The Selfish Technology Gene

Abstract

Guest editorial Mother Nature may be beautiful, but she is also unapologetically harsh. Changes in an environment—such as an increase in temperature or a shift in precipitation patterns—can act as triggers that ruthlessly reshuffle the fortunes of living things within an ecosystem. Organisms that are best suited to the new conditions will prosper; the rest are swiftly killed off without an ounce of remorse. Similarly, changes in one's business environment should act as a trigger to pause and reflect on the future. Seemingly innocent changes in the prevailing winds of an industry can reshape the competitive landscape of the market with brutal efficiency. The upstream oil and gas sector is beginning to feel the effects of just such a change, and there is every reason to believe that this shift will have a dramatic impact on the industry's "ecosystem." The sector has historically been very slow to develop and adopt new technologies, and relative investment in R&D by Big Oil has traditionally been only a fraction of that spent in other industries. Much of the oil and gas sector's R&D activities have shifted throughout the past decade toward service companies and, in some areas, to national oil companies (NOCs). But the industry is undergoing a significant transformation. With future hydrocarbon resources being in more technologically challenging environments, future winners in the industry are likely to be firms that have the ability to innovate and develop unique breakthrough technologies, and international oil companies (IOCs) are now working hard to strengthen their in-house R&D capabilities. Just as important as the technologies themselves, however, is how companies try to deploy them. Several of the accepted norms of the oil and gas sector are also barriers that impede the introduction of innovations in the industry. First, companies in the oil and gas market have used shared asset-ownership structures as a way to manage risk, but firms quite reasonably refrain from laying their cards on the table—that is, from revealing their cutting-edge innovations—if they believe that these tools and techniques will be immediately absorbed and replicated by the other partners. Second, partner firms often quash new-technology proposals because they are not convinced of the value of the innovation and/or they are uneasy about the additional layers of perceived risk that new technologies tend to carry with them. There always seems to be a reason not to use a new technology, and having many partners in an asset frequently begets frustratingly long lists of excuses.