Open Spirit Connection, Fall 2004 Think Big, Start Small, Scale Fast By Dan Piette OpenSpirit Corporation CEO

Here are two statements being tossed around the oil industry these days:

"In spite of high oil prices and record cash flow, oil companies are being extremely cautious about their expenditures, both capital and operational."

"Oil and gas is a pure commodity market, so the only thing that oil companies care about is cutting costs."

Both present a challenge to vendor sales forces. Given these conditions, a sales person asks, how can I get the customer to buy my product?

I tried to answer these or similar questions during my tenure as a salesman for various technology companies serving the industry. My favorite technique used to be something called "Value Selling," which is still very much in use today, and which demonstrates how much money clients can make by using the product in question.

Here's an example of the attempted Value Sell (any resemblance to Professor Harold Hill is purely accidental):

Ms. VP of Production, if I can make each of your engineers just 10% more efficient through use of my product, I can deliver a huge return to your bottom line!

Say that instead of designing 10 workovers per year, they design 11 workovers per year. How do you think that would affect your net?

Well now, the math is simple - if you perform more workovers, you increase production, right? If you increase production, you deliver more oil. If you deliver more oil, you make more money.

See here? Look at that huge increase in net at the bottom of the spreadsheet!

This argument seems so logical and irrefutable that sales managers and CEOs of technology companies (whoops) welcome it with open arms. And then blame the poor sales guy out there trying to make a living who comes back empty-handed.

What do you MEAN, BigOilCO didn't buy?! Didn't you show them how much money they will make? If you did your job right, they are CRAZY not to buy!

What do you MEAN they didn't believe you? Didn't you show them the spreadsheet? It is obvious! We are only saying that we can increase their efficiency by 10%! And that doesn't even take into account the time value of money! You are not calling high enough in the organization!

What do you MEAN the VP of Exploration won't take your calls! Didn't you tell her that without our product they will essentially be losing $500 million annually???

I am embarrassed to admit that I have been on both sides of that conversation. In my early days as a salesman I was eager to show the clients that our products solved problems that they didn't even know they had! Being a somewhat analytical guy, it made sense to me to create a mythical (but believable) spreadsheet with a mythical ROR and a mythical savings. That was the problem though - it was all mythical.

Once decision makers became familiar with this approach, I left an oil company office more than once after being told that I shouldn't be so arrogant as to tell them how to do their business. Who was I-or any vendor for that matter-to tell them how much money they were or were not going to make? Did I know better than they did how to manage their operation? Oops. A few of the more sympathetic customers went to the trouble of showing me the flaws in Value Selling. For one thing, you can look at the numbers from a purely rhetorical viewpoint and analyze the fallacies as they occur. Or, you can assert that oil exploration and production are far too complicated to simplify into a single spreadsheet with a valid forecast. Or, you can admit that while the spreadsheet looks nice, oil is still where you find it, and the alternative conclusions will never be tested so you really don't have a way to understand where value was or wasn't added to the final number.

So I became extremely wary of Value Selling some time ago. It doesn't really hold water, and may do more harm than good. So what does work in terms of oil companies adopting (i.e., buying) new technologies? In my experience, the process that has worked the best historically (for the oil company, not always the software companies) has been Think Big, Start Small, Scale Fast.

Think Big
Most people (and companies) have limited vision. They can see how they get to the end of the day, the end of the week, maybe the end of the month. Occasionally they like to look at quarterly boundaries, because that is the way "The Street" judges them. But the way to really break through is to think Big Thoughts.

Making the leap from an overland express transportation company to a global financial services company (like American Express) took a series of Big Thoughts over the years to respond to changing markets. Going from a radio repair shop to a guitar manufacturing company (like George Fender did in the mid 1900s) was a big jump that definitely resulted from Big Thinking. Big Thoughts are what make companies change.

Thinking Big provides the opportunity to explore all the alternatives that abound in the market. Without that jump start of Big Thinking, without that leap to solving a big problem, innovation just doesn't happen. It is almost Coveyesque - Start with the end in mind-but it is more. Look at the need and explore ways to fill it. Work with a vendor to understand how the product will work in the whole scheme of the company. And dream of the possibilities, not only for this product, but for any others that have any touch points WITH that product.

Start Small
Starting Small is the only sure way that Big Thoughts will be realized-either successfully or unsuccessfully. Big Thoughts, after all, can cause Big Failures, especially if they are implemented with Big Starts. Much better to Start Small, find out what the problems and issues are, correct them, then iterate the Small Start again. Getting the bugs out in the Small Start is a way to success, akin to a fast prototyping development process. Trying to introduce a Big Thought without a Small Start is like taking your entire fortune to Vegas and putting it all on one spin of the roulette wheel. Great when it works, but the odds are stacked against it.

Scale Fast
Scaling Fast is the way to sidestep the roulette wheel. Taking the knowledge from the Think Big/Start Small approach and delivering value to the organization quickly is where the payoff occurs. It doesn't make sense to wait on roll out once the bugs have been worked out. On the other hand, planning for a scaled implementation needs to be complete before all the bugs are worked out. The ability to rapidly scale a successful Small Start is critical to the long term success of the implementation, because slow take up due to scaling issues will be plagued with fear, uncertainty, and doubt, then belief that a failure will occur. So the Scale Fast plan needs be set well before the end of the Start Small step.

What has this got to do with OpenSpirit? Well, this is how we work. We like to Think Big-the bigger the better. We understand how to arrive at a company-wide solution that is fit for purpose. In collaboration with our customers, OpenSpirit staff help design a long-term plan with the products we can deliver today, as well as ideas for how to implement what we will be delivering over the next several years.

To get this process started in a customer's enterprise, however, we like to Start Small. Many software companies, including us, make claims that can seem pretty outlandish. We (of course) only tell the truth, but it can still be a stretch for folks who are not as familiar with OpenSpirit as we are. By starting small, we can show exactly what we mean in a short amount of time. While a two-week trial in one office may not be long or broad enough to establish new work flows and techniques, it is often enough to demonstrate the viability of an OpenSpirit-supported procedure. The key is to identify the goal of the installation, and then work hard to make sure that it does what we said it would.

Finally, Scaling Fast is the best way to get value from a software infrastructure like OpenSpirit. The more ubiquitously a company uses OpenSpirit, the better it works. There is a virtuous cycle that results in more good things happening the more our software is used. It becomes part of the furniture that everyone rests their applications on.

Technology has come to the rescue of the oil industry more than once-in the form of new data (downhole tools, 3D seismic), new hardware (steerable drilling, flexible tubing) new software (3D visualization, reservoir modeling). The next jump is in the form of new ways to collaborate and interact. In the E&P community, OpenSpirit is one of these new ways, and it is a technology that is leading the industry into a whole new realm of productivity.

The world needs more oil. We can help. We are helping. Not with mythical spreadsheets, but in close collaboration with our customers to Think Big, Start Small, and Scale Fast.