Volume 2 Number 10

Conventional wisdom holds that, “people resist change.”  In fact, a cottage industry has been built upon this core premise.  One common model that addresses this resistance to change is the Five Stages of Grief.[i]  Denial, Anger, Bargaining, Depression and finally Acceptance are the elements that describe this process.

Certain industries, e.g., energy are typically conservative by nature.  One can argue that high capital costs and a dangerous working environment lead to a more measured adoption of the new.  Is conventional wisdom wrong?

Flip a coin taken from your pocket and there are two possibilities—heads or tails.  The common process resolves wagers, determines first possession in athletic contests and is a well-known probability game.[ii]

As with a coin, there are two sides to change.  In the 1980s, the first IBM PC “Killer App” was the spreadsheet software program, Lotus 1-2-3.[iii]  The acceptance rate in 1983 was over 13 times the original forecast.  Similar stories tell the tales of other high value agents of change.

Clearly, the rate of change for a low cost software program can be faster than that of major changes to energy production infrastructure.  Hypothesis—in both cases change is driven by the inherent economic value proposition.

Human beings are born change agents!  Indeed, our very survival depends on the individual’s ability to adapt.

The human life-cycle is a change matrix; aging, experience/knowledge and areas of interest are just a few of the parameters that evolve and morph from one perspective to another.  One could argue that we thrive on change, not shrink from it.

It is convenient to blame the perceived reluctance to embrace a new proposition or product/service as a function of resistance to change.  However, perhaps the value proposition is not well articulated.  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.

Finally, randomness is not synonymous with robust change management processes.  The next Killer App will touch that inherent human desire to change.  Its adoption curve will be business “process” relevant with our primordial behaviors driving it forward.

Is your organization’s approach to change management akin to a coin flip?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://grief.com/the-five-stages-of-grief/
[ii]  http://math.stackexchange.com/questions/195359/when-to-stop-in-this-coin-toss-game
[iii]  http://hightechhistory.com/2010/01/26/history-of-lotus-1-2-3/

Volume 2 Number 9

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.  So common are the use of “talking points” that the term has become part of the lexicon and even the butt of jokes.

According to behaviorists, humans are comfortable with repetition.[i]  In other words repetition pleases.  In his seminal book on economics, The Economics of Freedom[ii], Frédéric Bastiat identified this principle over 150 years ago.[iii]

Bis repetita placent is Latin for “the things that please are those repeated.”[iv]  We see this human trait everyday as we develop our playlist; engage in pleasing behaviors, etc.  Over time, pleasurable behaviors can become habits (good or bad).

The upstream oil and gas industry is in the process of transforming the industry culture to one of a Culture of Safety.  Engraining desired behaviors is a function of management staying on message and repeating its talking points in a coherent manner.  Over time the acculturation process evolves to a new culture.

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.  However, with light often a byproduct, the atom quickly returns to its previous stable state.[v]

Consistently applied managerial energy is the only power source that can excite the organization and move it to the next level.  Moreover unlike the atom, organizations can be transformed and remain at the higher enlightened (pleasurable) level.

Bastiat also noted; Repetita docent—repetition teaches.  Politicians understand this and seek to teach the electorate.  Elections are often won or lost based on their success or failure to continually instruct potential voters.  Similarly, staying on a consistent, understandable and believable message is a Critical Success Factor (CSF) as the oil and gas industry transforms itself.

Are your oft repeated talking points teaching your intended audience?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://changingminds.org/principles/repetition.htm
[ii]  http://studentsforliberty.org/wp-content/uploads/2010/04/The-Economics-of-Freedom-PDF.pdf
[iii]  http://en.wikipedia.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat
[iv]  http://latin-phrases.co.uk/dictionary/b/
[v] http://www.brooklyn.cuny.edu/bc/ahp/SDPS/SD.PS.electrons.html

Volume 2 Number 8

Conventional wisdom holds that every spring a bellicose North Korea emerges from winter hibernation and threats its neighbors.  Seemingly starved for attention it feasts at the table of world fear.

This year marks the 60^th Anniversary of the beginning of hostilities of this still unresolved conflict on that divided peninsula.[i]  What makes this year’s "Korean Spring" different?

Many observers argue this year’s “starved” hunger comes from an unknown North Korean leader.  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]  The risk profile is thus raised!

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]  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.

Measureable Latents

Strictly speaking, a latent variable is not directly measureable.  However, modern behavior economics provides us with tools that illuminate previously hidden causalities.

Since early 1980s, this author has been investigating cross-cultural issues as they relate to international business deals, particularly in Asia.[iv]  Additionally, there is an extensive body of work by this and other authors regarding cross cultural behaviors.  One would not be surprised at the conclusion from this effort that there are significant cultural differences between the United States and Asian societies.

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.  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]  Interested readers can visit Professor Hofstede’s web site for further information and definitions of his cultural dimensions.

This cursory perspective suggests that there are key differences between these two societies.  Perhaps in the normal course of events this delta may simply make negotiations challenging, but when Brinksmanship is the game, one hypothesis is they can contribute to disaster.  Knowledge of these dimensional constructs can enlighten one about an adversary and his or her emotional drivers.

World War I was not the only historical event resulting from missteps between societies.  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]  In both of these cases, cooler heads (on both sides) prevented the unthinkable.

Today, some argue that the United States suffers a similar myopia in contemporary Afghanistan.  Behavioral economics suggests the human condition will continue to suffer from cross cultural misunderstandings.

Energy Infrastructure Risk

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.  This assessment would be short sided.

South Korean shipyards are significant suppliers to the global offshore oil and gas community.[vii]  One could argue that the industry’s risk profile is too exposed if there is any significant business interruption in Northeast Asia.  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.

From a portfolio perspective, one must question whether individual companies and even the industry in general are exposed unnecessarily.  As with the Japanese Tsunami of 2011, the impact on global markets from a regional disruption can be broad and long lasting.

Market Cap Risk

Finally, terrorist incidents have a direct and measureable impact on individual corporations and their market sectors.  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]

This can be significant shareholder exposure.  Incidents subsequent to that study suggest that an environmental impact from catastrophic incidents can raise the market capitalization risk bar much higher.

The greatest risk may be covert.  Terrorism aimed at the South Korean shipyards.  Is this a worst case scenario?

We raise these issues not as a critic but as part of the global energy dialogue.  Geopolitical risk assessment is part of every major organization’s enterprise risk management process.  The recent events on the Korean peninsula should cause us all to pause and perhaps rethink our asset portfolio and associated supply chain.

The nature of today’s global supply chain processes finds critical components and key knowledge sometimes residing in unlikely places.  Make sure your firm’s risk mitigation strategy incorporates this perspective.

Does your firm have more exposure to events in Korea than is readily apparent?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://www.army.mil/koreanwar/textonly.html
[ii]  http://www.nytimes.com/2013/04/10/world/asia/south-korean-leader-seeks-to-end-vicious-cycle-with-north.html?pagewanted=all&_r=0
[iii]  http://www.washingtonpost.com/wp-dyn/content/article/2006/08/09/AR2006080901514.html
[iv]  http://www.scribd.com/doc/13395182/Abstract-Cross-Cultural-Negotiations-Between-Japanese-and-American-Businessmen-A-Systems-Analysis
[v]  http://geert-hofstede.com/countries.html
[vi]  http://en.wikipedia.org/wiki/Able_Archer_83
[vii]  http://www.offshoreenergytoday.com/tag/korea/
[viii]  http://www.investopedia.com/articles/07/terrorism.asp

Volume 2 Number 7

Every year on April 1^st, pranksters emerge often producing funny consequences and on occasion mayhem.  Crossing this line is sometimes not clear to certain participants.  One individual’s mindless prank can cause another’s crisis.

How many of us have seen what appears to be a harmless office joke illicit tears from the recipient?  Quickly noting that it was not funny, most protagonists shrink from the scene.  On occasion, a bully once tasting the victim’s proverbial blood continues to prod.

Unfortunately, the term “going postal” has become a colloquial term for workplace violence often directed against coworkers and managers.[i]  Office stresses leading to violence can result from a poor performance appraisal, firing / demotion, the taunting from coworkers or change.

While there is no excuse for this individual behavior, the RBC model can provide insight into organizational cultures that may foster destructive performance.  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]

More recently, the RBC model has been extended to focus on the Management of Change (MOC) process unfolding in many industry sectors.  As a fundamental model of the human experience, RBC enables management to develop a perspective that here to for was the domain of psychologists.

Does this approach demand that management now become “shrinks?”  Not hardly, but it does suggest that organizations have a responsibility to categorize the pranksters versus the true malcontents.  Moreover, true team building pranks need to be tempered within specific boundaries.

Change for some individuals is hard, even threatening.  These people may not have an outlet for their frustrations within acceptable societal norms.  They may act upon these exasperations in ways most would not even envision.

Destructive performance does not have to manifest itself as a visible malcontent.  More often, it is an insidious behavior that consciously or unconsciously seeks to undermine the very corporate entity that spawned it.  Like a cancer, it seeks to destroy the host organization.

In today’s extended firm, the term employee is also defined as those employed by supply chain partners and their vendors.  These individuals may not have strong ties to the success of the firm.  Some may even deliberately seek to cause harm and disruption.

According to Google, a Fool’s Errand is defined as “A task or activity that has no hope of success.”  Hypothesis: there is no room for a fool’s errand in today’s organizations.

Malcontents can be deadly or at very least detract from shareholder value.  This issue is no longer just a Human Resources concern but now one of governance in today’s changing environment.

Is your organization on a Fool’s Errand when addressing employee malcontents?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://en.wikipedia.org/wiki/Going_postal
[ii]  http://www.therrinstitute.com/uploads/The_Blast_Heard_Around_the_World_-_January_2011.pdf
 

Volume 2 Number 6

As the northern hemisphere approaches the season of spring, flowers of all kinds begin to blossom precipitously in the warmer weather.  In the state of Texas, azaleas, bluebonnets and other flower are in bloom as of this writing.  Soon the state will be awash in new life as witnessed by the abundance of colorful flora.

With such bounty, one would suspect that the price point for flowers is relatively low and available to most income levels.  That is not always the case.  Many readers may not be familiar with the Dutch Tulip Bubble of 1637.

The tulip was introduced in Holland in 1593; originally for research purposes.  After several bulbs were illicitly sold, a brisk Dutch tulip trade ensued.  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]

The tulip bubble reached its zenith during the winter of 1636-37.  At the time, tulip traders were making almost three quarters of a million US dollars (today’s equivalent).  The ride ended when a single buyer failed to pay for his tulip purchase.  The ensuring panic drove prices down to only a hundredth of their previous value.[ii]

So it seems that irrational exuberance is a normal part of the human condition.[iii]  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]

After the oil price crash of 2008, the author released his first monograph of the Changing the Dialogue series, Rapid Response Management: Thriving in the New World Order.[v]  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.

The essay opens with a quote from Winston Churchill that is still fitting today, “It is no use saying, ‘We are doing our best’.  You have got to succeed in doing what is necessary.”  As with the human behavioral lessons from seventeenth century, words from this World War II leader can still help guide the Board of Directors.

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]  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]

All indications are that the world remains economically volatile.  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.

Many firms continue to be trapped in this cycle because of inadequate risk-based governance models.  While no one can predict future market performance, appropriate risk mitigation is critical.  This includes changing managerial Key Performance Indicators (KPI) and other metrics as market condition dictate—quickly!

Organizational culture cannot be changed on the fly.  As with other crisis driven managerial actions, governance models must reflect and embody these not-so-new realities as the way the organization does business.

How does your firm’s governance model account for likely rapid market movements?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/
[ii]  Ibid.
[iii]  http://www.irrationalexuberance.com/definition.htm
[iv]  http://www.irrationalexuberance.com/index.htm
[v]  http://www.therrinstitute.com/uploads/Rapid_Response_Management_-_Thriving_in_the_New_World_Order_2.0_-_January_2009.pdf
[vi]  http://www.federalreserve.gov/releases/h6/current/
[vii]  http://www.zerohedge.com/news/2012-10-10/food-inflation-surge-goldman-warns

Volume 2 Number 5

Most of us have heard of unintended consequences, those causal effects that were not expected.  These happen all the time for a number of reasons.  Often, the cause and effect relationship is not well understood or it is incorrect.

Moreover, statisticians refer to latent variables as ones that are not directly observable.[i]  In other words, some behavioral effects may not be measureable until after the fact.  Therefore, it would appear that humankind is doomed to suffer unintended consequences regardless of the level of expertise or planning undertaken.

Process engineers are very familiar with cascading alarm events.  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.  Identifying the root cause is often a challenge with alarms of equal priority simultaneously occurring.  A robust Alarm Management Strategy is required for the safe operations of these plants.[ii]

Geometric or exponential growth or decay rates results in significant changes of statistical populations.[iii]  Biological population growth and radioactive decay are examples.  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.

Additionally, it would be a mistake to view this from a linear deterministic system perspective.  There are certain Structural Dynamics, defined as the morphology or patterns of motion toward process equilibrium of interpersonal systems, at work in any process or system.  Systems are actually a combination of multiple sub and often nonlinear systems with varying degrees of integration. [iv]

To name a few, the organizational stakeholder network extends across shareholders, local communities, global competitors and regulatory bodies at all levels of government.  This is a subset of nested constituencies that in today’s social media environment can be substantial and broad in scope.

Unintended consequences can explode geometrically across the organization’s interpersonal systems.  They can branch down unanticipated avenues similar to lightning following multiple conductors during a thunderstorm.

Organizational governance models cannot adopt Wac-A-Mole solutions to address branching consequence developments.[v]  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.  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]

How has your organization prepared to manage unforeseen branching consequences resulting from an incident?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  Shemwell, Scott M. (2012, July 2). The Iceberg Principle. Governing Energy
[ii]  http://www.emersonprocessxperts.com/articles/ICR/Alarm-Management-Strategy.pdf
[iii]  http://stats.oecd.org/glossary/detail.asp?ID=6685
[iv]  http://www.therrinstitute.com/uploads/Structural_Dynamics_-__Version.pdf
[v]  http://en.wikipedia.org/wiki/Whac-A-Mole
[vi]  http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf

Volume 2 Number 4

The Center for Offshore Safety is charging the upstream energy industry to transform itself to one of a Culture of Safety.[i]  In other words, risk management from a systemic perspective.[ii]

Change management professionals have long argued that in order for change to become permanent, it must be driven from the top of the organization.  This industry renovation will be no different.

Throughout this series, indeed the theme of this soliloquy has been the changing nature of institutional governance.  To date, this blog has mainly focused on events and learning from events.  This knowledge must become actionable as organizations move up the Maturity of Understanding curve.[iii]

Much has been written about organizational change management, including a forthcoming book, Implementing A Culture of Safety Offshore: On Target—On Time—On Budget which I am the coauthor along with the eminent authority on change management, Winford E (Dutch) Holland, Ph.D.[iv]  The unique challenges faced when an entire industry is transformed rapidly are not unique to the upstream sector.

Notable others including the U.S. Navy nuclear submarine program and the nuclear power generation segment.  Some in the drilling and production segment are looking to these two in particular for learning and good practices that are applicable.

None of this transformational change can be enabled without strong leadership.  The Board of Directors is uniquely positioned to enable a transformation charter.  The Committee of Sponsoring Organization of the Treadway Commission describes the role of the Board from the standpoint of effective enterprise risk oversight.  The COSO report stresses the following requirements:

- Expectations of the Board in enterprise-wide risk oversight are at an all-time high
- Balancing enterprise risk management while adding value is a significant challenge facing Boards
- Board engagement in this area is critical
    - Risk is a function of the organizational culture
    - Active role in effectiveness of risk management systems
    - Identify excessive exposure in the organizations’ portfolio
    - Keep appraised of the most significant risks and appropriateness of management’s response
- Robust engagement by the Board strengthens the organization’s resilience to significant exposures[v]

COSO released it original Internal Control—Integrated Framework in 1992.  Since then, there has been a substantial body of knowledge developed in this area.[vi]  Of importance to this discussion, COSO has its roots in the financial governance side.  Therefore, field operational risk management converges with financial risk management.  Perhaps obvious but sometime not understood in practice.

As has been previously suggested in this series, extending the governance model directly to field operations is now required.  It is no longer satisfactory to incorporate management leadership simply in the company’s Standard Operating Procedures (SOP).

The Board’s responsibility for effectively field operations cannot be delegated to management any more than the financial reporting requirements.  Transformation to a Culture of Safety should strength organizational resilience to significant risk exposures.

How does your Board of Directors assure stakeholders that the transformation to a Culture of Safety will be successful?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  Establishing a Culture of Safety

[ii]  Shemwell, Scott M. (2011, May 12). Navigate the Compliance Matrix: Compliance Tools as the First and Last Line to Regulatory Defense. The Energy Summit. The Houston Club.

[iii]  Six Levels of Understanding

[iv]  http://www.hollandmanagementcoaching.com/

[v]  Effective Enterprise Risk Oversight: The Role of the Board of Directors

[vi]  COSO Internal Control—Integrated Framework, December 2011

Checking Doctors

Volume 2 Number 3

Pilots use them and now doctors do as well.  Mission critical is by definition an activity that must not fail.  Partial success in such an environment may not be good enough and often has management visibility and even legal consequences.

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.  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.

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.  Checklists assure that bases are covered quickly and concisely with the most obvious and common sense and immediate solutions tried first.[i]

The medical doctor author of The Checklist Manifesto makes several salient points:

The Problem—highly trained professionals are so busy in their respective areas, that sometimes basic and preventable mistakes are made.

The Solution—many of today’s tasks are too complex to be carried out from memory alone.  The pilot’s checklist is a systemic approach to daily operations.

Validation—seemingly trivial, good checklists have been shown to work.  They can get the routine and obvious off the table quickly so the focus can be on the “hard” stuff.

According to the World Health Organization there are over 13,000 different diseases, syndromes and types of injuries.  The medical industry has developed about 6,000 drugs and 4,000 medical/surgical procedures. [ii]  We all know that each drug and procedure can generate side effects and each has its own risk profile.

However, even the best checklist is of no use if it is not followed.  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.  This is the basic premise of the checklist—take the routine and obvious off the table.

Proposition—highly trained and experienced pilots and medical doctors recognize the value of checklists.  Isn’t this methodology equally applicable to industry sectors where safety and environmental management are paramount?  Life and death as well as significant capital and operations expenditures are the daily fare of highly trained and experienced petroleum personnel.

Moreover, as with these other professions, the world of the petroleum professional is getting more complex not less.  Good checklist methodology mitigates risks to the individual, the firm, the industry and society in general.

It is time to implement this proven technology at all levels of the corporation.  Organizational governance demands no less.[iii]

How does your knowledge based organization assure that complex solutions go right?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  The Checklist Manifesto: How to Get Things Right

[ii]  Ibid.

[iii]  http://www.therrinstitute.com/uploads/Asset_Integrity_Governance_-Ver_1.1.pdf

Volume 2 Number 2

The European Sovereign Debt Crisis would appear to be an incidence of governance gone awry.  The European Union and it monetary currency, the euro established by the Maastricht Treaty in 1992 were originally designed against strict criteria for membership.

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]  To the casual observer this statement would appear to be at odds with the current state of some EU members.

Partnerships, consortia, key supplier relationships and other forms of organizational bondage often suffer over time as well.  Frequently, governance models designed a decade or two ago have not kept up.

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.  The Relationships, Behaviors, and Conditions (RBC) model has its roots a tool for assessing cross-cultural negotiations.  It has been discussed previously in this blog; What a Difference a Year Makes, November 19, 2012 and earlier in Centralized—Decentralized, April 16, 2012.[ii]

The RBC model is fundamentally a multilevel analytic perspective of human behavior.[iii]  As we have shown in the December 5, 2012 blog, Acculturation, melded groups will form their own culture which will most likely be different than that of the parent organizations.

Original governance models developed at the beginning of some endeavor will be subject to RBC variables.  It is important, particularly in multi-party or cross culture entities that governance and other managerial processes be re-evaluated and updated as appropriate.

Failure to do so may result in a governance model for a situation that no longer exists.  Results from such a situation will not be optimal, at best.

What process does your organization to assure its governance models are current?

About the Author

Dr. Scott M. Shemwell 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.

End Notes

[i]  http://en.wikipedia.org/wiki/Euro

[ii]  http://www.pennenergy.com/index/blogs/governing-energy.html

[iii]  http://orgsci.journal.informs.org/content/4/2/269.short

Volume 2 Number 1

Every New Year, individuals and organizations take time to reflect on lessons learned and refocus on the future.  In January 2012, this author met with the publisher and editors of PennEnergy to begin this blog.  Our intent was to focus on those areas that are sometimes underserved regarding the need to extend the governance model directly to field operations.

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.  Perhaps no difference from any other human endeavor whether the annual commitment to lose weight again or the beginning of another corporate fiscal year.

Throughout this past year, this author reviewed learning, knowledge and good practices from other sectors that might have applicability in heavy industry segments.  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).  Hopefully nuggets of value were contributed to the dialogue.

We expect to continue this approach this year.  In addition, we plan to discuss business and mental models on the subject in greater detail from time to time.

In 1