2008—Redux

    December 18, 2014 1:52 PM by Dr. Scott M. Shemwell

    Volume 3 Number 24

    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]  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]  A similar process is unfolding during the last quarter of 2014.

    In the summer of 2014, West Texas Intermediate (WTI) crude oil traded at over $105 per barrel.  As late as October it was above $90.  By December, it hovered in the high $50’s per barrel.[iii]

    To some observers, this is a manipulated market and to others it is supply and demand driven.  Regardless of the drivers, those economic actors in the market must deal with high volatility from time to time.

    A rapidly falling market presents operations with significant challenges.  The common mantra, “do more with less” can become gospel.  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.

    Nothing changes in a down market except the commodity price point.  Safety, the environment, performance requirements, regulations, etc. remain the same.  However, managerial actions must change and decisions taken reflect the market realities.

    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]  A dramatic, quick reduction in commodity price points essentially has the same economic effect of the field.

    The focus on that study was the emerging (at the time) digital oilfield.  However, modern producers use a basket of technologies to drive their business models.

    Technology does make a difference.  The perceived market glut is partly due to the use of technologies of all kinds including information technology.  Enabling process change improved efficiencies and safer operations are well documented and have offered those organizations using them with a “healthy buffer against failing prices.”[v]

    Organizational Agility, Resilience and Sustainability are the hallmark of well-managed oil and gas operators and their energy services and manufacturing supply chain partners.  Rapidly responding to changing environments, whether market driven or in retort to an incident are the normal response of High Reliability Organizations.  The protection of shareholder value demands no less.

    As with any market downturn there will be winners and losers.  Mergers and bankruptcies, a level of unemployment and local recessions are likely.  Agile and resilient firms are best positioned for survival when the bust part of the business cycle is deep and fast.

    Finally, as the saying goes, “we’ll be back.”  ExxonMobil recently forecasts 35% higher global demand by 2040.  The demographics of an expanding global population and desire for increased standards of living throughout all economies are substantial economic drivers.[vi]

    Yet one wonders, how many more boom-bust cycles will there be before then?  Expect them and plan accordingly.
     

    What is your organization’s Rapid Response Management plan?


    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 four books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_the_United_States
    [ii] http://www.rff.org/Publications/WPC/Pages/The-2008-Oil-Price-Shock-Markets-or-Mayhem.aspx
    [iii] http://www.businessinsider.com/oil-prices-drop-december-10-2014-12
    [iv] Shemwell, Scott M. & Murphy, D. Paul. (2004, September). Roadmap to Enterprise Optimization: A Guide to the Impact of Information Driven Field Operations on the Petroleum Corporation. Strategic Decision Sciences. Authors. P. 110.
    [v] http://www.houstonchronicle.com/business/energy/article/As-oil-prices-fall-companies-produce-more-for-5923956.php#/0
    [vi] http://www.ogj.com/articles/2014/12/exxonmobil-forecasts-35-higher-world-energy-demand-by-2040.html?cmpid=EnlDailyDecember102014

     

     

    Requisite Variety

    December 11, 2014 12:27 PM by Dr. Scott M. Shemwell

    Volume 3 Number 23

    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.  This is a dynamic systems model of complex interactions.  In this edition, we will extend this discussion further.

    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.  Therefore, as system density increases, it acquires greater variety, that is systemic behavior becomes more uncertain.[i]

    In 1952, W. Ross Ashby first described requisite variety.  This axiom states that, “R’s capacity as a regulator cannot exceed R’s capacity as a channel of communication.”  In other words, ex(T)ernal (D)isturbances to the system that go unregulated may drive system (E)ssential variables outside appropriate limits.  Communications between these variables are represented in the arrows (→) in the graphic. [ii]

    In non-technical terms, “the variety in the control system must be equal to or larger than the variety of the perturbations in order to achieve control.”[iii]  Similar to Game Theory, a table of possible outcomes or payoff matrix can be either Good or Bad.[iv]

    It is not our intention to drift too far into Behavior Economics or Cybernetics (control and communications).  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—“it is necessary to have such a number of actions that is equal to the number of system’s states.”[v]

    Operations Management Systems (OMS) should consider this established principle to assure appropriate system controls are in place and functioning properly.  This is the essence of Strong Bond Governance model put forth for managing critical infrastructure such as energy operations.[vi]

    Does your organization’s system regulation have requisite variety?

    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 four books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf
    [ii] http://www.panarchy.org/ashby/variety.1956.html
    [iii] http://www.wyrdology.com/mind/creativity/variety.html
    [iv] http://pcp.vub.ac.be/Books/AshbyReqVar.pdf
    [v] http://stpk.cs.rtu.lv/sites/all/files/stpk/lecture6_2010.pdf
    [vi] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance. New York: Xlibris.

     

     

    Becoming a Part of Speech—Pluses & Minus

    November 25, 2014 10:12 AM by Dr. Scott M. Shemwell

    Volume 3 Number 22

    Conventional marketing wisdom suggests that becoming a verb can be a very good thing.  “Google it,” is an oft repeated statement when searching for information on almost any subject.  Becoming a household name is generally viewed as a good thing.  However, becoming a generic term may “mean losing the legal power of a trademark.”[i]

    It can be argued that the power of the verb is greater than the marketing power of a trademark.  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]

    As a general rule, this author believes that when the company or a product becomes part of the vernacular the benefits outweigh the drawbacks.  Aggressive trademark defense may actually detract from the brand in this case.

    However, there is a dark side.  The World War II Norwegian politician who collaborated with the Nazis, Vidkum Quisling became a part of speech.  Quisling, the noun is now often used to describe someone as a traitor or collaborator.  The verb form of the word is to quisle.[iii]

    Most recently, an American economist has joined the club or rogues.[iv]  Following the release of several videos, it did not take long for the slang to begin.  More than just an attempt at humor, his revelations cast serious doubt on major political figures and their motives.  Like all political red meat, expect more to come.

    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.  Moreover, as with the positive power of “Google it,” “Grubered” will probably stick with less desire effects for this professor.[v]

    The genericisation of a product or brand can have sustained benefits even when society in general grammatically tramples intellectual property.  The opposite sustains and often ridicules individuals and brands.  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.

    How does your company protect its Brand?


    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 four books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.fastcompany.com/3004901/google-what-it-means-when-brand-becomes-verb
    [ii] http://en.wikipedia.org/wiki/Generic_trademark
    [iii] http://en.wikipedia.org/wiki/Quisling
    [iv] http://www.politico.com/story/2014/11/obamacare-jonathan-gruber-architect-112886.html
    [v] Ibid.

     

     

    Agile, Resilient, Sustainable Ecosystem

    November 7, 2014 9:53 AM by Dr. Scott M. Shemwell

    Volume 3 Number 21

    High Reliability Management (HRM) places a premium on resiliency, the ability to recover in times of adversity.  This can be a challenge for any individual organization; however, the upstream petroleum sector requires an extensive supply chain.  Resilience is by definition is exogenous in this and other critical sectors.

    Industry executives and regulatory agencies have understood this exposure.  They are explicitly demanding that contractors of all sizes meet new safety, environmental and performance metrics.  Moreover, both parties recognize that the Tier 2 and their contractors and suppliers may be the weakest link in the supply chain.

    The concept of a supply chain visualizes a linear and hierarchy model of the industrial age of the 19th century and earlier.  Raw materials are transported to factories and finished goods such as an automobile are the output into the marketing and sales cycle.

    Linear models such as Just-in-Time (JIT) manufacturing are still prevalent and have their strengths and weaknesses.[i]  In 2011, the Great Tohoku Earthquake and Tsunami severely affected the global automobile manufacturing sector.[ii]  The agility and resilience of that industry was tested on a global scale.

    All supplier Tiers were negatively impacted for weeks, especially for Japanese automobile manufacturers and their suppliers from the affected areas.  US based automakers were less affected initially, due to long logistics tail of products in route to the United States.  As after any major incident, that industry needed to make adjustments including expanding geographical diversity of key components.[iii]

    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.  In this model, Tier 1, 2, and 3 suppliers may find themselves part of several ecosystems.  Moreover, governments are ecosystem partners with strong concerns about employment as well as tax revenue.

    The current upstream offshore wake-up call rang in 2010.[iv]  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.

    This author has put forth the Relationships, Behaviors, and Conditions (RBC) model as one approach towards managing this change.  We have argued that this multi-dimensional methodology mitigates systemic risk, including from the supply chain.[v]

    Agility and resilience are behaviors.  One can also view sustainability as a situation or condition.  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.

    Supply chains are no long linked sets of organizations and activities.  More properly, they have the traits of complex interrelated organisms confined by industry cosmos—an ecosystem.[vi]

    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.  Operators now have a greater dependency on their ecosystems than ever before.  In other words, the focus on Tier 1 partners is no longer enough.  Unseen risks may lurk in Tier 2 and beyond.[vii]

    Be Afraid

    The oil industry is entering another part of its ongoing cycle as West Texas Intermediate (WTI) dips below $80/bbl.[viii]  As margins shrink pressure on operators as well as their supply chain increase—cost cutting has been the traditional industry response.

    CEOs throughout the ecosystem have a fiduciary responsibility to their shareholders.  They are charged with growing shareholder value and protecting that value during downturns by reducing the direct costs of operations.

    A reduction-in-force, deferred maintenance, consolidation and facility/fleet mothballing are common actions.  However, safety, environmental stewardship and performance are just as important and perhaps more so during economic downtimes.

    Fewer people with more to do places additional stress on personnel and their equipment.  By extension, facilities may suffer as well.  Such a scenario can make incidents more likely.
     

    How strong is your firm’s ecosystem?


    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 four books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html
    [ii] http://fas.org/sgp/crs/misc/R41831.pdf
    [iii] Ibid.
    [iv] Shemwell, Scott M. and Dowlearn, Robert T. (2010, October). A Date Which Will Live… Oilfield Technology Magazine. pp. 16-20.
    [v] Ibid.
    [vi] http://www.merriam-webster.com/dictionary/ecosystem
    [vii] http://www.corporate-value.com/our-expertise/Transportation,-Defense,-%26-Security/risk-management-upstream-businesses
    [viii] http://www.bloomberg.com/energy/

     

     

    Veterans Administration

    October 20, 2014 10:29 AM by Dr. Scott M. Shemwell

    Volume 3 Number 20

    Recently, this author was in two taxicabs.  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.  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.  One surmises that the extra cash from the job may have been an economic driver as well.

    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.  This mid-career individual was very articulate and appeared very knowledgeable and even wise.  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.

    These two conversations early one Sunday morning were enlightening in many ways.  Both of these individuals were very personable, highly intelligent and by my brief observation hard working.  I can honestly say, I enjoyed their company and talking with them shortened my journey.

    However, several thoughts raced through my head as I exited the last taxi, paid the man and he shook my hand.  It appeared that he might be under-employed.  If that is the case, I asked myself why is it still so hard for veterans to find jobs.

    This point is not a new one and others have expresses similar concerns over the past few years.  Moreover, as a veteran myself it was initially difficult for me to navigate the corporate jungle.  To say that in my early twenties, just out of the Army with no corporate experience, I was clueless might be an understatement.  Fortunately, I managed to land an entry-level position with one of the two energy service companies where my direct military experience fit well.

    The energy sector is a logical next step in their careers for discharged military personnel of all ranks and Military Occupation Specialties (MOS).[i]  The first taxi cab driver had worked in military communications and the second in logistics.  These are two skills the industry desperately needs.

    The industry has an outreach program and many recent veterans are employed throughout it, both in the operator and services sectors.  Can we do more?  Always!

    Readers may draw the logical conclusion that the subject of this piece is to hire vets!  Evidence suggests that vets are highly prized talent and most add value to their employers and enjoy successful careers.

    However, there is another question.  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.  They may not even understand the functions of an oil company, an energy services company or an engineering firm.  Nor what kinds of people they employ.

    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.  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.  This effort would be an extension to the current initiatives that are successful helping vets making the transition.

    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]  Both kinds of resources are out there, I know I just met two in one morning.

    “Thank you for your service,” either begins or ends many conversations with veterans, especially on television shows.  Yet for many of these young (and even not so young) people, their service to their families and society is really just beginning.

    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.  One of the key components of the recent SEMS regulations is personnel competency and proficiency.

    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.  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.
     

    How does your organization administer its veteran’s affairs to take full advantage of these available resources?
     

    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 three books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://usmilitary.about.com/od/enlistedjobs/tp/armyenlistedjobs.htm

    [ii] http://www.vetsfirst.org/military-separation-guide/

     

     

    Workflow Alignment

    October 6, 2014 10:41 AM by Dr. Scott M. Shemwell

    Volume 3 Number 19

    Dateline September 25, 2014, Dallas, Texas.  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.  Subsequently it appears that the attending physician was unaware of this key piece of information.[i]  In other words, the set of tasks required to properly diagnose and treat the patient was not properly completed.

    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]  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.  Subsequently, the software was updated and this gap was closed.[iii]

    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.  However, the trials that have transpired (to-date) are having broad and complex impacts globally.  The medical profession is widely acclaimed to have a strong Culture of Safety; however, the lapse in Dallas exposed system vulnerabilities.[iv]

    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.  As such, it is a failure of high reliability management processes.  Or is it?

    High Reliability Management (HRM) has been discussed in these pages a number of times as well as our recent book, Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance.[v]  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]

    One of the most overused terms, A Crisis in Confidence is unfolding in Dallas as of this writing.  This concern is broader than simply a failure of one hospital.  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]

    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.  This is not to say that political pundits on both sides will not attempt to parley these fears for their benefit.  However, Public Health practitioners and management will most likely prevail over the current challenge.

    Does this seem similar to the deepwater offshore drilling industry, the nuclear industry, the space shuttle program and others?  Good practices and other organizational learning from one sector may have applicability in others.  Good systems management is the fundamental backbone of HRM regardless of the industry sector or life threatening event.

    Much has been written and discussed regarding the plentiful benefits of Big Data to organizations of all sizes.  Often overlooked is the system design process.

    The nursing staff has a different set of workflow processes and data requirements than the physician.  Good systems design (including updates to reflect changing conditions) which must include data sharing should not be under appreciated.

    The oil and gas industry is in the process of changing their Operations Management Systems (OMS) to include the new safety requirements.  Lessons learned from Dallas include a review of the data sharing requirements of rapidly changing business processes.

    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]  It is important to remember that Relationships can change based on changing Conditions and this often results in new Behaviors.

    The system is not static and it now necessary for the physician to understand the recent travel of a patient.  This may result in changes to tasks in a workflow with the subsequent impact on other workflows.  IT systems must represent the tasks required to accomplish a complex job and workflows must be continuously aligned as necessary.
     

    How does your organization assure that workflows across departments are aligned and data is shared as required to complete the set of tasks?


    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 three books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.dallasnews.com/news/metro/20141001-dallas-hospital-knew-man-had-been-to-w.-africa-didnt-isolate-him-for-ebola-testing.ece
    [ii] http://www.huffingtonpost.com/2014/10/02/dallas-ebola-patient-hospital-error-electronic-health-record-flaw_n_5924698.html
    [iii] Ibid.
    [iv] http://www.nursingworld.org/MainMenuCategories/ANAMarketplace/ANAPeriodicals/OJIN/TableofContents/Vol-16-2011/No3-Sept-2011/Teaching-and-Safety.html
    [v] Holland, Winford “Dutch” E. and Shemwell, Scott M. (2014). Implementing a Culture of Safety: A Roadmap to Performance-Based Compliance. New York: Xlibris.
    [vi] Ibid.
    [vii] http://www.hhs.gov/ash/initiatives/quality/system/
    [viii] http://www.amazon.com/Governing-Energy-Organizational-Governance-Century-ebook/dp/B00NB8C91Q/ref=la_B00KNBEQS8_1_5/179-1492846-1205359?s=books&ie=UTF8&qid=1412372804&sr=1-5

     

     

    Man Machine Codependency

    September 22, 2014 11:44 AM by Dr. Scott M. Shemwell

    Volume 3 Number 18

    One of the emerging trends in automobile design is the intelligent-car.  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.  Some even put forth the construct of “self-driving.”[i]

    As beneficial as these advancements are, there can be drawbacks.  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?  In this case, the implications appear to be minor as not many automobiles even have the standard transmission as an option. [ii]  In other instances the ramifications maybe more acute.

    We also see this phenomenon in mathematics where students trained using calculators and spreadsheets may struggle to understand the basic math operations.  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.

    For example, for this (then) student the use of the slide rule required me to devolve the problem into its component parts.  This process led to a better understanding of the problem and its mathematical structure as well as helping establish an order-of-magnitude for the expected solution.  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]

    Following a seminar on the sIide rule, one University of California, San Diego student remarked, “I like being engrossed in the calculations, instead of just punching them into my calculator.  I make less mistakes, and find I know what I am talking about …”[iv]

    Another way to frame this discussion is as cognitive training.  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]

    Software systems may not calculate properly.  Many may not be aware that any computer is basically a Babbage “Analytical Engine” circa the mid 1800’s.[vi]

    Most now take the output of digital calculators as gospel.  But, what if these current algorithm developers miss something?  Do many really understand the structure of the problem they are attempting to solve?

    Another example, earlier versions of a popular spreadsheet had known statistical inaccurate algorithms.  One professor is reported to have told his students not to bet their jobs on its accuracy.[vii]

    Now, statistics is widely used in Big Data and Bet-Your-Career, even Bet-Your-Company decisions.  Moreover, we trust our very lives to the accuracy of software calculations and the quality of the data input into the system.

    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]  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]

    Apparent confusion in the cockpit, one pilot pulled the aircraft up thinking he was at a lower altitude and need to climb.  He stalled the Airbus while the other finally understanding the situation urged him to descend and gain airspeed.[x]  Perhaps, the pilot was disoriented due to bad weather, nighttime, or lack of sleep.

    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.

    Our digital world provides all with a quality of life and entertainment only dreamed of by previous generations.  However, there is an inherent risk if we rely on technology too much.  We may lose our abilities to understand the problem we are solving, and whether the technology accurately supports that process.
     

    How does your organization assure that its workforce retains fundamental problem solving capability?

     

    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 three books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.extremetech.com/extreme/132812-mit-develops-intelligent-car-co-pilot-that-only-interferes-if-youre-about-to-crash
    [ii] http://www.roadandtrack.com/boot/whats-really-killing-the-manual-transmisson
    [iii] http://sliderulemuseum.com/Manuals/M175_Pickett_TeachingGuide_601.pdf
    [iv] http://sliderulemuseum.com/SR_Class/SlideRuleTalk-MIT.pdf
    [v] http://drjanestewart.wordpress.com/2011/05/11/what-is-cognitive-training/
    [vi] Shemwell, Scott M. (1993). Management Theory - Evolution Not Revolution, Proceedings of the 11th Annual Conference of the Association of Management, 11 (2), pp. 74 - 78.
    [vii] http://www.forecastingprinciples.com/files/McCullough.pdf
    [viii] http://en.wikipedia.org/wiki/Air_France_Flight_447
    [ix] http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html
    [x] http://www.telegraph.co.uk/technology/9231855/Air-France-Flight-447-Damn-it-were-going-to-crash.html

     

     

    Empty

    September 3, 2014 1:55 PM by Dr. Scott M. Shemwell

    Volume 3 Number 17

    Confidence is everything!  People need to trust the institutions and organizations that they depend upon, whether for their livelihood, family unit, commercial organizations or government structures.

    When confidence, nay trust is broken the human response can be swift and even terminal.  In a previous edition of this work (June 2012), the fate of the DC-10 aircraft (circa 1970) was posited as a Cautionary Tale.  Repeated accidents relegated this aircraft to freight as the public became “fear of flying” this asset.

    Some 40 years later, passengers appear to be fleeing a modern airline for many of the same reasons.  Malaysian Airlines has lost two aircraft in less than six months.  On March 8, 2014, Malaysia Airlines Flight 370 disappeared, remains a mystery and may never be solved.[i]

    In July, Malaysia Airlines Flight 17 became the apparent victim of hostilities.[ii]  In this case, questions have been raised as to the wisdom of the flight plan across the Ukraine when other carriers had rerouted.[iii]

    Commercial airlines have been lost before from perceived or actual military action.[iv]  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.  While an interesting political position, one might see the strategic weakness of this military response to commercial airline airspace intrusion.

    However, when the flying public is concerned about their safety, the impact on the business model can be immediate and severe.  This would appear to be the case with Malaysian Airlines.

    This problem is not limited to the airline industry.  Certain automobiles, e.g., Ford’s Edsel and Pinto are examples when entire model lines were withdrawn after customer confidence was lost.  Ford is not the only manufacturer to produce so-called “lemons,” many claim that title as well.[v]

    The Gulf of Mexico drilling moratorium in 2010 is an example whether the US offshore drilling industry suffered a similar fate.  One might argue that this is different because the US government drove this shutdown.[vi]  The counterpoint is that politicians echo their constituents’ desires.

    Six other commercial airliners have disappeared and never been found, including a Boeing 727 in 2003.  While the flying public always seems to bounce back from adversity, there is always a short-term impact at a minimum.  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]

    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]  Time will tell whether this restructure will be successful.  However, one surmises it will be costly.

    Crisis management is just that.  Organizations must move quickly to assure that constituent confidence is quickly reestablished when brought into question.
     

    How does your organization assure that stakeholders do not face a Crisis of Confidence in your Business Model?


    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 three books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.cbsnews.com/malaysia-airlines-flight-370/
    [ii] http://www.cbsnews.com/news/malaysia-airlines-cutting-6000-jobs/
    [iii] http://www.nbcnews.com/storyline/ukraine-plane-crash/who-had-authority-ban-air-travel-over-ukraine-n159636
    [iv] http://en.wikipedia.org/wiki/List_of_airliner_shootdown_incidents
    [v] http://www.forbes.com/2004/01/26/cx_dl_0126feat.html
    [vi] http://www.nytimes.com/2010/10/13/us/13drill.html?pagewanted=all&_r=0
    [vii] http://www.iata.org/pressroom/documents/impact-9-11-aviation.pdf
    [viii] http://www.independent.co.uk/news/world/asia/malaysia-airlines-state-fund-plans-overhaul-of-national-airline-9655896.html

     

     

    100

    August 28, 2014 8:41 AM by Dr. Scott M. Shemwell

    Volume 3 Number 16

    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.  The Guns of August fired in early August 1914 and set the world ablaze for the first of two world wars.  Empires and monarchs fell and millions died.  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]  Moreover, the peace set the stage for an even greater conflict less than 25 years later.

    Not so well known is the opening of the Panama Canal on August 15, 1914.  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]

    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.”  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]

    Decisions made generations ago can have consequences long into the future.  High quality decisions are important.  Staying the “proper” course sustains value even in the midst of major structural change.

    These lessons are also important to corporate executives whose vision may be limited to shorter horizons.  This political (US midterm elections in November) season will most likely find pundits stating words to the effect that, “elections have consequences.”  The same can be said of strategic decisions.
     

    How wise are your organization’s long-term strategic decisions?

     

    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 three books and has written extensively about the field of operations management.  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; 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.

    End Notes

    [i] http://www.telegraph.co.uk/history/world-war-one/inside-first-world-war/part-six/10607658/ottoman-empire-first-world-war.html
    [ii] http://www.history.com/this-day-in-history/panama-canal-open-to-traffic
    [iii] O’Grady, Mary Anastasia. (2014, August 18). The Panama Canal Celebrates 100 Years. The Wall Street Journal. p. A11.

    Culture’s Consequences

    August 12, 2014 10:28 AM by Dr. Scott M. Shemwell

    Volume 3 Number 15

    One of the seminal works on cross-cultural behaviors is Geert Hofstede&rsquo