TechnologyCatalogue.com believes in the central role of technology and innovation in accelerating the Energy Transition. And this is particularly important for energy companies as they are in the forefront of ensuring that we have the right infrastructure to embrace a new energy mix that favours sustainable sources of energy.
To give us insights on the innovation culture in huge energy companies, we invited Jaco Fok, an innovation and digitalisation expert, for an interview. Here, he discussed extensively how large companies change/improve/maintain certain aspects of company culture to welcome innovation and successfully embed it in their organisation. He also noted key opportunities for oil and gas companies that are at the intersection of Energy Transition.
Jaco has decades of experience introducing and implementing innovations in huge companies. He is currently the senior advisor for Digital & Commercial Strategy at OMV Petrom Downstream Gas, where he is driving the digital transformation towards a full digital customer experience, back office optimization & automation and change management.
Read his insights below.
How would you define innovation in the context of the energy industry’s transition to clean and sustainable energy?
Innovation in the energy industry is still the same thing as in other industries. All the principles still apply, only that there is an additional goal that significantly matters now: to make companies more sustainable. And sustainability has many elements, and there are a lot of things we can do especially on the ecological part of it.
First, we can have a look at our operations and assess where we can optimise. For that we can invest in technologies that do the same thing as we are doing currently, but just a lot more efficiently. The obvious one is digitalisation since, in general, it has the effect of increasing the utilisation of assets, including human resources. When you increase utilisation of assets, in essence you decrease your footprint. There are also a lot of digital monitoring sensors to make operations run more efficiently and to a desired setpoint where you make a minimum amount of ecofootprint.
As a next step, you think of innovation as also about how we step into new types of energy. As an energy company, we have an important role to play in providing our society with the reliable access to the energy it needs, as well as to develop options to reduce humanity’s ecological footprint.
As a final step, you think of how to come up with new business models, how we can monetise things in a clever way to help our customers reduce their ecological footprint. Whether that is coming up with ridesharing solutions or charging stations to encourage people to move to battery-operated vehicles. We are offering a mix of traditional fuels and alternative solutions for mobility.
It is worth noting that in the overall discussion of innovation in the context of Energy Transition, companies have dual responsibilities of constantly reducing our carbon footprint while maintaining a reliable and affordable energy supply to our customers.
Big, established companies are known to have more bureaucratic and analytical business culture, which may discourage creative ideas that lead to innovation. What do you think are common practices in big companies in the energy sector that you believe are discouraging innovative ideas or are hampering the introduction of innovation?
It might not be obvious to the public, but there is actually a lot of innovation happening inside a company, especially in big companies. What people do not see are innovations that are implemented by doing the same but only more efficient, much faster or cheaper. And there is a constant innovation going on in larger companies, but they are not always the super obvious, big, quirky innovations. This is the case especially that as a big company, you have the responsibility to have a certain degree of continuity for both your employees and clients. There are tons of innovations required of a large company just to maintain its size. One of the ways to do that is Open Innovation, often manifested in close cooperation with key suppliers and other elements of the business eco system like universities, customers and even peers.
When you are in a big company, your vision of the future tends to be formed by history and experience. So, the big breakthrough business model innovations are normally not captured by large companies. Having said that, large companies tend to just buy ideas from successful startups if required. They pay a premium, but that is much more convenient and economical than having to invest in hundreds of ideas that are not sure to succeed or for which the company has no relevant experience.
So, it is a classical race between startups and big companies. Is the startup able to scale faster to grab enough market share to be a significant player in an industry? Or is a large company able to tweak its resources to absorb and implement the innovative idea?
How do you then cultivate a company culture in big organisations, especially in the energy sector, where innovative ideas are encouraged and innovations are easily introduced?
You introduce innovative ideas in large companies with caution. You do not want energy companies to really go wild with innovative technologies and new business models, given the extent of risks that are involved. You want people to innovate within large companies, but you do not want them to take crazy risks.
One must really consider a wide array of factors – safety, environment, legislation, but we still need to innovate. So, how would you then encourage and introduce innovations? There are two ways to do that.
One, you can have a central innovation unit in your company that stimulates, drives and introduces innovation. Business managers do not have the time to think of new business models, so you need that central unit that is dedicated to thinking of how to do things differently and much more efficiently. Then, from that you can have annual cycles of new technologies, select a few of them for testing and pilot implementation, execute program management, etc.
The second one, which I find more effective in the long run, is to focus on people’s mindset. For instance, we have this concept of digital democracy, which aims to mobilise citizen developers within businesses to step up and learn more about new things. These include data visualisation, task automation and analytics, which are all crucial in tackling digitalisation challenges. You provide these citizen developers with learning materials and new tools, then suddenly you will see them applying their learnings to upgrade the way they do things at work. These citizen developers are a goldmine of the industry.
Combining your big corporate programs with these citizen developers who are already knowledgeable and prepared to take in innovations, you do not only solve the day-to-day nitty gritty problems in local innovation, you also prepare the organisation mentally and skill-wise for the bigger corporate innovation.
Do you believe that collaboration with external parties (i.e. innovation startups, scientific institutions) would encourage a culture of innovation in companies? If so, how?
Absolutely, on multiple levels.
What we do in the company is after we set up masterclasses, we started sponsoring startup competitions. And everytime large company employees work with startups as either mentors, jury members or coaches, their mindsets are changed for good. By exposing them to how these startups work and implement programs, it creates a very infectious mindset for agility and innovation. This mindset is then helpful when they come back to your company.
We also work with some larger and more mature companies like Microsoft, IBM, UiPath. This is extremely helpful as these guys know lots of stuff, provide tons of helpful tools and frameworks, and they just know much more about implementing at scale. Having the knowledge and expertise of these specialized companies is helpful in speeding up innovation in your company. The crosslinking that happens through suppliers and these major partners is also important.
We also have partners to work on aspects that we do not specialise on, like video analytics, customer portals, leakage detection. Having a local partner highly skilled in a particular territory can really make you more agile.
By doing all these things, we constantly develop an ecosystem with small, medium and large players around us, while further developing the skills of our workforce.
What are the opportunities for innovation in the energy industry, specifically for big energy companies who are at the intersection of going sustainable and maintaining major revenue streams (i.e. oil and gas)?
Data visualisation, data analytics and task automation are three technologies that we need to put in the hands of citizen developers. That’s the most basic level. This will drive increased asset utilization and efficiency, which helps sustainability of operations in several ways.
On a higher level, if you look at the developments in artificial intelligence, particularly in machine learning and deep learning, this is where you have opportunities to vastly improve process controls. For instance, there is a very good business case for adding a deep learning module on top of advanced process control in refineries to have more efficient, less wasteful, higher throughputs, more on-point than was possible before. The technologies are so de-risked that suppliers are now offering on a no-cure, no-pay basis. This to me is a very clear indication that the technology is way beyond being commercially available. It is almost business as usual.
Robotic process automation is a big second at a corporate level. It frees up essential resources to enable corporations to do more with the existing organization.
Somewhat disappointing technology is blockchain. It was huge at first, but -while still useful- it turned out to be not that easy and not that necessary. The huge promise of blockchain is dwarfed by the reality of artificial intelligence and robotic process automation.
TechnologyCatalogue.com’s Faces of the Energy Transition blog series aims to shed light on key issues surrounding the global transition to clean energy. We invite thought leaders, industry players and members of the academe to share their insights on topics that are related to the Energy Transition.
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