Knowledge management is key if the offshore oil and gas industry wishes to remain healthy, survive, and endure upcoming challenges, says Pyrodyne’s Randy Smith. In his opener to this month’s recruitment & training review, he explains why KM will be so crucial to the process of identifying and retaining talent in the new millennium.
The offshore oil and gas industry will eventually ramp-up and retool itself in the aftermath of the latest economic downswing. The current economic malaise has forced business managers of all stripes to do some serious navel-gazing about how to turn around company fortunes – essentially come up with game changing services or products, or ways of delivering them.
The primary problem is that managers in this business are drawn to step-by-step intuition, processes, and tools. The problem is that something efficiently codified this way can easily be replicated by your competitors. When the tide turns, as it inevitably will, fast-track projects will quickly drain and evaporate a limited talent pool that survived the industry’s lingering decline. The surviving talent can ill afford to be diluted with a reinvention of the wheel concept, and a business-as-usual strategy that has traditionally permeated our industry.
How do some companies appear to remain resilient in such times as we are experiencing, and always pull-off fast results out of a seemingly chaotic organizational structure? Knowledge management. It is an intellectual movement that is turning organizations upside down in the US, Japan, and Europe. Knowledge management professes that human skills, expertise, and relationships are the most precious resources in an organization. More often than not, the real intellectual assets lie tangled up in managerial red tape, generally locked away in a corporate bureaucracy, that has never inventoried its talent base, or is too inept to realize it needs talent. Therefore, when a new challenge crops up, either the wrong person steps forward or is selected by a manager, and the real expert in the company or organization never even hears of the task, or the company arrogantly and stubbornly refuses to acknowledge it, and go out and get what they need. Such companies will inevitably fail.
Essentially, knowledge management is the process of sharing what you know and leveraging what others know – connecting knowledge sources together and getting them to transfer that knowledge. To cut through this red tape, innovative companies depend on a new type of manager – a knowledge manager, or KM. What does a knowledge manager do for a living?
The KM promotes job flexibility throughout the company, so that staff with smart ideas, special, or unique skills can execute extremely quickly. That may mean letting a small team of talented employees develop a creative way to make a project work, when conventional wisdom may suggest that existing project barriers clearly dictate abandonment, and ultimately not pushing forward with a project that otherwise could be successful with the right idea development.
At all levels, knowledge managers try to break up traditional logjams. The goal is to allow every manager in the company to quickly find out who has the expertise in which areas.
Knowledge management is essential in the offshore oil & gas industry if it is to remain healthy, survive, and endure the challenges of the new millennium. As exploration necessarily migrates to phenomenal water depths, project costs escalate to a level that demands they be shared by an alliance of partners. This, typically, translates into ‘marginal’ developments, even though substantial proven reserves may be discovered. Recovery of those assets in a profitable manner requires significant innovative and creative thinking to overcome knowledge deficits and to develop and evaluate effective risk-taking concepts and measures that are not only required, but fundamental to the success of bringing any deepwater ‘marginal’ field development into production, irrespective of the host platform design that will support such a facility.
Essentially, a knowledge manager is a person who has the high-level clout in a company to break down hierarchies, unlock the knowledge and skills of the staff, channel these assets across the organization, and/or bring in talent when needed. This is a way of looking at what people know or need to know, how they use the knowledge, and how they sell it. Companies in the future will either get this message or sink, particularly in the oil & gas sector.
Businesses, if they’re smart, must latch onto knowledge management like a life preserver. In a recent Conference Board survey of 200 executives at 158 large multinationals, 80% said they had knowledge management projects in the works, and most had already anointed a chief knowledge officer, or have enlisted the services of a KM consulting firm.
Large-scale, complex intellectual projects, such as the creation of a floating hub gathering and processing facility for both a group of marginal subsea developments and local production, largely depend on collaboration. But great ideas that are essential to the design’s success come from exceptional individuals, who don’t tend toward teamwork, contrary to existing corporate culture. Often the most ambitious, the ‘eagle’ if you will, have little incentive to share expertise. As the old adage goes: ‘It’s hard to get eagles to fly in formation.’ Unfortunately, we live in a knowledge economy. Like it or not, these eagles will be inexorably linked to the failure or success of your company. Failure to admit this and identify the ‘eagles’, capitalize on their talent, and learn how to retain them will be a formula for disaster. Similarly, where there’s a vacuum of such, failure to identify, recruit, and bring eagles into the company is also a formula for catastrophe.
Companies have to clearly recognize that what we know depends on who is asking the question and how the question is structured. Even if smart people are identified and each person’s expertise is inventoried, they cannot be expected to simply dump everything they know into some corporate repository. Identifying, using, and retaining the best and brightest, the ‘eagles’, is crucial in the knowledge economy, and if expertise is not available in-house, smart companies will pay handsomely to acquire it. What a truly successful company in the emerging second decade of the 21st century will seek is something far less tangible than head counts under some job description on a project. They will need to seek the altitude that only ‘eagles’ can achieve. Knowledge managers and corporate executives must harness technology with incisive thinkers to break traditional logjams.
When it comes to retaining ‘eagles’, breaking down hierarchy pays additional dividends. Data suggests that most employees these successful companies are trying to attract and hire actually expect to have a series of careers. If a company can’t provide an outlet for their ambition, they’ll go elsewhere. So by design, all the roles, titles, and clusters of activities are transitory. Eagles don’t tend to build organizational citadels, or concern themselves with corporate culture, but like nomads, they pitch their tents and fight the battles and move on, simply asking for the recognition they deserve. Understand and come to terms with these facts; identify and develop a strategy to recruit, hire, and retain these eagles, or your business will probably fail.
Use the eagles wisely, there aren’t that many of them; they are the real value-adders in an organization. The most effective creative thinkers work off-line, away from the mainstream of project activities and contemporary thinking. They fundamentally think out of the box.
One application to consider is that such a team could be dedicated toward development of cost-reduction measures that have a significant impact to a project, basically, technology (and ultimately project) enablers that require introspective thinking. Deepwater developments can only rely on a floating facility host. Therefore, the platform has some tangible unit cost for its required buoyancy. For example, weight reduction and associated risk-taking measures are paramount to that particular technology’s success. Therefore, the decision-making process as to whether that type of project moves forward, is abandoned, or may never be considered is contingent upon innovation. Armed with such an innovative strategy in-hand, before it’s perceived as needed by a customer, puts the smarter organization in an advantageous position. The use of eagles for that process, therefore, is considered a preemptive business development strategy.
Similarly, a team could also develop deepwater riser concepts, innovative floating host concepts, or develop a comprehensive set of standards, practices, or procedures, etc that could be used by far less experienced or recent graduates that the industry will be required to rely upon. This ensures consistency and reduces the reliance on decision-making from less experienced resources, while maintaining project continuity.
Unfortunately, current corporate cultures shun words like ‘innovative’, ‘creative’, etc as though it’s an influenza pandemic. Corporate management must therefore rethink what those terms really mean and put them in proper context. Unfortunately, companies often miss the boat on innovations by limiting their strategies to those of technological substitution. Truly innovative products don’t just improve on performance of what came before. Real innovative products often change the meaning of the products themselves in the eyes of their users. The principal way to get at meaningful insights which can propel innovation is to collaborate closely with a few key visionaries. Don’t resist bringing in outside talent. Most often, those ‘eagles’ have already explored the cutting edge of what an existing product, component, or system offers and probably have modified, often for their own purposes in ways that point to even the extent of how its meaning is likely to evolve in the context of its use. Of course, this sort of thinking is unconventional, but it clearly distinguishes leaders from followers.
It must be pointed out that knowledge management does not specifically address (1) the thinking process or behaviors; (2) targeted questioning; (3) challenging; and (4) flexibility; all of which are fundamentally essential to innovation and the creative process. Specifically, radical innovation, or what may be perceived as such is normally squashed in corporations because of a risk averse culture; ie ‘Why do we want to add innovation risk to an already inherently risky business?’ The right answer is: Because it will make more money on a project and for future projects, and you should do it if: (1) you clearly define the true, not perceived risks; (2) you clearly identify mitigation opportunities; and (3) make educated decisions based on analysis and intelligence, not on assumptions, opinions, and gut-reaction or instinct.
Targeted questioning (somewhat of a Socratic type) presses for the truth behind the words, which is a healthy process. Unfortunately, some corporate cultures, particularly in large companies take this methodology to extremes, viewing it as a philosophical method to systematically doubt and question everything. Presumably, this approach is designed to elicit a clear, concise expression of something that is supposed to be implicitly known by all rational human beings. Cutting edge technological answers, unfortunately are not that easy and often don’t always initially appear rational.
Again, answers largely depend on who is asking the question and how the question is structured. The problem with the ‘question and doubt everything’ approach is that most people holding this view typically don’t have enough judgment and technical expertise to form sound opinions on anything. This results in unnecessary expenditures and imprudent use of assets, in a thin (soon to become rarified) human resource marketplace. Further, the answers obtained from this approach are usually filtered by some managers to suit other agendas, wherein: (1) the best solutions rarely grow out of this type of process because some of the stakeholders view this methodology as inquisitional rather than constructional, and are therefore unwilling to share their expertise; and (2) nothing ever gets accomplished, other than the frivolous expenditure of capital and additional project delays. Companies can ill afford to alienate their most precious asset – human capital.
By the same token, often times we accept someone’s words at face value. We also need the courage to bypass social politeness that often strangle corporate cultures and go for the second, third, fourth level answer (which tends to be the root problem and the key risk that needs to be resolved). For example; a large operating company designed a stackable jacket to be built in situ for the North Sea that could be installed by a very small lift vessel, possibly even a jackup rig. Management’s response: it was too risky. Why was it considered too risky? After many discussions with the ‘negative’ experts, their concern revolved around the ability to ensure the quality of the grouting at the connection points and the load transfer through the grout. After eagle focused attention on these two points, the risk went away, as did the ‘negative’ experts.
It’s perfectly normal to challenge the norm, challenge the metrics, challenge the conventional. We should support a challenge atmosphere, where what was done last is not good enough. Corporate management does this, but is unwilling in today’s corporate culture to support the time, effort, and resources that can come up with the different solutions. It is usually (and correctly manifested) as ‘do better this time, but do it faster and with less people’, which runs counter to conventional wisdom. Corporate cultures need to provide an environment to let creative, inquisitive people (eagles) expend their energies up front so they can move the business forward.
Finally, if you are fortunate enough to live in a corporate environment and culture that promotes all of those things, often times you end up going in a direction never expected. Let go of the original thought and go with the flow. Be nimble enough to know when you are in a blind alley and make the mental change quickly. Too often we chase an idea because it’s ours and end up with nothing. Ideas are only the catalysts to other ideas. Understand the difference between the industry concept of knowledge management and what ‘eagles’ have to offer.
We must understand that we now live in an idea-driven economy, largely based on creativity and analytical thinking. As such, companies can gain a significant edge through new ideas that increase substantially in value as they begin to be assimilated into real-world applications. Companies must exhaustively analyze where the industries they serve currently stand from a technological perspective. Don’t invent a black box looking for a home. Develop the ideas and vision necessary to move those industries upward, not laterally. Find out what challenges and knowledge deficits are restricting or limiting growth, or technological obstacles that may appear to preclude even remotely considering development of some project.
For example, deepwater floating host facilities must rely on some form of floating moored structure. As such, the buoyancy has a phenomenal unit cost, approaching $100 per pound to simply ‘float’ something. If the weight of facility components could be reduced by 1 million pounds, the saving could pay for export lines where there aren’t any, thus enabling a project wrought with show-stoppers.
One operating company wanted to use pressure vessels designed and built to ASME section VIII, division 2 rules to reduce weight in that regard. Unfortunately, they would not yield on using a particular grade of carbon steel ‘that we’ve always used’. If they had used a different material, the vessel weights could have been cut in half, rather than by 20%. Their ‘negative experts’ cited the price of materials as being twice as expensive. What they failed to realize is that vessel shops procure material by the pound. If the material is twice the price of a comparable material, but results in material that’s half the weight, the overall difference is zero! Given the prospects of a few more rounds of lay-offs in this business, hopefully many of these negative experts are going to begin to get the message.
An integral part of this process also embodies the development of a concurrent strategy and approach that will lead to customer or management acceptance of those novel, or creative ideas, and associated risk-taking that may be required. The bottom-line is that human capital will be the only corporate asset in the remainder of the 21st century, where creativity will be realized as the sole source of growth and wealth. Innovation will be the only resource that will build profit. Learn to identify, hire, and manage knowledge now; let the eagles soar, or you may become extinct sooner than you realize. The eagles will eventually devour you, since they’ll be working for your competitors.
Do not lose sight of the fact that most companies have systematically targeted and laid-off or ‘retired’ their older (and much wiser) workforce. Therefore, expertise – particularly those capable of innovative and creative thinking – is an extremely rare commodity these days. When walking through the halls of most companies, if you see someone over the age of 40 they’re considered ‘ancient’. Fortunately, most companies have seen the error of their ways and are bringing back many of these ‘retirees’ as consultants, and in recognition of their skills, they’re being brought back with even higher salaries and benefits than they had before.
The older workforce is a particularly good resource for recruiting ‘eagles’. When looking at a seven-page resume, you can understand why.
In summary, companies shouldn’t get too attached to the title ‘Chief Knowledge Officer’. If knowledge management is compartmentalized as it is typically found in corporate America, it becomes just another info-tech, throw bodies at it approach. Instead, the whole knowledge process must be embedded in the position of all managers and project leaders. The flatter the organization, the further knowledge will flow. The overwhelming aspiration of a knowledge manager should be to work himself or herself out of a job. OE
About the author
Randall M Smith, PE, is president and CEO of The Pyrodyne Corporation in Metairie, Louisiana. He holds undergraduate degrees in both mechanical and electrical engineering with subsequent graduate studies in metallurgy, material sciences, and machine design. He has over 40 years’ experience of detailed mechanical design and analysis of offshore oil and gas production facilities and has served on numerous ASME Code committees.
Smith, an internationally recognized subject matter expert on waste heat recovery systems and fired equipment, designed all of the waste heat recovery systems, heat transfer equipment, and numerous utility systems on Shell’s Mars, Ram-Powell, and Ursa TLP’s, in addition to such similar equipment on Chevron’s Petronius compliant tower platform and Agbami FPSO.