3 Keys to Navigating Digital Transformation in the Oil & Gas Industry

In November 2017, oil and gas technology and business leaders gathered at the Houston Astro’s Minute Maid Park just weeks after winning the World Series. What could energy executives and Mike Fast, Head of Research & Development for the Astros, possibly have in common? As it turns out, quite a bit – both are at the end of the beginning of a digital revolution. Furthermore, while technology may be the enabler, the people – whether it be MVP players or geoscientists – are the one’s holding the keys to deciding how the digital transformation will impact performance.

Throughout the American Energy Society’s Digital Oilfield Conference, the speakers highlighted the importance of people and organizational culture as they embarked on their digital journeys. This included ensuring the entire organization has appropriate skills training, communications of new expectations, and organizational structures to sufficiently support the high rate of evolving technological change and innovation underway in the industry. Below are some of the critical people-related considerations at the heart of a successful digital journey:

  1. Leadership Understanding and Engagement – A digitally enabled organization can mean different things to leaders inside an organization. It can be hard to think about the hyper connected world we live in, leap to what it could look like in 5, 10, and 20 years from now, and fully grasp how an organization should modify its structure and behaviors to remain competitive and innovative. It is important for an organization’s leadership to understand the evolving digital vision and be aligned on its strategy. Furthermore, good leaders set the example of the behavioral change they want to see in the workplace, such as using real time social media and collaboration tools instead of only using traditional town halls to engage with their workforce; or promoting something pertinent to digital technology heard on a recent podcast.
  2. Your People Inside the Change – Senior leadership should clearly define, articulate and reinforce new expectations with the next level of key change agents: middle management and specialists, particularly those with influence and strong voices. To remain competitive, the digital workplace requires a more agile and rapid work environment, safe places to fail, and innovation channels. Experience has shown that middle management tends to be more skeptical and risk averse to change and potential failures, and thus a clear understanding of expected guidelines from which to make good decisions is important. Furthermore, specialists such as engineers, geologists, mechanical integrity specialists, and project managers should understand and communicate the value of adopting a technology and an agile way of developing the solution. An organization’s trusted users are needed to communicate the benefits – in terms of efficiency, safety or the lifecycle of the asset to promote user adoption and acceptance.
  3. Incentives and Reinforcements – Adaptive and risk tolerant behavior promotion will only go so far until it is incentivized with rewards. For oil and gas companies, the rewards are not normally multi-million-dollar player contracts like top baseball athletes, but are seen in the organization’s performance management system of how it characterizes, ranks and compensates those types of behaviors and results. In addition, performance results may be viewed more longer term, such as net value of the asset versus typical budget and schedule driven metrics. When an organization is materially supporting these behaviors, then the breadth of innovation and growth expands.

As the industry continues to move forward in its digital revolution and organizations embark on their own journeys, it is key to weigh these three people-related considerations as they are central to success. Enabling your people to support the high rate of innovation ahead will ensure your organization is set up for a effective transformation.