By Linda Hsieh, Managing Editor
Although cost and efficiency are important factors to consider as the oil and gas market slows down, companies also should look at innovation and technology to get through this challenging period. Speaking at the International Petroleum Technology Conference on 10 December in Kuala Lumpur, Dato’ Wee Yiaw Hin, Executive VP and CEO of Upstream for PETRONAS, urged the industry to push not only the extent of its innovations but also the speed. “If you look at consumer products, from idea to prototype, prototype to tests and then to field trials and commercial application, consumer products take less than 10 years. In the medicine industry, it takes about 15 years. But look at oil and gas… it takes 20 to 30 years,” Mr Wee said.
Traditionally, the oil and gas industry has been shielded from the kind of fast-paced competition seen in industries like IT and automobiles, but times are changing. “You find that the cycles in the oil and gas industry where we face major disruption is getting shorter and shorter… Our speed to innovate and respond may need to be faster,” he said.
In fact, companies that are too slow in responding to market demands may find themselves left behind. Mr Wee cited the cases of Kodak and Motorola, where the former suffered because it didn’t recognize the increasing speed at which the digital world was moving. Additionally, “they were trying to hold on to the legacy of the photographic film because that was their product.”
Motorola also got left behind in a fast-evolving market. “Where Motorola went wrong is they didn’t see the impact and importance of integration in innovation – how you can integrate different functions and different technologies to reach what we see today as the smartphone,” he said. “A key message from this is that you maximize innovation when you integrate different functions and technologies.”
Innovation also is not confined to hardware or software – innovations around business models can make a big difference. Mr Wee noted the changes that the aircraft and automobile industries have made in response to difficult economics. These changes now permeate their operating model, from product development to procurement to the supply chain.
He also pointed to an annual ranking of the world’s most innovative companies, released in October 2014 by the Boston Consulting Group. The top 10 spots were dominated by the likes of Apple, Google and Samsung – but none were from the energy industry. “Why are there so few of us up there in the innovative companies?” Mr Wee asked. “If your company were in the top 10, what would be the impact to affordable energy and the way we work as an industry? And if you take 100 Google scientists and put them in the oil and gas industry and say, work with us on the challenges of affordable energy, what would the result look like? I think we need to ask ourselves these questions.”