This is the fifth part of series profiling organizations that are constructively changing the ways and means in which we talk about energy.
Calgary-based Kinetica Ventures – an arm of Calgary Technologies Inc. – is using next-generation innovation thinking to help energy companies understand how to create their own innovation cultures – and talking points – as part of their corporate evolution.
For previous instalments, please see links below.
Innovation is tough.
Innovation talk is often tougher.
In Canada's energy sector – particularly upstream oil and gas – there’s innovation talk aplenty.
It is important “talk” because it may well be the one single force capable of putting petroleum 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-gen “ecosystem” – the label most often applied to innovation systems thinking.
Many upstream industry veterans can justifiably point to great innovation track records stretching back decades, and they would be right. But in a contemporary sense, there are two distinct innovation cultures at work in energy; the first involves the practical hands-on, almost linear, innovations that are more about cracking the nuts of specific mechanical or process problems. That innovation style is about solving complicated problems by breaking them down into basic enough elements that they become relatively straightforward science and engineering challenges. It has served, and in some fashion continues to serve, the sector well enough.
The second culture is oriented more to problem solving through iteration and incremental minimum viability thinking – the approach that drives success in the technology space. This approach is necessary because the new challenges facing the sector today are what are known as “complex adaptive” problems – that is, they can’t be solved using the reductive-style engineering on which the sector leaned so heavily for years.
This second innovation culture is more open to collaborating on new ideas and new ways of thinking; it is iterative, experimental and typically non-linear. It often results in radical change that disrupts existing business models and unlocks transformative growth. That may sound worthy of “buzzwordiness” labels, but the process works.
Put operationally: companies in the past could afford to wait for technologies to be commercial-ready before implementation, rather than getting involved at early stage in the investments necessary to prove up a technology’s merits.
A key question is this: are we up for synchronizing the best of both cultures? And if we are, how do we use “talk” constructively to begin that melding?
The other reality is that linear innovation thinking was never really effectively systematized; that is, driven into a coherent critical mass that transcended individual companies and benefited the sector more holistically. Nor was that more traditional innovation thinking typically driven by the simple imperative of survival; rather, it was about value creation through process and product improvement in more financially predictable times.
But times have changed – and 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 to even future employees.
That innovation talk is important to restoring external credibility and confidence.
Indeed, innovation talk may be the ticket – as well be creating a broader ecosystem that transcends individual companies. To be effective as an ecosystem, though, means more than just thinking about being a system. Effective systems can clearly point to how systems thinking is acculturated around an ethos of innovation. And they can point to external talk beyond the boundaries of their own echo chambers as a success measure.
Think that sounds hokey?
Just look at Calgary's Rainforest community. Since it has taken root, pun intended, the various players in the system are far better connected, and as a result, collaborative. There is something that resembles a coherent systems approach. The Rainforest is organized as a self-replicating system held together by a commitment ethos – much of it achieved through talk. That talk has resulted in better synchronicity and improved synthesis of focus.
It’s a model the upstream sector should contemplate replicating. Indeed, some of the sector’s more progressive companies are habituating within the Rainforest already.
For Kinetica Ventures – the energy-sector focused arm of Calgary Technologies Inc. (CTI) – Rainforest thinking and the related talk will be key to the cultural shift required to help energy companies grasp what it means to be innovative in a contemporary world that leaves non-innovators in the dust. That means reframing past innovation thinking via new lenses and new ways of talking.
For Kinetica’s outgoing 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 thinking into their operating culture. That includes disrupting the prevailing model of technology competence built on procurement thinking that values only innovations that are market-ready and proven. It also requires shifting to an approach in which the end-user company functions as a technology co-developer – in other words, embracing, say, an innovator as a customer.
Said Frankowski: “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. 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; the former focuses on risk containment and risk elimination. That thinking has made it difficult for entrepreneurial innovators to really gain granular insight into the challenges companies (and the sector) are facing because no one is really open to owning up to a problem. In other words, they’re not talking.
Kinetica Ventures itself is undergoing a shift as a result of the strategic split of Innovate Calgary into two parts: CTI (of which Kinetica is part) will face the industry, while Innovate Calgary will return to its roots as the University of Calgary-facing interface for the commercialization of university-produced innovation.
The restructuring will allow CTI to shift its services and focus to a value-chain oriented approach to help innovators and entrepreneurs work. That value-chain thinking, notes Frankowski, permits more effective identification of key pinch points – in other words, the place where the industry needs the most help to 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.”
Past Kinetica and CTI successes including industry-sponsored accelerators point the way to opportunities for Kinetica to interface with energy companies in similar activities – but on a different scale, such as on a resource play level.
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.”