Innoboard: There is no consistent definition of innovation. Every industry and every department perceive it differently. What does innovation mean with respect to the oil and gas industry?
Dr. José A. Gutierrez: First allow me to clarify one element: My comments about O&G industry are centered only around Oil and Gas Drilling, with particular focus on Offshore Drilling. The rest of the exploration O&G industry and O&G production are quite advanced and innovative.
There is indeed a big confusion in the market place in the definition of innovation. Most people try to define innovation as the process of creating brilliant ideas – but brilliance is defined by the same authors of the idea. Many other use terms like “Technology Innovation”. In fact one cannot do technology innovation; technology defines a concept for solving a generic problem (stronger polymers, faster computers, etc.), but this is not innovation, it is just better technology with respect to some other benchmark.
We all create ideas – for technology, for cooking, for driving in the city faster, etc. As may creativity professor taught me years ago: if you are able to talk and write you are creative. However, those who execute the idea they created; those who create a new dish or actually take the shortcut they imagine while driving to work, or those who implemented the technology they created (R&D folks) are inventors. Of course, some inventions you improve upon, some you protect (patent), some you publish and teach a course about it (academia) and some are used as an element to create a product.
The next stage is that of innovation. At the moment a given product (enabled by many inventions; made of mixing and bundling several technologies) delivers value, that is, someone is willing to pay for it, then such a product becomes an innovation. In other words, Innovation is a business process, not a technology process.
Of course, a lot of innovations require the use of technology to enable it. But one should not confuse the use of new technologies as something innovative. There are plenty of new technologies that never enable any products. Notice that an innovation does not require the use of new technologies; a new innovative product can be new yet use old and mature technologies from adjacent markets.
NOTE: a clarification may be needed at this point. Sometimes a given technology gets confused with a product of the same name. For example, the discovery of the antibiotics as technology however when properly processed, packaged and commercialized the product also uses the same name as the technology: antibiotics.
For the case of the drilling oil and gas industry the market dynamics hinders the innovation landscape. The barriers to entry are very large mostly driven by the level of capital use, regulatory constraints and liability (environmental, people, etc.). This implies that only very few companies are able to strive in this environment. This creates monopolistic behaviors: Why take on additional risk in a new unproven product when the one I have today is good enough? Just make more of the old, or make it bigger! In general, this dynamic is not sustainable but been a wealthy industry it can be maintained for a long period. In my opinion the end of such period is now.
In your own words “the oil and gas industry has been quite wealthy where problems get solved by throwing more money into them”. How does this affect the innovation culture in this industry?
As stated above the drivers for innovation are diminished in the drilling oil and gas industry. Lacking competitive frictions there is little incentive to create new product offerings. This gets exacerbated by the large capital investment required to put a new kit in the field (typically in the order of triple digit millions) and the risk it may represent to operations.
One way to measure the lack of innovation in the drilling O&G industry is by measuring its patent output. By 2012 the entire offshore drilling industry had created a bit more than 36,000 unique patent families in 47 years. The entire telecomm market in its worst year (2014) produced 37,000 patents in one year.
At 2016 IADC/SPE Drilling Conference in Fort Worth you said “the place where we are at, in a downturn, is the best moment for innovation”. What does this mean for the oil and gas industry? How should this industry exploit the opportunities through digitization in the upcoming years?
In the middle of a downturn is when all innovation spirits peak. First there is high sensitivity to improve cost and improve efficiencies. The less fit disappears or get swallowed, the one that positions itself for the upturn has the highest chance to strive – innovation is one of the tricks in the toolbox to achieve this.
What role does the human interface play in product development in a decade of decreasing computing costs, high connectivity and omnipresent availability of big data?
I think machines and systems need to continue to consider the human element more and more for their own success as a product. More and more the users of technology enabled products expect to have plug and play functionality. No more large manuals and training required in the new mantra. The expectation is toward immediate satisfaction, or intuitive interaction.
This has nothing to do with big data or decreasing computing cost or high connectivity. Those are elements that enable those products but without the help of cognitive sciences those are not enough (recall the case of Motorola Phones – highly advanced with a 100-page manual vs Nokia – just do the job)
What are your personal goals regarding innovation for the next 12 months?
I have 3 very specific goals, (I) continue helping/mentoring small ventures to navigate the complexities of their product development to achieve the innovation stage, (ii) bring into fruition the largest subsea equipment innovation in the offshore O&G industry and (iii) lead Transocean‘s Digital Transformation process.
About the interviewee:
Dr. José A. Gutierrez is catalyst leader with an outstanding track record of driving customer-centric innovation in complex organizations. Accomplished leading technology development across international boundaries with ability to successfully envision, design and execute transformational programs new-to-the industry and new-to-the-world. Expert in aligning technology strategy with corporate goals and driving initiatives through business ecosystems and technology commercialization. Resolute commitment to developing exceptional talent and high-performing teams within an open innovation environment.
Highly versatile and assertive leadership style with deep technical and business expertise in multiple industries: Oil & Gas (O&G), industrial automation, electric power industry, and commercial sector. Broad technical scope covering embedded systems, cyber-security, wireless communications, robotic vision, internet-of-things (IoT) platforms, analytics, and machine learning; skills further augmented with a Ph.D. in engineering sciences.