.foxnews.com/politics/2012/07/03/efforts-to-implement-obamacare-law-raise-concerns-massive-government-expansion/"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.foxnews.com/politics/2012/07/03/efforts-to-implement-obamacare-law-raise-concerns-massive-government-expansion/</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-18421079230406851882012-09-17T18:12:00.000Z2016-05-12T20:12:50.705ZIt&rsquo;s Very Complicatednoemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 15</div><br /><div class="MsoNormal">At a meeting several months ago as the deepwater drilling industry was coming to grip with the new Safety and Environmental Management Systems (SEMS) requirements,<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> one executive expressed his concerns. Stating, &ldquo;It&rsquo;s very complicated,&rdquo; it was dawning on him that the regulatory environment was forever changed.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Today&rsquo;s executives, regardless of industry must meet regulatory requirements from local, state, and federal agencies around the world. Moreover, other constituents such as the local community and environmental groups also exert influence on field operations. It is indeed complicated.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">More than a decade ago, global organizations were challenged with implementing global management systems enabled by Enterprise Resource Planning (ERP) solutions.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> These systems enable better decision making across complicated global enterprises. For the first time, the CEO could look at his or her dashboard and view the organization without waiting for reports to be developed and delivered.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In 2002, financial reporting became more complicated with the advent of Sarbanes Oxley.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a> Section 404 of the Act indicates that public firms must put in place management processes and internal controls to assure more effective financial reporting.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> Extensions to the leading ERP software systems enabled public companies to automate this new level of complexity.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In the white paper, Asset/Equipment Integrity Governance: Operations&mdash;Enterprise Alignment a multidimensional Integrated Compliance Management Framework addresses issues of operational complexity and multiple constituent influences.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a> Fundamental to the model is Compliance Automation.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Organizations are demanding that field employees and suppliers at all levels perform their daily tasks in accordance with an increasingly complex regulatory framework. Codified as part of the firm&rsquo;s Standard Operating Procedures (SOP), a myriad of regulatory requirements are imposed throughout the organization and by extension to its suppliers.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Governance models are now extended from the Boardroom to field operations directly and by force of law. As with other critical business processes this complicated environment is better served when automated. Software providers have developed tools to enable transformational governance models. Competitive advantage will likely go to those that can simplify this complicated process.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">How does your organization simplify complexity?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2>End Notes</h2><div><hr align="left" size="1" width="33%" /> <br /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a><a href="http://www.centerforoffshoresafety.org/toolkit.html"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.centerforoffshoresafety.org/toolkit.html</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a><a href="http://en.wikipedia.org/wiki/Enterprise_resource_planning"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://en.wikipedia.org/wiki/Enterprise_resource_planning</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a><a href="http://www.soxlaw.com/"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.soxlaw.com/</span></a><o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a><a href="http://www.proedit.com/writing_sarbanes_oxley_404.asp"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.proedit.com/writing_sarbanes_oxley_404.asp</span></a> <o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Sept%204%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a><a href="http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf</span></a> <o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-36053587471111656102012-09-04T18:45:00.000Z2016-05-12T20:12:51.127ZYadadameannoemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 14<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The software company, Oracle offers collaborative solutions in almost 30 languages. One can surmise that this for profit entity is providing products and services its clients have an economic demand for. This need should come as no surprise to observers of our global business environment.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">A colleague of mine once remarked that his field operations in the Middle East required that he communicate with personnel in Russian, Chinese, Arabic and English to accomplish the engineering tasks at hand. In situations like this interpersonal communications is one of the Critical Success Factors (CSF).<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">A breakdown in communications can take place in one of several ways. There can be a misunderstanding based on accent, e.g. the stereotypical New Yorker in Texas. The language of the transaction may be the second (or even third) language for one or more of the participants. Generational based vernacular can enter the picture as well. In other cases, situational issues may contribute to misunderstandings for example, loud machinery noise levels, during crisis management or perhaps a simple lack of attention by one or more parties.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Moreover, communication is not just a function of the words said and their meaning. Verbal interactions also must be placed in context. Interpretation of context is a function of culture, among other variables. Even within a firm there can be different cultures between divisions or perhaps the newly acquired firm and its parent. Additionally, organizations and its key suppliers may have cross cultural communications as well given different business models, heritages, etc.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The ability of an organization / team to communicate across cultures is paramount; never more so than during an HSE driven incident. Applying the pressures of incident management to a multi-faceted / cross cultural task force can exponentially increase communication difficulties.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">There are many case studies whereby relatively simple problems rapidly get out of hand when one or more individuals are distracted by either other matters or a multiplicity of cascading events. Poor communications amongst team members can compound this already difficult environment.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Management must realize the communications challenges faced by today&rsquo;s firm. Training and other processes must be put in place to mitigate the risks associated with potential misunderstandings. Not only is good, consistent cross cultural communications a CSF for field operations, it is a CSF for enterprise risk management as well. As such it deserves the same level of managerial attention as other major components of business risk.</div><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">BTW (by the way), one translation of the title is, &ldquo;Do you know what I mean?&rdquo;<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%2016%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> Not surprisingly there are other slightly different (culturally characterized) interpretations as well.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">How your company assure that individuals involved in mission critical decision making processes can actually communicate with each other?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2>End Notes<o:p></o:p></h2><div><br clear="all" /><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%2016%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i] </span></span></span></span></a><a href="http://www.urbandictionary.com/define.php?term=yadadamean"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.urbandictionary.com/define.php?term=yadadamean</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-44928205217116602422012-08-16T17:50:00.000Z2016-05-12T20:12:51.707ZFlaps & Slatsnoemail@noemail.orgPennEnergyVolume 1 Number 13<br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Airline piloting 101 surely teaches that the wing flaps and forward slats must be in the extended position prior to takeoff. On August 16, 1987, Northwest Airlines flight 255 crashed shortly after taking off claiming 156 lives. <i>The National Transportation Safety Board </i>(NTSB)<i> determined that the probable cause of the accident was the flight crew&rsquo;s failure to use the taxi checklist to ensure that the flaps and slats were extended for takeoff</i>.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The Federal Aviation Administration (FAA) qualified and experienced cabin crew certainly knew about this item on the taxi checklist. So why would both the captain and first officer both overlook this basic and often repeated work process?<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The NTS report goes on to state that prior to take off, the runway was changed to a shorter runway and that the captain subsequently missed the turn off taxiway initially. During takeoff, there were difficulties engaging the auto throttle system amid poor weather conditions including a potential wind shear situation. Moreover, there were issues with power to the aircraft&rsquo;s take off warning system.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> In other words, a number of non-routine events were taking place either simultaneously or at least within a relatively short period.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In 1987, the pre-takeoff check list was manual and according to one source poorly designed. Text fonts and paragraph spacing made it difficult to be assured that if interrupted, pilots could resume exactly where they left off. Today, commercial aviation checklists are computerized, dramatically reducing errors.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Our daily repetitive chores are ubiquitous. So much so, we often do not remember what we did or did not do. How many times have we driven home in the peak hour and not remembered the details of our trip? How many times have we wondered whether the garage door was down and returned home shortly after leaving to check and find it closed? Sometimes our routine is such an ingrained process that we don&rsquo;t remember whether or not we have acted on every item on our mental checklist.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Today, many industrial checklists are manual, mental, or a function of an individual&rsquo;s personal experience&mdash;circa commercial aviation 1987. As much as the expertise of decision makers (the captain of flight 255 had been flying for 31 years) is very critical, events can overwhelm even the best of us.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">No matter how routine a task is, in today&rsquo;s complex environment, even the most skilled and experienced personnel can overlook or incorrectly perform something they have done hundreds and even thousands of times. When the routine is impacted by exogenous events outside of our control, particularly when more than one occurrence are happening simultaneously, our entire mental checklist can breakdown.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Many &ldquo;field&rdquo; jobs can be defined as, &ldquo;long periods of boredom, punctuated by moments of sheer terror.&rdquo;<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> Boredom (and experience) can beget complacency. Our hubris is often interrupted at the most inopportune time. An automated checklist can help mitigate mistakes made at critical moments.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12.0pt; line-height: 115%;">What are the critical (success factors) flaps and slats in your organization and how does your firm assure they are in the right position each and every time?<o:p></o:p></span></b></div><h2>About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2>End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://libraryonline.erau.edu/online-full-text/ntsb/aircraft-accident-reports/AAR88-05.pdf"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://libraryonline.erau.edu/online-full-text/ntsb/aircraft-accident-reports/AAR88-05.pdf</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> Ibid.<o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://www.smithsonianchannel.com/site/sn/show.do?episode=140661"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.smithsonianchannel.com/site/sn/show.do?episode=140661</span></a><o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-Aug%202%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a> <a href="http://answers.yahoo.com/question/index?qid=20120309231834AAlTBrP"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://answers.yahoo.com/question/index?qid=20120309231834AAlTBrP</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-29367380792707650032012-08-02T17:59:00.000Z2016-05-12T20:12:52.004ZStop Work!noemail@noemail.orgPennEnergy<br /><br /><div class="MsoNormal">Volume 1 Number 12<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">This phrase is generally defined as the authority of anyone regardless of position or seniority on a job site to authorize work stoppage when an unsafe or environment hazard is identified.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%2016%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> There is another situation where a stop work may be required.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Think of a circumstance when an employee or contractor without malice puts a given field process out of compliance with various regulations. In many cases, for example the new deepwater drilling regulations, an individual on the offshore drilling rig either by action or inaction can place the entire operation at jeopardy with regulations, especially safety regulations.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">If during the period of &ldquo;non-compliance&rdquo; an incident occurs, the operator may not be able to escape liability. Moreover, it is unclear how much responsibility the operator can &ldquo;lay off&rdquo; on the contracting company. Unplanned operational downtime or a safety incident are two potential outcomes for being out of compliance requirements and putting your &ldquo;license to operate&rdquo; at risk.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">There are two actions firms must take to minimize the risk of an incidental noncompliance problem. First, and most importantly employees, contractors, subcontractors and suppliers must be trained and updated often.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">It is not enough to complete certification for a job; there must be an ongoing formal and informal updates not unlike the Continuing Professional Education (CPE) credits accountants, attorneys and engineers are required to complete on an annual basis. In addition, Standard Operating Procedures (SOPs) must incorporate compliance processes into the work processes in a way that is easy to understand without requiring the individual to become a &ldquo;field&rdquo; lawyer.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Today's mobility devices allow both. All individuals regardless of grade or organization can undergo continuous training without attending the classroom. Distance learning can be brought to the field. <o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Moreover, compliance management can also be integrated into online SOPs. It then becomes part of the individual job description and not just something else to deal with as additional &ldquo;paperwork.&rdquo;<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Since both of these major categories are delivered in an online format, the training and work process checklist, SOP and maintenance documents are the &ldquo;current&rdquo; version annotated for that particular individual and in that particular oil or gas field or facility.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Finally, the entire process undergoes an automatic audit. This provides management with documentation that may be required from time to time by various regulatory bodies.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The alternative is a number of fragmented processes with few assurances that at a particular moment in time operations may technically be out of compliance.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">How does your company support highly talented empowered field personnel thus minimizing inadvertent out of compliance?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2> End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%2016%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://www.hanford.gov/files.cfm/Hanford_Stop_Work_Procedure.pdf"><span style="color: black;">http://www.hanford.gov/files.cfm/Hanford_Stop_Work_Procedure.pdf</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-45134474941604090932012-07-18T17:53:00.000Z2016-05-12T20:12:52.773ZThe Iceberg Principlenoemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 11<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Anyone who has seen the movie, Titanic knows that the damage to the ship that ultimately sank her came from below the waterline and was hidden from view. More often than not, it is the unseen hazard that is more dangerous than the visible peril.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Any risk management process must assume that not all exposures are known. Famously, former Secretary of Defense, Donald Rumsfeld said, <i>&ldquo;There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.&rdquo;<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a></i><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Years ago, while working on yet another corporate reorganization, it seemed to me that there were market forces at play that we just did not understand. Regardless of any actions we took, a host of management consultants retained and management shakeups, the results were tepid at best. It seemed that we <i>did not know what we did not know</i> about the microeconomics exerting themselves on the firm.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">I asked myself if there was a better way. I believe there is and it is available to all of us. The remainder of this article describes a better way of understanding our business environment.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The Iceberg Principle states that 90% of any system&rsquo;s structure is below the surface or hidden from direct observation. This <i>latent</i> component controls <i>all</i> the processes associated with the system.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Statisticians define latent variables as ones that are not directly observable and must be inferred through mathematical modeling.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a> In other words there are tools available that can shed light on unknown unknowns.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">It is not the intent of this piece to dive deeply into statistical models. These models are usually the purview of professionals in their fields. However, the models must be populated with relevant data and that process of developing the data set is often the real value of the exercise.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The <i>Structural Dynamics</i> methodology that enables a better understanding of unknown unknowns has a discovery process associated with it. It is this activity that generally tends to drive out a range of thinking that challenges the status quo as management asks hard question and dives deeper than a PowerPoint presentation into ground truth.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">There is a time and place for high level executive briefings. Deciding the future of the firm is not one of them.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">This is not to say that we must be buried in data. Just the opposite, much of the &lsquo;data&rsquo; is in the minds of knowledgeable individuals. Behavioral economics provides us the tools to better understand and articulate our knowledge and reduce the number of unknown unknowns.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">This introspection is not an easy process. If it was, it would already have been done. It is however, personally rewarding when the health of an organization is improved.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">We all have icebergs to navigate around. Having a better understanding of the iceberg structural dynamics is a better position than the skipper, crew and passengers of the Titanic found themselves.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Readers interested in a more technical discussion are invited to check out my recent monograph, <i>Structural Dynamics: The Foundation of Next Generation Management Science</i>.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a><o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">Have you taken a structured assessment of possible unknown unknowns that might help avoid an organizational shipwreck?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><h2> End Notes</h2><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_ednref1" name="_edn1" title="">[i]</a> </span></span></span></span><a href="http://www.youtube.com/watch?v=GiPe1OiKQuk"><span style="color: black;">http://www.youtube.com/watch?v=GiPe1OiKQuk</span></a> <o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_ednref2" name="_edn2" title="">[ii]</a> </span></span></span></span><a href="http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf"><span style="color: black;">http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf</span></a> <o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_ednref3" name="_edn3" title="">[iii]</a> </span></span></span></span><a href="http://en.wikipedia.org/wiki/Latent_variable"><span style="color: black;">http://en.wikipedia.org/wiki/Latent_variable</span></a> <o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt; text-align: justify;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20July%202%202012.rtf#_ednref4" name="_edn4" title="">[iv]</a> </span></span></span></span><a href="http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf"><span style="color: black;">http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-3434985555075383572012-07-05T18:24:00.001Z2016-05-12T20:12:53.273ZVirtue, Liberty, & Independence - At Risk?noemail@noemail.orgPennEnergy<br /><span style="background-color: white;">Volume 1 Number 10</span><br /><span style="background-color: white;"><br /></span><br /><span style="background-color: white;">The state motto of Pennsylvania challenges all to a high standard.</span><span class="MsoEndnoteReference" style="background-color: white;"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn1" name="_ednref1" title="">[i]</a> </span></span></span></span><span style="background-color: white;">Allegedly, led down the low road by one individual football coach, not just the university but the state is faced with a very high cost. Stakeholders at both institutions are rightfully outraged by these events.</span><br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Most readers are likely familiar with the Jerry Sandusky child abuse case and it is not the intention of this piece to focus on those details.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> As with other abuse of power instances, the broadening impact of his alleged crimes touches those who either knew, should have known and/or overlooked the behavior of one individual. Now their personal lives are in turmoil and potential legal exposure is created for these individuals and the institutions that employed them.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">According to one credible source, Penn State University will not be able to invoke sovereign immunity and may be faced with eight digit financial exposure to settle a number of pending and future civil litigations.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> Moreover, as with many institutions, during these economic times it is already confronted with a number of steep financial hurdles, for example its 2011 funding reduction by the state of Pennsylvania of approximately $182 million.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">So which of PSU&rsquo;s stakeholders will be impacted by this one two punch? All of them and most likely to varying degrees!<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Students, teachers, university employees, suppliers to the university, and the list goes on. Add the multiplier effects; the communities serving the 24 campuses and don&rsquo;t forget the families of these stakeholders. Citizens of the state of Pennsylvania are also the ones left holding the proverbial financial bag.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Good governance is not about putting a governance policy document in place. Good governance is the active involvement by the board of directors and top executives <i>imprinting</i> ethical and legal behavior into the daily activities of all employees, suppliers and others involved with delivering organizational performance&mdash;a culture of good governance/transparency. Early warning and early action can prevent or at least minimize a crisis caused by one out of control individual in a position of power.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The cadets at West Point have an Honor Code that reads, "A cadet will not lie, cheat, steal, or tolerate those who do."<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_edn6" name="_ednref6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vi]</span></span></span></span></a> One could surmise that today there are several high ranking (current and former) individuals in Pennsylvania that wished they too had followed that creed.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">It appears that the PSU governance model failed in a systemic and highly visible manner. What will not be known for some time is the impact on the university&rsquo;s stature and future. The standing of the football program, ability to recruit new students, retention and attraction of top professors, research funding and more are now in play. All of these have a financial metric attached to them in addition to their contribution to the reputation of the university.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">How much damage could illegal conduct by one executive do to your firm?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><div><br /><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a><a href="http://www.statesymbolsusa.org/Pennsylvania/Motto_PA.html"><span style="color: black;">http://www.statesymbolsusa.org/Pennsylvania/Motto_PA.html</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a><a href="http://www.pennlive.com/midstate/index.ssf/2012/06/jerry_sandusky_graham_spanier.html"><span style="color: black;">http://www.pennlive.com/midstate/index.ssf/2012/06/jerry_sandusky_graham_spanier.html</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a><a href="http://articles.philly.com/2011-11-10/news/30382552_1_sexual-abuse-grand-jury-football-coach"><span style="color: black;">http://articles.philly.com/2011-11-10/news/30382552_1_sexual-abuse-grand-jury-football-coach</span></a><o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a><a href="http://www.erlegal.com/sherry-in-legal-psu.pdf"><span style="color: black;">http://www.erlegal.com/sherry-in-legal-psu.pdf</span></a><o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a><a href="http://live.psu.edu/story/52435"><span style="color: black;">http://live.psu.edu/story/52435</span></a><o:p></o:p></div></div><div id="edn6"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%2016%202012.rtf#_ednref6" name="_edn6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vi]</span></span></span></span></a><a href="http://en.wikipedia.org/wiki/Cadet_Honor_Code#The_U.S._Military_Academy_at_West_Point"><span style="color: black;">http://en.wikipedia.org/wiki/Cadet_Honor_Code#The_U.S._Military_Academy_at_West_Point</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-91577293107444370702012-06-20T18:57:00.000Z2016-05-12T20:12:54.445ZThe DC-10: A Cautionary Talenoemail@noemail.orgPennEnergyVolume 1 Number 9<br /><br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal">The McDonnell Douglas state of the art wide body passenger airliner, the DC-10 made its inaugural flight on August 29, 1970.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> The company believed this was the airplane that would revolutionize the public's flying experience and add significant shareholder value to the firm. The plane is remembered in the annals of aviation history but not in the manner McDonnell Douglas had hoped.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Something happened on the way to the future. The aircraft was beset by problems and ultimately the public lost its faith in this wide body jet. After four major crashes and a host of other problems including temporary grounding by the Federal Aviation Administration (FAA), the plane went out of production in 1983.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> Perhaps, the most infamous accident, Flight 191 from Chicago on May 25, 1979 killed 271 people and may have cemented negative public opinion of this asset.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Once trust has been lost, it is very difficult and sometimes impossible to regain. This is particularly true where safety is involved.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">For example, the FAA found that airline maintenance was the most likely cause for the loss of Flight 191 not aircraft design, but this technical detail was lost in the public outcry of this greatest airline incident prior to September 11, 2001.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> From its inception through July 2006, the aircraft had 29 accidents with over 1400 fatalities.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">One could argue that this stream of misfortunes for the company's flagship product contributed to its ultimate demise. In 1997 The Boeing Aircraft Company acquired the 58 year old McDonnell Douglas as its share of the commercial airline market struggled.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn6" name="_ednref6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vi]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In an era where we are continuingly reminded that too big to fail is an oxymoron and complex systems continue to sub optimally perform, all firms are potentially just an event away from demise&mdash;often at fire sale prices. The history of the DC-10 is insightful, not necessarily regarding the inherent airworthiness of the aircraft, but because of a reputation rightly or wrongly acquired.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">It should be noted that the DC-10 continues to fly albeit primarily by the air cargo sector. The last US passenger service by the aircraft ended in 2007. Lastly, one argument in defense of the airliner is that its safety record is not much different from the Boeing 747, a very successful product.<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"> <a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_edn7" name="_ednref7" title=""><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vii]</span></span></a></span></span> In the end however, <i>perception is reality</i>.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Many industry sectors have a similar profile. Assets are manufactured by global organizations, sold or leased to global operators and maintained by still others. The weakest link in a supply chain can ripple through to all.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">What is your company's crisis management process to assure continuance of your hard earned reputation?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</div><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/McDonnell_Douglas_DC-10"><span style="color: black;">http://en.wikipedia.org/wiki/McDonnell_Douglas_DC-10</span></a> <o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> <a href="http://www.nytimes.com/1989/07/20/us/troubled-history-of-the-dc-10-includes-four-major-crashes.html"><span style="color: black;">http://www.nytimes.com/1989/07/20/us/troubled-history-of-the-dc-10-includes-four-major-crashes.html</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://en.wikipedia.org/wiki/American_Airlines_Flight_191"><span style="color: black;">http://en.wikipedia.org/wiki/American_Airlines_Flight_191</span></a><o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a> <a href="http://articles.latimes.com/2007/jan/07/opinion/op-thornton7"><span style="color: black;">http://articles.latimes.com/2007/jan/07/opinion/op-thornton7</span></a><o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a> <a href="http://www.dc-10.net/"><span style="color: black;">http://www.dc-10.net/</span></a> <o:p></o:p></div></div><div id="edn6"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref6" name="_edn6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vi]</span></span></span></span></a> <a href="http://economics.illinoisstate.edu/dloomis/eco320/downloads/papers/steve.PDF"><span style="color: black;">http://economics.illinoisstate.edu/dloomis/eco320/downloads/papers/steve.PDF</span></a><o:p></o:p></div></div><div id="edn7"><div class="MsoEndnoteText" style="margin-bottom: 3.0pt; margin-left: 0in; margin-right: 0in; margin-top: 3.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20June%202%202012.rtf#_ednref7" name="_edn7" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vii]</span></span></span></span></a> <a href="http://articles.latimes.com/2007/jan/07/opinion/op-thornton7"><span style="color: black;">http://articles.latimes.com/2007/jan/07/opinion/op-thornton7</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-19938333216663944482012-06-04T20:52:00.006Z2016-05-12T20:12:54.882ZTrust but Verifynoemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 8<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">President Ronald Reagan is noted for his speech where he expressed a new model when dealing with the former Soviet Union quoting an old Russian proverb, "doveryai, no proveryai."<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> Coinciding with Perestroika<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> this new relationship between the United States and the Soviet Union led to a dramatic change in the post World War II status quo; yielding to the Realpolitik<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iii]</span></span></span></span></a> of the 21<sup>st</sup> century.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In many ways corporations, regardless of industry sector they serve or country of origin find themselves in a similar situation. Contemporary organizations are multi-dimensional with numerous business units. Their supply chains are large and often convoluted with constituents that include not only shareholders, government regulatory agencies, but a host of local, national and international groups concerned with the firm's activities and its corporate citizenship behaviors.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Much has been written, including in this dialogue, about the need for standard operating procedures, reporting and oversight as well as good governance models extending beyond the traditional approach. All of this may not be enough in our 24/7 century.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">As of the writing, JP Morgan Chase has announced and is in the process of explaining a 2% negative impact<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[iv]</span></span></span></span></a> on one of its investments&mdash;a loss of $ 2 billion and possibly more.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[v]</span></span></span></span></a> Given that the international stock markets can move two or more percent in one day, is this a <i>material</i> event? However, given today's environment, it appears this disclosure may take on a life of its own.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Trust but verify. Management must put its trust in those key individuals it has tasked with the creation and delivery of value. Micromanagement of a major global firm has been repeatedly shown not to produce the best shareholder value. However, governance models must heed the advice of President Reagan.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Individuals, business units and partners must be trusted to deliver value that has been contractually agreed upon. However, governance oversight must extend to a new auditing process. Going forward, auditing as it is typically defined as a quarterly reporting event will most likely become one along the lines of continuous improvement.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Edwards Deming et al. developed management models for the manufacturing era that extoled the virtues of independent behavior in the framework of Total Quality Management (TQM) and continuous improvement.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn6" name="_ednref6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vi]</span></span></span></span></a> It is time to extend this model to include ongoing governance.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In 2009, this author put forth a model for managing industrial enterprises in ever increasing volatile environments.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn7" name="_ednref7" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[vii]</span></span></span></span></a> Subsequent events suggest this model be extended to include real time governance. The forthcoming monograph does just that&mdash;AEIG.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_edn8" name="_ednref8" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[viii]</span></span></span></span></a><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Doveryai, no proveryai&mdash;common sense then, good governance now.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">How does your firm govern the details in a world where a 2% negative impact becomes an international political football?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc.; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</div><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a><a href="http://en.wikipedia.org/wiki/Doveryai,_no_proveryai"><span style="color: black;">http://en.wikipedia.org/wiki/Doveryai,_no_proveryai</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a><a href="http://en.wikipedia.org/wiki/Perestroika"><span style="color: black;">http://en.wikipedia.org/wiki/Perestroika</span></a> <o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a><a href="http://www.merriam-webster.com/dictionary/realpolitik"><span style="color: black;">http://www.merriam-webster.com/dictionary/realpolitik</span></a> <o:p></o:p></div></div><div id="edn4"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iv]</span></span></span></span></a>Interview with JP Morgan Chase CEO. NBC Meet the Press. May 13, 2012<o:p></o:p></div></div><div id="edn5"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[v]</span></span></span></span></a><a href="http://www.brookings.edu/research/opinions/2012/05/11-jpm-elliott"><span style="color: black;">http://www.brookings.edu/research/opinions/2012/05/11-jpm-elliott</span></a><o:p></o:p></div></div><div id="edn6"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref6" name="_edn6" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vi]</span></span></span></span></a><a href="http://deming.org/index.cfm?content=66"><span style="color: black;">http://deming.org/index.cfm?content=66</span></a> <o:p></o:p></div></div><div id="edn7"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref7" name="_edn7" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[vii]</span></span></span></span></a><a href="http://www.scribd.com/doc/11792098/4/I"><span style="color: black;">http://www.scribd.com/doc/11792098/4/I</span></a> <o:p></o:p></div></div><div id="edn8"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20May%2016%202012.rtf#_ednref8" name="_edn8" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[viii]</span></span></span></span></a>Shemwell, Scott M. (2011, October). <u>Asset/Equipment Integrity Governance: Operations&ndash;Enterprise Alignment</u>. Author.<o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-67298332071894456112012-05-16T17:39:00.004Z2016-05-12T20:12:55.617ZRoad Mapnoemail@noemail.orgPennEnergy<span style="font-family: Calibri;">Volume 1 Number 7</span><br /><br /><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">The past two years for the deepwater drilling sector have been full of uncertainties and concerns about the way forward. <span style="mso-spacerun: yes;"></span>From this author&rsquo;s perspective, it appears that the industry and the federal government have worked closely to develop a new path, although not always in harmony to be sure.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">History shows us that following major events, society can expect dramatic changes to unfold and often quickly. <span style="mso-spacerun: yes;"></span>Acts of God, military actions, and large scale industrial accidents can initiate the imperative for changes in human behavior.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">After the record Houston, Texas traffic jams caused by Hurricane Rita evacuations in September 2005, Interstate Highway 10 as well as other primary evacuation routes were changed to facilitate same direction travel on all lanes.</span><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 11pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;"><span style="color: blue;">[i]</span></span></span></span></span></span></a><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"></span> Likewise, following attacks on the military&rsquo;s High Mobility Multipurpose Wheeled Vehicle or &ldquo;Humvee,&rdquo; armor was added to what was previously a light weight utility vehicle.</span><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 11pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;"><span style="color: blue;">[ii]</span></span></span></span></span></span></a></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">It would not be an overstatement to suggest that the deepwater drilling industry was in shellshock following the April 20, 2010 blowout in the Gulf of Mexico.<span style="mso-spacerun: yes;"></span>Ramifications of that event are still transforming the global sector and will for some time to come.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">A number of industry as well as internal company taskforces have studied a multitude of issues and provided recommendations. <span style="mso-spacerun: yes;"></span>Both the industry as well as regulatory bodies are adjusting internal standard operating procedures and establishing new behavioral norms.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">One clear example is the American Petroleum Institute (API) recently published chart; SAFE Drilling Operations.</span><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_edn3" name="_ednref3" style="mso-endnote-id: edn3;" title=""><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 11pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;"><span style="color: blue;">[iii]</span></span></span></span></span></span></a><span style="font-family: Calibri;"><span style="mso-spacerun: yes;"></span>This snapshot of the drilling road map provides all constituents, lay, academic, government and industry with a clear, simple, and compelling perspective of a very complex environment.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Calibri;">The first phase of the new industry paradigm is now set and no doubt will continue to evolve. <span style="mso-spacerun: yes;"></span>The feds have established new rules and the industry has developed new thinking and new standards. <span style="mso-spacerun: yes;"></span>Now is the time for the full implementation of internal systems to meet these requirements and generally accepted practices.</span></div><h3 align="center" class="MsoNormal" style="margin: 0in 0in 10pt; text-align: center;"> Has your firm codified its Road Map to the future?</h3><div style="margin: 10pt 0in 0pt;"><strong>About the Author<o:p></o:p></strong></div><span style="font-family: Calibri;">Dr. </span><a href="http://www.linkedin.com/in/scottsh"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">Scott M. Shemwell</span></span></a><span style="font-family: Calibri;"> has over 30 years technical and executive management experience primarily in the energy sector. <span style="mso-spacerun: yes;"></span>He is the author of two books and has written extensively about the field of operations management. <span style="mso-spacerun: yes;"></span>Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></span><br /><br /><hr align="left" size="1" width="33%" /><div style="mso-element: endnote-list;"><div id="edn1" style="mso-element: endnote;"><div class="MsoEndnoteText" style="margin: 0in 0in 0pt;"><br /><div class="MsoEndnoteText" style="margin: 0in 0in 0pt;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 9pt; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 9pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;">[i]</span></span></span></span></span><span style="font-size: 9pt;"><span style="mso-spacerun: yes;"><span style="font-family: Calibri;"> </span></span><a href="http://www.txdot.gov/about_us/2005_2001.htm"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.txdot.gov/about_us/2005_2001.htm</span></span></a><span style="font-family: Calibri;"> <o:p></o:p></span></span></div><br /><div class="MsoEndnoteText" style="margin: 0in 0in 0pt;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 9pt; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 9pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;">[ii]</span></span></span></span></span><span style="font-size: 9pt;"><span style="mso-spacerun: yes;"><span style="font-family: Calibri;"> </span></span><a href="http://defense-update.com/features/du-3-04/up-armored-humvee.htm"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">htt<span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">p://defense-update.com/features/du-3-04/up-armored-humvee.htm</span></span></span></a></span><span style="font-size: x-small;"><span style="font-family: Calibri;"><o:p></o:p></span></span></div><br /><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 10pt; line-height: 115%; mso-bidi-font-family: &quot;Times New Roman&quot;;"><span style="mso-special-character: footnote;"><span class="MsoEndnoteReference"><span style="font-family: &quot;Calibri&quot;,&quot;sans-serif&quot;; font-size: 10pt; line-height: 115%; mso-ansi-language: EN-US; mso-bidi-font-family: &quot;Times New Roman&quot;; mso-bidi-language: AR-SA; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-fareast-language: EN-US;">[iii]</span></span></span></span></span><span style="font-size: 10pt; line-height: 115%;"><span style="font-family: Calibri;"> </span></span><span style="font-size: 9pt; line-height: 115%;"><a href="http://www.api.org/~/media/Files/News/2012/12-April/OffShoreSafety-Graphic-20120411.ashx"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;"><span style="color: black; mso-style-textfill-fill-alpha: 100.0%; mso-style-textfill-fill-color: black;">http://www.api.org/~/media/Files/News/2012/12-April/OffShoreSafety-Graphic-20120411.ashx</span></span></a></span><span style="font-size: 10pt; line-height: 115%;"><span style="font-family: Calibri;"> <o:p></o:p></span></span></div></div></div><a href="http://www.api.org/~/media/Files/News/2012/12-April/OffShoreSafety-Graphic-20120411.ashx%3Cspan%20style=" x-small;?=""></a><br /><a href="http://www.api.org/~/media/Files/News/2012/12-April/OffShoreSafety-Graphic-20120411.ashx%3Cspan%20style=" x-small;?=""></a></div><a href="http://www.api.org/~/media/Files/News/2012/12-April/OffShoreSafety-Graphic-20120411.ashx%3Cspan%20style=" x-small;?=""></a>tag:blogger.com,1999:blog-7394743285735574091.post-40439482749198053992012-05-02T13:53:00.000Z2016-05-12T20:12:56.882ZCentralized&mdash;Decentralizednoemail@noemail.orgPennEnergy<br />Volume 1 Number 6<br /><div><br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal">If one boils down the political hyperbole to its essence, elected officials, their surrogates and pundits are arguing the merits of a strong centralized governance genre versus more decentralized models. This discussion dates back to the earliest efforts to create societies of more than one village or tribe. While the debate will most likely continue well in to the future, this discussion about governance models is also applicable to modern global and culturally diverse commercial organizations.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In the United States of America, the definition of Congressional &ldquo;enumerated powers&rdquo; has undergone an ebb and flow since the founding of the republic.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> The latest tension at this margin is most dramatically unfolding as the Supreme Court decides on the constitutionality of The Patient Protection and Affordable Care Act.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Another high profile test case is on the other side of the Atlantic as the fate of the European social model is being decided. The Nobel Prize winning economist, Frederick Hayek comes down strongly on the side of a more limited centralized model. He contends that local communities are best able to deal with many social and economic concerns. Using this logic, a recent article in the Wall Street Journal claims the strong form of centralized governance practiced in the European Economic Union is at the point of failure.<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_edn2" name="_ednref2" title="">[ii]</a></span></span><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_edn2" name="_ednref2" title=""></a></span></span><o:p></o:p></div><div class="MsoNormal"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><br /></span></span></span></div><div class="MsoNormal">A &ldquo;level&rdquo; of centralized governance and stakeholder transparency is a reasonable model and has been well vetted throughout history. Those powers that are not enumerated to the central authority reside with other entities in the federation. Difficulties occur when the balance between the two is inconsistent with core tenets of the entity.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Corporations are not countries much less societies. However, they are organized and managed by a diverse set of increasingly cross cultural men and women tasked with their firm&rsquo;s successful operation. Corporate &ldquo;culture&rdquo; is common rhetoric and generally refers to the mores of a given organization as opposed to others in or out of the industry sector.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">However, it would be a major mistake to assume global organizational cultural homogeneity. Parties&rsquo; RELATIONSHIPS, parties&rsquo; BEHAVIOURS, and influencing CONDITIONS (RBC) are well understood aspects of international dealings. Implicit in this model is the recognition that cultural distinctions can vary widely (even inside major cultural groups) and these differences must be recognized and adequately addressed.<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_edn3" name="_ednref3" title="">[iii]</a></span></span><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_edn3" name="_ednref3" title=""></a></span></span><o:p></o:p></div><div class="MsoNormal"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><br /></span></span></span></div><div class="MsoNormal">At times of organizational stress there is a tendency to hold power at the top. In recessionary periods, for example, budget spending authorization is often temporarily curtailed requiring more senior commitments. Signature authority often reverts back once the economy improves. Sometimes, such as compliance with Sarbanes-Oxley, specific long standing processes and authorizations are demanded.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">This balance continuously fluctuates and is a function of organizational culture, statutory requirements and current situational awareness. For most firms, variations around the centralized&mdash;decentralized set point will be small. Wide pendulum shifts are generally not desirable.<o:p></o:p></div><div class="MsoNormal"><br /></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">Does your organization have the appropriate balance&mdash;an enumerated centralized governance that allows the diverse divisions&rsquo; competitive flexibility?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><div class="MsoNormal"><br /></div><div><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://law2.umkc.edu/faculty/projects/ftrials/conlaw/congpowers.htm"><span style="color: black;">http://law2.umkc.edu/faculty/projects/ftrials/conlaw/congpowers.htm</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> <a href="http://online.wsj.com/article/SB10001424052702304636404577299471982641512.html"><span style="color: black;">http://online.wsj.com/article/SB10001424052702304636404577299471982641512.html</span></a><o:p></o:p></div></div><div id="edn3"><div class="MsoEndnoteText" style="margin-bottom: 6.0pt; margin-left: 0in; margin-right: 0in; margin-top: 6.0pt;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%2016%202012.rtf#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[iii]</span></span></span></span></a> <a href="http://www.scribd.com/doc/12392990/Cross-Culture-Negotiations"><span style="color: black;">http://www.scribd.com/doc/12392990/Cross-Culture-Negotiations</span></a><o:p></o:p></div></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-1384229577751245652012-04-16T19:25:00.001Z2016-05-12T20:12:57.797ZFull Faith and Creditnoemail@noemail.orgPennEnergy<br /><span style="font-weight: normal;">Volume 1 Number 5</span><br /><br />A child hands over a one dollar bill and receives a small amount of candy at the local convenience store. Likewise, foreign currency trading volumes exceeded $126 billion in February of this year.<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%202%202012.rtf#_edn1" name="_ednref1" title="">[i]</a> </span></span></span></span>Fundamentally, the processes are the same.<br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">An individual with fiat currency exchanges it for goods and services. A piece of paper (one dollar bill) or a few electrons (online trading) are accepted by both buyers and sellers even though neither has any intrinsic value.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Today, governments stand behind their monetary vehicles and the strength of their currency is a function of the perception of their long standing reputation. To be sure, the strength of a country&rsquo;s economy is important, but their currency is only backed by their <i>full faith and credit …</i><o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">In our current global economic model, only sovereign entities can issue currency. However, there are a number of financial vehicles issued and traded everyday by private organizations that also have no intrinsic value&mdash;stocks, bonds, and the list goes on.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The seemingly endless global fiscal and monetary crisis continues along with a loss of faith in societal institutions. As the reputations of specific countries, organizations, and even individual executives have plummeted, so have their fiat currencies.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Empirical studies have shown that organizations with strong governance and transparency are held in higher regard than others in their peer group.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%202%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> A typical metric is the price of the firm&rsquo;s common stock as traded on public exchanges.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Quarterly earnings aside, the long term sustained value creation is a function of the firm&rsquo;s reputation. Even if the goal is to position the organization for acquisition, this intangible metric is paramount. Where this is disregarded by the acquirer, value is dissipated and often quickly. This is the primary reason most acquisitions are dilutive&mdash;and often outright failures.<o:p></o:p></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Book value represents the value of a firm&rsquo;s tangible assets. Any additional value is extrinsic.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">How do your stakeholders perceive your organization&rsquo;s <i>Full Faith and Credit</i>?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><div><br /><hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%202%202012.rtf#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[i]</span></span></span></span></a> <a href="http://online.wsj.com/article/BT-CO-20120307-704620.html"><span style="color: black;">http://online.wsj.com/article/BT-CO-20120307-704620.html</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Apr%202%202012.rtf#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;">[ii]</span></span></span></span></a> Shemwell, Scott M. (2011, October) Asset/Equipment Integrity Governance: Operations&ndash;Enterprise Alignment&mdash;A Case for Board Oversight. <u>Author</u>.<o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-11141006621289068652012-04-02T17:44:00.000Z2016-05-12T20:12:58.406ZMillennials Arrive!noemail@noemail.orgPennEnergy<br /><div class="MsoNormal">Volume 1 Number 4<o:p></o:p></div><div class="MsoNormal"><br />The &ldquo;Big Crew Change&rdquo; has been part of industry folklore for a number of years now. Like all demographic age driven change, the date of its arrival has been known for lets say at least 20 years. Now as the old order yields to the new, the industry finds itself competing for critical talent at a time it is at a major inflection point. A resurging North America oil and gas boomlet coupled with new safety and regulatory requirements along with growth in the global demand curve are converging towards a knowledge driven cusp.<br /><br /><o:p></o:p></div><div class="MsoNormal">Much has been written about the Echo Boomers and their impact on society. Like any new generation, they arrive to the workforce the sum total of their life experience. Sometimes derided for their focus on video games and use of social networking, they are unlike any generation before&mdash;true sons and daughters of the digital age.<o:p></o:p></div><div class="MsoNormal"><br />Firms face the traditional challenge of incorporating new entrants into the organizational culture and training them for the tasks set before them. However, traditional training methods may no longer be relevant.<o:p></o:p></div><div class="MsoNormal"><br />Best practices from other sectors suggest that video game skills can be useful when piloting remote equipment. Flying a drone or underwater vehicle incorporate hand/eye coordination with a sense of spatiality without the direct feedback such as one gets at the wheel of an automobile. Moreover, many new entrants arrive with military experience where they have often been trained with state of the art immersive simulation solutions designed to enhance situational awareness such as one might require in a combat zone.<o:p></o:p></div><div class="MsoNormal"><br />Individuals with these skills and training are of high value to an industry built on large scale, complex and technologically sophisticated processes. Whether geo-steering a drill bit or managing a fully automated remote production &ldquo;plant of the future&rdquo; stakeholder value creation will be in their hands.<o:p></o:p></div><div class="MsoNormal"><br />This talent pool will challenge the industry status quo like the Boomers beforehand. Imparting organizational knowledge from subject matter experts will demand the use of the technology this generation has grown up with. Anything less is so 30 seconds ago, dude!<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br />How will your company attract, train and keep the next generation?<br /><br /><o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal"><br />Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div>tag:blogger.com,1999:blog-7394743285735574091.post-21727013635735517202012-03-16T17:43:00.003Z2016-05-12T20:12:59.000ZInflection - Reflectionnoemail@noemail.orgPennEnergyVolume 1 Number 3<br /><div class="MsoNormal"><o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Those alive during a seminal historical event, for example, the assassination of President John Kennedy, or 9/11, will often remember years later exactly where they were and what they were doing at the time. Such is the power of a major change in a paradigm.<br /><br /><o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">After the passing of time, we often have a different perspective about events that transpired before, during, and after a notable incident. However, near term decisions will be made in direct response (fog of war environment) to an operational incident as well as the given changes to the regulatory environment and internal organizational policies afterwards. Reflection will come later.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />For a major operational incident, the entire industry segment may be temporarily traumatized and most certainly the offending entity is forever imprinted, yet the <i>show must go on</i>. This is where organizational preparedness or &ldquo;training&rdquo; pays off.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />An organization that is ready to rapidly respond<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Mar%202%202012.rtf#_edn1" name="_ednref1" title="">[i]</a> </span></span></span></span>to non-normal events will in most cases fair better than ones who are ill prepared with a strategy based on <span style="font-variant: small-caps;">hope </span>&ldquo;it doesn&rsquo;t happen on my watch.&rdquo; In 2005, Hurricane Katrina ransacked the city of New Orleans, Louisiana. In 2008, Hurricane Ike negatively impacted Houston, Texas for a while. Without arguing the geographical differences between these Gulf Coast metropolitan areas, behaviors during and immediately after these seminal events were different. So were the near and long term impacts.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />Which brings us to Japan, 2011. How bad could it get? An earthquake of Biblical propositions, a horrific Tsunami and loss of a nuclear power plant facility. Three strikes and this society is not out! Historians and countless prognosticators will analyze, criticize, lament and all of us will learn from what was in place beforehand, how effective the immediate response was, and finally what was the long term impact of this paradigm shift.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />Reflecting on the past, we may seek the nostalgia of the way things were (or they way we think they were), but more importantly we must learn. The often repeated quote attributed to George Santayana, &ldquo;Those who do not learn from history are doomed to repeat it&rdquo;<span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Mar%202%202012.rtf#_edn2" name="_ednref2" title="">[ii]</a> </span></span></span></span>sums it up.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br />Mathematicians define an inflection point as a major change in the shape of a curve&mdash;a past event. How one reflects on this transformation and makes adjustments is the future.<o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;"><br />How prepared is your organization for a seminal event and what will its response be during, on day two and on day two hundred?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal" style="text-align: justify;">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><div><br /><div id="edn1"><div class="MsoEndnoteText"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Mar%202%202012.rtf#_ednref1" name="_edn1" title="">[i]</a> </span></span></span></span><a href="http://www.scribd.com/doc/11792098/Rapid-Response-Management-Thriving-in-the-New-World-Order"><span style="color: black;">http://www.scribd.com/doc/11792098/Rapid-Response-Management-Thriving-in-the-New-World-Order</span></a><o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Mar%202%202012.rtf#_ednref2" name="_edn2" title="">[ii]</a> </span></span></span></span><a href="http://thinkexist.com/quotation/those_who_do_not_learn_from_history_are_doomed_to/170710.html"><span style="color: black;">http://thinkexist.com/quotation/those_who_do_not_learn_from_history_are_doomed_to/170710.html</span></a> <o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-13696339338679676042012-03-02T16:52:00.005Z2016-05-12T20:12:59.360ZSergeant Schultz 2.0noemail@noemail.orgPennEnergy<div class="MsoNormal">Volume 1 Number 2<br /><br /><o:p></o:p></div><div class="MsoNormal">Many readers will recall the 1960s era sitcom wherein the German prisoner of war camp guard, Sergeant Schultz repeatedly refrains, &ldquo;<i>I see nothing</i>&rdquo; in an attempt to inoculate himself from the antics of the Allied prisoners under his watch.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Feb%2016%202012.rtf#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[i]</span></span></span></span></a> This common defense continues to manifest itself across all societies and at all levels. Does it still work&mdash;has it ever worked?<o:p></o:p></div><div class="MsoNormal"><i><br />Plausible deniability</i> has made its way into the lexicon.<a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Feb%2016%202012.rtf#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 11pt; line-height: 115%;">[ii]</span></span></span></span></a> A lowering of standards with roots in the legal code, this statement attempts to deflect accountability away from oneself and perhaps towards others. Many in the U.S. will have teachable moments on this subject as we endure the political silly season until November 6<sup>th</sup>.<o:p></o:p></div><br><div class="MsoNormal">However, attempts to dummy down accountability have been exposed. The current legal framework for organizational accountability can be traced to The Sarbanes Oxley Act of 2002 and SOX threw down an accountability gauntlet that the U.S. Deepwater sector recently picked up.<o:p></o:p></div><div class="MsoNormal"><br />In an era of flash mobs and viral videos, isn&rsquo;t it logical that demands for increased transparency, accountability, safer behavior and greater environmental responsibility will go viral across all heavy industrial segments? Chances are, it already has but those in the 1.0 world haven&rsquo;t yet got the memo.<o:p></o:p></div><div class="MsoNormal"><br />The Sergeant Schultz defense is pass&eacute;. In reality it was never a very good one anyway or why is management paid the big bucks!<br /><br /><o:p></o:p></div><div align="center" class="MsoNormal" style="text-align: center;"><b><span style="font-size: 12pt; line-height: 115%;">What is happening on your watch right under your nose?<o:p></o:p></span></b></div><h2> About the Author<o:p></o:p></h2><div class="MsoNormal">Dr. <a href="http://www.linkedin.com/in/scottsh"><span style="color: black;">Scott M. Shemwell</span></a> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.<o:p></o:p></div><div><br /><div id="edn1"><div class="MsoEndnoteText"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Feb%2016%202012.rtf#_ednref1" name="_edn1" title="">[i]</a> </span></span></span></span><a href="http://www.youtube.com/watch?v=34ag4nkSh7Q"><span style="color: black;">http://www.youtube.com/watch?v=34ag4nkSh7Q</span></a> <o:p></o:p></div></div><div id="edn2"><div class="MsoEndnoteText"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-size: 10pt; line-height: 115%;"><a href="file:///C:/Users/hiltonp/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2E6E80FP/Governing%20Energy%20-%20Feb%2016%202012.rtf#_ednref2" name="_edn2" title="">[ii]</a> </span></span></span></span><a href="http://www.urbandictionary.com/define.php?term=plausible%20deniability"><span style="color: black;">http://www.urbandictionary.com/define.php?term=plausible%20deniability</span></a><o:p></o:p></div></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-33100243659741387222012-02-17T15:45:00.003Z2016-05-12T20:13:00.328ZAll Hands!noemail@noemail.orgPennEnergy<span style="font-family: Times, 'Times New Roman', serif;">Volume 1 Number 1</span><br /><br /><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Times, 'Times New Roman', serif;">Over the past couple of years we have all been reminded about the impact a major operational failure can have on our everyday lives. Most recently and despite modern navigational aids, the Italian cruise ship<i style="mso-bidi-font-style: normal;"> Costa Concordia</i> was lost allegedly because of negligence by the ship's Master and possibly abetted by other executives. By some accounts, it was apparently common practice to sail close to shore as a publicity "salute."</span><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-family: Times, 'Times New Roman', serif;">[i]</span></span></span></span></span></a></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Times, 'Times New Roman', serif;">One of the emerging challenges of the 21<sup>st</sup> Century is the management of expensive, global and complex revenue generating assets that have the potential for <i style="mso-bidi-font-style: normal;">low frequency&mdash;high impact</i> catastrophic, high visible failures. Whether a cruise liner, pipeline, offshore drilling rig, or nuclear power plant, recent events have illuminated the need for management to take a more robust role in operations.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Times, 'Times New Roman', serif;">This is the first in a series of biweekly commentaries about contemporary issues in organizational <i style="mso-bidi-font-style: normal;">governance</i> and its new role in operations. Mention the word governance and many think of the classic definition of corporate governance as the framework for accountability and transparency within the organization.</span><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-family: Times, 'Times New Roman', serif;">[ii]</span></span></span></span></span></a><span style="font-family: Times, 'Times New Roman', serif;"> Implicit in this definition is the requirement for sound operational practices. However, in practice, governance is often viewed as a Board and CEO/CFO function with little impact on daily field operations.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Times, 'Times New Roman', serif;">Hypothesis&mdash;this limited view of corporate governance is no longer valid. Exogenous events often drive significant industry sector change. One can argue that beginning in April 2010 the energy sector has experienced multiple <i style="mso-bidi-font-style: normal;">low frequency&mdash;high impact</i> incidents that have triggered change both inside industry actors as well as from broader societal constituents.</span></div><div class="MsoNormal" style="margin: 0in 0in 10pt;"><span style="font-family: Times, 'Times New Roman', serif;">The CEO and the Board of Directors now live in a world where a field engineer/technician or even a supplier can destroy significant shareholder value (even cause the death of the firm) in an instant. Governance models must extend into the field and supply chain!</span></div><div style="mso-element: endnote-list;"><span style="font-family: Times, 'Times New Roman', serif;"><strong>What assurances does your organization have that your ships will keep off the rocks?</strong></span><br /><br /><div id="edn1" style="mso-element: endnote;"></div></div><strong><span style="color: black; font-family: Times, 'Times New Roman', serif;">About the Author</span></strong><br /><span style="font-family: Times, 'Times New Roman', serif;">Dr. </span><a href="http://www.linkedin.com/in/scottsh" target="_blank"><span style="font-family: Times, 'Times New Roman', serif;">Scott M. Shemwell</span></a><span style="font-family: Times, 'Times New Roman', serif;"> has over 30 years technical and executive management experience primarily in the energy sector. He is the author of two books and has written extensively about the field of operations management. Shemwell is also the CEO of Knowledge Ops, Inc; a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.</span><br /><br /><div id="edn1" style="mso-element: endnote;"><div class="MsoEndnoteText" style="margin: 0in 0in 0pt;"><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">[i]</span></span></span></span></span></a><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;"> </span><a href="http://www.voanews.com/english/news/europe/Divers-Continue-Search-on-Italian-Ship-138126028.html"><span style="color: black;"><span style="color: black;"><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">http://www.voanews.com/english/news/europe/Divers-Continue-Search-on-Italian-Ship-138126028.html</span></span></span></a><span style="font-family: Times, 'Times New Roman', serif;"><span style="font-size: x-small;"> </span></span></div></div><div id="edn2" style="mso-element: endnote;"><div class="MsoEndnoteText" style="margin: 0in 0in 0pt;"><a href="http://www.blogger.com/blogger.g?blogID=7394743285735574091#_ednref2" name="_edn2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif;"><span class="MsoEndnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">[ii]</span></span></span></span></span></a><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;"> </span><a href="http://www.businessdictionary.com/definition/corporate-governance.html"><span style="color: black;"><span style="color: black;"><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">http://www.businessdictionary.com/definition/corporate-governance.html</span></span></span></a><span style="font-family: Times, 'Times New Roman', serif;"><span style="font-size: x-small;"> </span></span></div></div>tag:blogger.com,1999:blog-7394743285735574091.post-37028212289751795642012-02-02T16:23:00.002Z2016-05-12T20:13:00.813Z 500

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