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Why delivering complex engineering solutions to new 'Energy Transition' market segments cannot use current outdated processes' 

The oil and gas industry is going through one of the biggest changes in its history. Whether it be the main, big oil extractors (BP, Shell etc) or oil and gas services companies, they are all effected by the ‘Energy Transition’ 

This term has become a quango of sorts, but what does it really mean? According to SPGlobal it is ‘the global energy sector’s shift from fossil-based systems of energy production and consumption  to renewable energy sources like wind and solar, as well as lithium-ion batteries’ https://www.spglobal.com/en/research-insights/articles/what-is-energy-transition

As a result, the oil and gas industry have major challenges ahead. 

It must keep oil current oil and gas producing assets at 100% operability and consider the fact that oil and gas production is still rising. However, to keep competitive, operators need to do this at lower and lower prices. 

At the same time they need to ‘envisage the future’ http://clareo.com/wp-content/uploads/2018/05/OilGasReport.final0420172.pdf

Envisaging the future will involve spending on capital expenditure, R&D and innovative technology to continue the extraction of oil that is becoming more and more difficult to get and also renewable industries.

My organisation, being an oil and gas ‘services company’, like others, must respond with flexibility, speed, collaboration or, as has happened within my company, can lose out to the tide of digital companies who can often do it cheaper, more efficiently and at less cost. 

Although my organisation has, as a result, developed a new ambitious growth strategy to service the Industrial (Nuclear, MOD) and Renewables industries, the truth is; they are doing this on the back of old oil and gas processes and resource making it difficult to deliver on time and on budget. Recent new renewable clients, not used to the oil and gas processes and delivery have seen their engineering solutions delayed. Likewise, services companies, like my organisation, have ‘gone in’ and tried to deliver using old, out of date processes, set up for an [once] stable oil and gas industry. 

So……What’s the problem? 

To some, there may not be, and assumptions could be made that it is a competence issue, or under resourcing.  Unfortunately, the fact is, my organisation is struggling to deliver engineering solutions on time and on budget, especially within these new market sectors. 

Smaller companies and those who have had a ‘foot in the door’ within the renewables industry for years are delivering faster and cheaper.  Contracts are being lost as a result. 

Can it be fixed?

Yes…… This may be a bold statement, but it just needs time and a resource to analyse the problem and come up with a possible solution. An MBA student is therefore a great resource to use!

Using a mind map (see below) it is clear that one of the major problems is culture. As a result of my organisation employing many influencers that have been with the company for 15-20 years, the ‘not invented here’ (Peter, 1997) or ‘we’ve always done it this way’ rhetoric makes any change difficult and so ‘buy-in’ must be earned through trust and evidence.

The problem that faces the organisation is therefore:

‘How can Sparrows Offshore Services (SOS) Ltd deliver future energy transition engineering solutions to new markets using outdated Oil and Gas processes? 

The answer is…. It can’t, or it can, but with difficulty, which can influence safety, staff morale, stress and reputation.

My project will, therefore, focus on a number of questions and sub questions, which I shall ask virtually and in person (interviews) to three engineering departments and the business development department. This will allow me to see where the main issues lie. These questions and sub questions can be seen below:

The results of the questioning will allow me to address what buy-in and cultural biases exist. Are there any reluctances to change and is this coming from senior management, middle management or from others? 

The results will then allow a closer look at the current processes and whether they would benefit from major or minor changes to allow efficient delivery to our clients. Would technological advances already out there be utilised (partnerships) so that lengthy R&D time (using their implicit R&D process) is dramatically reduced. 

This would lead to sub questions such as bridging the expertise, skills shortage? Can the use of outside organisations, consultants or internal department restructures solve the problem? 

Could the R&D investment using an ‘explicit’ R&D strategy help develop next generation technology rather than putting the risk on our clients? 

From these questions, the use of theories and frameworks can be used to evidence ways in which a new process may be mapped and presented to senior management. Such as:

Bartol, K.M. and Martin, D.C. (1998) Management, 3rd edn, Boston, Irwin/McGraw-Hill.

Holmes, A. (2004) Smart Risk, Chichester, Capstone Publishing Ltd

Teece, D.J. (2009) Dynamic Capabilities and Strategic Management: Organizing for Innovation and Growth, Oxford University Press.

Change management theories such as Oakland and Tanner’s Quality Management system could then be used as a method of introducing the change into the organisation.