(This is the fifth in an occasional series profiling organizations committed to more productive energy talk.)
Innovation talk may well be the one force capable of putting Canada’s energy sector – particularly upstream oil and gas – back on its feet.
But we have to get it right.
That means creating – through talk – a synthesized innovation culture. That’s more than just a next-generation ecosystem. Many upstream industry veterans can point to great innovation track records stretching back decades. But there are now two distinct innovation cultures at work in energy.
The first involves the hands-on innovations that are more about specific mechanical or process problems. That style is about solving complicated problems by breaking them down into basic enough elements so they become relatively straightforward science and engineering challenges. It has served, and in some fashion continues to serve, the sector well enough.
The second is oriented more to problem solving through iteration and incremental thinking – the approach that drives technology development. This is necessary because the challenges facing the sector are complex. It’s more open to collaborating, and is experimental and typically non-linear. It often results in radical change that disrupts business models and unlocks transformative growth.
Companies in the past could wait for technologies to be commercial ready before implementation, rather than getting involved early to test a technology’s merits.
Are we up for synchronizing the best of both cultures? And if we are, how do we use talk constructively to begin that melding?
Linear innovation hasn’t typically transcended individual companies and benefited the broader sector. Nor was more traditional innovation thinking typically driven by the need for survival; it was about value creation in more financially predictable times.
But oil and gas companies that are surviving by the thinnest of margins need to think (and act) differently. They need to talk differently to investors, to policy-makers, to industry opponents and even to future employees.
That innovation talk is important to restoring credibility and confidence. Indeed, innovation talk may be the ticket.
Just look at the Rainforest Alberta community. Since it has taken root, the various players in the Calgary-based system are far better connected and, as a result, collaborative – much of it achieved through talk.
It’s a model the upstream sector should contemplate replicating. Indeed, some of the sector’s more progressive companies are within the Rainforest already.
For Kinetica Ventures – the energy-sector-focused arm of Calgary Technologies Inc. (CTI) – Rainforest thinking will be key to help energy companies grasp what it means to succeed in a world that leaves non-innovators in the dust.
For Kinetica’s departing leader, Kevin Frankowski, and Dave Van Den Assem, the incoming leader, that means helping oil and gas companies develop a customer-centric view of how to drive more current innovation. That includes disrupting the prevailing model that values only innovations that are market-ready. It also requires embracing an innovator as a customer.
“If we could fix one thing (in the industry) it’s the need to shift from a mindset that is focused on eliminating technology risk, to instead, a mindset that is focused on being more nimble than the disruptive market forces coming at us,” says Frankowski. “Just procuring proven technology is no longer going to be enough to prevent this industry from being disrupted. Instead, we need to become willing customers who work side-by-side with entrepreneurs to co-develop new technologies and approaches, where we are doing the disrupting rather than being disrupted.”
Frankowski isn’t naïve about the impetus needed to shift an oil and gas company from an execution mindset to an innovation mindset. Focusing on risk containment has made it difficult for entrepreneurial innovators to really gain insight into the challenges facing the industry.
Kinetica Ventures is undergoing a shift as a result of the strategic split of Innovate Calgary in two: CTI (of which Kinetica is part) will face the industry, while Innovate Calgary returns to its roots to commercialize University of Calgary-produced innovation. The restructuring will allow CTI to help innovators and entrepreneurs. That, notes Frankowski, will allow CTI to focus on helping industry crack tough problems.
“The key lesson we’ve learned is about the need to solve that customer problem … to do that, we need to build innovation receptor capacity within the technology end users, the energy companies themselves. Innovation cannot just exist within the startup technology developers – both groups need to embrace innovation … and work together to co-develop the future of this sector.”
Notes Van Den Assem: “In terms of our future solutions, some will directly address the need to be disruptive and some will focus on meeting industry where they are by providing an accelerator of new tech for them to engage with.”
Bill Whitelaw is president and CEO at JuneWarren-Nickle’s Energy Group.
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