How a new approach to risk can transform operational efficiency.
Innovation! We’re all looking for it, right? We’re seeking it out in every part of the business and it’s at the forefront of every strategy session. But, is launching an ideas contest and painting the walls orange really going to draw out the innovative thinking needed to secure the long-term future of the business?
One of our indigenous leaders here in Australia (Noel Pearson), recently drew attention to this when he paraphrased Prime Minister Paul Keating by saying “every galah in every pet shop is talking innovation”.
For those of you outside of Australia, a galah is a rose-breasted cockatoo. Pearson is paraphrasing the fact that Paul Keating famously said: “I guarantee if you walk into any pet shop in Australia, the resident galah will be talking about microeconomic policy”.
The point Pearson was making was in the context of social and policy innovation but it applies to any business that is trying to innovate. Essentially he’s saying that everyone is talking about innovation in isolation – we all want to get the tick in the box for innovation. However, no-one is really innovating because the real innovation comes from a much deeper level in the business.
Real innovation probably comes in two forms. Through evolution; where a new approach is taken in response to a problem that is difficult to solve. Or through disruption; by paradigm shift as a result of standing back and creating a new vision to achieve an outcome.
In both cases, a practical approach is adopted to achieving an outcome. The evolutionary approach provides incremental improvement whereas the paradigm shift approach has the potential to provide large, compound improvements.
We’re looking for the latter, right? So let’s cut to the chase with an example.
Practical approaches to innovation in the world of a gas producer
In the traditional model of operating a large gas asset, the owner subcontracts an EPC to manage the operational aspects and then the EPC subcontracts some of this contract to independent contractors to deliver specific services.
In this world, risk is managed by the owner through the engagement of the EPC and the reservation of some capital on the balance sheet in case something bad happens. Unfortunately, this delegation of responsibility means risk is going to increase as the owner progressively loses control of the maintenance/management processes and also the engineering data.
The owner’s vision was to maintain the asset efficiently whilst also maximising safety and productivity. But by becoming distant from the process, the owner has introduced increasing complexity as more parties become involved. Even worse, safety has also probably reduced because of this increased complexity.
Practical innovation is there for the taking if we focus on re-thinking how we manage risk.
Innovating in risk management
A new way of visioning this scenario is for the owner to accept that the risk resides with them. It always has and it always will, it’s just that responsibility has been unnecessarily delegated down the chain.
In a capital project, the value of the physical asset can be increased by aligning ownership and control of the process and data environment to ownership of the actual asset itself
Here’s what we think about that:
If the owner fully embraces ownership of the process to maintain the asset, then the owner profits in the long-term.
Own the process and own the data
Removing the layers of complexity can be achieved by the owner assuming ownership of the process and requesting that all stakeholders participate in the running of their process. This turns the relationship around and puts the owner back into the drivers seat.
Here’s our thinking on how to achieve that.
Install a unified platform
In a project, data, process and knowledge insights are typically owned by various parties. This introduces unnecessary complexity and risk.
The solution is to install a unified platform to manage all process, data and knowledge and ensure that every project participant is contracted to use it.
Break down the silos
Typical project and data management systems do not drive ownership alignment – they are often siloed. This also introduces unnecessary risk as knowledge and data becomes removed from the owner’s control.
The solution is to develop a cloud-based platform that breaks down the silos by integrating with existing datasets and ensuring that all project knowledge and data is centrally captured and available to everyone.
This split ownership does not drive cooperative site behaviour and we all know the inefficiencies that are introduced when people don’t talk to each other.
The solution is to create a platform that is easy to adopt for all participants and which delivers immediate benefits to all user entities. People should actually enjoy using the system!
Ensure data integrity
If the owner is not in control of the process, the natural outcome is incomplete and error-prone data environments.
The solution is to develop a platform based on open transparency: Data quality should be KPI’d and participants need to be mandated to provide quality data. Again, if the system is a joy to use and the benefits of providing good data are reciprocal, then the quality data will appear.
In summary, costs associated with data remediation, lost knowledge, and field productivity are ultimately always borne by the asset owner and this has serious implications on profits.
The innovation is that if true ownership of data, process, and lessons learnt are placed in the hands of the asset owner, then profitability will naturally ensue.
Choosing a technology stack
Connect this owner-managed process to the right technology stack that separates along the lines of visualisation, engineering data, and job execution and we have the potential to simplify the process, align all stakeholders and create a single source of the truth.
This doesn’t mean one technology provider delivers the entire platform but each one delivers the components they are best at doing and leveraging them in a way that delivers a robust and scalable platform. This is a reflection of tapping into the expertise of each technology provider and in the actual process using the EPC for design engineering and niche experts for their particular value-add.