Digital Transformations Require Robust Organizational Cultures

Operational efficiency is the goal for any oil and gas company, and, to that end, the industry has seen a greater focus on using technology to improve process work flows. But how does this affect the people working in these companies? A panel at the SPE ENGenious Symposium in Aberdeen looked at how pre-existing organizational structures can make or break the implementation of new technologies, as well as the people skills and competencies needed to execute a digital work flow transformation.


Philippe Flichy, digital transformation strategist and advisor at Energy Embassy, said that the oil price downturn forced operators and service companies to trim their workforces and the big challenge they face today is maintaining the artificial efficiency gains those workforce reductions produced. Streamlining work flows is an ongoing effort. Flichy said any technical integration is a microcosm of application because companies adapt technologies to fit their individual needs. This has an effect on work flow optimization, requiring a systemic approach from the reservoir to the facilities.

“I think, if there’s one thing that’s evolved from the digital transformation, it is the fact that we were more concerned about wells and fields in the past and now we’re seeing things more globally as an organization, especially when looking at fields. That means the wells, the facilities, the export systems, and a lot else,” Flichy said.


This systemic approach requires an integration of disparate data and processes. Tony Edwards, chief executive officer of Step Change Global, said this can conflict with classic organizational models in oil and gas, which are generally based on geographies—for example, a company with an office in Australia or Africa or the Middle East—that act as siloes, blocking people from information. Edwards said he has seen the emergence of a number of different models that are delivery-based, multidisciplinary, geographically agnostic, and operate in real time.

One example Edwards listed was the multidisciplinary production optimization team, which uses real-time data to support operational sites, maximizing throughput on a predetermined time scale.

“Really, we’re thinking of this idea of a time-sliced organizational model, and so these teams are delivery-based and multidisciplined,” Edwards said. “If you think about wanting to optimize a molecule of oil from the reservoir to the marketplace, then that’s inherently multidiscipline. You need reservoir, you need production, you need operations, you might need pipeline, you might need a terminal, you might need a shipping guy. Just locating a delivery team that way is one of the new team structures which has to come to fruition.”

Edwards said remote control is a key component of these new organizational models and that the mining industry has moved ahead of oil and gas in this regard. BHP Billiton has created multiple integrated remote operations centers (IROC) for its mining businesses, including an IROC for its coal business in Brisbane, one for iron ore production across its Pilbara operations, and a remote center for the Escondida copper mine in Chile.

People and the Process
Dennis Seemann, a senior consultant at MAANA, said that companies must understand the business case behind any digital transformation efforts and they must also understand the effects that digital work flows may have on employees and management. He said that people respond to two main forces, incentives or fear, and that technology-driven reorganizations typically elicit negative reactions driven by fear. To combat this, he suggested that companies move away from “command and control” structures and that buy-in on a new technology must start with middle management.


“Middle-level managers have to become coaches,” Seemann said. “They have to see that this new technology is not a threat to them, or they will fight you. They will fight you, and they will win.”

Seemann said that perceived loss of power on any level of management can kill a technological initiative within a company: If a person feels marginalized, he or she will be less likely to work toward a desired outcome. Collaboration should be a priority, and workers must be made to feel included and accountable for the success of a new technology.

“If you cannot convince your team that what they’re doing is of high value and rewarding to the company, you will never get this thing off the ground,” he said.

Seemann’s sentiments echoed those of the other speakers. Edwards said that people in functional organizations are incentivized to work within those functions and that multidisciplinary, team-based companies will have different reactions to new work flows than companies with traditional, heavily siloed structures. He argued that successful digital work flows are tailored to fit the strengths of the individuals within it. Transformations are an ongoing process, not a final product.

“The classical consultancies who are doing big change programs in many companies, what they do is they say ‘you need a new organizational model,’ and then they change how people work and what they do,” Edwards said. “That’s just wrong. What you want to do is work out what the digital capabilities are that you need and you need to architect the organization in such a way as to deliver on those capabilities. It’s an output of your study of the way you want to do change. It’s not an input. We see this time and time again.”


Andre Baken, founder and general manager of Digital Oilfields Assessment Services, said collaboration is nearly impossible if individuals within an organization are not in tune with their own concerns regarding a digital transformation.

“When you read about change management, you probably read about stuff like how you have to help your team become aware. But first you have to become aware of yourself. You have to become aware of the dialogue you have with that little man on your shoulder. If you can’t figure out why you feel things, why you react to things, it’s very difficult to have collaboration going on,” Baken said.



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