The three-way challenge of cross-cultural technical management by pptfiles

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									INTERCULTURAL ISSUES IN THE UPSTREAM OIL & GAS
                INDUSTRY


     University of Warwick: November 15, 2012

                  Glen Burridge
          NDB – New Digital Business Ltd
Structure of Presentation
1. Overview of Upstream Oil & Gas business
2. The Three-Way Intercultural Challenge
3. The Consequences
4. Possible Solutions
1. Overview of Upstream
  Oil & Gas Business
The Upstream Oil & Gas Industry
2. The Three-Way Challenge
         A. The NATIONAL Challenge

                                                      Algerian
                          Egyptian     7 Production Engineers                                 American
                                        British          British
                    Pakistani           6 Reservoir Engineers
                                        Living in France Living in Indonesia
Algerian-American
Living in US                                     7 Geologists
                                                  3 Managers
                                              2 Geophysicists
                                            2 Admin Support
                                          2 Software Support
                                              1 Petrophysicist
                                              1 Data Manager
British
                     British
Living in Hungary
                     Living in Australia         British                       Portuguese
                                                                               Living in UK
B. The ORGANISATIONAL Challenge
        Operating Company                                 Government



                                Partner 1                      P3
     Operator
                                               P2                      P4


  Project 1
  Project 2
                  Consultants             Advisors



                          Contractor 2                    C6
   Service Co 1                               C4     C5
                           Contractor 3                   ……Contractors n




                                     …………..…………Sub-Contractors x many n?
C. The TECHNICAL Challenge

               People




     Process            Technology
                                                                           People




                                                                 Process            Technology


The Technical Challenge I - People
• The Big Crew Change:
        - Large number of highest experience staff to retire in coming decade
        - Missing Generation of mid-career professionals
        - Budding economic powers providing increasing share of workforce
       - Steadily more gender-balanced professional workforce
• Knowledge Transfer:
        - Professional operational status: 5+ years
        - Project-specific expertise: 6 months+
        - High degree of training, but poor mentoring of new staff
       - Poor knowledge capture & transfer from experienced staff
• Geoscientists (“Geo’s) vs Engineers:
       - Large-scale, 4D conceptually-driven thinking of geoscientists
       - Focused, measurement & building-driven view of engineers
    Engineer                       Geologist                         Geophysicists

So, an Engineer, a Geologist & Geophysicist are in a room with the Boss.

The Boss asks the Engineer “What’s 2+2?” The Engineer replies “4.0000 ″.
Then the Boss ask the Geologist the same question. The Geologist replies” Oh,
somewhere between 3 and 5″.
Finally, the Boss ask the Geophysicist the same question. The Geophysicist replies ”
What would you like it to be?”
Well Engineer
Geophysicist / Driller
Geologist Engineer Engineer
Production/Facilities
Reservoir                     Petrophysicist
                                                                             People




                                                                   Process            Technology


The Technical Challenge II - Process
• Long, complex, projects with multiple partners & web of contractors:
        - Differing perceptions of lines of command
        - Matricial vs hierarchical decision-making structures
        - Opposing motivations -> poor integration
        - Vastly different psychological contracts (Handy, 1999)
• Project Governance:
        - Nationalisation of JV projects often written into Production contracts
        - Ability of host country to effectively manage resources
        - Training and technology transfer aspects often poorly executed
        - National identity strong in management, but workforce diverse
        - Major disparities in remuneration, roles and expectations
        - Mentality conflict of operational expediency vs project management
        - Office-based vs Operations (off-shore vs on-shore)
               The Asset Learning Curve

                                     Expertise             Experience

                       Evaluation
       Y
    LT
  ICU



                 Synthesis
          RT
          FO
   FF




               Analysis
                                                 KNOWLEDGE
                                                 VALUE
DI

        EF




                                                                                  RISK
         Application
                                    Application of correct technology,
                                    people & skills
   Comprehension


Knowledge



                                                                         Time or $$

                                                                                         20
Explore     Develop   Produce




           “Cloud
          Thinking”
      Explore   Develop   Produce




$$$
  X                             X
                 $$$
                          X
                          $$$
Explore   Develop   Produce
                                                                           People




                                                                 Process

The Technical Challenge III - Technology
                                                                                    Technology




• Increasingly difficult targets:
        - Geopolitical constraints
        - No Elephants Left to Discover?
        - Extreme physical environments (deeper water, arctic)
        - Multitude of environmental considerations
        - Rarely a “silver bullet” technology
• Unrelenting levels of:
        - Heterogeneous technology development
        - Complex infrastructure testing & deployment
        - Potentially massive data overload (which patterns, trends important?)
        - Residual risk and carried uncertainty (the subsurface is never “known”)
3. Consequences
Examples of 3-Way Cultural Challenges faced by Oil & Gas
Managers:
•   Differences in interpretations / recommendations between local and expat subsurface staff:
           Need to reconcile & select most appropriate fitting all necessary criteria

•   Critical Issue / Error / Risk Reporting:
            Face, power-distance, individual vs collective responsibility

•   Goal Conflict:
          Idiocentric Corporate multinational company goals vs Allocentric National
          Polychronic perspective

•   Large project planning:
           Point outcomes vs consensus building. Time perceptions. Delegation.

•   Roles & Responsibilities:
           Power-Distance, Linear vs Circular decision-making, Matrix vs Hierarchy. Multiple
        projects

•   Uncertainty handling (sub-surface environment, external constraints etc)
                                        National
                                                                   European
THE INDIVIDUAL




                                                British                       Inter
                                                                                      natio
                                                                                           nal
                                        Cons          Close-knit consultancy
                                              cl iant
                                              utton
                                           eraEnglish
                                    nt Int
                             Clie
                                                         Project Teams
                                                       f f
                                                   Sta


                                                   eer
                                                 t           Solo
                                           lien
                                                 gin
                 Geologist               C                   work
                                                En
                                                                 en
                                                                    t    Organisational
                                                               em
                                                           nag
                                                    t Ma
                     Geophysicist            Cl ien


                 Technical
 Western European
 IOC (Integrated Oil & Gas
 Company)

                                 National
ORGANISATION 1




                                    Yemen
                                            Russian Arctic




                     North Sea
                                                  Organisational



                 Technical
 Middle Eastern
 NOC (National Oil & Gas
 Company)

                               National
ORGANISATION 2




                                                 Russian Arctic
                             Yemen


                                     North Sea


                                                       Organisational



                 Technical
Root Causes/ Failures of Macondo Well Explosion
Ref: US Chief Counsel’s Report to President

￿Most significant failure at Macondo and clearly the root cause of the blowout was a
failure of industry management.

￿BP‟s management process did not adequately identify or address risks created by late
changes to well design and procedures.

￿Decision making process at Macondo did not adequately ensure that personnel fully
considered the risks created by time and money saving decisions.

  The
￿ well blew out because a number of separate risk factors, oversights and outright
mistakes combined to overwhelm the safeguards meant to prevent just such an event
from happening.

￿ Better management by BP, Halliburton and Transocean would almost certainly have
prevented the blowout by improving the ability of individuals involved to identify the
risk they faced, and to properly evaluate, communicate and address them.
Root Causes/ Failures of Macondo Well Explosion
Ref: US Chief Counsel’s Report to President

“As a result of a cascade of deeply flawed failure and signal analysis,
decision-making, communication, and organizational - managerial
processes, safety was compromised to point the blowout occurred with
catastrophic effects.”

Perhaps there is no clear-cut “evidence” that someone the organizations in
the Macondo well project made a conscious decision to put costs before
safety; nevertheless, that misses the point.

It is the underlying “unconscious mind” that governs the actions of
an organization and its personnel.

“Cultural influences that permeate an organization and an industry
and manifest in actions that either promote and nurture a high
reliability organization OR actions reflective of complacency,
excessive risk-taking and a loss of situational awareness.”
4. Possible Solutions
             National

Understand
                           Cultural
                           Intelligence

                            Communicate



                            Organisational

                  Engage

Technical                  Ref: E. Plum et al., 1998
What can be learnt by O&G from the world of aviation?
• Recognition of the importance of Human Factors
         - Integral to aviation industry training and culture
         - Established as primary factor in many incidents
         - Cultural factors tackled head-on with safety justification
• High Reliability Organisation (HRO) foundations:
         - Standard Operating Procedures (SOP’s)
         - Checklisting
         - Licensing
         - Crew Resource Management (CRM)
         - Command, Control, Communicate (C3)
• Promotion of Quality Assurance, Safety & Excellence
         - Non-negotiable barriers
         - Confidential Reporting
         - Pro-active RCA (root-cause analysis)
         - Accident Investigation
• High levels of accredited training all the way through an organisation
         - Simulation, simulation, simulation…..
         - Emulation of What If’s, Consequences, ….not just Deliverables
HRO (High Reliability Organisations) accomplished by:

1) Command by exception
2) Redundancy / robustness
3) Procedures and Rules
4) Selection and Training
5) Appropriate Rewards and Punishment
6) Ability of Management to See The Big Picture


Examples: Commercial & Military Aviation, Nuclear Power Stations
3-Way Cross-Cultural Management Requirements:
 Strong inherent understanding of and ability to distil:
          - complexity
          - risk
          - uncertainty
          - motivations
          - consequences
 Ability to enforce, engage or drive (the “stick”):
          - best practice goals
          - learning from past mistakes
          - non-negotiable thresholds
          - 3-way cross-cultural awareness
          - awareness into action (RACI)
 Encourage, steer and define (“the carrot”):
          - context-sensitive communication
          - multi-threaded, flexible management style
          - knowledge transfer, management & sharing
          - team-working as inter-cultural exercise
Q&A

								
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